Canada continues to be the world’s leading capital market for natural resource companies. During 2009, mining companies listed on the Toronto Stock Exchange (the “TSX”), Canada’s senior market, or on the junior TSX Venture Exchange (the “TSX-V”), raised in excess over C$22 billion in equity financings. This represented about the same as the amount raised on the London Stock Exchange (“LSE”)/AIM, however 90% of the LSE/AIM figure was represented by two transactions (Rio Tinto $12.4 billion and Xstrata $7.2 billion). In addition, the oil and gas sector remained strong with TSX and TSX-V listed companies raising over C$9.2 billion in 2009. Notwithstanding the “challenging” first five months of 2010, TSX and TSX-V listed mining companies raised over C$6.2 billion and oil and gas companies C$4.3 billion.
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Accessing Canadian Captial Markets: Mining and Oil & Gas Companies
1. MONTRÉAL OTTAWA TORONTO CALGARY VANCOUVER NEW YORK CHICAGO LONDON BAHRAIN AL-KHOBAR* BEIJING SHANGHAI*
*Associated Office Blake, Cassels & Graydon LLP | blakes.com
Accessing the
Canadian Capital Markets
Legal Considerations for Non-Canadian
Mining and Oil & Gas Companies
2. INDEX
Accessing the Canadian Capital Markets 1
Listing Requirements 2
On-going Public Company Reporting Requirements 3
Technical Reports for Mining Companies – National Instrument 43-101 4
Reserve Reporting for Oil and Gas Companies – National Instrument 51-101 5
3. ACCESSING THE CANADIAN CAPITAL MARKETS
LEGAL CONSIDERATIONS FOR NON-CANADIAN
MINING AND OIL & GAS COMPANIES
Introduction – The TSX is a World Leader for the Resource Industry
Canada continues to be the world’s leading capital market for natural resource
companies. The Toronto Stock Exchange (the “TSX”), Canada’s senior capital market, and the
junior TSX Venture Exchange (the “TSX-V”) are home to over half of the world’s public mining
companies and one-third of the world’s public oil and gas companies.
During 2011, mining companies listed on the TSX and TSX-V raised C$12.5
billion in equity financings. This represented about the same as the amount raised on the
London Stock Exchange (“LSE”)/AIM, however, 80% of the amount raised on the LSE/AIM was
represented by the C$9.5 billion initial public offering (“IPO”) of Glencore. In addition, the oil and
gas sector remained strong with TSX and TSX-V listed companies raising over C$10 billion in
2011.
Notwithstanding the challenging first half of 2012 as a result of various
macroeconomic conditions, including the slowdown of the Chinese economy, TSX and TSX-V
listed mining companies raised over C$4.3 billion of capital and oil and gas companies C$3.5
billion.
At the end of 2011, the TSX and TSX-V had a combined total of 1,646 mining
companies listed with an aggregate market capitalisation of approximately C$427 billion, a net
increase of over 200 companies since the end of 2009. This compares favourably to the 700
mining companies listed on the Australian Stock Exchange (“ASX”), 191 LSE/AIM listed mining
companies and 141 New York Stock Exchange (“NYSE”)/Amex listed mining companies.
Similarly, in oil and gas, the TSX and TSX-V had 405 oil and gas issuers, the most in the world
with an aggregate market capitalization of over C$378 billion, as compared to 212 on
NYSE/Amex and Nasdaq combined, 224 on ASX and 142 on LSE/AIM. It is also worth noting
that TSX/TSX-V was the only market in which there was a net increase in the number of listed
mining companies since 2009.
As a result, the TSX and TSX-V present not only a destination for foreign
companies to raise capital, but also a significant source of acquisition targets and merger
partners for international major and mid-cap resource companies.
In 2011, TSX and TSX-V listed issuers completed 2,021 mining financings
compared to 208 on the NYSE/Amex, LSE/AIM and ASX combined. In terms of new listings, the
TSX and TSX-V facilitated 201 new mining listings and 49 new oil and gas listings in 2011.
Again, this compares favourably with LSE/AIM, ASX and NYSE/Amex/Nasdaq which had a
combined total of 117 new mining listings and 52 new oil and gas listings.
