Mining Eye

Ernst & Young's Mining Eye is a weekly share index tracking the combined performance of the top twenty mining companies on AIM by market weight. A quarterly report provides key analysis and commentary on these AIM listed Mining shares.

Q3 2012: the funding challenge

• The Mining Eye index fell 3% over Q3 2012 – encouraging compared with the dramatic 33% fall since January. Strengthening metals prices provided some support, but the sector continues to underperform the wider AIM market.
• Financing conditions on equity markets are still challenging for juniors miners. At £84m, quarterly equity proceeds raised by the sector on AIM are at their lowest since Q3 2004. Companies are reluctant to further dilute existing shareholders’ holdings at current share prices.
• Q3 saw the early signs of distress that became widespread after the 2008 financial crisis, with a small but symptomatic number of companies reporting distressed asset disposals, strategic reviews and last-resort financing.
• Creative cost and capital management is so far helping to sustain the majority through these times – cost-cutting, non-core asset sales, fast-tracked cash generation options, and the attraction of strategic, long-term investment partners.

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