Dec '10/Jan '11

Metals Monitor

The MEG Industry Monitor: Metals Economics Group’s analysis of the developing supply pipeline

By The staff of Metals Economics Group

In developing effective strategies, explorers, acquirers, suppliers, financiers and planners need an up-to-date view of the emerging mine supply pipeline, and of trends in financings and acquisitions, at both macro and ground levels. The bimonthly MEG Industry Monitor assembles and collates exhaustive current data on exploration, development, financings and acquisitions available from Metals Economics Group (MEG). The service reveals trends, provides an overview of where and how the whole supply pipeline is developing, and facilitates exploration of key strategic questions:

  • Where is today’s successful drilling concentrated?
  • What new gold and base metals reserves are being added to different stages of the pipeline on a month-to-month basis? Where? By whom?
  • How does this activity compare with the recent past and with the same period a year ago?
  • What does it tell us about emerging areas of activity and opportunity?

The MEG Industry Monitor takes a wealth of information from a number of different MEG services including MineSearch, Exploration Activity Services and Acquisitions Services. An integrated package of visual presentations and commentaries is presented.

  • Monthly totals of significant drill results announcements based on grade/length intervals and further divided into new finds, new zones or satellite deposits, and work at existing projects.
  • Number and value of initial resource announcements.
  • Number, value and type of late-stage project milestone announcements — projects entering feasibility, making production decisions, entering production, or being put on hold at any of these stages.
  • Significant junior and intermediate company financings (the financing market most closely linked to exploration spending).
  • Project and company acquisitions.

To gauge levels of activity, the MEG Industry Monitor combines the numbers of new drill results, resource announcements, positive project milestones and financings in a comparable monthly Pipeline Activity Index (PAI) — for all metals and, separately, for base metals and gold. To provide further useful context, the PAI is plotted against a blend of precious and base metals prices, weighted by the percentage of overall exploration expenditures dedicated to each metal, and against the changes in monthly aggregate market capitalization of publicly listed precious and base metals companies worldwide.

MEG’s Pipeline Activity Index reaches a high

Metals Economics Group’s Pipeline Activity Index (PAI) rose to a 2010 high in October. Gains in the PAI resulted from a jump in the number of completed gold financings and a steadily increasing number of significant drill results. Initial resource announcements equaled their highest bimonthly total in a year. The industry’s aggregate market value also reached a high water mark of $2.07 trillion in October — its first time above $2 trillion since May 2008.

Continuing the upward trend that began in May-June 2010, the number of significant drill results increased again in the latest two-month period. Gold results reached their highest bimonthly total in more than two years and base metals results reached their highest total since September-October 2008. Regionally, North American projects consistently accounted for the highest proportion of significant gold results, while Latin America and Australia-Pacific together accounted for more than 50 per cent of base metals results.

The overall value of the initial resources reported in the latest period represents the highest bimonthly total in the last 12 months, led by the Tumpangpitu porphyry deposit at Intrepid Mines’ Tujuh Bukit copper-gold project in Indonesia. Although still not reaching levels seen in early- to mid-2008, the number of initial resource announcements reported in the September-October period is a considerable improvement over July-August. The improvement may indicate that the increased drill activity observed since early 2010 may begin to translate into more initial resource announcements.

The resource value of late-stage projects in September-October 2010 was down substantially from the previous period due to BHP Billiton’s Olympic Dam Mine resuming full production in August, following a failure in the main haulage system in late 2009.

The number of significant financings completed by junior and intermediate companies was up 30 per cent from July-August, largely driven by the gold financings completed in October. The average amount raised per gold financing decreased almost 40 per cent from July-August, serving as evidence that record-breaking gold prices are feeding the investor appetite for smaller juniors with prospective early-stage projects. Base metals financing increased slightly from July-August, as the value of equity financings more than doubled, offsetting a decrease in debt financings.

The ten IPOs that closed in September-October raised a combined $96.6 million, including $60 million raised on the AIM by Central Asia Metals for its copper project in Kazakhstan and its copper-gold and molybdenum projects in Mongolia. Gold and base metals IPOs (each raising at least $2 million) completed in 2010 now total 41.

To register for a trial of the MEG Industry Monitor, including the PAI, go to

Metals Economics Group is a trusted source of global mining information and analysis, drawing on three decades of comprehensive information and analysis, with an unsurpassed level of experience and historical data. (

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