EXTRACTING INSIGHTS
A review of the performance of AIM listed mining companies + Spotlight on GOLD
900
700
500
100
0
2. Further issue proceeds
Fundraising for mining companies has remained low, although further issue proceeds ticked up by 6% from last year's depressed levels.
2015/16
2016/17
2017/18
2018/19
2019/20
382
795
£m
498
153
162
Yellow Cake is not an
exploration or production
company but offers investors direct exposure to the uranium spot price. It will be interesting to see if an investment play such as this becomes a popular way to invest in commodities.
1. Market capitalisation
Despite a continued reduction in mining company numbers…
0
£m
60
50
40
20
2018/19
2015/16
2016/17
2017/18
29
40
42
52
3. Top 10 companies by market cap
4. Commodity prices and AIM Basic Resources Index
JUL-19
40
80
140
160
2019
2020
The AIM Basic Resources index has rebounded strongly since the markets declined in March when many countries entered lockdown.
It increased by 36% in Q2 2020, probably reflecting the continued strength of gold as a safe haven commodity during the current crisis (up 29% over the year).
Copper
Nickel
Gold
AIM Basic resources
Alternative funding sources will continue to be a key source of funding alongside the traditional equity markets. For junior miners private equity and offtake contract financing can help unlock asset values and
de-risk projects for equity investors.
This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. This publication should not be used or relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained in this publication without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any responsibility or duty of care in respect of any use of or reliance on this publication, and will deny any liability for any loss arising from any action taken or not taken or decision made by anyone in reliance on this publication or any part of it. Any use of this publication or reliance on it for any purpose or in any context is therefore at your own risk, without any right of recourse against BDO LLP or any of its partners, employees or agents.
BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO member firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.
Copyright © October 2019 BDO LLP. All rights reserved. Published in the UK.
www.bdo.co.uk
FOR MORE INFORMATION:
BDO Global
Mining Group
BDO LLP Mining Sector
MATT CRANE
+44(0)7929 332 677
matt.crane@bdo.co.uk
JEFF HARRIS
+44(0)7788 144 250
jeff.harris@bdo.co.uk
Possible title here....
FURTHER READING
Download a printable version
and visit the extracting Insights archive
2019/20
30
10
42
200
300
400
800
The aggregate market caps of the top ten mining companies increased by 9% from last year, reaching an aggregate value of £2.989bn.
This compares to an increase of 18% for all other mining companies (resulting in an overall increase of 12%), showing that mining companies of all sizes have benefitted from rising market values.
-60
-40
-20
0
20
40
1525%
759%
gold
other
Show / Hide all
Split by Commodity type
CLICK FOR MORE:
Movement (%)
Gold
Gold
Gold
Other
Other
Gold
Gold
Other
Other
Gold
Main Commodity
844
448
338
257
203
197
196
185
164
156
Mkt Cap
as at
Jun-20
(£m)
HIGHLAND GOLD MINING
GREATLAND GOLD
PAN AFRICAN RESOURCES
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
Company
100
20
120
60
0
MAY-20
MAR-20
JAN-20
NOV-19
SEP-19
600
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
2021F
2022F
2023F
2024F
1800
1600
1400
1200
1000
800
600
400
200
0
-6%
1%
24%
22%
5%
17%
17%
24%
32%
28%
28%
12%
6%
-28%
0%
-12%
9%
13%
-1%
19%
14%
2%
-2%
-2%
-1%
The
price of gold rose by 650% between
2000 and
2011
After 2008, central banks turned from sellers of gold to buyers, facilitating the demand for gold
Eurozone
debt crisis along with investor concerns about quantitative easing driving inflation in the US boosted gold prices.
Gold
prices rose significantly, lifted by the deep negative economic impact from the COVID-19 pandemic.
SPOTLIGHT oN Gold
Prices for gold reached a 7-year peak in 2020 driven by increased investor interest in gold as a safe-haven.
Future gold price movements will heavily depend on the trajectory and pace of the global economic recovery and resulting government policies.
Price in USD
Annual %
change
Download our Global Gold Market Update here
August
2015
450
400
350
250
200
150
100
50
August
2016
August
2017
August
2018
August
2019
August 2020
Average annual gold prices, USD, 2000-2024
Au
Gold
Gold companies’ challenges and opportunities posed by COVID-19
CHALLENGES
posed BY COVID-19
OPPORTUNITIES
POSED BY COVID-19
Decline in production due to the coronovirus-related lockdown measures
1
2
Negative impact on companies' profitability and operating results
3
Supply chain interruptions
1
Lower energy costs as the looming global recession pushes oil demand lower
2
Rising demand for gold as a safe-haven asset
... the average market cap per mining company increased to £52m, a 79% increase on five years ago, highlighting an increase in the quality of the remaining AIM mining population.
