In response to uncertainty in the marketplace about the listing
standards for exploration and development stage mining issuers, the
Toronto Stock Exchange ("TSX") has
released a staff notice (the "Notice")
providing guidance on the meaning of the key phrase
"economically interesting grades."
The "Advanced Property" Requirement
The TSX currently has three subcategories for listing in the
mining category: (i) producing mining companies, (ii) exempt mining
companies and (iii) mineral exploration and development stage
companies. Issuers applying to list on the TSX under the mineral
exploration and development-stage category must have a property
with continuity of mineralization demonstrated in three dimensions
at "economically interesting grades" (an
"Advanced Property"), as reflected in a
report by an independent qualified person (a
The Notice focuses on the TSX's consideration of
infrastructure as a factor in determining whether a project
qualifies as an Advanced Property (other factors include
mineralization, commodity grades, current and forecast commodity
prices, geology and size of the deposit, and location).
The Relevance of Infrastructure
The TSX's view is that a lack of infrastructure may prevent
an issuer's property from qualifying as an "Advanced
Property" where the required infrastructure costs make the
extraction of the resource uneconomic. This is particularly true
where (i) the project is located in a remote, relatively
inaccessible area, and (ii) the resource is a commodity shipped in
bulk, such as coal, iron ore, base and precious metal concentrates,
and industrial materials such as sand and gravel, limestone,
commercial clay and gypsum ("Bulk
The TSX expects issuers with Bulk Commodity projects in remote
locations to produce a reasonable plan to develop or gain access to
the required infrastructure, including a cost estimate (though an
applicant need not have the necessary funds on hand to develop the
infrastructure as a condition of listing). In evaluating the
reasonableness of the plan, the TSX will consider:
whether the proposed infrastructure has been built in similar
circumstances and the costs associated with building such
whether the proposed infrastructure will be unconventional;
the assumptions in respect of funding the infrastructure, and
specifically whether the applicant will rely on third parties to
fund or develop it.
The TSX's position is not that issuers have to ship Bulk
Commodities from remote areas will not be listed, but that such
issuers need to have a reasonable and achievable plan for
The TSX noted that generally a project will be considered an
"Advanced Property" if it has "mineral
reserves" or "mineral resources" (as those standards
are defined by the Canadian Institute of Mining, Metallurgy and
Petroleum, or CIM, which establishes definitions and guidelines for
the reporting of exploration information, mineral resources and
mineral reserves in Canada).
The Notice encourages prospective applicants to submit Technical
Reports to obtain a preliminary opinion as to whether a particular
project qualifies as an "Advanced Property."
Please contact any member of our Mining and Natural Resources
Group to discuss these latest developments.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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