Canada Triggers Mining Investment Frenzy with Radical Policy Overhaul

Canada's Prime Minister Mark Carney unveiled sweeping policy changes at the Canada Investment Summit. The 'Productivity Mega Deduction' measures immediately widened across industries, including mining and oil and gas. This sparked an investment frenzy in the country.

The government lowered Canada's marginal effective tax rate on new business investment from 13% to 6.4%, making it the lowest among major economies. Finance Minister François-Philippe Champagne called this a 'significant change' to the country's business tax system, setting up an 'investment supercycle'. Ottawa aims for $1 trillion in new investments.

TD Cowen sees opportunities in precious-metal miners due to the policy changes. Michael Gentile of Bastion Asset Management said it's like giving mining companies a 25% discount on capital expenditures. Historically, miners recouped only 5-10% of capital spending in year one, but under the new regime, they can expect $250-$300 million in tax savings for every $1 billion invested.

Barrick Mining Corporation and Equinox Gold Corp are among TD Cowen's top picks. Barrick trades at a 25% discount to peers and has a target price of $59 (82.60 Canadian dollars). It should generate $8 billion in free cash flow next year, with gold output forecast to rise 16% and copper up 7%. Equinox trades at a 20% net asset value discount, with a target price of 20 Canadian dollars ($14.29).