Investors cautious on mining stocks

Performance of Canadian mining equities improved slightly in Q3, but investors remain cautious, according to EY’s Canadian Mining Eye index for Q3 2013.

Read: Tough year for junior miners

The index, which tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations between $1.4b and $55m in Q3, increased 5% in the third quarter, but has fallen 50% in the past 12 months.

Despite moderate improvement, the near-term performance of the sector remains unclear — especially with an uncertain outlook for metal prices reducing investor interest.

Mining companies are continuing to respond to softer prices by trimming their input costs and rationalizing their asset portfolios. Yet managing cost remains very challenging for majors and mid-tier companies.

Read: Scotiabank Commodity Index dips

Many looked to joint ventures to manage cost, optimize assets and drive operational efficiency in the face of restricted access to capital, cost pressure and cash burn in Q3. Companies are now also turning to the following cost management efforts:

• Cease or delay of expenditures
• Alternative financing options
• Non-core asset disposals

Read: Different metals, different fates

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.