The first quarter of 2013 has been tough for the international mining industry, with rising operating costs and falling metal prices, lower ore grades and a continued scarcity in the availability of funds. At the end of 2010 and 18-month decline was followed by a gradual recovery in the mining industry’s overall market capitilisation which was helped by a strengthening gold price, however precious metals and the industry’s valuation has gone into reverse this year.A recent report titled ‘State of the Market’ from IntierraRMG has indicated that the price of most metals fell considerably during the last two months on the quarter, and this has had a particularly damaging effect on the valuations of the smaller companies. The final three months of 2012 was fairly optimistic, but this year looks like being especially challenging to raise exploration finance.Initial public offerings (IPOs) have played an important role in generating cash for mining projects but market confidence has been dented against the backdrop of volatile markets, political turbulence and fragile economic news. As a result, there has been little IPO activity in the past quarter for either the Toronto or London stock exchanges. Retail and professional investors do not have the capacity, or apatite to fund equity raisings, and so equity markets remain constrained. With their share prices so low, most explorers can’t realistically raise the necessary funds to bring themselves to the stage where they can generate cash flow from metals production.According to the IntierraRMG database of almost 3,500 listed companies, funds raised by the mining sector in the quarter to end-March dropped to under $5.2 billion from almost $6.8 billion in the last three months of 2012. Moreover, there has been a particularly sharp fall in the funds raised by exploration companies; dropping to only $1.5 billion in the quarter just ended from $3.4 billion in the December quarter. Mining companies raised only $0.2 billion during the quarter on the London Stock Exchange (LSE), which represents a slump of almost 80% from the previous quarter.The Toronto Stock Exchange (TSX) and Australian Stock Exchange (ASX) also saw sharp falls, with 80% of the funds being raised during the quarter by companies with individual market capitalisation of over $100 million. There was also an improvement in the amount raised by the industry’s smallest companies (those valued under $10 million), following an especially sparse December quarter, but the amounts raised are still well below the funds secured in the year-ago quarter. This is particularly worrying as companies have typically raised most of the necessary funds for project development during the first quarter of the year.