The SHARP DROP in Gold Mining share prices has fed through to hit new financing, says a report from a key industry source, capping exploration as the traditionally strong summer season begins.
Gold Mining companies raised only $445 million from world stock markets in May and June, says Metals Economic Group's latest Pipeline Activity Index.
That was "the lowest two-month total since late 2008," when global asset prices sank amid the collapse of Lehman Brothers.
"Debt accounted for three of the four largest gold raisings," says MEG. But even then, total financing raised by the Gold Mining sector fell by nearly one-third from March-April.
Overall, and including base-metal miners as well as Gold Mining companies, the mineral sector's stock-market capitalization fell by more than 20% during the northern hemisphere's spring, taking it down to $1.55 trillion – the lowest level since January 2010 – and hitting new financing.
"As markets are unlikely to improve significantly in the near term," says MEG, "at least until the European debt crisis is remedied, many companies could be in for a long summer of budget restraint."
What Metals Economics Group calls "the typical seasonal pattern" of increased drilling through the summer and early autumn "will likely keep drilling steady for the coming months.
"But we do not expect it to reach the highs of 2011, due to poor financing conditions and the overall softening of metals prices."
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