How bad was 2014 for Vancouver-based mining companies? With coal prices stumbling along at 52-week lows, even the lumps in the stocking were a stinking money-loser.
Take mining heavyweight Teck Resources, which is better-positioned than most coal producers to weather low prices. While its six coal mines were profitable for the three months ended Sept. 30, third-quarter profit dropped largely due to lower metallurgical coal prices. The stock has slumped more than 40 per cent this year to $16 on the Toronto Stock Exchange, pushing its dividend yield up to nearly six per cent.
Gold looked to break even at about $1,200 US an ounce after hitting highs of $1,385 during 2014. As for the prices of other resources produced in B.C. — copper, molybdenum, natural gas — each finished the year lower as economic growth in China continued to slow.
However, it was Vancouver’s mineral exploration companies — which rely on fresh capital infusions to continue their quest for buried treasure — that felt the most pain.
The S&P/TSX Venture Composite index — a bellwether of sorts for the junior exploration sector — finished the year at 690, comparable to levels at the height of the 2008 financial crisis. Several junior mining companies even gave up on mineral exploration and switched over to the burgeoning medical marijuana industry, while others closed their doors or hunkered down in cash-conservation mode.
But there were also bright spots — more mergers and acquisitions than in 2013, consolidations, projects advanced and work done behind the scenes laying the foundation for when the market eventually turns.
Those in the industry are looking ahead to the annual Roundup hosted by the Association for Mineral Exploration B.C. and hope the event — which runs from Jan. 26 to 29 at the Vancouver Convention Centre East — will be a catalyst for brighter times.
With an eye to 2015, here is a (highly subjective) look back at some of the deals and events that shaped the industry in 2014.
Lundin picks some low-hanging Fruta…
Resource tycoon Lukas Lundin is renowned for his ability to operate in challenging jurisdictions, as well as buying assets at low prices and selling high. Perhaps the best example of the latter was the 2010 sale of Red Back Mining and its Tasiast mine in Mauritania to Kinross Gold for $7.1 billion US (four and a half years later, Kinross’s entire market capitalization is mired at $3.7 billion and it has written off billions on Tasiast).
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