In Aussie Mine - Going for Gold, we find that amongst the gloom, companies holding quality gold assets were the shining lights of 2015 with revenues up by 11% and share of mid-tier revenues growing 5%. Gold companies also benefitted from increased AUD gold price and a lower cost environment.
Copper also glistened as gross margins on the metal reached 54% making it the most profitable commodity in the sector. Elsewhere falling commodity prices and investor confidence contributed to a decline in total market capitalisation amongst the Mid-Tier 50 companies.
Our key findings:
Looking ahead, the Mid-Tier 50 mining companies must stay focussed on continued innovation, alternative sources of capital and improved project success to help revive its fortunes.
The use of mobile digital solutions to improve the performance and safety of mines is on the rise. But mid-tiers need to make sure they have the capacity and capability to implement these new technologies and leverage the data to its full potential.
Despite falling market capitalisation, pockets of private funding currently exist and more continue to emerge. These sources of capital present a viable capital alternative for the Mid-Tier 50 in 2016 and beyond.
Although mid-tiers have embraced predictive analytics at the geology and mine planning level, it’s yet to make its way fully into business and operations planning. Prescriptive analytics, implemented right across the value chain, offers companies the ability to create the competitive commercial advantage required to sustain them through periods of low commodity prices and capital constraints.
The Indigenous Economy is developing at an increasing rate, with at least $8 billion in assets. We are seeing an increasing number of organisations acquire the appropriate level of sophistication to explore a diverse range of investment opportunities. Indigenous investment could provide an important long-term source of capital for mid-tier Australian miners.
With almost 65% of projects failing, mid-tiers need to seriously rethink their approach to project implementation and governance. The application of standardised processes and controls can significantly boost project success and accelerate time to value.
Tax reform will have significant implications for the performance of the Australian economy, including the mid-tier mining sector. It is important that the sector understands the Government's thinking and contributes to the tax reform debate, given its direct and indirect contribution to the economy, its global outlook and its standing in the community.
Now in its 9th year Aussie Mine provides industry and financial analysis of the largest 50 mining companies listed on the Australian Securities Exchange (ASX) with a market capitalisation of less than $5 billion at 30 June 2015 (the mid-tier 50).
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