www.pwc.com                          Executing a                          successful listing                          Mark...
2   PwC | February 2012
Introduction                                                 achieve cost efficient production levels,                    ...
Overview of internationalmining finance centresHistorically, the New York Stock                    We are also seeing an a...
The Toronto Stock Exchange                   Hong Kong Stock ExchangeTSX and TSX-V are perhaps the most           The bigg...
Overview of international mining finance centresSo, what will the future bring?                    How do the listing requ...
•	 Some of the unique market features          •	 Ease of further fund raising – this   include two-tier system in Canada ...
Fact sheets              Guide to listing a mining company   9
Australia (ASX) Amounts raised by IPOs, split by sector                                                  Number of compani...
Australia (ASX)Eligibility conditions                                                               Mining specific listin...
Canada (TSX & TSXV)                                                                                                       ...
Canada (TSX & TSXV)                                                                                        Telecommunicati...
Canada (TSX & TSXV) Eligibility conditions       TSX                                                  TSXV                ...
Canada (TSX & TSXV)                                                         Mining specific listingTier 2                 ...
London (Main Market & AIM)                                                                                                ...
London (Main Market  AIM) Amounts raised by IPOs, split by sector                    Number of companies listing, by secto...
London (Main Market  AIM) Eligibility conditions                              Premium listing                             ...
Mining specific listingAIM                                                      requirementsNOMAD (retained at all times o...
Hong Kong (HKEx  GEM)                                                                                                     ...
Hong Kong (HKEx  GEM)               Amounts raised by IPOs, split by sector                                   Number of co...
Hong Kong (HKEx)Eligibility conditions                                                               Mining specific listi...
Guide to listing a mining company   23
PwC publications                                                 Mine 2011 - the game has changed                         ...
Financial reporting in the Mining IndustryEnergy, Utilities  MiningFinancial reporting inthe mining industry*             ...
PwC supportWhatever the motivations driving the process, taking your company public can be arichly rewarding experience. T...
Contacts                         Capital MarketsAustralia                Jock O’Callaghan                         T: +61 (...
www.pwc.comThis publication has been prepared for general guidance on matters of interest only, and does not constitute pr...
PwC Executing a Successful IPO Listing
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PwC Executing a Successful IPO Listing

  1. 1. www.pwc.com Executing a successful listing Markets for minersA PwC IPO Centrepublication − helpingmining companies assesstheir choicesFebruary 2012
  2. 2. 2 PwC | February 2012
  3. 3. Introduction achieve cost efficient production levels, get unencumbered access to the best transportation routes, secure off-take agreements or other supply arrangements and achieve commodity synergies? All these issues need to be thought through at the outset. Clear strategy and a well developed equity story are the foundations that will support the success of your listing. In order to maximise success of your listing and life as a public company, you then need access to finance professionals and market analysts with a deep knowledge of the mining industry and a commodity focus and investors who understand the risks of investing in mining companies. Miners need capital We can help you wherever you Rising commodity prices and decide to raise capital global economic growth driven by industrialisation in emerging markets, The PwC network of capital markets especially China, has led to a strong and mining experts across the globe appetite for mining stocks. Even the has extensive practical experience sharp downturn in prices and demand floating mining companies from all over triggered by the global financial crisis of the world on the leading exchanges. 2008-09 seems to have interrupted this If you are considering a listing or just trend only temporarily. Mining companies beginning to explore your options, it is require capital to fund exploration efforts definitely the right time to talk to us. We and mine development, and historically, can help you examine where you are in equity markets have been the main source the fundraising cycle, determine if an of mining finance, with the London, IPO or a secondary listing is indeed the Toronto and Australian stock exchanges right solution, which listing venues are providing the platforms to access capital. worth considering and perhaps even However, going forward, the choice will connect you to the right market players. increase with the Asian and emerging To help you on your way this publication market exchanges fighting for a share of has been designed to provide an this activity. overview of different financial markets Almost $130 billion was raised by miners and how they serve the mining sector – in IPOs and follow on equity offerings in the factsheets cover some key features 2009-2011. The pipeline remains