Canada’s Top 40: 2015 edition
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Last year was tough for the global mining industry. Commodity prices are sagging. Investments are down, especially in junior companies. Projects are being stalled and pushed back as activists are more outspoken. And the Canadian sector has not escaped these realities.
Canada’s miners felt the pinch, too. That the top six of our 2015 Top 40 are unchanged from a year earlier is testament to their skills. The top performers are seeing revenues in the billions, and with one exception, they posted net earnings. Only Barrick had a net loss, and that is attributable to the flat price of gold and the many write offs it took in 2014. (Nor was it the only gold producer posting a loss.)Again, potash and fertilizer producer Agrium, is the best of the best Canadian miners with gross revenues of $17.72 billion in 2014 ($19.03 billion in 2013). Not too far behind it is Barrick Gold that recorded sales of $11.26 billion ($13.78 billion). Close behind Barrick at No.3 is Suncor Energy’s oil sands operations, with revenues of $10.66 billion ($9.06 billion), a rise from 2013, despite the falling petroleum price in the last half of 2014. The other stalwart oil sands producer, Syncrude, was in fourth place at $9.31 billion ($9.73 billion). The No.5 miner was again Teck Resources, at $8.56 billion ($9.38 billion) for its primarily base metals and coal production.
And because it remained in sixth place, we note Potash Corp. of Saskatchewan, among the world leaders in potash and phosphates for fertilizer. It had 2014 revenues of $7.83 billion ($8.04 billion).
A look at some of the numbers by commodity produced reveals a great deal about the markets. Let us start with gold.
Gold started 2014 at US$1,225 per ounce, and it finished the year at US$1,164.25. There was a price spike in March to US$1,385, but it was pretty much downhill after that. The results of our gold producers reflect that reality.
More gold producers than not saw revenues fall from 2013 to 2014. Some of those losses were substantial, such as Walter Energy (-31.2%) no thanks to the falling price of coal. Some were tiny, such as Yamana Gold (-0.4%), which benefitted from acquiring the Canadian Malartic gold mine in Quebec. Yamana’s partner, Agnico Eagle Mines, saw revenues rise by 15.8% thanks to its half of the same mine and excellent results from the Goldex mine, also in Quebec. The gold miner with the greatest year-over-year increase in revenues was Detour Gold (248.1%), thanks to the first full year of production at the Detour Lake open-pit mine in Ontario.
Among Canadian miners that are primarily producers of base metals, all but one reported revenue gains, and it seems likely that Teck Resources fell -8.3% due largely to the coal component of its business. The greatest gainer was Turquoise Hill Resources at 6,747.4%, as its Oyu Tolgoi copper mine in Mongolia hit its stride.
Other base metal gainers include Nevsun Resources (232.9%), having transitioned the Bisha mine in Eritrea from gold to copper in late 2013; Capstone Mining (97.5%), with its purchase of Pinto Valley in Nevada, just as development ended. Lundin Mining (30.7%) that acquired an interest in the Candelaria iron-copper mine in 2014, and an interest in the Tenke Fungurume copper mine in late 2013; Taseko Mines (28.0%), with the Gibraltar copper mill expansion in British Columbia; First Quantum Minerals (9.7%) which will need considerable cash as it continues the Cobre Panama development; and Hudbay Minerals (8.4%), which opened its Lalor zinc-gold and Reed copper mine in Manitoba.
The steep decline in the price of oil took a toll on the revenues of Canadian Oil Sands Trust and Syncrude, where revenues declined 4.1% and 4.3%, respectively. However, the oil sands operations of Suncor Energy bucked that trend, finishing 2014 with 17.6% higher revenues than 2013. The company focused heavily on improving maintenance and reliability in the oil sands, notably boosting Firebag in situ production over its 180,000 bbl/d nameplate capacity.
Congratulations, also, to the 15 companies on our runners-up list. Five made the list for the first time – Copper Mountain Mining, Fortuna Silver Mines, Sierra Metals, Argonaut Gold and Tahoe Resources. They are producers of both precious and base metals. These companies either put a new property into production (Copper Mountain) or completed mining and milling expansions (Fortuna).
Another measure of the successful Canadian mining company might be to plot earnings against revenues, in other words look at how much of the money coming in stays with the company and its shareholders. Dominion Diamonds leads that table with an earnings-to-revenue correlation of 62.7%. Readers are reminded that Dominion’s year-end was Jan. 1, 2014. The results reflect an uptick in rough diamond prices during 2013 as well as the fact that stones from the Ekati and Diavik mines command a hefty premium.
Endeavour Mining (56.2%) and Agnico Eagle (43.8%) both retained a fair share of revenues. So did Walter Energy (33.4%), Silver Wheaton (32.2%), Nevsun Resources (30.0%) and Franco-Nevada (25.5%). Interestingly, Silver Wheaton and Franco-Nevada are precious metals streaming companies. They lack the expenses associated with operating mines, mills and other facilities, often in difficult corners of the world.
The successful asset growers deserve mention as well. They either bought into producing mines (Agnico Eagle +331.1% and Lundin Mining +69.8%), or their new mines reached production (Hudbay Minerals +68.9%).
So now you have a snapshot of Canada’s Top 40 miners. They earned the designation by measurement of their gross revenues, but there are several other comparisons by which to define success. Please have a look at not only the Top 40, but the runners-up and rankings by earnings, assets and various comparisons.
Who is eligible for the Top 40?
Determining a list of Canada’s Top 40 mining companies takes time and research. We examine financial statements, annual reports and other public information for almost 100 separate companies.
We keep in mind that eligible companies must meet two of the following three criteria:
- Companies that are traded on a Canadian stock exchange.
- Companies that are domiciled in Canada.
- Companies that own or have a significant equity interest in a producing mine in Canada. Companies with a project in the advanced development stage may also be considered.
For example, a company with its head office in Toronto and its stock trading on the TSX or TSX-V would meet the above criteria even if all its producing mines are offshore. Companies with foreign head offices, and that do not trade on a Canadian exchange, will not make the Top 40 list even if they have substantial mining assets in this country.
For the 2014 calendar year, the Bank of Canada reported that the average Canadian:U.S. dollar exchange rate was C$1.10:US$1.00. Results reported in greenbacks have been converted to loonies at that rate.
We make every effort to include all eligible companies. If you believe your enterprise should be listed among the Top 40, please write to the author at MScales@CanadianMiningJournal.com.
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