Mining Returns to Center Stage

EXPERT OPINION ARTICLE BY:

Dean McPherson,

Head of Global Mining,

Toronto Stock Exchange & TSX Venture Exchange

Last year we launched the TSX30 program in an effort to shine a light on some of the companies on Toronto Stock Exchange by recognizing the top 30 performers over a 3-year period across all sectors. By raising the profile of our top performers, we are offering investors another window into important market trends and offering opportunities for portfolio diversification through companies that may be missed by the indices or ETFs for various reasons. Last year, eight mining companies made the list.

In 2020, the mining sector dominated the TSX30, increasing to 14 companies. Representing an average 3-year return of 223% for the sector. You can purview the full list here: www.tsx.com/tsx30. This is pretty impressive by any measure, especially considering the volatility associated with the sector recovery that we first observed started just over three years ago.

Past performance does not guarantee the future, however, and there are some important observations here that may be helpful as we anxiously look to the start of a new year and navigate out of this Covid-19 pandemic.

While precious metal (particularly gold) prices have been on a steady climb, equities are finally joining the trend. Expectations are that the trend is likely to continue with growth across the number of financings, amount of capital raised, as well as the number of new listings. It is encouraging that this interest and corresponding heightened activity in our market goes beyond the Toronto Stock Exchange and extends into the TSX Venture, dominated by exploration and development mining companies.

Investors have clearly returned their interest to the mining sector; not just specialist investors, long waving the flag for hidden value with the sector, but the generalist investors who are searching for growth and value investment opportunities. This spring, sector headlines focused on the world’s most famous value investor (Berkshire Hathaway) making an historic first investment in one of our gold mining issuers (Barrick, TSX: ABX).

We posit this is no coincidence. Over the past four years, the mining sector has been going through a process of transformation (Mining 2.0), as companies corrected missteps of the past, improved balance sheets, better communicated and embraced corporate social responsibility initiatives (such as ESG) as key business success factors. We believe investors are now recognizing and evaluating mining companies not only based on commodity exposures but as well-managed investment opportunities with tremendous value and growth opportunities.

As this Mining 2.0 transformation spreads and extends further into the early exploration stage companies, investment opportunities in mining (for even the generalist investors) may now only be scratching the surface.

Half of the 14 mining companies recognized on the TSX30 program this year started out on our TSX Venture Exchange, where they developed and eventually graduated to the Toronto Stock Exchange. This only highlights the value within our world leading two-tiered equity markets. We continue to empower our issuers so they can exceed investors’/stakeholders’ expectations through relentless innovation. This year we launched an ESG 101 site focusing on resources and information for our issuers.

As we celebrate 2020TSX30, follow these trends as we look to 2021 when we hope to recover from this pandemic. Significant future investment opportunities to meet your portfolio diversification needs may already be here - on the globe’s leading mining equity markets and ecosystem.

Image courtesy of Brxxto