Market Report: Fresnillo left with a free float dilemma

  • @LauraHChesters

How will punters be able to get their hands on shares in the world's largest silver producer? Mexico's Fresnillo was discussing just that today. The miner is one of a handful of groups on the benchmark index facing a ticking clock – the deadline for their free float to reach 25 per cent is the end of the year.

Fresnillo reported a 24 per cent drop in pre-tax profit, but the City was interested in its plans to let other investors get their hands on the stock.

FTSE Group changed the rules for free floats for companies listing in London in 2011. Now all groups must have at least 25 per cent of their shares publicly available and five commodities groups – ENRC, Essar Energy, Evraz, Ferrexpo and Fresnillo – were given 24 months from 1 January 2012 to comply.

Fresnillo said it is considering two options to manage the change. Its largest shareholder, Mexico's Industrias Penoles, which owns 77.14 per cent, could sell down some of its stake. But due to a huge tax bill the more likely option could be a rights issue to raise funds for new projects – funds of around £229m could be raised if it pursued this option. Currently 22.8 per cent of the group is publicly available. Following its update and the hit from falling silver prices the shares dipped 9p to 1,481p.

Kazakhstan's copper giant Kazakhmys, a perennial faller, topped the benchmark index with its first rise in five days and the shares added 31.5p to 552p. Kazakhmys is the single largest investor in fellow miner ENRC with 26 per cent. ENRC, up 0.1p to 346.1p, will release its full-year results next week.

The benchmark index failed to fall despite expectations that profit takers would push it back after its recent rally.

UK manufacturing data for January disappointed but the FTSE 100 still managed to add 6.99 points to 6,510.62, a five-year-plus high.

Fashion followers at Société Générale took a look at the luxury goods sector and rated it overweight, but said slower top line growth and flat margins have produced more "risk and less upside".

London Fashion Week darling Burberry was issued with a hold rating. SocGen said it expected Burberry to deliver "above sector revenue growth over the coming three years" but its management is now "facing new obstacles and challenges". Burberry's shares were static at 1,433p.

Property giant British Land raised cash to fund new purchases and placed 90 million new shares representing 9.9 per cent of British Land's existing share capital at 550p a share. The shares finished the day down 25.5p to 555p.

Over on the mid-tier FTSE 250 index, translation software group SDL disappointed investors with a 19 per cent fall in profits. The shares dipped 55.1p to 444p, taking the wooden spoon.

The return of winter may herald a rush of holiday bookings, and punters warmed up travel group Thomas Cook's share price ahead of its City update today. The City is expecting the holiday group's management, led by chief executive Harriet Green, to be bullish at its Capital Markets Day and the shares travelled up 4p to 87p.

Despite the City's keenness on the stock, Bank of America Merrill Lynch scribblers said they prefer rival TUI Travel. They rate it a buy with a 355p price target and the shares journeyed up 9.2p to 320.3p.

After the market closed Royal Bank of Scotland said it plans to sell a part of its stake in motor insurer Direct Line Group through an offering of 229.4 million Direct Line shares. Direct Line shares closed down 0.1p to 210.2p and RBS added 5p to 306.3p.

Gem Diamonds' shares lost their sparkle, down 5p to 158p, after revealing a 61 per cent fall in revenues caused by weak diamond prices. But analysts at Liberum Capital said the outlook for the group is better for 2013.

AIM-listed explorer Berkeley Mineral Resources was one step closer to production and its shares ticked up 0.12p to 2.55p.

US-focused oil and gas producer Nostra Terra will today announce a deal to buy a 5 per cent working interest in a field in Texas. The shares edged down 0.01p to 0.5p.