strong, of the London, Toronto, Australian albeit slower to emerge than we all hoped. and Hong Kong stock exchanges and include a high level summary of the How does your equity story listing requirements in each of those influence your choice of market? international markets applicable to We provide a brief overview of the key mining companies. characteristics of the key markets in terms of market size and profile, as We wish you every success in well as regulation and process, achieving your company’s however these considerations are to growth plans. some degree secondary. The starting point in any listing is the Clifford Tompsett equity story. Have you thought about Head of IPO Centre your story and who will buy it? How are you going to maximise the value of Tim Goldsmith your mineral resource portfolio, carry Global Mining Leader out your development programme, Guide to listing a mining company 3
  4. 4. Overview of internationalmining finance centresHistorically, the New York Stock We are also seeing an accelerating Anglo American, Glencore, Xstrata),Exchange and London Stock Exchange trend in cross border international which offers mining majors significant(LSE) have been the main finance listings and dual, or even triple listings liquidity and access to capital. AIM,centres for diversified mining majors, of junior miners on the AIM, TSX and the junior market of the LSE, provideswith Toronto Stock Exchange (TSX), ASX taking advantage of the fast track financing opportunities for smallerAustralian Securities Exchange (ASX) route. However multiple listings do not exploration and development companies.and to a lesser degree the Alternative automatically lead to greater liquidity, London also remains the mostInvestments Market (AIM) of the and additional compliance costs need to international of all global capitalLSE funding junior exploration and be borne in mind. markets, with over 500 internationaldevelopment companies. companies listed on the LSE, including The London Stock ExchangeHowever the capital markets landscape is companies from Latin America,continuously evolving. Over the past ten The London Stock Exchange has Australasia, Europe and other parts ofyears, post Sarbanes-Oxley we have seen maintained its place as one of the global the world. Particularly well representeda decline in popularity of the US markets mining finance hubs. Nearly a quarter are companies operating in Russia andas a listing destination and more recently of global equity financing value for the the CIS and Africa.the rise of Asian capital markets and mining sector was raised on the LSE over In terms of commodity focus, LondonHong Kong in particular. the last five years. The LSE is the listing is the largest listing venue for copper venue for the world’s largest diversified companies by market value and has a mining groups (Rio Tinto, BHP Billiton, strong presence of precious metals stocks.Key statistics London Australia Toronto Hong KongAt 31 Dec 2011 Main Market AIM ASX TSX TSXV Main BoardTotal no. of issuers 1,376 1,143 2,079 1,588 2,249 1,326Total market cap ($bn) 5,584 101 1,198 1,967 48 2,247No. of international issuers 312 225 96 194 158 24No. of mining issuers 44 136 687 371 1,274 69Mining market cap ($bn) 405 20 308 391 28 243IPOs 2010-2011 5 17 96 22 78 15IPOs 2010-2011 proceeds ($m) 12,873 265 1,489 1,408 252 6,437Further issues 2010-2011 11 37 689 86 223 42Further issues 2010-2011 proceeds ($m) 834 312 13,101 11,687 1,965 3,232Sources: World Federation of Exchanges, stock exchanges, ThomsonOne data, PwC analysis4 PwC | February 2012
  5. 5. The Toronto Stock Exchange Hong Kong Stock ExchangeTSX and TSX-V are perhaps the most The biggest change in the global capital Starting with the high profile IPO of Rusalimportant markets for junior mining markets map in more recent years in early 2010, to date Hong Kong hascompanies. Over a third of equity has been the rise of the East. China attracted seven listings of internationalcapital value raised globally for the and Hong Kong emerged as leading (non-Chinese) mining companiesmining industry is raised in Canada capital markets after surviving the including secondary listings of global(which also accounted for over 80% of global financial crisis of 2008 virtually majors (Vale, Kazakhmys, Glencore).the number of equity financing deals unscathed - compared to their western Success, however, has been mixed.over the past decade). counterparts - with 65% of IPO Secondary listings of Vale andThe Canadian market is characterised proceeds raised in Greater China in 2010 Kazakhmys have so far seen very thinby a high concentration of small cap (although this share decreased to 51% trading, and Glencore only trades aboutcompanies and an investor community in 2011, with the return of activity in the 5% of its stock in Hong Kong, with thewilling to evaluate exploration assets, US and Europe). bulk of trading taking place in London.including many international projects. Unlike other aforementioned markets, On the other hand, TSX listed SouthA flexible two-tier system for each Hong Kong has not been a traditional Gobi achieved higher liquidity throughmarket, for more established and less mining finance centre. It has a its Hong Kong listing.established issuers, provides alternative significantly fewer number of mining While all of the traditional mininglisting requirements depending on the companies than any of the other finance centres feature the full range ofstage of the company’s development, and exchange, and these companies are market participants that are well versedoffers access to capital for early stage predominantly large Chinese state- in the industry and have significantexploration companies. owned corporations. experience with