Mining Capital Raising

2012 saw a decline in overall capital raised for mining companies with $249 billion being raised as compared to $340 billion in 2011. The decline in capital raised reflects changing investment appetite, scaling back of capital outlay by large diversified mining companies and a fundamental shift in funding sources from traditional capital markets to alternative investors and new funding sources.

Capital raising by asset class – proceeds $m (2007-2012)

$bn	2007	2008	2009	2010	2011	2012
IPOs	21,400	12,406	2,987	17,984	17,449	1,388
Follow ons	66,802	48,751	73,806	49,705	49,745	25,950
Convertible bonds	12,865	12,238	14,431	5,477	2,365	3,537
Bonds	36,358	38,146	61,016	72,502	83,804	112,539
Loans	110,787	171,146	62,420	183,875	187,059	105,981
Total	248,212	282,687	214,660	329,543	340,422	249,395

The mining IPO market was down 40% by volume in 2012 with an 81% decline in proceeds (their lowest levels since 2007 and 2009 respectively).Widespread risk aversion resulted in a 48% decline in secondary equity offering proceeds to $26 billion and a reduction in average proceeds raised by junior companies to just $4 million per company.2012 witnessed a significant fall in loan proceeds to mining companies with a reduction to $106 billion (from $187 billion in 2011) as banks continued to reduce their risk exposure in order to manage reserve capital requirements. Over 50% of the loans closed in 2012 were adjustments to existing facilities. Mining and metals companies raised bond proceeds of $113 billion in 2012, using bond markets as an alternative to bank debt. Bond issues by the top six diversified miners were $42 billion.