Four Reasons why I'm Optimistic about Exploration
An increase in financings, the rebound of global drilling activity, and the jump in resource announcements are just some of the reasons why Mines and Money Head of Content Andrew Thake is feeling positive about exploration.
Over the last few years, there has been concern in the industry about the lack of investment in mining exploration, not just among exploration juniors, but also by mid-tiers and majors.
Fortunately, it looks as if the outlook is changing. Reading S&P Global Market Intelligence's Pipeline Activity Index for July, which analyses significant financings, drilling activity, initial resources and positive project milestones, there are four good reasons to be optimistic.
Firstly, the number of mine financings has increased.
The number of financings by junior and intermediate companies rose to 180 in July 2019. The number and value of gold financings were up sharply from 36 in June to 51 in July, closely following the recent run-up in the price of gold. Of these, the largest gold financing was by Merdeka Copper Gold, one of the speakers at this year’s Mines and Money London, who completed a US$61.3 million private placement of 215 million shares. The emerging Indonesian producer is working on increasing leaching capacity at its Tujuh Bukit mine from 36 million tonnes per year to 56 Mt/y of ore, which it expects to complete in 2019.
Secondly, global drilling activity rebounded strongly in July, with the total number of distinct projects reporting drill results rising to 207, from 152 in June.
The number of significant drill intersections, which are used in calculating the PAI, also rose sharply in July, to 132 from 92 in the previous month, with the increase led by gold projects.
We’ve already seen this impact Mines and Money London positively, with many gold miners signing up over the last few months - Black Dragon Gold, Mako Gold, St Barbara Gold, Yamana Gold and Resolute Mining to name a few.
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Thirdly, the number of initial resource announcements jumped from three to eight in July following four consecutive months of declines. Five of the new resources were from gold projects, two were from zinc projects, and one was from copper.
After gold, we have seen the next biggest increase in attendance at Mines and Money London from zinc projects: NorZinc, Adriatic Metals, White Rock Minerals, Panoro Minerals and Foran Mining are just some of the zinc companies who are coming to present their projects.Finally, positive project milestone activity improved in July, with the number of project milestones (i.e. production startups) increasing to five from three from June. Three milestones were for gold projects, and two were for copper. After gold, copper remains the commodity that the 600+ investors attending Mines and Money are most bullish about, as they search for that next elusive Tier 1 deposit.
These four reasons, set against the backdrop of improving metal prices, augurs well for mining exploration, as well as for Mines and Money London, where we have seen bookings up Year on Year by 21%.
Are you more or less optimistic about mining exploration?