The TSX Company Manual describes the role of the Toronto Stock Exchange in capital markets:
The Exchange plays an important role in assisting in the recruitment of capital and in the maintenance of an effective secondary market for relatively new enterprises, as well as for established companies. Exchange listings range from junior mining, oil, gas and industrial issues to mature international companies. To accommodate companies with such a diversity of activity and size, while at the same time ensuring that certain basic standards are met, the Exchange maintains listing requirements for the various types of companies which list on the Exchange.
Therequirements to list an exploration or development stage mining company are straightforward and relatively modest:
- an Advanced Property, detailed in a report prepared by an independent qualified person. The Exchange will generally consider a property to be sufficiently advanced if continuity of mineralization is demonstrated in three dimensions at economically interesting grades;
- a planned work programme of exploration and/or development, of at least $750,000 that is satisfactory to the Exchange, will sufficiently advance the property and is recommended by an independent qualified person;
- sufficient funds to complete the planned programme of exploration and/or development on the company's properties, to meet estimated general and administrative costs, anticipated property payments and capital expenditures for at least 18 months. A management-prepared 18 month projection (by quarter) of sources and uses of funds detailing all planned and required expenditures signed by the Chief Financial Officer must be submitted;
- working capital of at least $2,000,000 and an appropriate capital structure;
- net tangible assets of $3,000,000; and
- an interest or the right to earn and maintain at least a 50% interest in the qualifying property.
Unlike the balance of the requirements, the first requirement i.e. that the Advanced Property have “economically interesting grades”, is subjective in nature.
Historically, this has meant that a National Instrument 43-101 technical report which established mineral resources on a property in three dimensions at economically interesting grades would generally satisfy these criteria.
Recently, the TSX has taken the position that no company which has to ship its products in bulk (as opposed to a product such a diamonds or dore) would be eligible for listing, unless there was a clear indication of how those products would be shipped to market and some assurance that the necessary roads, rail links or port facilities would be constructed.
As a result, it appears that the TSX will not list companies whose principal projects are located in regions of the world which lack infrastructure and which plan to produce a bulk concentrate, in circumstances where plans about how the infrastructure will be built to service projects in those regions have not been determined. We understand that the TSX has recently turned down the listing application of several companies in the Ring of Fire and in Quebec, because of concerns about the availability of infrastructure.
In our view, the creation of infrastructure is just one of many issues and risks facing mining companies which have an impact on project economics, including, for example, commodity price risk, metallurgical issues, native claim and title issues, environmental permitting, and changes in taxes and other government policies. Provided such risks are adequately described in appropriate disclosure documents, we see no valid reason to apply a blanket prohibition on listing such companies solely on the basis of lack of infrastructure.
We believe it would be helpful for the TSX to solicit comments from the mining industry on this issue.