Industry Monitor - October issue

Surging gold exploration boosts
pipeline activity

By Robert Anders | 20 October 2017

S&P Global Market Intelligence’s monthly Industry Monitor reviews activities and trends in the mining industry's exploration and development sector. Here's some highlights of the report:

As evidenced by newly released global exploration budget data from S&P Global Market Intelligence's Corporate Exploration Strategies series*, an increase in planned gold exploration spending in 2017 is leading the mining industry out of a four-year slump. Benefiting from firmer metal prices since early 2016, gold explorers have increased their aggregate budget by 22% year over year to US$4.05 billion. Junior companies' gold budgets have increased the most (41%), raising the juniors' share of the global gold budget to 29% from 25% in 2016.

Mirroring the increase in exploration allocations, S&P Global Market Intelligence's Pipeline Activity Index (PAI) was up sharply in September, surging to 96.5 from 76 in August as a steep rise in the number of initial resources and an increase in drilling activity were tempered by a drop in significant financings. The increase in the PAI was fueled specifically by the PAI for gold, which skyrocketed from 92 to 143, to reach a 4.5-year high. (The base metals PAI was down slightly to 58.5, off from an almost three-year high of 62 in August.)

The number of initial resource announcements jumped from three to seven in September. Five of the announcements were for gold projects which hosted a total of almost 4.3 Moz of contained gold. The month's largest new resource was a 1.5-Moz resource at IAMGOLD's Saramacca gold project in Suriname. Close behind was TriStar Gold, which unveiled a 1.3-Moz initial resource at its Castelo de Sonhos gold project in Brazil's Para state.

Global drilling activity increased for a second consecutive month in September, with the total number of distinct projects reporting drilling rising to 232 from 221 in the previous month, matching a four-year high achieved in January 2017.

The number of financings by junior and intermediate companies decreased in September, to 170 from 178; however, the US$619 million total raised was more than twice the US$279 million garnered in August. In the month's largest gold financing, Toronto-based McEwen Mining completed a US$46.6 million bought-deal offering, which it will use to fund its planned acquisition of the Black Fox gold complex in Ontario.

S&P Global Market Intelligence's milestone activity was unchanged in September, with the number of positive milestones remaining at seven. In the month's largest positive milestone, Denver-based Newmont Mining achieved commercial production at its Tanami expansion project in Northern Territory; the US$200 million expansion is expected to increase output by 80,000 oz/y, lower all-in sustaining costs and extend mine life.

S&P Global Market Intelligence's Indexed Metals Price increased in September to a 38-month high; the indexed price rose for six (gold, silver, copper, nickel, zinc and cobalt) of the eight constituents of the index, fell slightly for platinum and was unchanged for molybdenum.

In the meantime, mining equities took a breather in September after reaching a three-year high in August, as S&P Global Market Intelligence's aggregate market value of the industry's listed companies (based on 2,449 firms) declined 3% to US$1.42 trillion.

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Industry Monitor - October issue

Surging gold exploration boostspipeline activity

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Surging gold exploration boosts
pipeline activity