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Miners lead FTSE fightback but $190bn bill hits Acacia

FTSE 100 claws back some of yesterday's losses as mining stocks charge, but Acacia continues slump on $190 billion tax demand.

 
Miners lead FTSE fightback but $190bn bill hits Acacia

A charge from mining stocks has helped the FTSE 100 recover some of the losses made in yesterday's slump.

The UK blue-chip index rose 53 points, or 0.7%, to 7,430, with Anglo American (AAL) jumping to the top of the index, up 5.2% at £11.63, after South African miner Kumba Iron Ore, in which it owns a majority stake, reported a jump in profits and reinstated its dividend.

Close behind were fellow miners, including:

  • BHP Billiton (BLT) +3% at £13.25;
  • Antofagasta (ANTO) +2.7% at 909p;
  • Glencore (GLEN) +2.3% at 320p;
  • Rio Tinto (RIO) +2.2% at £33.40.

But the buoyant mood for miners did not extend to Acacia Mining (ACAA), which endured a second day of heavy losses and was rooted to the bottom of the FTSE 250.

Shares in the gold miner fell 11.7% to 163.2p and are now down 30% over the last two days after yesterday's revelation the Tanzanian government had demanded a huge $190 billion (£146 billion) tax bill, 218 times its £669 million market cap.

The massive bill relates to revenues at the company's Bulyanhulu and Buzwagi mines dating back to 2000 and 2007 respectively. The Tanzanian government has alleged export revenues were undeclared.

The government demand is the latest stage in a long-running battle with Acacia, after a presidential committee in May claimed the miner had not fully declared gold and copper extracted in the country. Shares in Acacia have lost more than half their value this year.

Acacia said in yesterday's update that it 'refutes each set of findings and reiterates that it has fully declared all revenues'.

Domino's growth fears

Acacia was joined at the bottom of the 'mid-cap' index by Domino's Pizza (DOM), down 8% at 257p despite reporting a 10.5% jump in half-year sales, amid fears growth would start to slow.

'In the last 12 months, Domino's opened 100 stores in the UK,' said George Salmon, equity analyst at Hargreaves Lansdown. 'While these openings are driving headline revenues, they are cannibalising sales from existing stores.

'There are other worries too. With household incomes squeezed by inflation, investors will be concerned that consumers are increasingly counting the pennies.'

Virgin's housing warning

Virgin Money (VM) was another big faller, down 6.4% at 287p despite unveiling a 26% jump in half-year profits, as the bank warned of 'some areas of weakness to be navigated' in the UK housing market.

Among 'small cap' stocks, Jimmy Choo (CHOO) surged 16.9% to 228p after US group Michael Kors swooped on the fashion house with a £896 million takeover bid.

Games Workshop (GAW) meanwhile jumped 9% to £14.53 as the miniature war game maker said profits for the year would beat expectations.

On the Alternative Investment Market, shares in Fever-Tree (FEVR) notched up the latest stage in their huge rally, up 9% at £19.01 after the fizzy drinks maker posted a 77% jump in first half revenues. The shares are up 448% over the last two years.

'Fever-Tree is performing well in all regions but UK growth has been exceptional, up 113%,' said Russ Mould, investment director at AJ Bell.

'The group continues to invest and improve its infrastructure and its relationships with key suppliers and is well positioned as the opportunity for premium mixers continues to gather momentum.' 

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