Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The top five mining juniors on average doubled their market capitalization over the 12 months ended June 30, 2016 to CA$546 million, says Price Waterhouse Coopers in newly released study.
The accounting firm analyzed junior mining issuers on the Toronto Venture Exchange.
“Investors’ renewed enthusiasm for the sector doesn’t necessarily signal the end to the painful downturn, but it puts market valuations very close to where they were in 2012,” writes the report’s authors.
If you want to feel better about the mining sector, read the full report.
Chart from PWC’s Junior Mine 2016: Signs of Life study.
In addition to stock prices, cash reserves were up, too.
The top five junior miners also managed to replenish diminishing cash reserves, reporting an average of CA$49 million on hand, up from just CA$14 million a year earlier.
Gold is the key asset for each of the top five juniors, with the exception of number-one-ranked NexGen Energy, a uranium exploration company.
Importantly, two members of the group progressed beyond the TSX-V in July this year, with NexGen graduating to the TSX and Kaminak Gold being acquired by Goldcorp for CA$520 million.
This is Kaminak’s only appearance on the top-five list, but Gold Reserve, Roxgold and NexGen held onto their top-five status from a year earlier. Two juniors fell off the list in 2016, including Reservoir Minerals Inc., which was acquired by Nevsun Resources Ltd. in June.
Chart from PWC’s Junior Mine 2016: Signs of Life study.