international companiesMore than two thirds of companies listed Historically, mineral companies without with offshore assets, this still needs toon TSX have market capitalisation of less proven reserves and / or production develop in Hong Kong.than CAD 50 million, and the average were not able to list on the HKSE. Hong We believe this will happen over time,market cap of companies listed on TSX-V Kong declared in 2009 its ambition to however in the short term, earlieris USD 22 million. build on its business infrastructure and stage miners will find it difficult to sellProximity to US capital combined with proximity to China, the world’s largest their stories in Hong Kong and achievemore flexible and friendly regulatory producer and consumer of many core sufficient analyst coverage post-listing.regime accounts for nearly half of all commodities, and become one of theinternational companies listed on TSX/ key listing venues for internationalTSX-V being US companies, with another natural resource companies. In order28% representing Asia and Australia. to support that, mineral company rules were amended in June 2010 to allowTSX features high concentration of listing of exploration and developmentprecious metal companies especially gold, companies, which was previouslyas well as uranium and potash miners. not possible due to minimum profit requirements. However, companies withAustralian Securities Exchange only inferred or prospective resources are still not eligible for listing.Resource companies make up nearly halfof all ASX listed companies and accountfor a third of ASX market capitalisation.A large proportion of those companies,similar to TSX, have historically beenjunior miners – 63% of all ASX listedcompanies have market capitalisationof less than AUD 50 million. Averagemining market capitalisation is, however,higher than Toronto at USD 448m,compared to USD 255m for combinedTSX/TSX-V, due to the presence of such We are seeing an acceleratingdual-listed mining giants as Rio Tinto and trend in cross borderBHP Billiton. ASX is the only exchange international listings,with one board, although recentlyproposals to set up a junior market akin including secondary listingsto TSX-V and AIM have been debated.ASX is the most diversified listingvenue with a balanced mix across allcommodities, the most prominent beingiron ore and coal. Geographically, itis less international than both Torontoand London and is more of a regionalAustralasian rather than globalmining hub. ASX listed companiesinvest predominantly in projects inAustralia and South East Asia, and now,increasingly, Africa. Guide to listing a mining company 5
  6. 6. Overview of international mining finance centresSo, what will the future bring? How do the listing requirements thresholds, which may relate to and process in the key markets profits, assets, market capitalisation,We believe London, and increasingly, but compare? revenue or cash flow tests.not in the short-term, Hong Kong will bethe main global finance hubs for major We have looked at the key market • All markets require a mineral expertsresource companies. characteristics of each of the leading report or equivalent to be included mining industry listing venues. But in an offering document. There isTSX will continue attracting the bulk substantial similarity amongst codes are there any substantive differences inof junior and mid-tier exploration and (with Reporting of Exploration Results, terms of regulation and process?development companies globally - and Mineral Resources and Ore ReservesASX regionally for Australasia, also In recognition of the nature and risks of (JORC Code) being the most commonserving Canadian and Australian investors resource project financing, and to allow one used globally) and the format ofinvesting anywhere in the world. investors access to diverse investment experts reports, with Canadian NI opportunities, leading mining industry 43-101 being more prescriptive andSingapore will focus on attracting mid- listing venues have established special HK Listing Rules requiring certainsize South-East Asian companies - as listing requirements for mining/ additional disclosures.an alternative to Hong Kong which is mineral companies. Some of them areheavily dominated by large Chinese • All markets have some form of summarised below:companies, on the back of a more forward looking working capital,flexible listing process and access to • All mining exchanges require cash or profit forecasts, although theother Asian pools of capital. shareholder spread – a minimum degree of diligence required from number of shareholders (typically accountants in relation to thoseDomestic capital markets in resource 200-500), except London. statements varies, with TSX beingrich countries of South-East Asia, LatinAmerica, pockets of Eurasia and Middle • All markets generally require audited least onerous. Forecasts are typicallyEast will continue to grow and deepen, track record - largely under IFRS included in prospectuses in Australia,with African markets emerging on these days - since the beginning of while working capital is required tothe scene. Resource nationalism will operations, and typically for a 3-year cover at least 125% of the next 12increasingly drive listing decisions. period if available. month requirements in Hong Kong. • All exchanges except LSE have • HKSE requires listing entity to some form of financial eligibility be incorporated in an approved jurisdiction. While there are no specific requirements on other exchanges, regulators and institutional investors will look for certain shareholder protection measures and will consider the local regulatory environment of the country of incorporation. • In London and Hong Kong, a new issuer is required to make a declaration about adequacy of its financial reporting procedures to fulfil continuing obligations as a listed company. This is supported by an accountant due diligence exercise, which is more onerous in Hong Kong, including testing of internal controls. • Ongoing requirements differ for all exchanges, but all include audited annual financial reports and half yearly reviewed reports (except Canada), as well as quarterly financial statements in Canada and quarterly mining/exploration activities report in Australia. Requirements are less onerous for TSX-V and AIM and most onerous for HKSE, including stricter rules for related party transactions approval and notification.6 PwC | February 2012
