Sources available to offer insight on most
recent mining and metals results
TORONTO, May 28, 2015 /CNW/ - EY's Canadian Mining Eye
index fell 1% in Q1 2015, compared to a 12% decline in Q4 2014.
With a weak global macroeconomic backdrop, most players are working
on controlling expenses, as declining grades will put continued
pressure on costs.
"Things like fluctuating commodity prices, stretched balance
sheets and exploration shutdown are all challenging miners," says
Bruce Sprague, EY's Canadian Mining
& Metals Leader. "But with challenges come opportunity. We're
seeing many mining companies putting efforts into streamlining
inventory, optimizing working capital, divesting non-core assets
and strengthening their focus on portfolio management."
The Canadian Mining Eye: Q1 2015 highlights the
following trends:
- Base metals experienced negative returns due to weak Chinese
demand.
- The iron ore price index was down by 28% to US$51.40, the lowest since 2005.
- Companies are aiming to reduce capex, lower costs and
strengthen their balance sheets in order to survive amid falling
commodity prices.
- The valuation differential between precious metal producers and
developers helped to stimulate M&A activity.
- During the period of higher gold prices in January, there was a
surge in bought-deal financing activity.
The Canadian Mining Eye tracks Canadian mining sector
performance of 100 TSX and TSXV mid-tier and junior companies with
market capitalizations at the end, broadly falling between
CDN$2.1b and CDN$160m.
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SOURCE EY (Ernst & Young)