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State of the Market Exploration Report Edition 1 2013

State of the Market Exploration Report Edition 1 2013

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Published by James Hudson
State of the Market: Exploration Report (Free)

Quarterly analysis of global exploration activities and trends.
State of the Market: Exploration Report (Free)

Quarterly analysis of global exploration activities and trends.

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Categories:Types, Research
Published by: James Hudson on Mar 06, 2013
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Edition 1, 2013
State of the Market:
Exploration Report
Comprehensive examination of recent exploration activitiesand trends, plus the outlook for the next quarter 
 
 
02
State of the Market: Exploration ReportEdition 1, 2013
Driller’s Log 03Feasibility Studies 04Capital Raising for Exploration 06Exploration Hot Spots 07Exploration Results11 Assay Share Price Alert 15
Contents
STATE OF THE MARKET: EXPLORATION REPORT
Report is published by IntierraRMG Pty Ltd
IntierraRMGAbbey House, 5th Floor74-76 St John StreetLondon, EC1M 4DZTel: +44 (0)20 7780 7470Website: www.intierraRMG.com
Contact
Chris HindeEditorial DirectorEmail: chris.hinde@intierraRMG.comKelly ChanMarketing ManagerEmail: miningreports@intierraRMG.com
CONTRIBUTORS
Stuart FergusonNarelle GardinerChris HindeGlen JonesGreg KayRichard MurphyPeter Rossdeutscher Jeremy Thompson
This report is supplied on a condential basis for the subscriber's use only. The contents must not be disclosed to third parties and it must notbe copied in whole or in part without the prior written permission of IntierraRMG Pty Limited. Photocopying and electronic forwarding prohibited.Copyright 2013 IntierraRMG.
 
Copper prices (US$/t)
Coal prices* (US$/t)Iron ore prices* (US$/t)Gold prices (US$/oz)
Jan 2011Dec 2012
8090100110120130140150
* Australian thermal coal,(12,000btu/lb, under 1% sulphur, 14% ash,FOB Newcastle/Port Kembla)* 62% Fe CIF China
Jan 2011 Dec 20121,2001,3001,4001,5001,6001,7001,8001,900
Jan 2011 Dec 2012
6,8007,3007,8008,3008,8009,3009,80010,300
Jan 2011 Dec 2012100110120130140150160170180
03
State of the Market: Exploration ReportEdition 1, 2013
Driller’s Log
There is light at the end of the tunnel, at last, for the beleagueredexploration sector but it is far from a beacon
Funds raised for mineral exploration in thethree months to end-December registered awelcome improvement compared with the direSeptember quarter. Moreover, financings bythe exploration (junior) companies themselvesalso saw growth during the latest period.The upturn in funding for exploration, and by the juniors, will be welcomed throughout the miningsector, and comes just in time for the Prospectorsand Developers Association of Canada (PDAC)conference in Toronto at the start of March.Financing for exploration reached US$1.49billion in the quarter just ended, compared withonly US$0.65 billion in the three months to end-September. The Toronto Stock Exchange (TSE) wasthe largest source of exploration funds for thequarter (US$586 million) followed by the AustralianStock Exchange (ASX; US$519 million) and the TSX-Venture Exchange (US$319 million); all measured interms of the primary exchanges for each financing.There are caveats, however, and although wehave surely now passed the worst, the scenario forexploration companies remains extremely difficult.There are almost 3,500 listed companies inthe international mining industry, and the sectorhad a combined market capitalisation of justover US$2,500 billion at the end of the Decemberquarter. The top 681 companies (those that eachhad a year-end market capitalisation of over US$100million), accounted for 98% of the industry's overallmarket capitalisation, and 84% of the combinedfinancing during the December quarter.However, the majority of the companies inthe industry are extremely small. At the end of December 2012, IntierraRMG estimated that therewere 1,756 companies (ie about half of the total)with a market capitalisation of under US$10million. There were a further 817 companies(almost one-quarter of the total) with a year-endmarket capitalisation of US$10-49 million.The companies that represented the smallest 50% of the industry, raised less than 3% of the total financingin the past quarter, equivalent to just US$102,000 foreach company. With funding scarce, many of thesesmaller companies remain in a period of dormancy asthey ride out the current weakness in debt and equitymarkets. The situation remains especially difficultfor those with little prospect of early cash flow.Even those companies with metals productionhave been battered by investors' perceptionsof disappointing revenue as metals prices fall,narrowing margins as costs continue to rise,and rising operating risk as social tension rise.As companies went into the December quarter,cash holdings had fallen to under a combinedUS$2.0 billion for those companies with a marketcapitalisation of under US$10 million. The just over1,000 companies that have a market capitalisationof US$10-100 million had combined cash holdingsat the end of September 2012 of some US$7.3billion. This was dwarfed, however, by the US$252billion held in cash by the largest companies.With the lacklustre commodity prices, valuations forthe smaller companies have remained depressed. This,in turn, has made it difficult to finance projects byraising equity through public offerings. With their largecash holdings; we expect bids from the majors for someof the struggling juniors that have attractive projects.

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