  7. 7. • Some of the unique market features • Ease of further fund raising – this include two-tier system in Canada will depend on market liquidity and for each market providing rules regulatory requirements. for mining companies at different • Potential need for domestic listing in stages of development, the role of the country of operations – particularly, the Due Diligence Committee in the with growing resource nationalism in ASX listing process, and Australian many resource rich countries. use of “proforma” statements in the offering document, allowing for the • Eligibility and continuing obligations normalisation of earnings adjustments. as a listed company – can you meet the criteria for your market of choice?Overall, while London and Hong Konghave higher regulatory requirements What are the first steps and keythan TSX and ASX, with Hong Kong decisions on the road to an IPO?being the most onerous, the technicaldifferences in the regulations are unlikely Some of the key questions that need toto be a deciding factor. It is more the cost be addressed very early in the process:and the speed of the process that differ • Are you clear about your strategy?- again, further supporting TSX and ASX • Are your licence rights secure?positions as the preferred destinationsfor smaller companies - and, crucially, • Is an IPO the right route for you – orthe likely investor base that will buy a perhaps project finance or ventureparticular stock. capital investment would be more appropriate?Who will buy your story? • Do you need pre-IPO or bridgeThis is the single most important financing?question to ask - do you already have • Have you decided which market suitslong standing relationships with you best?particular investors who know the • Have you commissioned a mineralowners/management and their track expert’s report? Have you appointedrecord? If this is the case, your choice of other advisors?market decision is easier. • Have you got audited IFRS accounts?Other considerations to address in your • Have you addressed tax and legalchoice of market include: structuring considerations and• Geographic proximity – location potentially change of holding of management, location of mines company location? and proximity to key customers and • Have you addressed environmental, shareholders, particularly emerging health & safety and corruption risks markets and China. in the locations where you operate?• Commodity fit – and/or degree of • Have you got the right people and diversification. resources to successfully execute a• Location of listing peers – in terms of transaction and continue running commodity and regional focus. your day-to-day business?• Expectations of stakeholders – be they owners, government or cornerstone investors.• Quality, risks and stage of Companies that consider a listing, development of assets – investor whether initial or secondary, risk appetite and understanding of particular classes of assets in a should start preparing now to particular region at a particular stage give themselves the best possible of development differ from exchange chances of success when market to exchange. conditions are optimal• Extent of capital required for a large capital raising – not all markets may be able to provide sufficient depth and liquidity. Guide to listing a mining company 7
  8. 8. Fact sheets Guide to listing a mining company 9
  9. 9. Australia (ASX) Amounts raised by IPOs, split by sector Number of companies listing, by sector (Jan 2008 – Dec 2011): ASX (Jan 2008 – Dec 2011): ASX 1% 9% 1% 1% 2% 150 Materials 2% 120 129 28% 90 36% 60 30 19% Materials 0 19% Key Consumer products Consumer Energy and Govt and High Financials Healthcare and services staples power agencies technology Media and Industrials Materials Real estate Retail Telecommunications entertainment Spread of companies by market capitalisation as at 31 December 2011 400 370 300No. of companies 248 239 224 189 200 172 84 97 89 100 80 65 0 0-2 2-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1,000 1,000-2,000 Over 2,000 Market value range (AUD m) 10 PwC | February 2012
  10. 10. Australia (ASX)Eligibility conditions Mining specific listingAppointment of a sponsor Not required requirementsFinancial eligibility test • Profit test: Operating profit (from continuing operations) > AUD 1m over the past 3 years in Initial requirements include total and >AUD 400k over the past 12 months (reported on by a competent person) OR disclosure of: • Assets test: • Ownership of interests in –– Net tangible assets of at least AUD 2m after exploration areas deducting cost of fundraising or Market Cap of AUD 10m • Development work, maps and –– Less than 50% of tangible assets to be in schedules of mining tenements cash or if more than 50% of tangible assets in cash, must show an expenditure programme • Program of expenditure –– See working capital belowProperty test n/a • Exploration timetable ...Competent person’s report Typically included Once listed, quarterly reporting,Audited history • Clean three year track record (profit