The Metals Economics Group, Halifax, Nova Scotia, said its Pipeline Activity Index for January of the mining supply pipeline shows that financing kept pipeline activity steady as drilling slowed for the holidays. The index increased in November to reach its highest level since last March as a result of a record month of significant drill results, the global mining information and analysis firm said.
A December fall-off in exploration was mitigated by an end-of year financing push that included a significant amount of debt raised - particularly for base metals, analysts said.
The mining industry's aggregate market capitalization declined in November and December to finish 2011 at $1.74 trillion - the lowest capitalization since July 2010. Market caps have now been under $2 trillion for four consecutive months, bring the monthly average for 2011 down to 2.16 trillion, MEG analysts said.
MEG Pipeline Activity Index, January 2012
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- Source: MEG Industry Monitor, Mine Search; Exploration Activity Services
- (c)Copyright 2012 Metals Economics Group
The group reported that the number of significant precious and base metal drill results showed an increase in November and for the seventh consecutive month before slowing for the holidays. Although significant drilling results in December were the lowest one-month total since last April, the number of announcements during the month was still higher than any single month in 2010.
A marked increase in the total number of initial resource announcement was recorded in 2011 as compared with 2010, the analysts said, adding that if metals prices hold - particularly gold - that trend is expect to continue this year.
The year-end financing pushed helped the number of significant financings ($2 million minimum) completed by junior and intermediate companies rebound, although not nearly to the scale of 2010, analysts said.
Signficant Drill Results Announced
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- Source: MEG Industry Monitor; Exploration Activity Services
- (c)Copyright 2012 Metals Economics Group
The almost $2 billion raised for base metals in November and December included $1.46 billion in debt which was by far the most debt secured for base metals or gold in any two-month period since the MEG Industry Monitor began in 2008. While gold financing had a more balanced distribution, the $452 million in debt raised in December was also the highest one-month total for gold in the past four years.
The MEG Pipeline Activity Index (PAI) measures the level and direction of overall activity in the supply pipeline, incorporating significant drill results, initial resource announcements, project development milestones and significant financings. More information on the PAI and the MEG Industry Monitor are available at the Metals Economic Group website.
A report on world and African exploration trends will be presented by David Cox, MEG vice president, at the Investing in African Mining Indaba in Cape Town, South Africa, on Feb. 6.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at pburgert@resourceinvestor.com