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Mining Exploration Insights - April 2020


Exploration index drops to 4-year low due to COVID-19

Mining equities were not immune from the worldwide sell-off in equities due to mounting fear of the coronavirus that began toward the end of February, as S&P Global Market Intelligence's aggregate market value of the industry's listed companies, based on 2,333 firms, was down 16% month over month at US$1.06 trillion, off 29% from a 19-month high of US$1.49 trillion in December. It was the lowest aggregate market value for the sector since May 2016. The aggregate market cap of the industry's top 100 companies was down 15% in March at US$898 billion. The number of tracked mining companies remains at a 10-year low, declining steadily from a high of 2,921 companies in March 2012.

The following analysis is an extract of S&P Global Market Intelligence monthly Industry Monitor, which reviews exploration activity and development in the mining industry. The full report and data files are made available to our Metals & Mining subscribers onlyHere are the highlights from our March, 2020 issue:

With the coronavirus weighing on markets and countries in lockdown, planned exploration spending for 2020 will likely be pushed downward. Significant financings and drill results were down sharply month over month, initial resources were off slightly and positive project milestones were unchanged as S&P Global Market Intelligence's Pipeline Activity Index, or PAI, plummeted to 53 from 94 in February, its worst showing since February 2016.

Metals prices were down in March, as S&P Global Market Intelligence's Exploration Price Index, or EPI, fell to 128 from 131. The indexed price fell for seven — gold, silver, platinum, copper, nickel, zinc and cobalt — of the eight constituents of the index and decreased for molybdenum. As the COVID-19 shutdowns continue, volatility in metals prices will persist.

Global drilling activity fell sharply in March due to global mine and project shutdowns, with the total number of distinct projects reporting drill results dropping to 152 from 249 in the previous month. Reported drilling decreased significantly for gold and was also down for silver, zinc-lead and specialty commodities projects. Drilling was up for nickel, platinum group metals and minor base metals projects and was unchanged for copper.

After struggling to maintain late-2019 momentum in January and February, financings lost support in March as companies operating in nearly all global jurisdictions were forced to halt work due to the coronavirus pandemic. Falling to 24 from 40 in February, the decline was due to a one-third drop in significant financings for gold projects month over month, to 20 from 31, and a decrease in base/other metals financings to four from nine.

After rising to four in February, the number of initial resource announcements decreased to three in March. All three new resources were for primary gold projects.

Project milestone activity declined in February, with the number of positive project milestones slipping to four from five month over month. February's positive milestones included three new mine production startups and one project entering feasibility. All four milestones were for gold projects. There were no negative milestones.

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