TORONTO (miningweekly.com) – Mining companies must be careful to find a balance between caution, learned the hard way during the financial crisis, and the potential value to be added by acting quickly on growth opportunities that become available, Ernst & Young (E&Y) suggested on Wednesday.

“The persistent challenge is that the global financial crisis has shaken the prior confidence of market players,” said E&Y Canadian mining and metals leader Tom Whelan.

“Exploration and development companies are inexpensive and good long-term prospects, but there’s still not enough confidence in the market to make them attractive acquisition targets for the majors and companies with cash.”

E&Y published its 'Lessons from change' report on Wednesday, in which it examines what companies have learned during the financial crisis and how they are applying this knowledge to business practices.

Overall, mining and metals companies are no longer making big deals or bringing on new production without careful consideration — “and many seem to be waiting for the competition to make the first move”.

“A new performance agenda has emerged for Canadian mining and metals companies,” Whelan commented in a statement.

“Right now, industry players are focused primarily on optimising capital, establishing operational flexibility and reassessing their ability to manage risk.”

Although some smaller, low-risk transactions are taking place, the deal-making process is more cautious and subject to increased scrutiny.

“Paradoxically, this cautious outlook raises the risk of missing an opportunity,” said Whelan.

“Given the long lead time required to develop new mines and new markets, the reality is that companies should act soon, before this unusual door of opportunity shuts.”

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