Ernst & Young's junior mining index jumps 36% in Q3

But the group says exploration firms are still struggling with funding issues

LONDON (Reuters) - 

Ernst & Young said its index of the top 20 mining companies on London's junior Alternative Investment Market rose 36 percent over the third quarter, but that exploration firms continued to face funding problems.

"In their most recent trading updates a number of companies continued to warn that unless funding is forthcoming -- and quickly -- they would be unable to meet debt repayments or to finance their overheads, let alone their exploration activities," said Tim Williams, director of mining and metals.

He warned that more delistings, disposals and liquidations were likely in the coming months."

The accounting firm's index grew over the quarter on higher metal and equity prices, but was down 42 percent from the record high in March 2008.

There were no mining initial public offerings (IPOs) over the quarter.

"It will take a consistent period of stability in equity and metals prices, and in turn in investor confidence in the sector, before we are likely to see the return of mining IPOs to AIM," said Michael Lynch-Bell, Ernst & Young's head of EMEIA mining and metals. (Reporting by Julie Crust, editing by Will Waterman) ((julie.crust@thomsonreuters.com))

© Thomson Reuters 2009 All rights reserved.

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