The better the question. The better the answer. The better the world works. У вас есть вопрос? У нас есть ответ. Решая сложные задачи бизнеса, мы улучшаем мир. У вас є запитання? У нас є відповідь. Вирішуючи складні завдання бізнесу, ми змінюємо світ на краще. Meilleure la question, meilleure la réponse. Pour un monde meilleur. 問題越好。答案越好。商業世界越美好。 问题越好。答案越好。商业世界越美好。

Canadian Mining Eye

Positive start for Canadian Mining Eye in Q1 2019

The Canadian Mining Eye index saw a positive start to the year in the first quarter. Gold prices increased 1% quarter-over-quarter in Q1 2019 following an 8% quarterly gain in Q4 2018. The improvement in prices was due, in part, to the possibility of fewer US Federal Reserve rate hikes in 2019. Nickel prices saw a more significant increase of 22% in Q1 2019 compared with a 15% decline in Q4 2018. Copper prices also increased by 9% and zinc prices gained 19% in Q1 2019.

Index comparisons Q1 2019 Q4 2018
Canadian Mining Eye index 5% -2%
UK Mining Eye 9% -7%
S&P/TSX Composite Metals and Mining index 12% -11%
Major index (Top 20 - TSX mining companies) 7% -6%

Research firm Fitch Solutions anticipates total gold mine production in Canada to grow by 6% in 2019 compared with its previous estimate of 2%. This improvement stems from increased exploration spending resulting in a strong buildup of the project pipeline in 2019. Major projects that are expected to begin production in 2019 include GoldCorp’s Borden project in Ontario, Agnico Eagle Mines’ Meliadine project in Nunavut and Barrick’s Hemlo mine in Ontario.1

Barrick Gold has increased its gold production estimate from 4.53m ounces in 2018 to 5.1-5.6 m ounces in 2019 after its acquisition of Randgold, Kirkland Lake Gold from 0.72m ounces to 0.92-1.0m ounces and Kinross Gold from 2.45m ounces to 2.5m ounces.

Capital expenditure forecasts are also improving in 2019. Barrick Gold increased its forecasts from US$1.41b to US$1.4–$1.7b, Kinross from US$1.04b to US$1.05b and Alamos Gold from US$203.0m to US$290-$315m. 2

The recent deal activity between Barrick and Randgold as well as Newmont and Goldcorp provided much-needed optimism in a gold industry previously impacted by lower gold prices and unsuccessful deals. The total value of global M&A in the mining and metals sector stood at US$1.77b in February. Canada led M&A activity with 35 deals.3

Despite the Barrick no-premium hostile offer for Newmont leading to a joint venture, the outlook for M&A activity in the sector remains strong as companies continue to consolidate and divest non-core assets. EY Mergers, acquisitions and capital raising – 2019 outlook, 2018 trends suggests that 2019 will represent a fourth year of consecutive growth in deal value for the sector. Barrick has already indicated that it will sell its non-core assets, while the combined Newmont Goldcorp aims to divest US$1.0–US$1.5b in assets over the next two years.4 Fitch Solutions also suggests the rebound in M&A activity may act as a risk-mitigating tool in countries where ongoing projects are negatively impacted by resource nationalism, labor strikes and increased environmental regulation.5


Canadian Mining Eye index and peers, last 12 months Canadian Mining Eye index, gold, copper and LME Index over Q1 2019


The Federal Open Market Committee meeting held in March 2019 estimated the growth rate in the US to fall to 2.1% in 2019 compared with the prior projection of 2.3%. The US federal funds rate projection was also guided lower to 2.4% from 2.9%, suggesting a greater likelihood of fewer rate hikes this year. This is expected to benefit gold prices in the near term.6

The underlying demand factors for copper prices are expected to remain strong in 2019, on the back of tight supply market conditions and a likelihood of China’s stimulus package.7

In response to reduced inventory levels and ongoing strong demand from the stainless steel sector, nickel prices are expected to benefit in the near term. Prices are also slated to benefit from the surge in demand from the electric vehicle (EV) market.8 Similarly, zinc prices will remain positive on the back of supply deficit and an anticipated reduced refined production from Chinese smelters amid stricter environmental regulations.9


Changes to the Canadian Mining Eye index

There were five changes in index constituents in Q1 2019. Alamos Gold, Hudbay Minerals, Nevsun Resources, Tahoe Resources and West African Resources exited the index and were replaced by the index entrants highlighted in the table above.



