Did the TSX Raise the Bar for a Mining Listing?
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Did the TSX Raise the Bar for a Mining Listing?

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In this presentation, Dentons' Jessica Yee discusses a recent Staff Notice that provides guidance with respect to the following for companies considering a TSX listing: ...

In this presentation, Dentons' Jessica Yee discusses a recent Staff Notice that provides guidance with respect to the following for companies considering a TSX listing:
- Qualification for listing for mineral exploration and development companies
- Financial statement disclosure required for listing
- Stock options granted prior to an IPO

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    Did the TSX Raise the Bar for a Mining Listing? Did the TSX Raise the Bar for a Mining Listing? Presentation Transcript

    • Did the TSX Raise the Bar for a Mining Listing? Jessica Yee Associate, Dentons Canada LLP
    • TSX Staff Notice November 7, 2013 – TSX issued a Staff Notice that provides guidance with respect to the following for companies considering a TSX listing: • Qualification for listing for mineral exploration and development companies • Financial statement disclosure required for listing • Stock options granted prior to an IPO
    • Mining Companies – Economically Interesting Grades A qualification for a TSX listing under the mineral exploration and development-stage category is a 50% interest in an “Advanced Property” • Advanced Property = continuity of mineralization demonstrated in three dimensions at “economically interesting grades”, as detailed in a 43-101 Technical Report
    • Mining Companies - Infrastructure Staff Notice: • Infrastructure may be an important consideration in the determination of “economically interesting grades”.
    • Mining Companies - Infrastructure Infrastructure is a particularly important consideration for: • Projects located in a remote or isolated area • Bulk commodity projects Examples: • Bulk commodities (e.g. coal, base and precious metal concentrates and industrial minerals like sand and limestone) with low intrinsic value in remote areas  Infrastructure may be an important consideration • Commodities with high value produced on-site in small quantities relative to their weight (e.g. diamonds)  Infrastructure may NOT be as important a consideration
    • Mining Companies – Bulk Commodity Projects Bulk commodity projects will require the following: • A reasonable plan to develop or obtain access to required infrastructure; • A cost estimate in a 43-101 Technical Report; and • A preliminary economic assessment, pre-feasibility study or feasibility study.
    • Mining Companies – What is a Reasonable Plan? What is a reasonable plan to develop or access required infrastructure? 3 considerations: • Has infrastructure been built over similar terrain and circumstances in the past and what is the cost associated with building such infrastructure? • Is the infrastructure unconventional (e.g. using a pipeline for concentrate transportation)? • Will the mineral exploration company fund the infrastructure or rely on third parties to fund or develop the infrastructure?
    • Mining Companies – Technical Report Where does the information regarding infrastructure need to be disclosed? • Technical Report Item 18 – Project infrastructure Item 21 – Capital and operating costs • Preliminary economic assessment, pre-feasibility study or feasibility study
    • Mining Companies – Practical Implications What are the practical implications for mining companies? • Most projects are in remote areas and will require new infrastructure. • A preliminary economic assessment may be required. • Early-stage bulk commodity projects are especially limited because the TSX will request economic data backed by potential purchasers but potential purchasers will want to know the extent and continuity of mineralization and whether the project can support a TSX listing. • Engage in pre-filing discussions with the TSX. • Pre-file 43-101 Technical Report with the TSX. • Revise IPO timeline to allow time for the TSX to review the 43-101 Technical Report and provide guidance as to whether the company’s project will constitute an Advanced Property.
    • Mining Companies – Financial Statements • Sponsorship generally required if an audited forecast is not published in a prospectus or other disclosure document and not subject to the requirements of future-oriented financial information provided in NI 51-102 – Continuous Disclosure Obligations • TSX may make adjustments to pro forma financial statements and if they are not publicly available, the TSX may require the sponsor or auditor to comment or provide comfort on the adjustments. • TSX will accept financial statements prepared in accordance with IFRS, GAAP in the US for SEC issuers and GAAP of other jurisdictions if the other jurisdiction is a “designated foreign jurisdiction” or an “SEC foreign issuer” as defined in NI 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.
    • Mining Companies – Stock Options • Stock options granted within 3 months prior to the filing of a preliminary prospectus for an IPO are generally expected to be priced at or above the offering price. • TSX may require stock options to be cancelled, forfeited or re-priced to the offering price as a condition of listing. • Practice Point: Ensure stock options contain a price adjustment mechanism.
    • Thank You Jessica Yee Associate, Dentons Canada LLP jessica.yee@dentons.com 604.443.7136
    • The preceding presentation contains examples of the kinds of issues that mining companies could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.