Although the short-term negative effect of the COVID-19 pandemic caused liquidity-driven selling on the gold market, the FTSE Gold Mines Index shows a positive performance for gold mining companies’ shares in recent months.
132
125
115
104
95
140
120
100
80
60
40
0
No
20
Aggregate market caps (£m) (L-H scale)
No. of AIM mining coys (R-H scale)
60
FUTURE OUTLOOK
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
2021F
2022F
2023F
2024F
1800
1600
1400
1200
1000
800
600
400
200
0
-6%
1%
24%
22%
5%
17%
24%
32%
28%
12%
6%
-28%
0%
-12%
9%
13%
-1%
19%
14%
2%
-2%
-2%
-1%
The price
of gold rose by 650% between 2000 and
2011
After 2008, central banks turned from sellers of gold to buyers, facilitating the demand for gold
Eurozone
debt crisis along with investor concerns about quantitative easing driving inflation in the US boosted gold prices.
Gold
prices rose significantly, lifted by the deep negative economic impact from the COVID-19 pandemic.
Prices for gold reached a 7-year peak in 2020 driven by increased investor interest in gold as a safe-haven.
Future gold price movements will heavily depend on the trajectory and pace of the global economic recovery and resulting government policies.
Price in USD
Annual % change
Download our Global Gold Market Update here
Average annual gold prices, USD, 2000-2024
August
2015
August
2016
August
2017
August
2018
August
2019
August 2020
450
400
350
250
200
150
100
50
FTSE Gold mines ASIA PACIFIC
FTSE Gold mines AMERICAS
FTSE Gold mines
FTSE Gold mines emea
Source: FTSE Russell
Gold companies’ challenges and opportunities posed by COVID-19
Although the short-term negative effect of the COVID-19 pandemic caused liquidity-driven selling on the gold market, the FTSE Gold Mines Index shows a positive performance for gold mining companies’ shares in recent months.
1
Decline in production due to the coronovirus-related lockdown measures
2
Negative impact on companies' profitability and operating results
3
Supply chain interruptions
1
Lower energy costs as the looming global recession pushes oil demand lower
2
Rising demand for gold as a safe-haven asset
CHALLENGES
posed BY COVID-19
OPPORTUNITIES
POSED BY COVID-19
Improvements to corporate reporting and governance mean that mining stocks on all the global markets are becoming more attractive to investors looking to deploy risk capital.
Continued economic uncertainty created by COVID-19, ongoing tensions between the US and China, and low interest rates will likely keep the gold price buoyant. This could fuel M&A, fundraising for development and exploration projects and IPO activity within the sector.
Overall AIM market has jumped back to pre-COVID-19 highs, outpacing the big caps and mining has been one of the best performing sectors. This shows the market is resilient and adaptable.
28%
17%
Another rocky year but the market continues to mature...
A REVIEW OF THE PERFORMANCE OF AIM LISTED MINING COMPANIES FOR THE YEAR TO JUNE 2019
EXTRACTING INSIGHTS
review for the year to June 2020
HIGHLAND GOLD MINING
GREATLAND GOLD
PAN AFRICAN RESOURCES
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
GREATLAND GOLD
PAN AFRICAN RESOURCES
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
PAN AFRICAN RESOURCES
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
CENTRAL ASIA METALS
ATALAYA MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
CHAARAT GOLD HOLDINGS
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
EURASIA MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
Yellow Cake
BUSHVELD MINERALS
ANGLO ASIAN MINING
Overall AIM market has jumped back to pre-COIVD 19 highs, outpacing the big caps and mining has been one of the best performing sectors. This shows the market is resilient and adaptable.
Continued economic uncertainty created by COVID, ongoing tensions between the US and China, and low interest rates will likely keep the gold price buoyant.
This could fuel M&A, fundraising for development and exploration projects
and IPO activity within the sector.
Improvements to corporate reporting and governance mean that mining stocks on all the global markets are becoming more attractive to investors looking to deploy risk capital.
Alternative funding sources will continue to be a key source of funding alongside the traditional equity markets. For junior miners private equity and offtake contract financing can help unlock asset values and de-risk projects for equity investors.
and visit the Extracting Insights archive
Download a printable version
This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. This publication should not be used or relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained in this publication without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any responsibility or duty of care in respect of any use of or reliance on this publication, and will deny any liability for any loss arising from any action taken or not taken or decision made by anyone in reliance on this publication or any part of it. Any use of this publication or reliance on it for any purpose or in any context is therefore at your own risk, without any right of recourse against BDO LLP or any of its partners, employees or agents.
BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO member firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.
Copyright © September 2019 BDO LLP. All rights reserved. Published in the UK.
www.bdo.co.uk
BDO Global
Mining Group
BDO LLP Mining Sector
JEFF HARRIS
+44(0)129 384 8994
jeff.harris@bdo.co.uk
MATT CRANE
+44(0)207 893 2958
matt.crane@bdo.co.uk
FOR MORE INFORMATION: