Kitco News: Mining Finance Drops 56% In June Quarter Mining Finance Drops 56% In June Quarter – IntierraRMG
By Kitco News
Monday August 5, 2013 10:32 AM
(Kitco News) - Mining companies continue to struggle to raise capital as a new report shows mining finance dropped 56% in the second quarter.
Falling metal prices, nervous banks and risk-averse investors are the main reasons behind the lack of capital, said IntierreRMG, a resource intelligence company geared towards exploration and mining companies, in its State of the Market: Mining and Finance Report.
The company said that second quarter finance figures totalled $2.28 billion compared to $5.16 billion in the first quarter of 2013 and $6.12 billion in last year’s comparative quarter.
“At the corporate level, almost the entire drop in financing has been felt by the largest companies,” said Dr. Chris Hinde, IntierraRMG’s editorial director. “The 555 companies monitored by the IntierraLive mining database that had an end-June market capitalisation of over $100 million raised just $1.43 billion in the June quarter, compared with $4.08 billion in the three months to end-March.”
The report stated that producers were the hardest hit with the fall of almost 65% from the largest companies; they saw financing drop from $3.71 billion to $1.24 billion. IntierraRMG added that funding by exploration companies fell 28% to $1.04 billion.
“Cash holdings for the junior companies are now at critical levels, with overall cash balances of under $10 billion for explorers,” Hinde said. “Many of the smaller companies will be unlikely to survive until the end of this year unless there is a dramatic reversal of fortune.”
IntierraRMG’s report also pointed to the Australian Stock Exchange (ASX) which saw a slump in mining financing. The ASX showed a drop to $0.45 billion in the second quarter compared to $1.41 billion in the first quarter of 2013.
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