Canadian miners drive value in TSX Top 30 rankings

Seven out of the 30 companies on the Toronto Stock Exchange’s TSX30 list, which ranks the top-performing stocks over three years, are in the mining sector.

While the industry at large is stuck between a rock and a hard place when it comes to company valuations, specifically concerning today’s historically elevated metals prices, several miners in the list like Filo Corp (TSX: FIL), Capstone Copper (TSX: CS), and Allkem Limited (TSX: AKE) recorded top-tier value growth over the period of 1,217%, 624% and 587%, respectively.

“The general fundamentals in the mining sector are quite positive,” the head of global mining at TMX Group, Dean McPherson, said in a recent interview. “What’s missing is that the supply of funds has stepped to the side because of increased volatility in the marketplace and uncertainty around the economic situation going forward.”

McPherson, who was featured in The Northern Miner’s most recent podcast, highlighted the post-pandemic recovery of the resource sectors, including the oil and gas industry.

He said that while the energy transition and mining space initially drove the recovery, the energy sector also gained momentum in 2021. “What’s been happening post-pandemic in the capital markets has been quite significant,” McPherson told The Northern Miner.

The list saw significant representation from the energy sector. Paramount Resources (TSX: POU) and NuVista Energy (TSX: NVA) took the top two spots with returns nearing 2,000% and over 1,000%, respectively.

Mounting ‘frustration’

Mining companies are experiencing frustration despite the sector being recognized as critical for achieving global emissions reduction targets, McPherson has found.

“The industry has shown a responsible approach, garnering investor confidence. However, due to external economic shocks, investment is on hold until the global economy stabilizes.” McPherson noted that despite the current challenges, there’s optimism for the sector’s medium and long-term future, “but the delay in investment is understandably frustrating.”

However, the growing disparity observed within the industry of low valuations versus high metals prices arises, according to McPherson, from the increased volatility in the market, global economic concerns, and subsequent government responses.

“This year, in particular, has brought forth external challenges. The fundamentals in the mining sector are positive, but to align company valuations with these, investor confidence needs to be rejuvenated,” he explained.

Meanwhile, McPherson said the TMX team has been tracking an influx of new resource-oriented listings in recent quarters, mainly as a function of perceived shifts in market focus from attracting new listings by the London Stock Exchange and the after-effects of Brexit, especially from AIM-listed companies. Given their strengths and advantages, these juniors seek listings outside of the U.K. in North American markets like the TSX.

McPherson outlined more than 12 reasons why the TSX is the world’s leading resource capital market. Chief among these, “Canada has a well-respected regulatory framework that ensures transparency, integrity, and protection for investors” as one of the most critical pillars of instilling investor confidence.