Letter from London, Dec. 5-9

London, U.K. – It was another roller coaster ride of a week in London over the Dec. 5-9 period, culminating in the profound split on Friday by eurozone leaders over debt crisis plans. British Prime Minister David Cameron has refused to enter into a new EU treaty that would have seen his government lose control over certain fiscal rules and financial transaction taxes strongly opposed by the city’s banking sector.

The feeling on the ground in Britain remains one of uncertainty, with political commentators saying this will create considerable antagonism toward the nation while predicting a “two-speed Europe,” and an “increasingly isolated U.K.” European financial markets initially reacted with unease, as early-morning yields on Italian 10-year bonds rose by 16 basis points to 6.62%, nearing the 7% level at which other eurozone countries have found their debt payments unsustainable in the past.

German chancellor Angela Merkel and French president Nicolas Sarkozy now hope to have their slightly reduced “fiscal and stability union” signed by March, putting into effect new fiscal rules limiting debt and deficits as well as automatic penalties for countries that break them. So far, 23 of 27 member states have pledged their support for the deal, with Hungary similarly defying the euro bloc and Sweden and the Czech Republic needing to consult their parliaments before making a decision.

Also during the week, the Mines and Money resource conference concluded with a 1,000-seat black-tie awards dinner in London. Andrew Forrest, the Australian founder and chairman of emerging iron ore powerhouse Fortescue Metals Group (fmg-a), received a Lifetime Achievement award at the event for his work in Australia’s resource sector.

Of the seven other awards given at the gala, Liberia received the Country award for the nation that has shown the most improvement in terms of its attractiveness to international resource investors; Lydian International (lyd-t) won this year’s Exploration award, for its work on the Amulsar epithermal gold project in Armenia; Glencore International (glen-l) won the Deal of the Year award for securing such a high price for its $60-billion initial public offering; Vale (vale-n) received the Sustainable Development award for its reforestation work in Brazil; and Afferro Mining (aff-v, aff-l) won the Exploration Funding award for completing a US$25-million private placement in mid-July.

Another round of ratings downgrades on European banks continued this week with Moody’s cutting the credit ratings of three major French banks. Credit Agricole and BNP Paribas were downgraded to Aa3 from Aa2, while Societe Generale fell to A1 from Aa3. Moody’s last performed a rating cut on the banks in September, but noted this week that “liquidity and funding conditions have deteriorated significantly” for each of the banks, adding that the problem was likely to worsen. The banks hold a large amount of Greek and other troubled eurozone country debt.

In company news, London-based Kalahari Minerals (kah-l) has received a £632 million takeover bid from two Chinese entities, China Guangdong Nuclear Power and the China-Africa Development Fund. The parties have been in takeover talks for the past few months but have finally secured a deal. Kalahari’s main asset is its 43% interest in Australia’s Extract Resources (ext-t, ext-a), which is currently advancing the large Husab uranium project in Namibia. Investors are now waiting to see if any action comes from Rio Tinto (rio-n, rio-l, rio-a), which recently signaled its strong interest in uranium after snapping up Hathor Exploration in November. Rio already owns 11% of Kalahari and 14% of Extract, and its Rossing uranium mine is neighbours with Extract’s Husab project. The Chinese offer for Kalahari also comes with a downstream offer for Extract, currently valued around US$2.2 billion.

Shares of African Barrick Gold (abg-l) fell this week after the company announced fourth-quarter output would be lower than expected because of power outages. Tanzania’s largest gold producer said five or six daily power outages at its Buzwagi plant in the fourth quarter have caused it to cut 35,000 to 40,000 oz. gold off its annual production target, now sitting just short of 700,000 oz. To solve the problem, African Barrick has just commissioned 16 megawatts of back-up power capacity on top of the 5-megawatt unit it built at Buzwagi in July. It expects the mine will return to operating at full capacity later this month.