Nova Scotia, 24 March 2011

Metals Economics Group Pipeline Activity Index (PAI) dropped sharply in January from December’s three-year high before recovering modestly in February. The PAI’s movement over the past few months follows a typical seasonal trend—increased activity through the latter months of the year followed by a drop in the first few months of the following year as companies resume work after the holiday break. Despite January’s sharp fall from December’s record high, the PAI remains slightly above the 2010 average.

After reaching $2.36 trillion in December 2010—the highest since MEG initiated the PAI—the industry’s aggregate market capitalization dipped in January. Metals prices continued to increase helping to lift the aggregate market capitalization to $2.32 trillion at the end of February—less than 2% below December’s high-water mark.

MEG Pipeline Activity Index (PAI), March 2011

The number of significant drill results released in the latest two-month period was slightly lower than the November-December 2010 period, but still relatively strong compared to 2009 and the first half of 2010. Regionally, the top three destinations—North America, Latin America, and Australia-Pacific—combined to account for more than three-quarters of announcements in both November-December 2010 and January-February 2011. Unlike gold results, which have slowed recently as the relative gold price has more or less flattened over the past five months, significant base metals results remained strong through the holiday season.

Initial resource announcements by junior and intermediate companies were up from January-February 2010, but still well shy of bimonthly numbers prior to the economic collapse in early 2008. The overall value of initial resources reported in the latest two-month period is up from November-December 2010, with more than 40% of the $28 billion total attributable to the Zafranal project in southern Peru, where AQM Copper and Teck Resources announced initial resources containing more than 1.5 million mt of copper and 870,000 oz of gold. Of the initial base metals resources announced in January-February 2011, the top three primary copper projects accounted for more than 92% of the total value.

The decrease in the number of significant financings completed by junior and intermediate companies in the latest two-month period was the biggest contributor to the decline in the PAI, as both January and February expectedly dropped from December’s peak. The amount raised in January-February 2011 was also below the 2010 bimonthly average of $3.82 billion.

Significant Junior and Intermediate Company Financings

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Metals Economics Group www.metalseconomics.com

The MEG Pipeline Activity Index (PAI) measures the level and direction of overall activity in the supply pipeline, incorporating significant drill results, initial resource announcements, project development milestones, and significant financings into a single comparable index. The PAI is featured in the MEG Industry Monitor—a series of comprehensive graphs and charts, with related commentary, illustrating MEG's analysis of monthly changes and emerging trends in the base and precious metals pipeline. Using information only available from MEG through MineSearch, Exploration Activity Services, and Acquisitions Services, the Industry Monitor tracks developments based on announcements over the past 26 months of significant drill results, initial new resources, project development milestones, significant financings, and acquisitions.