Canadian Mining Eye index surges ahead in Q1 after several weak quarters: EY

Sources available to discuss why Canadian Index is seeing significant growth

TORONTO, May 24, 2016 /CNW/ - EY's Canadian Mining Eye index gained 26% during Q1 2016, significantly outperforming the S&P/TSX Composite index and the London Metal Exchange. This is a large turnaround compared to just a 2% gain in Q4 2015. The index's gains were mainly driven by an increase in commodity prices, largely on the back of a robust increase in gold prices.

"Improved gold and base metal prices appeared to generate much needed positive momentum in the sector," says Bruce Sprague, EY's Canadian Mining & Metals Leader. "The strong growth of Canadian mining equities also indicates benefits from strategic initiatives on non-core asset sales, aggressive cost control measures and a disciplined approach in reducing debt."

EY's Canadian Mining Eye: Q1 2016 shows that miners are looking for strategic partners and innovative financing solutions to fund growth. Some of the key commodity changes in Q1 include:

• Gold increased by 16% in Q1, after a 5% decline in both Q3 and Q4
• Copper gained 4%, compared to a 9% decline in the previous quarter
• Zinc was up 14%, which eliminated the loss in Q4

"As markets anticipate more of the positive environment over the next few quarters, we are likely to see a turnaround of fortunes for companies," says Jay Patel, EY's Mining & Metals Transactions Leader. "At the other end of the spectrum, challenging global market conditions remain so, some caution is warranted."

Special section – Q&A with Randall Oliphant, Executive Chairman of New Gold

EY's report also features highlights from an interview with Randall Oliphant, Executive Chairman of New Gold and Chairman of the World Gold Council. Oliphant offers his perspective on how the recent downturn is changing the sector.

Oliphant told EY: "I think this low commodity price environment has forced everybody to re-examine their business model. What they've found is that this big scale didn't really lead to a better result. Big office culture and huge head office staffs meant their attention was being diverted all over the place."

Find out why Oliphant thinks this realization will result in a healthier sector 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.

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SOURCE EY (Ernst & Young)

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: Leigh Kjekstad, [email protected], 604 648 3807; Sasha Anopina, [email protected], 416 943 2637; Julie Fournier, [email protected], 514 874 4308