  • 1.“Canada's gold production to grow robustly in 2019,”, 24 February 2019.
  • 2.“Barrick Reports Q4 Earnings Results,” Barrick Gold, 13 February 2019; “Kirkland Lake Gold Q4 Earnings Results,” Kirkland Gold, 21 February 2019; “Kinross Q4 Earnings Results,” Kinross Gold Corporation, 13 February 2019; “Alamos Q4 Earnings Results,” Alamos Gold, 20 February 2019.
  • 3.“Metals & mining industry M&A deals in February 2019 total $1.77bn globally,” Mining Technology, 18 March 2019.
  • 4.“Newmont and Goldcorp Combine to Create World’s Leading Gold Company,” Newmont Mining Corporation, 14 January 2019.
  • 5.“Cost-Cutting and Increased M&A Expected In 2019 Gold Mining Sector,” Resource Global Network, 14 January 2019.
  • 6.“FOMC Projections materials, accessible version,” Federal Open Market Committee, 20 March 2019.
  • 7.“RBC Dealership Dynamics,” RBC Capital Markets,” 6 February 2019; “Base Metals,” GMP Securities, 9 January 2019.
  • 8.“Base Metals - Year Ahead Thematic,” National Bank of Canada, 13 January 2019.
  • 9.“Teck Resources Ltd.,” Credit Suisse, 13 February 2019; “The Trunk Call: Weekly Metals,” IA Securities, 1 February 2019.
Canadian Mining Eye index and peers, last 12 months ×
Canadian Mining Eye index, gold, copper and LME Index over Q1 2019 ×
Index constituents selected at quarter end: Canadian Mining Eye - Q1 2019 ×
Mining Eye index and S&P/TSX Composite index performance, last 12 months - Q1 2019 ×
Mining Eye index and S&P/TSX Composite index since 2008 - Q1 2019 ×
EY - Marie Inkster Q&A
with Marie Inkster
President, CEO and Director, Lundin Mining

Q. How important is culture to success at Lundin Mining?

Culture is a large part of our success. It’s all about having the right people and a culture that empowers. I joined Lundin Mining in 2008. It was a challenging time in our industry with the onset of the global financial crisis and a period of leadership change for our company. What stood out immediately was a corporate culture of optimism, integrity and openness. Those qualities helped us navigate difficult times. We truly believed that if we came together we could work through anything.

Over the last 11 years, our corporate culture has continued to evolve and progress as we’ve grown. Last year we undertook an important refresh of our mission and values, in part ensuring they best reflected our current culture. Safety, respect, integrity and excellence are our core values that guide our decision-making. We operate in diverse locations with distinctive cultures and our values are what connect us all. We strive to continue to build a culture of trust and mutual respect, knowing that when our people feel valued they bring their best selves to work.

Q. How important is license to operate in today’s stakeholder landscape?

Good corporate citizenship is central to our values and vital to the long-term success of our company. Social license to operate can’t be an afterthought. Communities and other stakeholders more than ever are turning to their mining partners for transparency and consistency of information, as well as involvement in the decision-making process that impacts them.

All companies need to be intentional in how they enable honest, transparent and open discussion with the communities where they operate, and how they respond to their questions and concerns. This is true throughout the lifecycle of a mine, from early exploration through post-reclamation monitoring. Even before the first drill hole there must be open and transparent engagement with the community and other stakeholders, and that will set the tone for the entire project.

We operate mines in four different countries, each of which has its own unique and diverse cultures, languages, landscapes and levels of economic development. This inevitably leads to unique challenges and, in turn, unique opportunities.

One thing I believe our industry as a whole can do better is to communicate the good we’re doing and the positive steps we’re taking to support community development and protection of the environment. We have to recognize the negative perception that exists and work together with critics for a better future. After all, the demand for base metals is not going down — it’s actually increasing significantly. One way we can enable positive change is by supporting companies that are doing the right thing and mining responsibly.

Q. What role is technology playing in attracting the future workforce?

Our industry has a reputation for being old fashioned and not forward thinking. We need to correct that perception and fast, particularly when it comes to attracting and developing our future workforce. We need to help educate younger people to attract more youth into our industry. That’s how we’ll continue to generate new ideas and move forward.

There are a lot of interesting things happening with new technology. Everything from carbon reduction and water purification to exploration mapping. Automation is playing a big role. We’ve done a lot of work with automation to improve our underground mining process. There is great opportunity to improve safety in underground mining, along with productivity. To lead this effort, we’ve created a new position for operational technology.

