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Mining Exploration Insights – March 2020: Equities off 10% as Part Of Wider Coronavirus Sell-Off

Mining equities were not immune from the worldwide sell-off in equities due to mounting fear of the coronavirus, which began towards the end of February. S&P Global Market Intelligence's aggregate market value of the industry's listed companies, based on 2,339 firms, was down 10% month over month at US$1.25 trillion, off from a 19-month high of US$1.49 trillion in December. The aggregate market cap of the industry's top 100 companies was down 9.6% in February at US$1.05 trillion. 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:

Increases in significant financings and initial resources in February were offset by decreases in significant drill results and positive project milestones, as S&P Global Market Intelligence's Pipeline Activity Index, or PAI, rose to 92 from 90 in January. The gold PAI jumped to 159 from 128, while the base metals PAI dropped to 33 from 56 over the same period.

Metals prices were mixed in February, as S&P Global Market Intelligence's Exploration Price Index was unchanged at 131. The indexed price rose for three — gold, molybdenum and cobalt — of the eight constituents of the index and decreased for zinc, copper, nickel, silver and platinum.

Global drilling activity declined in February, with the total number of distinct projects reporting drill results falling to 249 from 288 in the previous month. Confirming the decrease in the number of reporting projects, the total number of reported drillholes was down in February, to 4,497 from 4,836 in January.

The number of financings by junior and intermediate companies rocketed to 149 in February from 111 in January, and the US$343 million raised was up 25% from US$274 million in the previous month. The total number of significant gold and base metals financings, which is used in the calculation of the PAI, was also up sharply in February, more than doubling to 37 from 18 in January.

After falling to two in January, the number of initial resource announcements rose to four in February. Three new resources were for gold projects and one was for base metals.

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.

Equities off 10% as part of wider coronavirus sell-off

Mining equities were not immune from the worldwide sell-off in equities due to mounting fear of the coronavirus, which began towards the end of February. S&P Global Market Intelligence's aggregate market value of the industry's listed companies, based on 2,339 firms, was down 10% month over month at US$1.25 trillion, off from a 19-month high of US$1.49 trillion in December. The aggregate market cap of the industry's top 100 companies was down 9.6% in February at US$1.05 trillion. The number of tracked mining companies remains at a 10-year low, declining steadily from a high of 2,921 companies in March 2012.

Definitions

The Pipeline Activity Index, or PAI, measures the level and direction of overall activity in the commodity supply pipeline by incorporating significant drill results, initial resource announcements, significant financings and positive project development milestones into a single comparable index.

The Exploration Price Index, or EPI, measures the relative change in precious and base metals prices, weighted by the percentage of overall exploration spending for each metal as a proxy of its relative importance to the industry at a given time.

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