The MEG Pipeline Activity Index (PAI) dropped over the past two-month period, reaching a low for the year of just 60 in July before rising slightly in August. A steady climb in the number of significant drill results and the relatively stable pace of financings since the beginning of the year were outweighed by the dearth of initial resource announcements and a slow decline in the number of projects progressing through significant development milestones. As a result, the overall PAI has been trending downward since December 2009.
(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, the Industry Monitor tracks developments based on announcements over the past two years of significant drill results, initial new resources, project development milestones, significant financings, and acquisitions. )
The same general trend is shared by both the gold and base metals components of the PAI; however, the increased month-to-month volatility in gold sector activity is clearly influencing the overall movement in the PAI.
The industry's aggregate market capitalization followed the uptrend of most metals prices and rose 10% to $1.7 trillion at the end of August from a recent low of $1.55 trillion at the end of June.
 For the third consecutive bimonthly period, the number of significant drill results increased, with most reporting extensions to existing deposits. Regional distribution remained relatively consistent, with North American projects accounting for about a third of the gold results, and projects in the Australia-Pacific and Latin American regions combining for almost three-quarters of the base metals results.
The ongoing scarcity of initial resource announcements continued to drag down the PAI in the July-August period-only four initial resources were reported. Conversely, the overall value of the initial resource announcements did rise significantly.
As drilling activity continues to increase-particularly in the search for new deposits or new zones/satellites as opposed to step-out drilling on known deposits-the frequency of initial resource announcements should eventually follow suit.
It is too soon to say if the recent decrease in the number of projects progressing through significant development milestones is a short-term or longer-term trend, but the data indicates that most of the projects that were stalled in 2008-09 are back on track. The value that resources advanced in July and August was more than $485 billion-down dramatically from $1.2 trillion in May-June-with almost 90% of the value of these projects in base metals.
Overall, the pace of significant financings by junior and intermediate gold and base metals companies dropped slightly from a busy May-June. Junior and intermediate gold companies continue to find strong investor support, as equity raisings accounted for the vast majority of financings completed in July-August, including four raisings of more than $200 million each. In the base metals, the amount raised through equity fell sharply from the previous bimonthly period and accounted for less than 40% of the total raised compared with 75% in May-June (including IPOs).

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