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IM June 2018 — Pipeline activity up strongly as most metrics improve

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S&P Global Market Intelligence's Pipeline Activity Index, or PAI, was up strongly in May, rising to 96 from 77 in April, as increases in financings, drill activity and project milestones were tempered by a slight decrease in initial resources at base/other metals projects. By target, the gold PAI was up to 126 from 93, while the base metals PAI rose to 70 from 62.

Global drilling activity rebounded in May, with the total number of distinct projects reporting drill results rising to 267 from 218 in the previous month. Significant gold and base metals results, used in the calculation of the PAI, also rose, to 157 from 119. The best assay from a gold project was reported by Hecla Mining Co. from its Greens Creek mine in Alaska, while the best intercept from a base/other metals project came from Xanadu Mines Ltd.'s Kharmagtai copper-gold project in Mongolia.

The number of financings by junior and intermediate companies rose to 180 in May from 163 in April, and the US$1.38 billion total raised was almost two and one-half times the US$570 million garnered in the previous month. Significant gold and base metals financings, which are used in the calculation of the PAI, were also up, to 50 from 44 in April. In the month's largest financing, Nemaska Lithium Inc. completed a US$629.7 million package that it will use for construction and commissioning of its Whabouchi lithium mine in Quebec.

The number of initial resource announcements fell for a third consecutive month in May, to four from five, and was split equally between gold and base/other metals projects. The largest new resource was at Osisko Mining Inc.'s Windfall Lake gold project in Quebec, where almost 3 Moz of indicated and inferred resources were declared at the Windfall deposit. Osisko is working on a preliminary economic assessment, scheduled for the September 2018 quarter, that combines the Windfall and Osborne-Bell deposits in a blended mining scenario.

S&P Global Market Intelligence's milestone activity increased in May, with the number of positive project milestones rising to five from two in April. The month's largest milestone was the start of commercial production at Telson Mining Corp.'s Campo Morado zinc-lead-silver mine in Mexico. Telson secured approval at the end of May to begin trading as a tier-1 issuer on the TSX Venture exchange.

S&P Global Market Intelligence's Indexed Metals Price slipped to 126 in May from 128 in April, off from a 57-month high of 131 in January. The indexed price fell for six (gold, copper, zinc, cobalt, silver and platinum) of the eight constituents of the index, rose for nickel, and was unchanged for molybdenum.

Despite the robust gains in the PAI, mining equities were basically unchanged in May (and still off an almost five-year high in January), as S&P Global Market Intelligence's aggregate market value of the industry's listed companies (based on 2,401 firms) remained at US$1.52 trillion. The aggregate market capitalization of the industry's top 100 companies also held steady in May at US$1.25 trillion (off from a 41-month high in January).

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