Metals Economics Group pipeline activity index, March 2012

Halifax, Nova Scotia, March 22, 2012 — Metals Economics Group (MEG) Pipeline Activity Index (PAI) slid for the third consecutive month in January to its lowest level since mid-2010, before showing some encouraging signs of recovery in February. Gold drilling regained momentum lost during the holidays, and the total number of initial resources announced in January-February matched the highest two-month total since early 2009.

Boosted by improving metals prices and many miners reporting healthy profits from 2011 operations, the industry’s aggregate market cap rose to break through the $2 trillion mark for the first time since August 2011.

The number of significant drill results appears poised to regain lost momentum, boosted by gold results that continue to lead the way. The recent turnaround in metals prices also seems to be re-instilling confidence in base metals explorers—although the real test for base metals exploration in 2012 will be the availability of risk capital, which has essentially been stalled since mid-2011.

The number of initial resource announcements got off to an encouraging start in 2012, matching the highest two-month total since early 2009. The number of resource updates also increased substantially as companies began quantifying results from their 2011 drill programs. Given the current state of markets, the quality of initial estimates and subsequent updates will likely determine which junior companies succeed in raising sufficient funds to continue project advancement.

The 91 significant financings (US$2 million minimum) completed by junior and intermediate companies marked the lowest two-month total since early 2009, mainly due to only 31 being completed in January. Gold financings rebounded in February to reach the highest one-month total raised since December 2010. However, a considerable portion of the February total is attributed to the three largest gold equity financings, which totaled more than $800 million. The five largest base metals equity financings accounted for half the total raised in January-February, and were all for copper projects. The $430 million raised for base metals during the period is the lowest since the global economic crisis in late 2008.

MEG Pipeline Activity Index (PAI), March 2012

Significant Junior and Intermediate Financings Completed


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 into a single comparable index. The PAI is featured in the MEG Industry Monitor—a series of comprehensive graphs and charts, with related commentary, illustrating MEG's analysis of monthly changes and emerging trends in the base and precious metals pipeline. Using information only available from MEG through MineSearchExploration Activity Services, and Acquisitions Services, the Industry Monitor tracks developments based on announcements over the past 26 months of significant drill results, initial resources, project development milestones, significant financings, and acquisitions.