test only) reviewed by competent person, of: • Reviewed pro forma balance sheetApplicable GAAP Australian IFRS, IFRS, EU IFRS, HK IFRS, US or • Production & development Singapore GAAP activities, including expendituresPublic distribution Minimum no. shares 500 with a value of AUD 2,000 incurred each or 400 with a value of AUD 2,000 and 25% held • Summary of exploration by unrelated parties activitiesWorking Capital adequate • Only required if applying under the assets test.to carry on business If so, the prospectus must state that the entity • Mineral results & ore results “has enough working capital to carry out its objectives” Mineral reporting standard: the • Working Capital must be at least AUD 1.5m, Australasian Code for Reporting which may include budgeted revenue for the first of Exploration Results, Mineral full financial year after listing (but must be after Resources and Ore Reserves (JORC costs of acquiring mining tenements) Code)Management continuity Not requiredand experienceForeign companies ASX Foreign Exempt Listing may apply and reduceexemptions and Fast Track the listing processAccountant diligence • Investigating accountant’s report • Review of profit forecasts, if applicable • Review of pro forma balance sheet • Accounting and tax diligencePeriodic disclosure • Annual financial reportrequirements • Half-year financial report • Quarterly report on mining activities within a monthMajor transaction May be triggered in certain circumstancespre-approval by theshareholders Guide to listing a mining company 11
  11. 11. Canada (TSX & TSXV) The TMX has a secondary board, the TSX Venture Exchange (TSXV), to support smaller, growing companies seeking access to a public market Spread of companies by market capitalisation as at 31 December 2011 594 600 TSX TSXv TSXv 488 500 432 TSXNo. of companies 398 400 300 242 200 177 200 171 154 156 115 123 119 86 100 47 68 17 33 21 8 1 0 0 0-2 2-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1,000 1,000- Over 2,000 2,000 Market value range (CADm) 12 PwC | February 2012
  12. 12. Canada (TSX & TSXV) Telecommunications Amounts raised by IPOs, split by sector Number of companies listing, by sector (Jan 2008 – Dec 2011): TSX Retail (Jan 2008 – Dec 2011): TSX 2% 70 Real EstateMaterials 2% 1% 60 14% Media & Entertainment 14% 2% 50 Materials 33% Materials1% 40 34 5% 30 Industrials1% 20 High Technology 10 0 Healthcare 38% Government and Agencies Financials Amounts raised by IPOs, split by sector Number of companies listing, by sector Energy & Power (Jan 2008 – Dec 2011): TSXV (Jan 2008 – Dec 2011): TSXV Consumer Staples 3% 500 Consumer Products & Services 400 24% 300Materials Materials 200 56% 56% 144 100 15% 0 1% Key Consumer products Consumer Energy and Govt and High Financials Healthcare and services staples power agencies technology Media and Industrials Materials Real estate Retail Telecommunications entertainment Guide to listing a mining company 13
  13. 13. Canada (TSX & TSXV) Eligibility conditions TSX TSXV Tier 1 Appointment of a sponsor Required for non-exempt companies May be required for certain transactions Financial eligibility test • TSX Exempt: CAD 7.5m net tangible assets; pre- CAD 2m net tangible assets tax profitability from ongoing operations in last fiscal year; pre-tax cash flow of CAD 700,000 in last fiscal year and average of CAD 500,000 for past two fiscal years • TSX Non-exempt producer: CAD 4m net tangible assets; reasonable likelihood of future profitability • TSX Non-exempt exploration and development stage: CAD 3m net tangible assets Property test • Producers: 3 years proven and probable reserves Material interest in a Tier 1 property as estimated by an independent qualified person • Exploration and Development: min. 50% ownership in the property Competent person’s report Required Required Audited history 3 years audited and most recent reviewed quarterly 3 years audited and most recent reviewed quarterly financial statements, if applicable financial statements, if applicable Applicable GAAP IFRS, as applicable in Canada IFRS, as applicable in Canada Public distribution min. CAD 4m, 1m shares, 300 public holders of 100 min. 20% of all shares, 1m shares, 250 public holders shares Working Capital adequate Management-prepared 18-month projection of Management-prepared 18-month projection to carry on business sources and uses of funds of sources and uses of funds, CAD 200,000 in unallocated funds Management continuity Adequate experience and technical expertise of Adequate experience and technical expertise of and experience management relevant to the company’s business management relevant to the company’s business and industry as well as adequate public company and industry as well as adequate public company experience experience Foreign companies No specific regime No specific regime exemptions and Fast Track Accountant diligence Comfort letters Comfort letters Periodic disclosure • Annual financial report • Annual financial report requirements • Quarterly financial statements within 45 days • Quarterly financial statements within 60 days Major transaction Minority shareholder approval and/or valuation may Minority shareholder approval and/or valuation may pre-approval by the be required for certain transactions, depending on be required for certain transactions, depending on shareholders their nature and materiality their nature and materiality14 PwC | February 2012
