As global markets continue to suffer through uncertainties and
turmoil, many mining companies have turned their eyes to Canada to
raise funds. Canadian markets are a viable and prolific source of
funding for foreign mining companies, particularly for those aware
of the advantages Canadian stock markets present over their local
stock exchanges. Many of these foreign companies are turning to
Vancouver-based professional services companies in search of mining
finance expertise, creating an often unseen but nonetheless
lucrative economic opportunity for Vancouver professionals.
Over the past five to seven years, we at Lawson Lundell have
seized on this opportunity, and have assisted numerous exploration
and early-stage development companies with their fundraising needs,
even though they are not Vancouver-based. As the global marketplace
in effect shrinks, we increasingly act for foreign companies,
including a substantial number of management teams based in
Australia's mining capital of Perth. This is currently a very
active practice area for us, with four new listings underway from
Perth-based management teams.
One of the great strengths of Canadian capital markets is that
that they will support a mining project based on an assessment of
its geological merit and political risk, regardless of where it is
located. The local stock markets in many countries, including
Australia, often fail to support companies with projects based in
far-flung regions of the planet. Other internationally-minded stock
exchanges, such as the London Stock Exchange, tend to be successful
capital-raising venues for only the biggest companies.
As a result, the Toronto Stock Exchange (TSX) and the TSX
Venture Exchange (TSXV) are attractive to mining companies from
across the world. Offering unrivalled sector expertise, the two
exchanges have the most diversified roster of public mining
companies by commodity and stage of development. Mining companies
listing on the TSX benefit from experienced mining analysts,
specialized indices, flexibility and tailoring of listing
requirements not offered by any other global exchange.
In 2010, more mining companies were listed on the TSX and TSXV
than any other market in the world, with 60% of the world's
mining equity capital - totalling $17.8 billion - being raised on
these two exchanges alone. In comparison, its nearest rival,
London's sub-market AIM exchange, raised only 7.5% of the
mining world's equity financing. This strong gravitation
towards the Canadian exchanges has continued unabated in 2011, with
123 mining companies listed in Canada by July.
A substantial number of foreign mining companies are coming to
Vancouver for the professional services and merchant banking advice
they require for their financing. These companies are often
headquartered abroad, and are raising funds for exploration,
surveys, feasibility studies and the development of projects mainly
outside of B.C. In fact, 50% of more than 9,500 mineral exploration
projects held by TSX and TSXV companies are outside of Canada.
However, a significant volume of this professional and banking work
is being channelled through Vancouver, which is a facet of the
economy that many in our city are unaware of.
Companies are attracted to Vancouver for its reputation as one
of the world's pre-eminent mining centres, and numerous leading
mining companies are headquartered here. For many of the almost 40
Australasian companies listed on the TSX and TSXV, Vancouver's
professional advisors offer another more practical advantage over
competitors in Toronto: a more amenable time zone. Being in the
Pacific time zone, several hours of the workday overlap with mining
clients based in Western Australia, facilitating better client
For gold mining companies in particular, the current market
turmoil is a blessing. It has resulted in a spike in the price of
gold and increased demand for their shares. Many copper producers
(and those nearing production) have also seen rising demand for
their shares. However, the ability of companies to raise financing
in the current markets is commodity specific. For example, uranium
producers have faced great challenges in the aftermath of
Japan's Fukushima disaster earlier this year.
Despite the market challenges facing other industries, the
mining sector appears to be weathering the storm well. For the
Canadian exchanges and Vancouver-based advisors in particular,
their in-depth mining expertise has become a commodity of its own,
and is more attractive than ever to foreign mining companies
looking to finance current operations and future growth. Indeed, it
would be fair to say that mining finance remains one of
Canada's great exports, and one of Vancouver's competitive
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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