LONDON Mining pipeline activity declined significantly in the first two months of 2013, according to research and analysis company SNL Metals Economics Group (SNL MEG).
The companys Pipeline Activity Index, which measures the level and direction of activity in the base and precious metals supply pipeline, for January and February fell 43 percent vs. October 2012 levels, representing a three-year low.
In January and February, 80 financings were completed, the lowest two-month total since early 2009, SNL MEG said. Equity financings in February totaled less than $300 million, including just $67 million for base metals, it added.
"Poor equity markets have made it extremely difficult for many junior explorers to raise capital," SNL MEG said. "The combination of weak financing conditions and budget cuts by major producers has resulted in idle drills, stalled projects and lower grassroots spending as companies focus primarily on their tier-one assets."
There has previously been room for quick improvement in weak environments, but it is difficult to forecast whether the index will pick up in time for the exploration season during the Northern Hemisphere summer, the company said.
The mining industrys aggregate market capitalization was relatively stable in January and February, SNL MEG said, but it is likely to slip in the coming months because of the recent fall in gold prices and the general lack of movement in base metals prices.
"After rebounding in January, the number of significant drill results dropped again in February to match December 2012 as the lowest monthly total since 2010," the company added. "Remaining results from 2012 programs helped boost January numbers, but the low February totals are likely to be a sign of things to come in 2013."
Despite an improvement in significant financingsa minimum $2 millionin the final quarter of last year, junior and intermediate mining companies with funding needs for 2013 will likely to need to scale back or put off plans if they cant find strategic investors.