Low metal prices put chill on global mineral exploration

Low metal prices put chill on global mineral exploration

Global exploration stalled last month.

Depressed metal prices are still weighing heavily on global exploration spending, with SNL Metals & Mining’s Pipeline Activity Index (PAI), which monitors the health of the sector, receding in August for the first time four months.

Despite the overall improvement in global metals exploration since April, SNL’s latest industry monitor reveals it is still too early to start celebrating a recovery in the sector.

The PAI, which hit an all-time low in April, had been improving until last month. The index is a measure of activity in the metals supply pipeline and incorporates four important stages into a single comparable index: significant drill results, initial resource announcements, major financings and project development milestones.

Low metal prices put chill on global mineral exploration

While the first two PAI constituents improved in August, shows the report, there were sharp falls in the financings and project development milestones components, which reveals that developments and financings “remain in the doldrums,” say the analysts.

Modest gains

The study also shows that while the downward trend in exploration has not yet broken, the market has stopped marking down mining equity. SNL has recorded modest gains in the industry's market capitalization since the mid-2013 lows. At the end of August, the aggregate market capitalization of the 2,750 companies included in the group’s monthly reports, reached $1.604 trillion. Big remains best, however, with the largest 100 companies accounting for almost 86% of this total.

Image by Sumit buranarothtrakul | Shutterstock.