Q. What excites you about the future of Lundin Mining?

There are many reasons to be excited about our future. This year and last, we have been making substantial investments in our operations. We invested approximately US$750 million last year and are on track to do the same this year. These investments are reinvigorating and expanding production at our mines.

Toward the end of this year we’ll be completing several reinvestment initiatives at our largest operation, Candelaria in Chile. We have been replacing our mining fleet, everything from shovels, haul trucks, drills to support vehicles and water trucks. We are developing a new underground area called Candelaria South, and we are debottlenecking and optimizing the Candelaria mill. These are important investments and upgrades to support the extension of the life of mine out to 2040 and potentially beyond.

In the fourth quarter, we expect to process first ore from the Eagle East orebody at our mine in Michigan’s upper peninsula. And early next year we’ll be commissioning the Zinc Expansion Project at our Neves-Corvo operation in Portugal. This expansion is set to double our zinc production from the mine. We have another substantial exploration program again this year. Exploration in the Dalby area of our Zinkgruvan mine in Sweden is particularly encouraging.

We’re also actively pursuing new growth opportunities with rigor and discipline to create long-term value. In all, a very exciting time for us.

Q. What does the future look like to you?

Copper is our primary focus. We believe the fundamentals for copper are strong. The market appears to be transitioning from a period of surplus into deficit. There are only a few projects under construction and new projects take time to bring into production. A supply response to fulfill growing demand will take several years to materialize.

Historically, junior miners have attracted risk capital for exploration. There has been a noticeable shift in investor appetite away from mining exploration toward cannabis or technology companies. Juniors are finding it more difficult to raise money than they would have just four or five years ago. That is going to have a knock-on effect in our industry.

We also believe we’ll start to see more resource scarcity. This is especially true for copper, given the difficulty in substituting other metals or material for copper. It’s easier to engineer other metals out of a given project. That is why we think copper has a bright future ahead.

Past interviews

EY - Peter Marrone

“There needs to be a greater emphasis on improving operational excellence and productivity.”

Jeff Swinoga
EY Canada Mining & Metals Co-Leader

Read more
EY - Peter Marrone

“The primary challenge I see is more critically defining projects.”

Peter Marrone
Founder & Executive Chairman, Yamana Gold

Read more
EY - George Burns

“Technology has played an important role over the four decades I’ve been in the industry.”

George Burns
President & CEO, Eldorado

Read more
EY - Stephen Letwin

“I have renewed optimism in the mining industry overall.”

Stephen Letwin
President and CEO, IAMGOLD

Read more
EY - Scott Perry

“I’m feeling constructive and bullish on all base metals for 2018, with a particular focus on copper.”

Scott Perry
CEO, Centerra Gold

Read more
EY - David Garofalo

“I do see real potential for disruptive technologies for the mining industry”

David Garofalo
President and CEO, Goldcorp Inc.

Read more
EY - Anthony Makuch

“I think digital mining is something we need to embrace.”

Anthony Makuch
President and CEO, Kirkland Lake Gold

Read more

About this report

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$92m and CDN$2.3b. These companies trade on the TSX and TSXV, though some of them are headquartered outside Canada. Movements and analysis of the index are reported quarterly. From Q1 2014, we have retroactively reset the index to Top 20 and Next 100 (from Top 25 and Next 100) based on the market capitalizations at the end of 2013. The historical data has also been reset for comparatives purpose.

All company information is sourced from publicly available sources, including company websites and regulatory announcements.

Recent insights and thought leadership

How can we help?

Please contact a member of our team to learn more about about how our experience, knowledge, services and talent can help you.
For general descriptions of the services we offer across Canada and globally please click here.

Contact us

EY - Jeff Swinoga
Jeff Swinoga
Canada Mining & Metals Co-Leader

416 943 7181

EY - Theo Yameogo
Theo Yameogo
Canada Mining & Metals Co-Leader

416 943 7181

EY - Jim MacLean
Jim MacLean
Canada Mining & Metals Tax Leader

416 943 3674

EY - Iain Thompson
Iain Thompson
Canada Mining & Metals Advisory Leader

604 891 8378

EY - Jay Patel
Jay Patel
Canada Mining & Metals Transactions Leader

416 943 3861

EY - Blake Langill
Blake Langill
Canada Mining & Metals Assurance Leader

416 943 3556

EY - Patrick Bertrand-Daoust
Patrick Bertrand-Daoust
Quebec Mining & Metals Leader

514 879 2897

© 2019 Ernst & Young. All rights reserved.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.