INDUSTRY & COMMODITY

HIGHLIGHTS FROM 2022’S FINANCIAL POLICIES & MARKET TRENDS

2022’S INDUSTRY & COMMODITY HIGHLIGHTS

Inflation was the centerpiece of both the markets and Main Street in 2022, with rates reaching the highest seen in decades. To help combat this inflationary wave, central banks around the world increased their interest rates, sparking concerns that a global recession is on the horizon. This in turn led GDP growth projections downward over the course of the year.

Here are three additional noteworthy trends and events from the commodity markets in 2022:

| Base metals were largely under pressure in 2022, even though they were up across the board in 2021. Nickel, however, is the outlier – the only base metal that was up in 2022 – most likely due to the current conflict in Europe dislocating supply chains.

| Precious metal prices were a mixed bag in 2022 with platinum and silver showing some modest gains yearover-year, with gold and palladium prices down for the second year in a row.

| The two principal battery metals – cobalt and lithium – had prices head in vastly different directions in 2022. Lithium pricing went up multi-fold, while cobalt retreated down into negative territory.

The amount of equity and debt invested into the mineral industry dropped by a substantial amount in 2022. This followed the declining economic conditions – and broader market slowdown – experience throughout the year. Debt and equity were down a combined 35 per cent from 2021. The key factors most likely behind the decline of availability of both equity and debt capital in 2022 were the interest rate increases by central banks, and growing concerns for the global economy.

Countering the above market slowdown, global and Canadian domestic exploration spending reached a relative high point in 2022. This is based on a trend from the last decade, where we can see mineral exploration dollars going into the ground in regions around the world has been on the rise since 2013. This trend is expected to reverse in 2023, though, as the decline in investments in 2022 will impact industry activity throughout the following year.

While the amount of exploration spending for critical minerals like lithium, cobalt or Rare Earth Elements (REEs) remains below 5 per cent of the activity in Canada, the 2022 total domestic expenditures exploring for this group is up more than five-fold from 2020. This may, in part, indicate the new CMETC incentive is having a positive impact on investments into the industry’s battery metals segment, along with a growing interest for finding new critical mineral deposits in Canada.

PDAC’S ADVOCACY EFFORTS IN ACTION

Since the association was formed 91 years ago, PDAC has been a strong advocate for – and leading voice of –the mineral exploration and mining community. One of our focuses is on taxation and financial incentives from government and other bodies, that help create projects, opportunities and success for the industry in Canada.

Below are a few highlights from PDAC’s financial advocacy work on behalf of our stakeholders, and for the Canadian community:

| PDAC advocated for and saw the launch of a new listed issuer financing exemption under NI 45-106. This exemption will provide improved access to capital, and create more flexibility for junior companies to raise funds and be better aligned with market activity.

| PDAC successfully lobbied Finance Canada to ensure tax treatment changes for stock options – that began in 2021 – would not impact junior exploration and mining companies.

| The Canadian Securities Administrators adopted PDAC’s recommended amendments to make At-TheMarket offerings more practical and competitive with the U.S. market.