Many junior explorers are reporting sufficient cash on hand to continue work, but some will likely scale back their programs to conserve cash. The industry’s aggregate market cap dropped in March and again in April, after showing good gains in the first two months of 2012. Market caps finished April at an aggregate $1.82 trillion, the lowest total since December 2011. Although still relatively strong, the number of significant drill results appears to be stalling. Gold drilling has remained flat since peaking in November 2011, while base metals results appear to have settled at levels similar to late 2010-early 2011 after a moderate spike in February. As long as adverse markets continue to make equity funding scarce, particularly for early-stage explorers, drilling activity will likely remain below the highs of late 2011.

The number of initial resource announcements in both March and April is easily the bright spot for the period. It is the first time since early 2009 that there were 15 announcements in a single month, and the two-month total of 30 is the highest since July-August 2008. Junior and intermediate companies completed 137 significant financings (US$2 million minimum) in March-April for a total of $2.6 billion, up 17% from the previous two-month period. Gold financings remained relatively steady, although the $712 million in debt secured during the period is almost quadruple January-February and is the highest two-month debt total in the Industry Monitor’s four-year history.

Debt accounted for three of the four largest gold raisings, including $302 million of senior notes issued by New Gold to repay higher interest debt due in 2017. The almost $800 million raised for base metals is up, but more than half was debt, including $200 million for intermediate copper-producer Capstone Mining. 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 pipelines. 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 resources, project development milestones, significant financings, and acquisitions.