Abstract:

The traditional strategy of mining companies is pretty simple: increase production and increase reserves. How has that strategy worked out for shareholders? Pretty poorly. Over the past 15 years the TSX generated an average annualized return of 7% while the average Canadian mining company lost 8%.

While that is the performance of the average mining company, there are indeed companies that performed significantly above (and significantly below) the average. What can we learn from these companies? Is it simply the case that these star performers increased production and increased reserves more than the others?

This presentation will review the performance of all operating mining companies listed on the TSX from 2003-2016 and identify the factors that differentiated the best performers from the worst. It will show that increases in production and increases in reserves have no relationship to shareholder returns. It will also show that commodity prices don’t play as much of a role as you may think, and the one thing mining companies really need to worry about is asset impairments.

Biography of the presenter: Andrew Gillis is a PhD Candidate in the Mining Engineering department at UBC. His research is focused on the strategic decisions mining companies can make to improve public market performance. He has developed a dataset of over 100 publicly traded, operating mining company on the TSX over the past 15 years and has identified the key factors that lead to above and below average performance. He holds a Mining Engineering degree from UBC and an MBA from the Beedie School of Business at Simon Fraser University. He is also the Vice President of Marketing, Research & Development and Intellectual Property at Sepro Mineral Systems, Canada’s largest manufacturer of mineral processing technology.

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Dr. Andrew Gillis

Biography