Market capitalization up 49% for the top 100 mining companies on the TSX-V

Rise in gold prices drives significant growth for junior mining industry

TORONTO, Oct.21, 2010—Market capitalization for the top 100 junior mining companies on the TSX Venture Exchange (TSX-V) rose to $12.7 billion in the 12 months ending June 30, 2010. This is a 49% increase from the $8.6 billion achieved for the same period in 2009, according to PwC’s latest Junior Mine report released today.

The market capitalization of the entire TSX-V also staged a rebound in 2010, increasing 51% to $37.7 billion and reversing the downtrend of the past two years. However, these figures are still well below the highs of mid-2008 when the top 100’s market capitalization reached $18.1 billion and the exchange’s value totalled $55.9 billion just before the recession hit.

“A healthy appetite for risk among investors and strengthening commodity prices have contributed to the improved market conditions for the junior mining sector in 2010,” says John Gravelle, national Mining leader, PwC. “Although the recovery remains fragile, we have seen substantial growth in the sector this year, especially among precious metal producers.”

Gold dominates

• Rising commodity prices, particularly for precious metals, boosted revenues by 21% to $801 million for the top 100 on the TSX-V and nearly two-thirds reported gold or silver as their principal commodity.
• Gold is the main commodity of interest with 55% of companies either exploring for, developing or mining the precious metal, up from 50% in 2009 and 42% in 2008.
• This year’s top five junior miners on the TSX-V are all gold companies. Each company at least doubled their market capitalization year over year and had a total market capitalization of $3.45 billion on June 30, 2010, increasing 27% from $2.71 billion for the top five of 2009.

“The dominance of gold is not surprising given the steady increase in gold price over the past five years,” says Gravelle. “Gold companies will likely continue to dominate the top 100 for the foreseeable future provided that gold prices remain buoyant.”

Since June 2008, the price of gold has climbed from US$925 per oz to its recent record-breaking price of more than US$1300 reached in October 2010. Before year end, gold is widely expected to breach the US$1500 per oz level.

Another noteworthy trend in junior mining relates to a 31% drop in exploration spending to $64 million while cash used for acquisitions soared 349% to $270 million. This drop in exploration spending is concerning since such spending is required to find additional world class deposits.

The juniors were also able to finance their own exploration and acquisitions this year as market conditions recovered from the crash and credit markets loosened. Moreover, share issues increased by 46% to $2.2 billion while debt financing was up 64% to $405 million year over year.

For more information or to download the full report, visit www.pwc.com/ca/juniormine.