Canadian mining equities witnessed a 45% decrease in market capitalization over the course of 2013, according to EY’s Canadian Mining Eye: Q4 2013.
The index decreased 9% in Q4 alone as concerns around global economic growth and uncertainty surrounding the Federal Reserve stimulus program continued.
Declining metal prices also spurred significant write-downs in the value of assets across the sector. Companies were reluctant to raise equity capital on dilutive terms and witnessed less capital readily available in a soft market. Total proceeds raised were approximately $6.9b, down 49% compared to the same period in 2012.
Though these market forces are already setting the stage for a modest year of transaction activity, growth opportunities continue to exist for companies across the sector. In 2014, expect:
- Majors to continue disposing of non-core assets
- Mid-tiers with cash flexibility to take advantage of inorganic growth opportunities
- Juniors with good quality assets and de-risked projects to attract buyer interest