  14. 14. Canada (TSX & TSXV) Mining specific listingTier 2 requirementsMay be required for certain transactions On TSX and TSX-V, choice of listingFor mining companies: no requirement standard according to the applicant’s stage of development and industry • Initial requirements include (reported on by a competent person) disclosure of: –– work program –– geological report –– statements of uses and sourcesFor mining companies: significant interest in of fundsa qualifying property; No less than CAD 1m ofexploration expenditures on the qualifying property in • Once listed, no requirements specificthe past 3 years to mining companiesRequired • Mineral reporting standard:3 years audited and most recent reviewed quarterly NI 43-101 / CIMfinancial statements, if applicableIFRS, as applicable in Canadamin. 20% of all shares, 0.5m shares, 200 publicholdersManagement-prepared 12-month projectionof sources and uses of funds, CAD 100,000 inunallocated fundsAdequate experience and technical expertise ofmanagement relevant to the company’s businessand industry as well as adequate public companyexperienceNo specific regimeComfort letters• Annual financial report• Quarterly financial statements within 60 daysMinority shareholder approval and/or valuation maybe required for certain transactions, depending ontheir nature and materiality Guide to listing a mining company 15
  15. 15. London (Main Market & AIM) The LSE has a secondary board, the Alternative Investment Market (AIM), to support smaller, growing companies seeking access to a public market Main AIM Market Standard Premium Equity GDRs (Global Equity Only Depositary Receipts) Spread of companies by market capitalisation as at 31 December 2011 245 250 Main market AIM 204 200 176No. of companies 156 142 150 116 119 108 95 98 100 99 100 91 91 73 50 35 41 27 28 14 6 0 0 0-2 2-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1,000 1,000- Over 2,000 2,000 Market value range (GBP m) 16 PwC | February 2012
  16. 16. London (Main Market AIM) Amounts raised by IPOs, split by sector Number of companies listing, by sector (Jan 2008 – Dec 2011): London (Main) (Jan 2008 – Dec 2011): London (Main) 60 3%3% 3% 2% 1% 6% 50 40 MaterialsMaterials 32% 30 25 32% 20 45% 10 3% 0 2% Telecommunications Amounts raised by IPOs, split by sector Number of companies listing, by sector Retail (Jan 2008 – Dec 2011): London (AIM) (Jan 2008 – Dec 2011): London (AIM) Real Estate 70 3% 2% 10% 1% 60 Media Entertainment 18% 3% 50 Materials 40 MaterialsMaterials 30 Industrials 26 30% 30% 20 High Technology 27% 10 0 Healthcare 2% 2% 2% Government and Agencies Financials Energy Power Consumer Staples Consumer Products Services Key Consumer products Consumer Energy and Govt and High Financials Healthcare and services staples power agencies technology Media and Industrials Materials Real estate Retail Telecommunications entertainment Guide to listing a mining company 17
  17. 17. London (Main Market AIM) Eligibility conditions Premium listing Standard listing Appointment of a sponsor Required Not required Financial eligibility test Exemptions available for mineral companies Not required Property test Control of the majority of assets over the last 3 years Not required Competent person’s report Required Required Audited history • Clean three year track record • 3 years audited, if available • Audited financial statements no more than 6 • Interims reviewed if document dated 9 months months old after the end of last audited year Applicable GAAP IFRS, US GAAP, Australian or Canadian IFRS, IFRS, US GAAP, Australian or Canadian IFRS, Japanese or Chinese GAAP Japanese Public distribution min. 25% of all shares min. 25% of all shares/GDRs Working Capital adequate Sufficient working capital for at least 12 months from Not required for mining companies to carry on business date of prospectus Management continuity No specific requirement No specific requirement and experience Foreign companies No specific regime No specific regime exemptions and Fast Track Accountant diligence • Comfort letters • Comfort letters • Long Form report • Review of pro forma and profit forecasts, if • Financial reporting procedures report included (not applicable for GDRs) • Review of pro forma and profit forecasts, if included Periodic disclosure • Annual financial report • Annual financial report requirements • Half-year financial report • Half-year financial report • Interim management statement • Interim management statement Major transaction As part of continuing obligations, approval is required Not required pre-approval by the for significant (25% ratio) acquisitions and disposals shareholders and material (5% ratio) related party transactions18 PwC | February 2012
  18. 18. Mining specific listingAIM requirementsNOMAD (retained at all times once listed) Initial requirements include disclosureNot required of:Not required • On Main Market: geological report and historic production/Required expenditures reported on by a• 3 years audited, if available competent person.• Interims reviewed if document dated 9 months after the end of last audited year • On AIM: material assets liabilities related contracts as well as reservesIFRS, US GAAP, Australian or Canadian IFRS, maps, reported on by a competentJapanese person, due diligence and site visitsNot required by the Nomad, payments overSufficient working capital for at least 12 months from GBP 10,000 made to governments ordate of prospectus regulatory authorities with regards toNo specific requirement the assets, specific risks. Once listed:Fast Track may be available depending on the homeexchange • On Main Market: no requirements• Comfort letters specific to mining companies.• Review of pro forma and profit forecasts, if • On AIM: resource updates prepared included by a competent person, review by the Nomad of all notifications. Mineral reporting standard: Australian,• Annual financial report Canadian, US, South African and other• Half-year financial report selected codes are acceptable.Only for reverse takeover Guide to listing a mining company 19
