The Metals Economics Group Pipeline Activity Index(PAI) rebounded in May, from a dismal April, reaching its second-highest level in 2011 before dipping slightly again in June. A sharp increase in drill results coupled with a strong number of financings in May helped push up the PAI; how-ever, a record number of significant drill results in June was not enough to offset a lack of projects advancing and a lower number of financings.
The industry’s aggregate market cap slipped to $2.38 trillion in May, from $2.42 trillion in April 2011, before slipping again in June to $2.32 trillion. This is the first time since May-June 2010 that market caps decreased for two consecutive months.
The number of significant drill results spiked considerably, as May and June both easily surpassed the previous one-month highs. North America and Latin America continued to be the top regions for successful drilling, accounting for more than 60 per cent of the combined bimonthly total.Latin America alone accounted for almost half of the significant base metals results.
The number and in situ value of initial resource announcements in May-June was down very slightly from March-April, but was still the second-highest bimonthly total in the past two years. In terms of in situ value, gold and base metals were both dominated by single projects: Levon Resources’s bulk-tonnage Cordero project in Mexico – with 451 million ounces of silver, 3.4 million metric tonnes of zinc, 2.8 million metric tonnes of lead, and 1.1million ounces of gold – accounts for about 75per cent of the base metals total and is easily the largest announcement of the period; andEast Asia Minerals’s initial estimate of 3.14million ounces of gold and 8.95 million ounces of silver for its Miwah epithermal gold project in Indonesia accounted for more than 60 per cent of the total value of initial gold resources announced in the period.
The amount raised in significant financings(US$2 million minimum) completed in May-June was unchanged from March-April, mainly due to the increased number of financings closed in May, the fourth time in the last eight months that more than 100 financings closed ina single month. Unfavourable markets subsequently affected June financings, as a number of companies elected to cancel, delay, renegotiate or reduce their fundraising plans.
For more information on the PAI, visit the MEGwebsite at www.metalseconomics.com.
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