Sources available to discuss why index is seeing second quarter of double-digit growth
TORONTO, Aug. 11, 2016 /CNW/ - EY's Canadian Mining Eye index gained 42% during Q2 2016, outperforming indexes around the world. This follows a gain of 26% in the Canadian index in Q1, which was already a significant turnaround compared to 2015.
"Mining companies are seeing significant improvements in their earnings, and their results are better than expected," says Bruce Sprague, EY's Canadian Mining & Metals Leader. "The index's gains were due in large part to an increase in gold and base metals prices, but the growth also comes from the debt and operational restructuring we've seen in the sector, including deleveraging, cost optimization and capex suspension."
EY's Canadian Mining Eye: Q2 2016 suggests gold prices may get a further boost by the continuing market uncertainty. Some of the key commodity changes in Q2 include:
- Gold increased by 7% in Q1, a modest gain after a 16% gain in Q1
- Zinc continues to be the best performing of the metal group with 16% gain in Q2 following a 14% gain in Q1
- Nickel prices increased by 11% in Q2, compared to a 4% decline in the previous quarter
- Both copper and nickel continue to operate in over-supply markets
"The mining sector is already seeing the benefits of reduced interest costs, reduced cash costs and operating efficiencies," says Jay Patel, EY's Mining & Metals Transactions Leader. "Looking ahead to the rest of the year, supply reductions and commodity price improvements are indicating a positive outlook for the sector."
Special section – Q&A with Mark O'Dea, Chairman and Founder of Oxygen Capital Corp.
EY's report also features highlights from an interview with Mark O'Dea, President and Founder of Oxygen Capital Corp. O'Dea offers tips on how to find quality projects, and the questions that helped him decide whether to take a big risk.
O'Dea told EY: "With the wave of M&A activity that has taken place recently, investors are definitely looking at recycling some of their money into exploration companies. My advice is to not be afraid to step out of your comfort zone."
Find out why O'Dea thinks True Gold's recent risk is paying off for shareholders, and why selling a mine as it was ramping up to go into full production was "a phenomenal success" 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 CDN$1.6b and CDN$47m.
EY's Canadian Mining & Metals team is available to offer insight into the report's findings.
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SOURCE EY (Ernst & Young)
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