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

Continued positive trend for index in Q2 2019

The positive start to 2019 continued in the second quarter of the year with the Canadian Mining Eye index moving up three percentage points from Q1 2019. Gold prices increased 9% in Q2 2019 after a 1% gain in the previous quarter — driven by the possibility of US Federal Reserve rate cuts toward the end of the year. Meanwhile, base metals price momentum stalled with nickel, copper and zinc prices declining 2%, 8% and 14% respectively after a positive first quarter.

Index comparisons Q2 2019 Q1 2019
Canadian Mining Eye index 3% 5%
UK Mining Eye -7% 9%
S&P/TSX Composite Metals and Mining index 2% 12%
Major index (Top 20 - TSX mining companies) 5% 7%

Gold dominated sector trends in the second quarter, with central banks around the world, in particular Russia and China, continuing to buy up considerable amounts of gold. In the first quarter of the year alone, central banks globally purchased 145.5 tonnes of gold — a 68% year-on-year increase. Country-wise, the Central Bank of Russia purchased 55.3 tonnes of gold in Q1 2019 to reduce its dependency on US dollar reserve, amid growing geopolitical tensions with the US. Meanwhile, the Central Bank of China bought 33 tonnes of gold during the same period. This trend is expected to continue throughout 2019, which may benefit gold prices.1

The second quarter wrapped up with spot gold at US$1,414. Prices increased 8% in June 2019 alone — reaching new all-time highs in Canadian dollars and Australian dollars. They remain 25% below their peak in US dollars in August 2011 and 20% below their Chinese Yuan peak reached in the same month.

Gold consolidation also continued to capture attention in Q2 2019. In March 2019, Newcrest Mining Limited is in the process of closing the purchase of a majority stake in Imperial Metals Corporation's Red Chris gold and copper mine for US$806m.2 Australia's St. Barbara entered into an agreement to purchase Atlantic Gold Corporation for US$536m in May 2019.3 EY research in Does tomorrow's success depend on being bold today? suggests that global deals will continue to focus on investments rather than divestments to replenish portfolio growth. Although, the recent run up in gold prices may dampen enthusiasm for cash deals.


Canadian Mining Eye index and peers, last 12 months Canadian Mining Eye index, gold, copper and LME Index over Q2 2019


The recent Federal Open Market Committee meeting signaled the possibility of rate cuts toward the end of the year. Further, Refinitiv, previously known as Thomson Reuters Financial & Risk, expects global gold production to decline by ~2% year-on-year to 3,266 tonnes in 2019.4 The likelihood of a rate cut, increased geopolitical risk — heightened by recent conflicts between the US and Iran and despite the resumption of US-China trade negotiations — and increased gold buying by central banks are all expected to benefit gold prices in the near term. 5

Similarly, copper prices are expected to remain strong in 2019 underpinned by supply deficit and growing demand of copper in renewable energy and electric vehicles. The International Copper Study Group anticipates copper deficit of 189Kt in 2019. That's expected to increase to 250Kt in 2020.6

The underlying demand factors for nickel remain strong on the back of tight supply market conditions. However, slowing global manufacturing activities may put downward pressure on prices.7

Zinc prices are expected to remain positive in the near term on the back of tight supply market conditions. However, the supply deficit is expected to reduce by 2022 due to the commencement of new projects between 2019 and 2022 which contain zinc as either a primary or secondary commodity.8

Changes to the Canadian Mining Eye index

There were 13 changes in index constituents in Q1 2019. Centerra Gold and Detour Gold Corporation were the new entrants in the Top 20 index. Centerra Gold, Detour Gold Corporation, Cornerstone Capital Resources, Harte Gold, Amerigo Resources, Avesoro Resources, Sherritt International Corporation, Ascot Resources, Pure Gold Mining, White Gold, Cardinal Resources Limited, Belo Sun Mining and Stornoway Diamond Corporation exited the index and were replaced by index entrants highlighted in the table above.


  • 1.“Central bank buying gives gold market new lustre,” Financial Times, 2 May 2019; “Central banks ditching the dollar for gold,” Economic Times, 3 May 2019.
  • 2.“Newcrest acquires majority stake in Canadian mine,”, 12 March 2019.
  • 3.“Australia’s St. Barbara grabs Canada’s Atlantic Gold,”, 15 May 2019.
  • 4.“GFMS Gold Survey 2019,” Refinitiv, May 2019.
  • 5.“Gold prices today suffer biggest one-day fall in a year,” Livemint, 1 July 2019.
  • 6.“The Trunk Call: Weekly Metals Update,” IA Securities, 17 May 2019; “Energy Morning Research Package,” GMP Securities, 2 April 2019.
  • 7.“Confusing signals cloud London nickel market,”, 20 May 2019.
  • 8.“Zinc market to grow at 3.8% in 2022,” Mining-technology, 1 February 2019.
Canadian Mining Eye index and peers, last 12 months ×
Canadian Mining Eye index, gold, copper and LME Index over Q2 2019 ×
Index constituents selected at quarter end: Canadian Mining Eye - Q2 2019 ×
Mining Eye index and S&P/TSX Composite index performance, last 12 months - Q2 2019 ×
Mining Eye index and S&P/TSX Composite index since 2008 - Q2 2019 ×
EY - Theo Yameogo Q&A
with Theo Yameogo
EY Canada Mining & Metals Co-Leader

Q. What are the greatest risks and opportunities for Canadian companies today?

Risks — or challenges — take various shapes and forms in the sector depending on the size of the company, the commodity in question, the health of the operation and the location. For gold miners, for example, current challenges include cost containment, reliability of production forecast and increased stakeholder management with governments or communities. Whereas base metals producers are focused on low prices. Commonalities across the sector tend to revolve around the fundamentals of obtaining permits and community support, raising and allocating capital, attracting talent, finding more ore to build up reserves and remaining profitable.

