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A truck hauls a load at Teck Resources Coal Mountain operation near Sparwood, B.C. in a handout photo. Teck Resources Ltd. (TSX:TCK.B) is preparing to spend a total of $685 million on improvements at two of its major metals operations in British Columbia, the Vancouver-based mining company announced Thursday. THE CANADIAN PRESS/HO, Teck Resources
A truck hauls a load at Teck Resources Coal Mountain operation near Sparwood, B.C. in a handout photo. Teck Resources Ltd. (TSX:TCK.B) is preparing to spend a total of $685 million on improvements at two of its major metals operations in British Columbia, the Vancouver-based mining company announced Thursday. THE CANADIAN PRESS/HO, Teck Resources
(The Canadian Press)

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Miners undervalued relative to commodity prices

Scott Barlow

 — The Globe and Mail

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Canadian mining stocks have performed extremely well in recent weeks despite widespread carnage in the stock market. Surprisingly, many domestic miners remain undervalued relative to underlying commodity prices.

With 37 of 63 companies in the basic-materials sector having reported earnings this quarter, profits are showing a disappointing 28.9-per-cent quarter-over-quarter decline. But at the same time, the S&P/TSX diversified mining index has performed extremely well, jumping 8 per cent since Oct. 1. The divergence between earnings and share prices demands explanation.