Canada’s remote Nunavut boasted the best economic growth rate in the country last year, as Statistics Canada this week revealed that a jump in construction and mining contributed to a GDP rise of 10%. Much of the construction activity was also down to mining news, as work on the development of Agnico Eagle’s Meliadine and Amaruq gold mines continued. Agnico Eagle Mining (TSX: AEM) poured its first bar of gold from its Meliadine mine earlier this year.
Canadian mining stocks were also featured on news site SmallCapPower, which dug up three mining companies which it calculated had realized the biggest cost savings over the past five years. With market capitalizations from $85 million to almost $4 billion, some of these stretched the definition of ‘small cap’ but Sherritt International (TSX: S) flew the flag for the true junior mining stocks: described as ”a world leader in the mining and refining of nickel and cobalt from lateritic ores,” Sherritt has enjoyed an operating margin of almost 20% in the last five years.
Sherritt made the list alongside Largo Resources (TSX: LGO), the Toronto-based strategic mineral company focused on the production of vanadium flake, high-purity vanadium flake and high-purity vanadium powder at the Maracás Menchen Mine located in Brazil; and the much larger Turquoise Hill (TSX: TRQ) - an international mining company focused on the operation and further development of the Oyu Tolgoi copper-gold mine in southern Mongolia.
In gold stock news, Canada’s Barrick Gold (TSX:ABX) (NYSE:GOLD), the world's second-largest producer of the precious metal, used its results presentation this week to announce the start of the asset sale many mining stock experts have been predicting: Barrick boss Mark Bristow said the firm would offload about $1.5 billion of unwanted assets once they are “optimized enough to create adequate value for shareholders”. The goal is for the sale process to be well advanced by mid-2020.
“This quarter has seen a great start for our first year as the 'new and improved' Barrick and I am confident that we are well on the way to achieving our strategic objective of becoming the world’s most valued gold mining business. It is our commitment to get there by finding, developing, owning and operating the best assets in our industry, with the best people, to deliver stand out returns for our owners and partners,” Bristow added.
The sale of unloved and marginal assets following mega-mergers at the top end of the sector, such as the Barrick-Randgold deal, has led experts to speculate about significant potential for junior mining companies to acquire these prospects and turn their fortunes around. Whether it be maximising value from a mature mine, or finding the sweet spot on an unexplored and complex acreage, it is thought that specialist junior mining stocks with experienced and determined teams can often achieve a profitable outcome where a large-cap miner can’t - in part because they work on a shoestring budget.
In other mining news, Brazil's Vale reported a $1.64 billion quarterly net loss as the world's top iron ore miner struggled with the aftermath of one of the country's deadliest mining disasters. Significantly, and largely unrelated to the Brumadinho tragedy, Vale also reported lower nickel output.
Canadian junior nickel miner FPX Nickel (TSX-V: FPX) was quick to tweet the figures: “Vale Q1 2019 nickel production miss. Production of 55kt (down 31% q/q and 22% y/ y) due to scheduled maintenance at the Matsusaka refinery, which affected Indonesia, and lower-than expected production at VNC and in Brazil (Scotiabank).”
Lower production from a major producer is a boost to junior nickel stocks as the world nickel supply is struggling to keep up with booming demand for high grade steel and lithium-ion batteries, both of which require significant quantities of the metal.