The Metals Economics Group Pipeline Activity Index (PAI) dropped sharply in January from December’s three-year high before
recovering modestly in February. The PAI’s movement over the past few months follows a typical seasonal trend – increased activity through the latter
months of the year followed by a drop in the first few months of the following year as companies resume work after the holiday break. Despite January’s
sharp fall from December’s record high, the PAI remains slightly above the 2010 average.
After reaching $2.36 trillion in December 2010 – the highest since MEG initiated the PAI – the industry’s aggregate market capitalization dipped in
January. Metals prices continued to increase, helping to lift the aggregate market capitalization to $2.32 trillion at the end of February – less than two
per cent below December’s high-water mark.
The number of significant drill results released in the latest two-month period was slightly lower than the November-December 2010 period, but still
relatively strong compared to 2009 and the first half of 2010. Regionally, the top three destinations – North America, Latin America and Australia-Pacific
– combined to account for more than three-quarters of announcements in both November-December 2010 and January-February 2011. Unlike gold results, which
have slowed recently as the relative gold price has more or less flattened over the past five months, significant base metals results remained strong
through the holiday season.
Initial resource announcements by junior and intermediate companies were up from January-February 2010, but still well shy of bimonthly numbers prior to
the economic collapse in early 2008. The overall value of initial resources reported in the latest two-month period is up from November-December 2010, with
more than 40 per cent of the $28 billion total attributable to the Zafranal project in southern Peru, where AQM Copper and Teck Resources announced initial
resources containing more than 1.5 million metric tonnes of copper and 870,000 ounces of gold. Of the initial base metals resources announced in
January-February 2011, the top three primary copper projects accounted for more than 92 per cent of the total value.
The decrease in the number of significant financings completed by junior and intermediate companies in the latest two-month period was the biggest
contributor to the decline in the PAI, as both January and February expectedly dropped from December’s peak. The amount raised in January-February 2011 was
also below the 2010 bimonthly average of $3.82 billion.
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 MineSearch, Exploration Activity Services, and Acquisitions
Services, the Industry Monitor tracks developments based on announcements over the past 26 months of significant drill results, initial new resources,
project development milestones, significant financings, and acquisitions.
For more information on the PAI, visit www.metalseconomics.com.
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.