VANCOUVER, BC, - In a report released this week by The Mining Recruitment Group Ltd - a Vancouver based executive search firm focused on the resource industry- 210 mining executives from TSX and TSXV companies revealed their outlook on the strength and viability of the sector over the short and long-term in addition to the current management strategies being employed. This survey was a direct follow-up to one completed in Q4, the results of which highlight just how dramatically sentiment and strategies can adapt over a short time period.
Andrew Pollard, President of The Mining Recruitment Group Ltd, states that “Through the eyes of mining executives, this new report provides evidence that companies of all stage and size have had to make to make tough decisions in the wake of nearly unprecedented market turmoil. With investors sitting on the sidelines turning a blind eye, wildly fluctuating commodities prices and having to face escalating costs, executives aren’t counting on a short term fix, though long term, their sentiment is steadfastly rosy.”
In the eyes of mining executives the next 6-12 months will prove to be bleak with 64% taking a bearish view when asked to comment on the overall strength of the Industry. This is in stark contrast to the only 9% of respondents who hold a bullish view over the same time period leaving the remaining 27% thinking it will be relatively neutral. These findings have fluctuated dramatically since our last polling in Q4 where only 11% of respondents held a bearish outlook.
When asked the same question but with a longer term (3 year) view, executives tend to be much more upbeat, with 66% of respondents being bullish as to the overall strength of the Industry. Only 11% of executives are bearish over this time horizon, with the remaining 21% holding a neutral view. This is incredibly similar to our previous polling from Q4 where 69% of respondents were bullish, 8% bearish at any degree and 23% had a neutral view. Pollard states “It would appear that for most executives, the long term fundamentals of the Industry are intact, despite the view that things will likely get worse before they start to get better.”
In terms of what commodities will likely see the greatest gains over the next 3 years, Gold was the clear winner with 74% of mining executives thinking it will shine the brightest. Copper came a close second with 63% of respondents expecting to see massive appreciation in the metal while Uranium rounded out the top 3 at 53%. Trailing close behind was Silver at 50%, which was the only other commodity that there seemed to be a long term consensus on. Commodities that executives see as having the highest likelihood of depreciating in value over the next 3 years are Molybdenum, Nickel and Iron Ore respectively with 44%, 36% and 27% of the multiple selection vote.
When asked how current market conditions have affected their short term business objectives, 39% of executives indicated that they have been launched into pure survival mode. Though alarming, these findings are extremely segmented as 65% of executives in companies under $10m in market cap indicated they were in survival mode whereas only 15% of executives within companies over $50m in market cap would say the same. For companies over $10m in market cap, it would appear to be business as usual, albeit at a slower pace, with 50% of those executives indicating that they have simply cut back on exploration and development.
80% of executives indicated that they have made a concerted effort to reduce overhead. How has this been accomplished? Surprisingly, executives from companies of all stages and sizes responded in much the same way. 65% of respondents indicated that they have spent less on Investor Relations and Marketing as opposed to one year ago and 61% stated their exploration spend was less over the same time period.
When asked if layoffs or employee reductions were being seriously considered for Q3, 46% of respondents indicated that they were. “Surprisingly to this recruiter, those working for the smaller (sub $50m market cap) mining companies seem to be safer than those of their larger peers, with only 27% of executives within these smaller companies considering further layoffs. This is in massive disparity to the 63% of executives in larger companies (over $50m market cap) that indicated that they’re seriously considering further reductions.”
In the wake of turmoil in the marketplace, only 10% of executives indicated that they have received a raise in base salary over the past 12 months. Despite this and given the Market unrest, 68% of executives are still satisfied with their current remuneration packages.
The biggest issues facing the resource over the next 12-24 months it would seem are pretty clear:
· 74% of executives were moderately to extremely concerned over a lack of investment capital
· 54% are moderately to extremely concerned with the volatility in commodities prices
· And 39% are moderately to extremely concerned with rising operating costs
Key Report Findings:
· Only 9% of mining executives hold a bullish view on the strength of the Industry over the next 6-12 months.
· 46% of executives admit that further layoffs are being considered for Q3
· Gold, Copper and Uranium will likely perform the best over the next 3 years
· 62% of respondents do NOT expect to recruit over the next six months. This is a major reversal in outlook from our last polling in Q4 where 66% of executives had indicated that they would be hiring.
· 82% of executives have indicated that the fear of a sustained downturn has impacted their budgeting and hiring behavior.
· Only 7% of executives indicated that their Company is actually spending more on Investor Relations and Marketing compared to one year ago. Almost equally dismal, only 12% of respondents said they have increased their exploration spend.
Those that took part in this survey were executives from mining companies of all sizes and stages. The lions’ share of the 210 responses came from executives at companies that would primarily be described as explorers at 46%. Among those remaining, 35% were primarily at the development stage and 19% were producers. Of those polled, 73% came from companies with market caps below $50m, 13% from companies between $51M-$250M, and 7% from companies with market caps between $251m-$1b. Additionally, 7% were made up of executives from $1b+ entities. The percentage of respondents coming from sub-$50m market cap companies went up dramatically when compared to our last polling, though given the massive sell-off mining equities have faced recently, it is our opinion that these findings represent a true cross section of the industry at this point in time. Pointedly, more responses came from smaller companies because there are now many smaller companies in the marketplace.
About The Mining Recruitment Group Ltd.
Established in 2006, The Mining Recruitment Group(MRG) is a leader in executive search for emerging junior and mid-cap mining companies. Since our inception, we have advised companies ranging in size from $5M to $20B in market cap and have been involved in successful searches spanning all senior executive and functional leadership positions within the mining industry.
To Request a copy of the Report with detailed findings or to schedule an interview with Andrew Pollard please email email@example.com