One of the greatest opportunities in the sector, like in all other industries, is digital transformation. Data is power, and the exploitation of data could be an invaluable resource and a great advantage. The challenge is that while most mining and metals companies are willing to embark on the journey, they either don't know where to start or how to do it. I believe the industry will get there, it's just a matter of time.

Related to digital transformation is what I think of as hard science innovation. Think robotics, automation, electric vehicles and driverless trucks. These are game-changing innovations. The sector has made some good progress in recent years, although in pockets and at larger corporations. What we need now is larger adoption across the sector.

One out-of-the-box opportunity to innovate the mining business model is integration with consumers or end-users of the raw material cycle. Consumers in the market to buy gold or diamonds may not be aware of the mining company that produced it or where it was extracted. There has always been a sort of buffer between the sector and the consumer. We need to address that missing link if we are to keep our seat at the table.

There's also the sensitive issue of license to operate. I always say that licenses, by definition, can always be revoked whether through failure to abide by the regulation, or through changes to the regulation. This is an ongoing issue in regions in Africa, Australia and South America — and with First Nations communities here in Canada. I believe that soon — and it may be happening already — we will see more symbiotic project development models rather than licenses to operate. Those mutually beneficial models or relationships with the communities will, in my opinion, stand the test of time and regulations.

Q. How is the sector evolving and what does that mean for how companies operate?

We're in an age of connectivity or, put another way, the Internet of Things. Everybody's lives today are connected and in-sync, and the mining sector is no different. The ongoing issue remains that mining companies need to do better at seizing the opportunity of the foundational pieces of that connectivity — from data acquisition and governance to making the best use of the cloud, which is central to connectivity.

When those pieces are working together, advanced analytics and machine learning come in, either through in-line edge computing or cloud-based data churn into meaningful insights and foresights. Besides, additional influential data sources can be connected or merged with the company data to generate both warnings for health and safety and competitive information that springs one company ahead of another.

Once connectivity and sound data sources are established, data visualization can be taken to the next level. Humans tend to be more visual in understanding complex sets of data. No matter how digital the sector becomes, the human element will remain at its core. Mining employs a lot of people, so visualizing data should cover the spectrum of mixed realities, from augmented to virtual. Mixed realities connect the digital to the physical world, thus allowing humans to operate more efficiently and effectively. Throughout the building blocks of the connectivity era, blockchain technology represents the glue that creates integrity in the data and process flow.

Q. Why is it important for companies to distinguish between digital transformation and innovation?

This distinction is important to me. In my experience, the bulk of digital transformation comes from factors that are external to the sector such as new ways of doing business or managing our lives. If you don't have proper data governance and data strategy, it's quite challenging to embrace digital. Digital covers multiple known aspects such as data-driven decision-making, cloud operation, mobile devices, connected devices, AI, data visualization. It takes an enterprise-level commitment to craft and execute a digital roadmap that caters to all those needs.

Innovation, on the other hand, is changing core business practices or adopting new business models. Innovation can be a lift-and-shift affair: mining companies can take ideas from other businesses and other sectors and put them into practice in a completely differentiated reality. For example, exploration drilling with drill rigs was an innovation at some point in the past; using machine learning on big data before a drill hole is designed could be what is innovative today. Innovation is a nexus of multiple inputs and players and, as a result, is sometimes larger, pricier or challenging. Digital transformation seems more straightforward, although requiring commitment and change control.

Q. What past experiences will you bring to your role as Co-Leader of EY Canada Mining & Metals services?

My most recent experience has given me insight into the burning platforms that mining and metals companies are contemplating. I'm bringing relevance of EY knowledge and real-world experiences to the industry.

I've also learned a lot of lessons on how to drive success with respect to digital and innovation strategies and execution. I was recently awarded the 2019 CIM Distinguished Lecturer for Industry 4.0 and Digital Transformation. My aim is to be a voice for the industry as well as an advocate for the future of mining and metals in Canada.

The other foundations that have driven my career are my mining engineering upbringing and my business education in finance, strategy and innovation. I've worked at mines, performed engineering consulting, dealt with regulators and communities, and traveled for the industry to every continent. As a result, I hope to be able to help the industry while continuing to learn.

Past interviews

EY - Marie Inkster

“Good corporate citizenship is central to our values and vital to the long-term success of our company.”

Marie Inkster
President, CEO and Director, Lundin Mining

Read more
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

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EY - David Garofalo

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

David Garofalo
President and CEO, Goldcorp Inc.

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$169m and CDN$2.5b. 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 comparative purpose.

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

Recent insights and thought leadership

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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

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