E&Y’s Mining Eye index, which monitors the share price performance of AIM-listed mining companies, fell 7% during the period compared with a 40% rise over the fourth quarter of 2010.

According to the report, the share prices of two-thirds of AIM-listed miners fell over the quarter, mainly due to project-specific “bad news”, as well as political and seismic unrest.

Volatility significantly impacted the new issues market to raise equity with proceeds of only 500,000 pounds raised and no IPOs during the period.

However, investors did throw their support behind companies advancing towards production as well as those with positive resource updates and drilling results.

These companies were able to raise significant proceeds for advanced stage project development and included Petra Diamonds, which raised £205 million to finance its acquisition of the Finsch diamond mine, and Bellzone Mining, which raised £144.8 million for development of its iron ore project.

E&Y also highlighted the rise of resource nationalism and political risk in a number of African countries in recent months, which impacted on miners’ share prices.

“This quarter’s largest share price fallers were subject to political or regulatory intervention and influence in its various forms,” E&Y said.

“Such events typically unnerve investors, particularly in the current volatile environment, and can ultimately leave companies with little choice but to delay or abandon projects in which they have made significant exploration investment, or to reallocate resources to other projects pending a potentially long-coming resolution.”

Looking ahead, E&Y expects the new issues market to improve during the rest of the year with IPOs, new listings and secondary listings, particularly by Australian companies keen to expand their investor reach.