Canadian Mining Journal

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MINING EYE: Weak 2016 finish belies mining’s gains


TORONTO – EY‘s Canadian Mining Eye index declined 13% during Q4 2016. This is predominantly due to weakness in gold and nickel prices, offset partially by gains in both copper and zinc prices. For the full year 2016, the Canadian Mining Eye index rose 61%, which was better than 18% gains in S&P/TSX composite index.

“The outlook for the Canadian mining sector remains healthy,” says Jim MacLean, EY’s Canadian mining and metals leader. “The recovery of commodities prices in the latter half of 2016, paired with improved productivity and global geopolitical factors means we can anticipate more sustainable growth in 2017.”

EY’s Canadian Mining Eye: Q4 2016 suggests investors will continue to view gold as a safe haven investment, given the uncertainty surrounding various policies and plans under the Trump presidency.

  • Gold prices remained subdued by declining 12% in Q4, a recent weakness that can be attributed to oversupply market conditions.
  • Copper prices increased 14% in Q4 due to anticipated increase in infrastructure spending by the United States.
  • Zinc prices increased 8% in the fourth quarter.
  • Nickel prices declined 5% in the fourth quarter.

“Gold is now accepted as an investment in Islamic finance,” says Jay Patel, EY’s mining and metals transactions leader. “With this adoption, the potential demand for gold and gold-based investments is expected to increase. This would help to improve supply-deficit market conditions and push gold prices above those in 2016.”

Nolan Watson of Sandstorm Gold.

 

Special section – Q&A with Nolan Watson, president and CEO of Sandstorm Gold

EY’s report also features an interview with Nolan Watson, president and CEO of Sandstorm Gold. Watson discusses capital markets in the mining sector, and the role streaming deals will play in the market in 2017.

Watson told EY: “I think innovation in financing is why we exist. It’s important to me that we’re always staying relevant and changing the way we do things to get streams and royalties.”

Read more about Watson’s perspective on the streaming industry and how he’s positioning Sandstorm to be successful, in the full interview, here.

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 $1.6 billion and $47 million.


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