Rough year for the mid-tier

GLOBAL market uncertainty has wiped 26% off the market capitalisation of 50 of Australia’s mid-tier miners, sinking their value to levels not seen since the global financial crisis.
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Kristie Batten

According to PricewaterhouseCooper’s report, Aussie Mine 2012, Staying the Course, the market cap of the miners, dubbed the “mid-50”, fell 31% from the March 2011 peak of $A75.3 billion to $51.8 billion at June 30, down 26% from the same time the previous year.

At the end of September, the market cap of the same companies was up slightly to $52.8 billion.

Also falling was net profit, which sank by 44% to $1.6 billion, despite a 21% rise in revenue and a 36% increase in cash flow to $5.2 billion.

But costs rose 22% and impairment charges rose to over $1 billion.

PwC classified the mid-50 as companies with a market cap of less than $5 billion, but it lowered the minimum from $483 million to $269 million due to lower values.

Iluka Resources was the largest company, with a market cap of $4.7 billion, though it, along with Alumina, re-entered the mid-50 after previously graduating to the rank of the majors.

BHP Billiton, Rio Tinto, Fortescue Metals Group and Newcrest Mining remained firmly in the majors category.

Jupiter Mines was the smallest company in the mid-50, while former member Intrepid Mines just missed out as its market cap dropped to $270 million on issues with its flagship Tujuh Bukit project in Indonesia.

PwC said once-dominant coal companies had fallen off the list, making way for gold miners which made up the largest share of the list at a combined market cap of $13.3 billion, or 26% of the mid-50.

Eight coal companies dropped off, though three were due to takeovers, with the value of coal plays in the mid-50 dropping to $9.5 billion from $22.2 billion.

Yancoal Australia was excluded from the list as it was yet to report a full-year result.

Gold representation on the list was helped along by the creation through mergers of Alacer Gold and Evolution Mining.

Iron ore companies also had a good showing, with Arrium, Sphere Minerals and Brockman Mining entering the fold, joining nine existing members.

In 2012 the iron ore share of the total market capitalisation of the mid-50 increased to 17% from just 6% in 2008 to 17%, and this remained the case in September, despite a big drop in iron ore prices in July-August.