SNL Metals & Mining January Industry Monitor — Disappointing end to 2014

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Continuing a yearlong trend, 2014 ended largely on a disappointing note for the exploration sector. The one bright spot was an increase in total financings by junior and intermediate companies over November, as they cashed up for the approaching exploration season.

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As detailed in the just-published "Monthly Industry Monitor," the final month of 2014 mostly added to the gloomy market conditions that prevailed throughout the year for the international mining industry. December is a period that inevitably sees lower levels of exploration and resource announcements, and last month was every bit as disappointing as expected.

At the end of 2014, the mining industry had a combined market capitalization of under US$1,300 billion, compared with over US$1,343 billion at the end of November and more than US$2,000 billion back in February 2012.

Reflecting the poor market conditions, SNL Metals & Mining's Pipeline Activity Index declined for the third consecutive month in December, although only one of the four constituents of the PAI showed a month-on-month fall: there were drill announcements from only 111 projects, compared with 142 in November.

Although SNL Metals & Mining's indexed metals price improved slightly in December, ending a four-month decline, the net positive value of the industry's project milestones in 2014 was only US$501 billion, compared with US$645 billion in 2013. On an annual basis, the mining industry has just suffered its fourth consecutive year of declining net milestone values.

The other two PAI constituents — initial resource announcements and completed financings — both improved in December, but not by enough to offset the seasonal slump in drilling.

Junior and intermediate companies' fundraising more than doubled from November to US$334.8 million in 32 financings, as some explorers cashed up for the coming season. Despite the month-on-month increase, December's total fell short of the US$463 million raised in December 2013, and was the lowest December total since before SNL began tracking financings in 2008. The 2014 total of US$5.55 billion in 329 financings was moderately short of the US$5.92 billion in 399 financings in 2013.

There were four initial resource announcements in December, with a total in-situ value of US$11.79 billion — mostly from NGEx Resources Inc.'s Filo del Sol copper project in Argentina. The year ended with a total of 50 new resources valued at US$130.6 billion, compared with 68 valued at US$87.1 billion in 2013.

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Christina Twomey
SNL Financial
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