  19. 19. Hong Kong (HKEx GEM) The HKEx has a secondary board, the Growth Enterprise Market (GEM), to support smaller, growing companies seeking access to a public market Main GEM Board Distribution of companies by equity market value as at 31 December 2011 300 268 HKEx HKEx GEM GEM 250 233 HKExNo. of companies 200 188 181 169 150 139 117 109 100 50 22 16 18 3 0 8 11 6 0 0 1 14 6 0 0 0-2 2-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1,000 1,000- Over 2,000 2,000 Market value range (USDm) 20 PwC | February 2012
  20. 20. Hong Kong (HKEx GEM) Amounts raised by IPOs, split by sector Number of companies listing, by sector (Jan 2008 – Dec 2011): HKEx (Jan 2008 – Dec 2011): HKEx 5% 5% 80 Materials 6% 14% 6% 70 79 60 50 4% 40 30 Materials 27% 20 18% 19% 10 0 10% 2%3% Telecommunications Amounts raised by IPOs, split by sector Number of companies listing, by sector Retail (Jan 2008 – Dec 2011): GEM (Jan 2008 – Dec 2011): GEM 1% Real Estate 8 5% 10% 4% 7 2% Media Entertainment 6 16% 5 Materials 21% 4 Industrials 3 2 High Technology 8% 1 25% 0 Healthcare 8% Government and Agencies FinancialsConsumer products Consumer Energy and Govt and High Financials Healthcareand services staples power agencies technology Energy Power Media andIndustrials Materials Real estate Retail Telecommunications entertainment Consumer Staples As at 31 December 2011 there were no mining companies listed on GEM Consumer Products Services Key Consumer products Consumer Energy and Financials and services staples power Consumer products Consumer Energy and Govt and High Financials Healthcare and Media and services staples power Industrials agencies Materials technology estate Real entertainment Media and Industrials Materials Real estate Retail Telecommunications entertainment Guide to listing a mining company 21
  21. 21. Hong Kong (HKEx)Eligibility conditions Mining specific listing requirementsAppointment of a sponsor Required (Main Board)Financial eligibility test Not required for mineral companies Initial requirements include (reported on byProperty test a competent person) disclosure of: Property valuation not older than 3 months and at least indicated resources • Mineral resources, reserves and terms Early stage exploration assets are not eligible for of rights listing • Specific risksCompetent person’s report Required • Payments made to host countryAudited history • Clean three year track record governments • Audited financial statements no more than 6 • Operating cash costs or plans to proceed months old to productionApplicable GAAP HKFS, IFRS, CASBE (for PRC issuers only) US GAAP Once listed: or other accounting standards may be accepted in • Half-yearly updates certain circumstances Mineral reporting standard:Public distribution Min. 25% shares, 300 public shareholders, min of HKD 50m – may be between 15% and 25% if market • Australian (JORC code) cap over HKD10bn • Canadian (NI 43-101 / CIM)Working Capital adequate Sufficient working capital for 125% of presentto carry on business requirement for at least the next 12 months, estimate • South African (SAMREC code) of cash operating costs or if not yet in production: • Companies not yet producing: plan to proceed to productionManagement continuity Management continuity for the last 3 years,and experience ownership and control continuity for previous yearForeign companies No specific regimeexemptions and Fast TrackAccountant diligence • Comfort letters • Private memo of profit forecasts • Report on pro forma and profit forecasts, if included in the prospectus • Financial reporting procedures reportPeriodic disclosure • Annual financial reportrequirements • Half-year financial report • Quarterly financial results recommendedMajor transaction Any spin-off after three years of the company’spre-approval by the original listingshareholders22 PwC | February 2012
  22. 22. Guide to listing a mining company 23
  23. 23. PwC publications Mine 2011 - the game has changed The eighth annual survey of the Top 40 global mining companies Mine 2011 The game has changed by market capitalisation. Our report provides a comprehensive analysis of the financial performance and position of the global Review of global trends in the mining industry mining industry and also discusses current trends in the global mining industry. SA Mine South Africa Mine Review of trends in the South African mining industry Aggregates the financial results of mining companies with a primary listing on the Johannesburg Stock Exchange (JSE) and November 2010 mining companies with a secondary listing on the JSE whose main operations are in Africa. Junior Mine Each year PwC analyses the Top 100 mining companies listed on the TSX Venture Exchange (TSXV), based on market capitalization as at June 30. Why do we believe market volatility has become business as usual versus a fleeting trend? Until the underlying factors driving market volatility are addressed, we do not expect stability to wash over the markets. pwc.com.au/industry/energy-resources Aussie Mine Onward and Each year PwC analyses the largest 50 mining companies listed Upward! on the ASX with a market capitalisation of less than AUD 5 billion at 30 June 2011. Our analysis this year shows that 2011 Aussie Mine November 2011 was a stellar year for the mid-tier 50, with key indicators across the board pointing to healthy growth in a sector which has recovered from the global financial crisis. www.pwc.com Mining Deals Riders on A bi-annual comprehensive analysis of MA activity in the mining the Storm... Global mining deals industry. Examining both the rationale behind the overall trends, 2011 mid-year update looking at the key individual deals under review and ahead to the September 2011 future direction of deal-making in the sector.24 PwC | February 2012
