HALIFAX, NOVA SCOTIA (Commodity Online): Metals Economics Group (MEG) Pipeline Activity Index (PAI) increased in November to reach its highest level since March 2011, thanks to another record month of significant drill results and improved financings, before falling again in December as explorers paused for the holiday season. December’s drop was mitigated by an end-of-year financing push that included a significant amount of debt raised—particularly for base metals.
The industry’s aggregate market cap declined in November and December to finish 2011 at $1.74 billion—the lowest since July 2010. Market caps have now been under $2 billion for four consecutive months, bringing 2011’s monthly average down to $2.16 billion.
The number of significant precious and base metals drill results showed an increase for the seventh consecutive month in November, before slowing for the holiday season. Although December was the lowest one-month total since April 2011, the number of announcements was still higher than any single month in 2010.
Compared with 2010, there was a marked increase in the total number of initial resource announcements in 2011. If metals prices hold—particularly gold—MEG expects the trend to continue upwards in 2012, given the significant increase in drilling reported throughout 2011.
Although not nearly to the scale of 2010, the year-end financing push helped the number of significant financings (US$2 million minimum) completed by junior and intermediate companies rebound. The almost $2 billion raised for base metals in November-December included $1.46 billion in debt—by far the most debt secured for base metals or gold in any bimonthly period since the Industry Monitor began in 2008. Although gold financings had a much more balanced distribution, the $452 million of debt raised in December is also the highest one-month total for gold in the past four years.
