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TORONTO (miningweekly.com) – Canadian mining equities witnessed a 45% drop in market capitalisation over the course of 2013, according to professional services firm EY's ‘Canadian Mining Eye: Q4 2013’.
The index decreased 9% in the fourth quarter alone as concerns about global economic growth and uncertainty surrounding the US Federal Reserve stimulus programme continued.
Declining metal prices also spurred significant write-downs in the value of assets across the sector. Companies were reluctant to raise equity capital on dilutive terms and witnessed less capital readily available in a soft market. Total proceeds raised were about $6.9-billion, down 49% when compared with the same period in 2012.
Despite these market forces already setting the stage for a modest year of transaction activity, growth opportunities continue to exist for companies across the sector.
EY said majors were expected to continue disposing of noncore assets, and midtiered companies with cash flexibility were expected to take advantage of inorganic growth opportunities during 2014.
Juniors with good quality assets and derisked projects were also likely to attract buyer interest.
The Canadian Mining Eye index tracks Canadian mining sector performance of 100 TSX- and TSX-V-listed midtier and junior companies with market capitalisations of between $1.6-billion and $100-million.