Canadian Mining Eye index continues decline in Q4: EY

Sources available to offer insight on most recent mining and metals results

TORONTO, Feb. 23, 2015 /CNW/ - EY's Canadian Mining Eye index fell 12% during Q4 2014, following a 15% decline in the previous quarter. Still, EY says with lower oil prices, miners will benefit from lower input and freight costs amid metal price weakness, helping them to protect margins.

"Continued weakness in metal prices combined with an uncertain global macroeconomic situation triggered a further slide in commodity prices," says Bruce Sprague, EY's Canadian Mining & Metals Leader. "But as investors remain cautious, companies are focused on improving productivity on the cost, labour and capital fronts."

Amid persistent weak metal prices, the Canadian Mining Eye: Q4 2014 highlights the following trends going forward:

  • Gold prices are expected to stabilize and trend upward with increased volatility on the back of safe-haven buying by investors and central banks.
  • Base metals are likely to witness continued weakness. This is likely to lead to subdued M&A activity.
  • Majors are expected to strengthen their core businesses, balance sheets and liquidity through cost rationalization, consolidation of core assets, improved operational efficiencies and disciplined investment.
  • Companies are likely to fund development of new projects and attractive acquisition through operating cash flows and the disposal of non-core assets instead of high-cost debt and equity dilution.

EY's report also features an interview with George Paspalas, President & CEO, MAG Silver, where he shares his perspective on the industry.

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 CDN$2.1b and CDN$160m.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

For further information: EY's Canadian Mining & Metals team is available to offer insight into the report's findings. To reach a spokesperson, or for more info, please contact: Erika Bennett, erika.bennett@ca.ey.com, 403 206 5157; Sasha Anopina, sasha.anopina@ca.ey.com, 416 943 2637; Julie Fournier, julie.fournier@ca.ey.com, 514 874 4308

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