The start of each new year is an infectiously optimistic time – promises to quit smoking, lose weight or find the perfect job buoy many as they embark on a fresh 365 days.
Such optimism, however, has not made its way into the mining sector.
After a difficult year enduring plunging commodity prices, sagging revenue and, in some cases, expensive writedowns, mining executives are entering 2014 on a cautious note, according to a PricewaterhouseCoopers (PwC)report.
Metals Mired in Global Uncertainty: Gold, Silver and Copper Price Report 2014 surveyed 150 mining firms, 50% of which are based in B.C., to gauge their views for 2014.
"There's a heavy B.C. focus," said Craig McMillan, a partner in PwC's B.C. mining group, "and there's a wide range of companies – big producers like Teck Resources (TSX:TCK.B) all the way through to small juniors as well."
Two-thirds of respondents said managing spending is a critical issue in 2014, while more than half – 54% – said raising financing is critical. A drop in investment in 2013 crippled the junior companies, in particular.
To raise money, 53% of respondents said they plan to use equity markets, 29% expect to raise project financing and 14% will raise corporate debt. Only 20% expect to pursue mergers and acquisitions in 2014.
Of the gold producers surveyed, 47% said they expect the price of the precious metal to increase in 2014, down from 88% last year.
Despite the sector's hesitancy to forecast a jump in price, some analysts believe gold is poised for a good year.
"Of all of the commodities, we are most bullish on gold," said Sid Rajeev, head of research at Vancouver-based Fundamental Research Corp.
"Historically, we have never been bullish on gold when it has passed US$1,500 an ounce. But we don't expect a drop from where we are today – the average price should go up this year. Gold is still a safe haven for people."
If the gold price does rise in 2014, it could be the catalyst for renewed investment in the junior market, added McMillan.
"Many juniors are in a position where they desperately need financing," said McMillan.
"But for the most part equity markets have been closed. I think if you saw an environment where the prices increased substantially there is going to be a knock-on effect and a return of investors."
Copper producers are bracing for "another challenging year," according to the report.
Nearly two-thirds of respondents – 62% – expect copper to remain around its current price of US$3.32 per pound, which is down from its 2013 high of US$3.74 and its record of US$4.60 in early 2011.
Silver enjoyed the most optimistic outlook for 2014, if only because it was the worst-performing of the three metals surveyed. The price of silver plunged in 2013, from a high of US$32.41 per ounce to a low of US$18.53. Only 9% of respondents expect silver to drop below the US$19.95 per ounce it currently trades at; 53% expect the price to increase.
