Q4 2012: things can only get better
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.
- The index experienced a 38% fall in 2012, the largest annual drop since the global financial crisis began. A 12% fall over Q4 concluded a punishing year for junior mining companies.
- Widespread risk aversion augmented the growing divergence between high risk juniors and their senior counterparts, and the disconnect between equities and metals prices – translating into an inevitable contraction of funding for those most needing it.
- "Risk-off” investor sentiment limited the supply of capital that enables companies to de-risk projects: 2012 saw the lowest equity proceeds raised since 2003.
- 2012 saw distress and value destruction, but also the growing importance of strategic investors.
- We believe the year ahead will bring a return to growth and greater funding options – but in moderation, with warnings attached.