STUDY: Pipeline of new mining projects drying up

HALIFAX – SNL Metals Economics Group has published its latest pipeline activity index for the mining industry, and the outlook is far from rosy. The PAI reached a three-year low in February. Equally alarming is that it declined 43% since...

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HALIFAX – SNL Metals Economics Group has published its latest pipeline activity index for the mining industry, and the outlook is far from rosy. The PAI reached a three-year low in February. Equally alarming is that it declined 43% since October 2012 due to poor equity markets, leaving the juniors with few opportunities.

"The combination of weak financing conditions and budget cuts by major producers has resulted in idle drills, stalled projects, and lower grassroots spending, as companies focus primarily on their tier one assets. In the past, this type of environment has shown a capacity for quick improvement; however, it is difficult to predict if improvement will come in time for the summer exploration season," reads the Industry Monitor Overview for January-February 2013.

SNL also tallies the number of significant drill results. The firm says higher numbers in January were carried over from activity in 2012. But the number of drill results fell off in February, and that is likely a sign of things to come this year.

There were 80 financings of more than US$2 million in January and February. Unfortunately that was the lowest total since early 2009. Equity financings in February were less than $300 million, of which roughly 75% were for gold and the balance for all other metals including silver and the platinum group.

The report can be downloaded in PDF format by clicking here or go to SNL.com to subscribe to the complete SNL MEG Industry Monitor.

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