Despite a slight improvement in performance during the third quarter of the year, Canadian miners are far from being out of the woods, Ernst & Young’s most recent Canadian Mining Eye index reveals.
The indicator—which tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations between $1.4 billion and $55 million in Q3—increased 5% in the third quarter but fell 50% in the past 12 months.
Since about 51% of the companies that make up E&Y’s index own gold assets, the moderate recovery in bullion prices helped the sector. However its near-term performance remains unclear, as an uncertain outlook for metal prices continues to drive down investor interest, the quarterly study shows.
Miners continue to react to soft commodity prices by cutting or delaying investments, dumping non-core assets and looking for alternative financing options, note the experts.
The biggest losers this quarter, according to the report, were Karnalyte Resources TSX:KRN, Paladin Energy TSX:PDN, Lydian International TSX:LYD, Gabriel Resources TSX:GBU and Allied Nevada Gold TSX:ANV, whose share prices each dropped about 40%.
The report concludes that while the sector continues to face headwinds in raising capital, finance teams should work with operations closer than ever in order to plan scenarios to manage the risks related to uncertain metal prices.
Reprinted by permission of MINING.com