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The challenges of the gold mining industry

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Exploration in the mining industry has hit a three-year low, as revealed by S&P Global Market Intelligence’s recent report. Despite an overall decline, gold mining has remained steadfast, experiencing a notable 3 per cent increase in exploration, contrasting with a substantial 12 per cent drop in other mining categories.

The report showed that the Pipeline Activity Index (PAI), a crucial gauge of exploration, has dipped to its lowest point since May 2020, falling an additional 3 per cent in September. Unlike other mining categories, which saw a substantial 12 per cent drop, gold exploration saw a 3 per cent increase

“Most metrics used in our PAI decreased month over month, with drops in positive milestones, completed financings and industry market cap. Initial resources were flat while the number of significant drill results increased slightly,” reads the report.

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The index can reflect changes in the number of significant drill results, funds raised by junior and intermediate mining companies and project development progress. This information can be useful for understanding trends and making predictions about future activities in the industry.

Gold holds steady amidst September’s mining fundraising decline

In September, junior and intermediate mining companies faced a significant drop in their fundraising efforts, with a total of USD$848 million raised, marking an 11 per cent decline from previous figures. This decline was primarily driven by decreased investments in specialized minerals, particularly lithium and graphite.

Meanwhile, fundraising for gold and other metals remained relatively stable.

Fundraising volume declined by 11 per cent to 219 transactions, with significant financings decreasing from 70 in August to 57 in September. Only three transactions exceeded the USD$50 million mark in September, down from five in August.

As for financing, gold was up slightly by 2 per cent with only one transaction valued over $30 million.

The largest gold financing in September was the C$70 million follow-on offering by Reunion Gold Corp, an Ontario-based company with gold assets in Guyana and French Guiana. The company reported a resource estimate for its Oko West gold project in Guyana, with 6.8 million tons grading at 1.91 grams of gold per metric ton.

On the other hand, the base/other metals group experienced its first decline in five months, with a 2 per cent decrease to USD$375 million. Copper fundraising supported the group’s overall total, but this was offset by lower nickel and silver financings.

The largest financing in the base/other metals category was the $184 million follow-on offering by Ivanhoe Electric Inc. The company is a Canada-based, US-listed company with multiple projects in the US and Côte d’Ivoire. It currently focuses on drilling at its Santa Cruz project in Arizona.

September drilling activity experiences its slowest pace in three years

The total number of drilled projects decreased to 258, approaching the year’s low recorded in June at 256. There was also a 6 per cent decrease in distinct drill holes, dropping to 3,982 from 4,258, marking the lowest September figure since 2020.

Year-to-date comparisons revealed a 23 per cent reduction in total drilled projects and drillholes compared to 2022.

Gold projects rebounded in September, rising by 16 per cent to 140 projects, with a significant contribution from Canada. Base metals projects decreased by 9 percent, with lead-zinc projects down 35 per cent and minor base metals down 45 per cent.

Specialty metals projects dropped to 40, with 16 fewer projects than in August.

Australia reported a significant decrease, with 17 fewer projects in September, while Canada increased by 15 per cent, primarily due to more gold projects.

SouthernCross Gold Ltd. saw “impressive” drillhole results, and Aya Gold & Silver Inc. saw the most drillholes in September.

The United States remained in third place but increased by 22 per cent, mainly driven by gold projects.

Gold spearheads project milestones in September

Initial resource drops totalled three, the same as in August. The largest one was from New Pacific Metals Corp. for its silver-zinc-lead project in Bolivia. The indicated and inferred mineral resource estimate came in at 260 million metric tons (MMt), containing 253 million ounces of silver, 1,800 ounces of gold, 1.45 MMt of zinc, 790,000 metric tons of lead and 59,000 metric tons of copper.

A second one by Calibre Mining Corp. for its Volcan Gold deposit included 30,000 ounces of gold indicated and 131,000 ounces of inferred gold. The last one was by Asante Gold Corp., announcing 157,000 ounces at the South Russel project at its Bibiani gold mine.

Compared to August, September saw a decline in project milestones, with gold showing off two positive project milestones during the month. The first one involved Rio2 Ltd releasing its feasibility study for the Fenix gold project in Chile. The second was by Monument Mining Ltd., which achieved commercial production at its Selinsing gold Mine in Malaysia.

In September, the mining industry faced significant challenges, with exploration hitting a three-year low, as S&P Global Market Intelligence reported. The decline in the Pipeline Activity Index (PAI) indicates reduced drilling activity and investments in the sector. While gold exploration showed resilience, fundraising declined, driven by a drop in specialized mineral investments.

Factors influencing this trend include economic uncertainties, changes in global demand for minerals, and fluctuating commodity prices. The mining industry continues to adapt to these challenges, with gold projects showing more stability than other sectors. However, ongoing market dynamics and geopolitical factors will be crucial in shaping the industry’s future.


Source: Mugglehead

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