  24. 24. Financial reporting in the Mining IndustryEnergy, Utilities MiningFinancial reporting inthe mining industry* Describes the financial reporting implications of IFRS across aInternational Financial Reporting StandardsJune 2007 number of areas selected for their particular relevance to the mining industry. www.pwc.co.uk/valuations The PwC Valuation Index: PwC Valuation Index Tracking the market Has mining missed the commodity boom? This report examines why the market appears to have missed the to understand value Is the mining boom a commodities boom – as indicated by the fact that on the one hand, bubble? July 2011 the mining sector has enjoyed boom times in terms of companies’ profit growth and excess returns achieved by mining investors, whilst on the other hand, the market valuations (PE ratios) have consistently lagged behind the wider market.  It assesses whether there is a bubble about to burst in the mining sector or whether the sector is still undervalued (as low PE ratios may indicate). 2012 Global Gold Price Report: Keeping up with the price of gold PwC’s 2012 Gold Price Report assesses gold companies globally, with companies surveyed representing 26.5 million ounces of gold mined in 2011, and 37.75 million ounces to be mined in 2012. www.pwc.com Global Mining Tax Comparison – Income Taxes, Mining Taxes and Mining Royalties: A Summary of Selected Countries Income Taxes, There is considerable interest today regarding income tax rates, Mining Taxes and Mining Royalties A Summary of Selected mining tax rates and mining royalty rates levied on mining PwC Global Mining Group Updated: Countries companies in various countries where significant mining occurs. Within this summary, the reader can roughly compare investments December 2010 across various countries. Guide to listing a mining company 25
  25. 25. PwC supportWhatever the motivations driving the process, taking your company public can be arichly rewarding experience. The PwC reach extends across the globe; the network PwC have in excess ofof PwC firms has ample experience supporting global mining companies. 1,500 mining professionals across the globe located in all significant mining territories. 1,500 Nordic region Amsterdam Moscow London Almaty Ulaanbaatar Vancouver Toronto Belgium Poland Denver Frankfurt France Switzerland Japan Phoenix New York Spain Italy Beijing Korea Israel Taiwan Mexico City Dubai Hong Kong Accra Hyderabad Bogota Abidjan Singapore Lubumashi Jakarta Rio de Janeiro Lima Harare Gaborone Brisbane Perth Sydney Santiago Johannesburg Melbourne We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services 168,71026 PwC | February 2012
  26. 26. Contacts Capital MarketsAustralia Jock O’Callaghan T: +61 (0)3 8603 6137 About the IPO E: jock.ocallaghan@au.pwc.com CentreCanada Dean Braunsteiner PwC has a strong and T: +1 416 869 8713 established record helping E: dean.braunsteiner@ca.pwc.com companies from all overChina/Hong Kong Kennedy Liu the world plan and execute T: +852 2289 1881 successful IPOs. The IPO Centre E: kennedy.liu@hk.pwc.com was created to respond toUnited Kingdom Clifford Tompsett today’s increasingly complex Head of IPO Centre cross border world. T: +44 (0)20 7804 4703 It is now more important than E: clifford.tompsett@uk.pwc.com ever for companies to be able to tap into both global knowledge Mining as well as local insights. The IPO Centre brings together ourAfrica Hein Boegman global expertise ensuring that T: +21 11 797 4335 we provide companies with E: hein.boegman@za.pwc.com the right mix of sector andAustralia Tim Goldsmith IPO expertise combined with T: +61 (0)3 8603 2016 relevant local and international E: tim.goldsmith@au.pwc.com market knowledge. Through the IPO Centre we are also ableCanada John Gravelle to connect companies with T: +1 416 869 8727 E: john.gravelle@ca.pwc.com the right PwC capital market specialists that are able to helpChina Ken Su them effectively evaluate the T: +86 (0)10 6533 7290 pros and cons of IPO, take them E: ken.x.su@cn.pwc.com through the flotation processIndia Kameswara Rao and prepare them for life as a T: +91 40 6624 6688 public company, regardless of E: kameswara.rao@in.pwc.com the market they choose to list on.Indonesia Sacha Winzenried T: +62 21 5289 0968 E: sacha.winzenried@id.pwc.comLatin America Ronaldo Valino T: +55 21 3232 6139 E: ronaldo.valino@br.pwc.comRussia and Central and John CampbellEastern Europe T: +7 495 967 6279 E: john.c.campbell@ru.pwc.comUnited Kingdom Jason Burkitt T:+44 (0)20 721 32515 E: jason.e.burkitt@uk.pwc.comUnited States Steve Ralbovsky T: +1 602 364 8193 E: steve.ralbovsky@id.pwc.com Guide to listing a mining company 27
  27. 27. www.pwc.comThis publication has been prepared for general guidance on matters of interest only, and does not constitute professionaladvice. You should not act upon the information contained in this publication without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information containedin this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability,responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on theinformation contained in this publication or for any decision based on it.© 2012 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network ofmember firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firmsof the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other memberfirm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any ofits member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm isresponsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another memberfirm’s professional judgment or bind another member firm or PwCIL in any way.EP6-2012-01-25-13 31-AC.

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