Things are looking up for the world's exploration companies -- but not for the smallest among them.
In the final quarter of 2012, mineral companies around the world managed to raise US$1.5 billion for exploration - more than twice the US$650 million raised in the year's third quarter, says a report by IntierraRMG, released today.
The quarterly State of the Market Exploration Report, which looked at the exploration funds raised by the nearly 3,500 listed companies in the mining sector globally, showed that the majority of that money (84%) was raised by the largest 681 companies by market capitalization.
In a release, IntierraRMG managing director Peter Rossdeutscher noted that most mining and exploration companies are "extremely small." About half of the total number, or 1,756 of them, have a tiny market cap of less than $10 million.
These companies, which only raised about 3% of the total US$1.5 billion -- or on average, a piddly US$102,000 each -- are awfully vulnerable.
"With the lacklustre commodity prices, valuations for the smaller companies have remained depressed," Rossdeutscher said. "As the IntierraRMG exploration report indicates, this has made it difficult to finance projects by raising equity through public offerings. With their large cash holdings, we expect bids from the majors for some of the struggling juniors that have attractive projects."