Mining Industry Outlook 2014 Outlook & Survey Results

Transcription

1 Mining Industry Outlook 014 Outlook & Survey Results

2 Introduction Introduction: The past five years have been a bit of a rollercoaster, to say the least, for the global economy, and particularly so, for the mining sector. According to the most recent survey by Mine Staffing International, the sector outlook for 014 is still very much apprehensive, with some optimism for the sector in the longer term. While 013 showed a marked decrease in M&A Activity and Market capitalization across the sector, there has been recent activity indicating some strengthening in the market. As opposed to 013, there is clear indication that there will be an increase in M&A activity in the sector, among mid-tiers and some juniors, while the major players will increase divestitures to focus on core commodities and activities. This in turn should benefit a few of the mid-tier companies and some juniors, which are in a position to make some acquisitions or become a partner in a strategic venture. There is evidence that there will be an increase in de-listings from the TSX and the TSX-V. Signs are pointing to an increase in M&A activities as we start 014, which indicates some stabilization in the industry, particularly among the mid-tiers and a couple of the major players. Recent activity including the merger of Glencore with Xstrata, the acquisition of Inmet Mining by First Quantum, the hostile bids by Goldcorp and Hudbay for Osisko and Augusta respectively, and the acquisition of several juniors, most notably Volta Resources by BGold, Brigus Gold by Primero, the acquisition of Afferro by IMIC, and the Canada Lithium/Sirocco merger suggests some positive changes coming throughout the next year or so. Many of the small mining firms with market caps less than 10 million CAD, will not survive through the next year. Those with proven projects and strong management reputations may be subject to acquisitions or find more fluid funding through private equity, streaming, flow through shares or eventually, some institutional financing. Below please find the questions posed in the MSI survey and the collated answers from our respondent pool.

3 Highlights of the Survey Survey Highlights: We surveyed over 90 companies throughout North America regarding issues of concern in predicting the economic outlook for the mining sector in 014. We are pleased to present to you a summary of this year s survey. o Survey opened December 0, 013 and closed January 014 o Overall perspective appears to be one of apprehension with some long range optimism, with most respondents predicting that 014 will be very similar to the situation of 013 but anticipating improvement within 5 years; last year s survey suggested a much greater level of optimism than this year o The average respondent was apprehensive for the next 6 months to one year about their company s prospects, but optimistic of their company s growth within 5 years o 4% of respondents planned to incorporate either mergers or acquisitions into their business growth plan over the next year, with 33% considering it a possibility. Surprisingly, last year s survey suggested a higher expectation of M&A activity, which did not materialise in any large scale sense o 44% of respondents predicted that new mining legislation globally will have a negative effect on their operational strategies, while 48% predicted that it will have no effect at all o Resource Nationalization, Infrastructure Access, and Skills Shortage were viewed as the biggest challenges affecting growth

4 Survey Results 014 Market Caps Market Caps of Respondents: Response Percent 38% 7% 14% 3% 6% 6% 5% Under 5 Million 5 Million to 49 Million 50 Million to 199 Million 00 Milllion to 499 Million 500 Million to 999 Million 1 Billion to 17 Billion Private Market Caps of Respondents Under 5 Million 5 Million to 49 Million 50 Million to 199 Million 00 Milllion to 499 Million 500 Million to 999 Million 1 Billion to 17 Billion Private

5 Survey Results 014 Question 1 How would you best describe your company s focus? Response Percent 53.9% 1.3% 9.0% 14.6% 1.1% Exploration Pre-producer/ Construction Phase Producer All of the above Other How would you best describe your company s focus? Exploration Pre-producer/ Construction Phase Producer All of the above Other

6 Question Which option best describes your company s operations? (Check all that apply) Response Percent Precious Metals Gem Stones Base Metals Industrial Minerals Coal Other 74.%.% 37.1% 1.4% 3.4% 3.4% Which option best describes your company s operations? (Check all that apply) 80% 70% 60% 50% 40% 30% 0% 10% 0% Precious Metals Gem Stones Base Metals Industrial Minerals Coal Other

7 Question 3 In your opinion what will the global economic conditions be for the mining sector over the next: Answer Options Very Unfavourable Unfavourable 6 Months 1 Year 5 Years No Impact Favourable Very Favourable Rating Average In your opinion what will the global economic conditions be for the mining sector over the next: 5 Years 1 Year 6 Months Very Unfavourable.5 No Impact Very Favourable

