Junior mine 2016: Signs of life

Our analysis of the top 100 junior mining companies on the TSX Venture Exchange.

Top 100 findings and analysis

With cash reserves rising, attention shifts to asset allocation.

There are approximately 1,000 mining issuers on the TSX Venture Exchange (TSX-V), with the top 100 accounting for two-thirds of the sector’s market value.

An interview with Monica Banting, Senior Manager, PwC Canada that explores whether there’s light at the end of the tunnel for the Canadian junior mining sector in 2016.

The gold rally in the last six months has definitely changed things for the juniors.

Monica Banting, Senior Manager, PwC
on the recent gold run

Market capitalization

The market capitalization of these top 100 surged 138%, to CA$11.4 billion, in the 12 months ended June 30, 2016. 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.

The breakdown of where the top companies sit in the mining life cycle remained mostly unchanged from the prior year, with the majority of companies at the exploration and evaluation stage, followed by development and production stage entities. But the different market valuation gains for each category are noteworthy. The 63 exploration companies led the way, rising by 154% as a group, suggesting that investors see the biggest opportunity in greenfield projects. The 25 issuers focused on the development stage enjoyed an aggregate gain of 124%, and the 12 production companies rose a respectable 67%.

Stage of mining of top 100 mining companies

TSX-V market capitalization 2007–2016 ($ billion CAD)

Cash

A year ago, the greatest fear among members of the top 100 was running out of cash entirely. Reserves were dwindling and the equity and debt markets had all but dried up for much of the TSX-V. Cash remains a serious concern for many of the juniors in 2016, but an upward trend may spell relief ahead. The top 100 companies reported a total of approximately CA$900 million in their coffers, up from approximately CA$670 million a year earlier and close to the level reported for 2014.

Total cash, top 100 ($ billion CAD)

Financing

The number of companies able to go to the market for funds remained steady over the twelve months to June 30, 2016, but the amounts the juniors were able to raise increased significantly. Cash flows from financing activities rose 89%, to CA$1.2 billion, over the twelve months to June 30, 2016. The top 100 raised CA$763 million through equity financings and the remainder from debt.

Equity raises vs. debt raises by stage of mining ($ million CAD)

Top 5 findings

On average, these leaders nearly doubled their market capitalization over the 12 months ended June 30, 2016, to CA$546 million. The market capitalization of the group surged 137%, to CA$2.7 billion.

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.

TSX-V market capitalization, 2016 top 5 mining companies ($ million CAD)

 

Interview with the experts

Interview with John Dorward,
President and CEO, Roxgold

Navigating a path to success
Roxgold credits a high-grade mine and a clarity of vision

Interview with Chris Batalha,
CFO, Atlantic Gold

Atlantic Gold goes open pit in Nova Scotia
In today's challenging environment, it can pay to think unconventionally

Interview with Mark Bennett,
Partner, Mining Group, Cassels Brock & Blackwell LLP

No room to stumble
In an unforgiving market, managing risk is critical


Contact us

Liam Fitzgerald
Partner, National Mining and Metals Leader
Tel: +1 416 869 2601
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Nochane Rousseau
Quebec Energy, Utilities & Mining Leader and Perspective North Initiative
Tel: +1 514 205-5199 
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Mark Platt
Partner, Assurance
Tel: +1 604 806 7093
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Dean Braunsteiner
Partner, National Assurance Leader, Mining
Tel: +1 416 869 8713
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Mark Patterson
Partner
Tel: +1 604 806 7160
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James Lusby
Partner, Assurance Group
Tel: +1 416 365 8181
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Marelize Konig
Partner
Tel: +1 416 814 5862
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Stephen Mullowney
Partner, Corporate Finance, Mining
Tel: +1 416 687 8511
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