Canadian mining and metals deal volumes and values fell year-over-year in the first quarter of 2014. Still, the results are a modest improvement over Q4 2013, shows an EY survey.

“Low first quarter deal numbers actually mask growing confidence across the sector,” says Bruce Sprague, EY’s Canadian Mining and Metals Leader. “Deal value may have fallen 51%, and volume 13%, in Q1 over 2013, but we’ve already seen increased desire to do deals in Canada. Transaction activity will come down to whether companies with an eye on M&A can find the right opportunity.”

Read: M&A activity droops in mining and metals sector

The growth for growth’s sake mentality isn’t returning to the sector, cautions Sprague.

“Companies pursuing transactions are looking for lower-risk deals that strengthen their positions in existing markets,” says Sprague. “Only 24% of global mining and metals companies have short-term plans to undertake transformational M&A. Cost management is still top of mind.”

Productivity and cost reduction is the primary focus of 36% of people surveyed.

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Executives are balancing cost management, including optimizing cost structures to drive greater margin improvements, with measured deal making, says Sprague.

They’re also confident the buyer/seller valuation gap is now closing. The valuation gap is perceived as less than 10% by 45% of those surveyed. And 80% expect it to stay level or decrease in the next six months.

“We expect deal volumes to build slowly through the rest of 2014 and into 2015,” says Sprague. “Portfolio optimization among larger miners, financial buyers, and consolidation among juniors and mid-tier companies will drive deals. It’s going to be an interesting year.”

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