Outlook bleak for exploration and discovery - Mining Journal
Falling Australian Exploration Spending, Means Outlook bleak for Discoveries
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Even before the coronavirus started to impact the mining sector, S&P Global Market Intelligence found that global exploration budgets were down 3% to US$9.8 billion in 2019.
"The pandemic is hitting while the industry is trying to recover," S&P principal analyst, exploration Kevin Murphy said last week.
The firm is "unfortunately" pessimistic on the outlook for exploration.
S&P's exploration price index dropped in March after being "relatively stable".
"March has changed everything," Murphy said.
Opaxe, which tracks all ASX and TSX drilling announcements, reported only 19 announcements last week and 19 again this week.
"We are at the lowest fortnightly total since 2015, apart from the annual Christmas breaks," it said.
There have been daily announcements about exploration being suspended or curtailed, either due to cost-cutting or travel restrictions.
As has been the trend in recent years, it looks like the larger companies will be doing most of the drilling in Australia for at least the next few months, but it is likely exploration budgets will be the easiest place to trim costs for FY21.
Gold Squeeze Had Traders Looking for Bars as Far Away as Sydney
The historic squeeze in New York that roiled the gold market last week had investors scouring the globe to track down physical gold—looking as far as Sydney for supply—as the Logistical disruptions caused by the coronavirus pandemic had led to fears there wouldn't be enough bullion in New York to meet delivery obligations for contracts traded on the Comex.
Gold Squeeze Had Traders Looking for Bars as Far Away as Sydney
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The historic squeeze in New York that roiled the gold market last week had investors looking as far as Sydney for supply.
Logistical disruptions due to the coronavirus pandemic had led to fears there wouldn't be enough bullion in New York to meet delivery obligations for contracts traded on the Comex. Investors scoured the globe to track down physical gold, with independent Australian refiner ABC Refinery reporting a surge in demand from North America for deliverable bars last week.
"We have received increased demand from North America, obviously with the recent Comex liquidity shortage," said Managing Director Phillip Cochineas. Demand also picked up from Europe due to "the lack of production from refiners who have had their operations locked down," he said.
ABC makes products including 100-ounce, 1-kilogram and 400-ounce bars, with the latter now deliverable after CME Group rushed the launch of a new futures contract to address supply issues.
While the squeeze in futures has eased -- there's enough gold in Comex warehouses to meet delivery obligations -- prices are surging on demand for a haven amid global market turmoil. Investors are pouring into exchange-traded funds, gold sales at Australia's Perth Mint jumped to the highest since 2013, while the U.S. Mint sold the most bullion coins in three years.
ABC, which has capacity to refine more than 400 tons of gold and over 750 tons of silver a year, has increased production as it's seeing strong demand in Europe and Asia, in addition to North America.
"The general demand is for gold in whatever form possible in order to fulfill the huge demand that is running across the market place at the moment," said Cochineas. The refinery has focused on making 1-ounce, 100-gram and 1-kilogram cast gold products and 1-kilogram cast silver products.
Strong demand may persist even once the virus is contained due to large amounts of government and corporate debt and low-yielding bonds, according to Cochineas.
"Equities and bonds are out and gold is in," he said. "Investors are worried about indebtedness. There's so much corporate leverage in the world that the worldwide economic impact of coronavirus is only going to amplify the pain that's going to be felt by those corporate borrowers. There will be a real deterioration of government finances in the aftermath of the virus. Gold will be a natural choice for investors both large and small."
March saw 74 deals close, which included a whopping 49 financings closed for less than $1 million, 66.23% of the total, while just 4.1% were for more than $10 million
Gold accounted for eight of the top ten largest financing's closed in Canadian capital markets in March, with oil & gas and graphite taking a spot each. The top ten deals closed aggregated $118.8 million, a 25.3% from $336.1 million closed in February, and representing 74.7% of the $159.1 million in deals closed, with three deals over $10 million.
Gold accounted for eight of the top ten largest financing's closed in Canadian capital markets in March, with oil & gas and graphite taking a spot each. The top ten deals closed aggregated $118.8 million, a 25.3% from $336.1 million closed in February, and representing 74.7% of the $159.1 million in deals closed, with three deals over $10 million. Premier Gold Mines led the way with a $38 million financing followed by Harte Gold ($27 million) and Corridor Resources ($20 million).
Premier Gold Mines lead the gold rankings with $38 million raised in March, followed by Harte Gold ($27 million) and QMX Gold ($6.8 million). The top ten yellow metal financings aggregated $100.5 million, a 27.9% decrease from the $139.4 million closed in February, and accounting for 63.2% of the total closed, with two financings of more than $10 million.
Base metals deals continued to wither away with the top financings closed raising just $5.9 million in March, a 29.8% fall from the $8.4 million raised in February, representing just 3.7% of the total. FPX Nickel was the largest financing at $1.5 million, the only financing for more than $1 million.
Battery metals faired equally poorly in March with $5.5 million raised, 66.9% less than the $16.6 million raised in February, and 3.5% of the total. The biggest raise was $2.4 million by SRG Mining.
March saw 74 deals close, which included a whopping 49 financings closed for less than $1 million, 66.23% of the total, while just 4.1% were for more than $10 million.
