Last week, EY revealed its Canadian Mining Eye index of 100 Toronto-listed mid-tier and junior miners had fallen 12% during the December quarter, adding to a 15% drop during the September quarter.
It wasn’t just the small end of town – the majors dropped 9% in the December quarter after a 10% fall in the September quarter.
The Canadian Mining Eye index underperformed the S&P/TSX Composite index, which fell 2% in the fourth quarter, and the London Metal Exchange index, which fell 6% during the quarter.
Unsurprisingly, capital raisings for the half were lacklustre.
“Continued weakness in metal prices combined with an uncertain global macroeconomic situation triggered a further slide in commodity prices,” EY Canadian Mining & Metals leader Bruce Sprague, said.
“But as investors remain cautious, companies are focused on improving productivity on the cost, labour and capital fronts.”
The Mining Association of Canada released a report last month, outlining the biggest challenges for the Canadian sector, which accounts for around 20% of the country’s exports and one in 47 jobs.
The report found exploration expenditure slumped by 41% to $C2.3 billion and 2013 and final figures for 2014 are expected to show a further drop to $2.1 billion, edging towards the 2009 global financial crisis low of $1.9 billion.
Canada also lost the long-held spot of top destination for exploration spending to Australia in 2014.
The MAC said the three biggest issues for the Canadian mining industry this year were the state of the global economy; the lack of critical infrastructure and the complex regulatory environment.
"To adjust to lower prices for some commodities, and to cope with high operating costs and a still uncertain global economy, it is more critical than ever that government remain focused on expanding Canada's trade network and enhancing Canada's overall competitiveness as a destination for new mining development through strategic investments and effective policies," MAC president and CEO Pierre Gratton said.
PDAC 2015 kicked off on Sunday with pleasing news for Canadian miners.
Canadian Finance Minister Joe Oliver announced the government would renew the Mineral Exploration Tax Credit, as well as a change to the Canadian Exploration Expense program to include certain environmental and Aboriginal consultation expenses as part of the permitting process,
PDAC president Rod Thomas welcomed the announcement.
“The METC is a financial catalyst for investment in Canadian companies and helps them to remain competitive in the international marketplace,” he said.
A PDAC spokeswoman told MiningNewsPremium the convention was expecting around 25,000 delegates, in line with last year, but down on 2012 and 2013’s numbers of more than 30,000.
But keen bargain hunters are expected to be among the delegates looking for merger and acquisition opportunities, including many Australians.
One Australian analyst told MNP that PDAC would be “M&A mania” due to the bargains in North America.
“The Canadians are bleeding from the eyeballs,” he said.
EY expects base metal M&A activity to remain muted, but there could be more action in gold, as already seen, with 88% of overall Canadian deals taking place in the gold sector.
The largest mining M&A deal last year was Yamana Gold and Agnico Eagle Mines’ joint $3.6 billion acquisition of Osisko Mining.
Canada was the overall top place for mining deals last year.
“But the reality is that the majority of the deals were junior-level strategic mergers aimed at conserving cash,” Sprague said.
Like many others, EY is also expecting private equity funds to start making moves this year.
It is estimated as much as $US8 billion of PE funds remain uncommitted.