8 Question 4 What is your feeling concerning your company s growth prospects over the next: Answer Options Very Pessimistic 6 Months 1 Year 5 Years Pessimistic Neutral Optimistic Very Optimistic Rating Average What is your feeling concerning your company s growth prospects over the next: 5 Years 1 Year 6 Months 0 Very Pessimistic Neutral Very Optimistic

9 Question 5 Does your company plan on incorporating mergers or acquisitions into your business growth plan in the next year? Response Percent Yes No Depends 41.6% 4.7% 33.7% Does your company plan on incorporating mergers or acquisitions into your business growth plan in the next year? Yes No Depends

10 Question 6 How would you rank the following risks/challenges as they affect growth in 014? (Low - 1 to High - 6) Rating Average Securing Financing Commodity Values Skills Shortage Cost Inflation Infrastruction Access Resource Nationalization How would you rank the following risks/challenges as they affect growth in 014? (Low - 1 to High - 6) Resource Nationalization Infrastruction Access Cost Inflation Skills Shortage Commodity Values Securing Financing

11 Question 7 How will changes in mining legislation impact your company s operational strategy in 014? Response Percent 8.5% 43.9% 47.6% Positively Negatively No Impact How will changes in mining legislation impact your company s operational strategy in 014? Increase Decrease No Change

12 Question 8 In your opinion, what is the cause for the shortage of technical skills in the mining industry? (Check all that apply) Response Percent Lack of new graduates Skilled workers leaving the mining industry for other sectors Lack of information directed toward the general public concerning mining and careers in mining Retiring workers leaving the workforce 34.1% 47.6% 41.5% 61.0% In your opinion, what is the cause for the shortage of technical skills in the mining industry? (Check all that apply) 70% 60% 50% 40% 30% 0% 10% 0% Lack of new graduates Skilled workers leaving the mining industry for other sectors Lack of information directed toward the general public concerning mining and careers in mining Retiring workers leaving the workforce

13 Question 9 How will the size of your workforce change in 014? Response Percent Increase Decrease No Change 5.6% 9.3% 45.1% How will the size of your workforce change in 014? Increase Decrease No Change

14 Question 10 Has your company outsourced any of the following organizational functions in order to reduce costs? (Check all that apply) Response Percent Human Resources Recruitment Payroll Benefits Accounting None 1.% 15.9% 8.0% 13.4%.0% 58.5% Has your company outsourced any of the following organizational functions in order to reduce costs? (Check all that apply) 70% 60% 50% 40% 30% 0% 10% 0% Human Resources Recruitment Payroll Benefits Accounting None

15 Mine Staffing International Mine Staffing International (MSI) Mine Staffing International (MSI) is an Executive Search and Recruitment firm solely focused on Mining & Natural Resources. MSI s leadership team collectively has over 60 years experience working directly in and around the Mining & Natural Resources industries. In sourcing executive talent for senior corporate roles, MSI focuses on a strong synergetic partnership with the client. Our consultants have substantial industry experience in sourcing management, professional, and technical roles, and a strong track record in recruiting both technically based management positions as well as other senior strategic roles in such areas as finance/treasury, human resources, corporate counsel, and business development. MSI maintains its own proprietary database for tracking, reporting, and organization, so we can handle volume projects and searches in multiple disciplines, multiple languages and multiple locations. MSI has an established presence on mainstream sites, niche sites pertaining to the mining sector, external Databases, electronic filings for public companies, as well as professional directories and websites, and we continue to further our reach within the global mining industry through our access to extensive international networks. Principals of MSI have regularly been consulted to develop search tactics to locate and attract quality candidates for ongoing operations as well as new sites and projects. What we do differently from most firms is to take control of the recruitment cycle as a project. This includes a documented project plan, timelines, and clear delineations of roles, responsibilities, and mutual deliverables. We make sure the hiring requirements are realistic in the current talent market and take an active role in helping to analyse your hiring requirements, from helping to create a position description through to completing reference checks and extending an offer of employment. Mine Staffing International is a leading service provider in the mining industry with a unique understanding of its technical requirements as well as a robust foundation in recruiting as a profession.

16 Mine Staffing International Our Principals & Expertise BOB LUNDBLAD Global Director +1(60) BRAD BLACKBURN Principal, Energy and Oil & Gas +1(05) JANA LIJOUR Principal, Latin & South America Search +1(416) ext. 51 MARY MCKENZIE Principal, Global Projects/ Technical Staffing +1(416) ext. 4 mmckenzie@minestaffing.com MARY MURRAY Principal, Executive Search +1(416) ext. 43 mmurray@minestaffing.com CAROLYN PEDERSEN-HOWARD Senior Recruiter/ Recruitment Project Manager +1(661) cpedersen-howard@minestaffing.com