Largest regional increase in drill results from Australia

Despite this growth noted in the company’s Pipeline Activity Index (PAI), the number of resource announcements is still well below the pace of mid-2008.
These developments were offset by a small drop in the number of significant drill results and a 40 per cent decrease in the number of projects advancing through development milestones - perhaps reflecting the fact that re-openings of mines and restarts of development projects put on hold during the recession have now worked their way through the system.
The 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 Index recovered sharply in March and then dropped again in April, although averaged over two months it moved just barely to 71 (from 73 in January-February). After stalling since late November, market capitalisations are again tracking the uptrend in MEG’s indexed metals price by rising 12 per cent - most of it in March - over the last two months.
The number of significant precious and base metals drill results reported in the March-April 2010 period was down 6 per cent from the previous two months, but was more than double that of a year-ago. Coincidentally, Australia, where the new proposed super-tax and associated exploration credits are creating great uncertainty, showed the largest regional increase in new positive results; what effect this announcement will have on the pace of exploration in Australia in the near-term is yet to be seen. Gold results account for about two-thirds of drill announcements, as they have for the past year, while base metals drilling remains concentrated on late-stage projects, with no new initial finds reported for the past three months.
Initial resource announcements released in March-April almost doubled from the previous two-month period, reversing a steady six-month decline. The $15.8 billion in-situ value of new resources announced in this two-month period is more than 60 per cent higher than the previous two-month period, with the increase entirely attributable to base metals.
The number of late-stage projects advancing through significant project milestones decreased to 37 in March-April 2010, matching year-ago levels. Almost 90 per cent of the value of these projects was in base metals. Six new mines made production decisions in the latest two-month period, while feasibility studies began at seven projects.
Significant precious and base metals financings announced by junior and intermediate companies increased 14 per cent in the last bimonthly period, while the amount of money raised almost doubled to $3.4 billion, returning to the levels of the second half of 2009 after a sharp drop during the first two months of 2010. For the first time since May 2009, base metals financings in April accounted for just over half of the monthly total raised, with a sharp rise in the ratio of debt to equity. The bimonthly base metals financings total was at its highest since mid-2008.

For more information on the PAI visit www.metalseconomics.com