Although the London and New York exchanges are homes to some of the largest
global mining companies, the TSX and TSX-V dominate the mid-cap range to which most juniors
aspire. Approximately half of the mining companies on the TSX/TSX-V are junior miners in the
exploration stage while the rest are in advanced exploration, development and/or production
stages. In addition, a growing number of the companies which started on the TSX or TSX-V as
junior players in the industry have grown. A critical factor in the growth of the Canadian market
has been the depth of liquidity, with 2011 seeing over C$460 billion mining shares and over
4. C$300 billion oil and gas shares traded. The market is supported by a broad institutional and
retail investor base (including many American investors) and a large, sophisticated analyst
community covering companies of all sizes. Also, supporting these companies is a similarly
sophisticated and experienced professional community of investment bankers, accountants and
securities lawyers who specialize in advising mining companies. The Canadian securities
regulators who administer National Instrument 43-101, the mineral project disclosure rule and
National Instrument 51-101, the oil and gas disclosure rule discussed below, also have
experienced geologists who understand the issues faced by resource companies and their
projects.
In the resources sector, Canadian investors have proven receptive to diverse
commodities and geographical risks. Of the nearly 10,000 mining projects held by TSX and
TSX-V companies, approximately half are outside of Canada and a third outside of North
America, including Mexico and Central/South America, Africa, Asia, Australia and Europe.
It is sometimes said that London is the “natural” home for companies with African-
based projects. However, the numerous mineral projects in Africa by the 185 TSX and TSX-V
companies and 684 mining projects active there tell a different story. In 2011, the TSX/TSX-V
facilitated 21 new mining listings with projects in Africa and C$1 billion of equity capital was
raised for mining projects in that continent. Of the TSX mining companies with market
capitalizations in excess of C$1 billion, many have material assets in Africa, including Barrick
Gold Corporation, First Quantum Minerals Limited, Centamin plc, Lundin Mining Corporation,
Franco-Nevada Corporation, IAMGOLD Corporation, Kinross Gold Corporation, Perseus Mining,
Royal Gold, Semafo, Teck Resources Limited, Uranium One, Paladin Energy Limited, Platmin
Limited and Katanga Mining Limited.
In the oil and gas arena, Canadian companies such as Suncor Energy, Ivanhoe
Energy, Niko Resources, Nexen and Husky Energy, to mention just a few across the spectrum of
companies, have significant assets outside of Canada and have developed strong local investor
followings.
Non-Canadian Companies Going to the TSX
Both Canadian and non-Canadian companies of all sizes have successfully
raised capital in Canada, ranging from small private placements through to large public offerings.
Blakes have been involved for issuer or underwriter on nearly half of these transactions.
Australian-based companies taking advantage of the Canadian public markets
include the following:
• Newcrest Mining Limited, with a market capitalisation of over C$20 billion,
established a secondary listing on the TSX in 2012;
• Elemental Minerals Limited raised over C$53 million in 2011 through an IPO on
the TSX using a long form prospectus; similarly Sarama Resources raised
approximately C$17 million in 2011 through an IPO;
• Azumah Resources Limited and Lachlan Star Limited established secondary
listings on the TSX in 2011 and subsequently raised approximately C$20 million
each in Canada by way of a short form prospectus;
• Aurora Oil & Gas Limited, whose shares have been listed on the TSX since early
2011, recently raised A$120 million through an issuance of 33.8 million ordinary
shares (18 million shares were successfully placed pursuant to a short form
prospectus in Canada);
5. • Ratel Gold∗
spun out its African property interests into Ratel Group which became
listed on the TSX in 2011; as part of the reorganization, Ratel Group*
also
undertook a C$10 million capital raising by way of subscription receipt to fund its
future activities and to satisfy TSX original listing requirements;
• Red Back Mining Capital NL∗
, which carried out a merger with the Canadian
company Champion Resources to form the new Canadian public company Red
Back Mining; in 2010 the company was acquired by the Canadian-based gold
miner Kinross Gold Corporation for US$7.1 billion;
• Equinox Minerals Limited*, Anvil Mining Corporation and OceanaGold
Corporation, each of which chose the route of establishing a new Canadian
holding company that became the public vehicle for their mining interests; both
Equinox and Anvil Mining have recently been acquired by Barrick Gold and
Minmetals Resources Limited, respectively;
• Rugby Mining Limited and WCB Resources are the product of reverse take-overs;
• Nustar Mining Corporation, which acquired Intrepid Minerals Corporation (an
existing Canadian company with material assets) and under the new name
Intrepid Mines Limited listed in Canada and Australia, and Talison Lithium
Limited∗
, which acquired Canadian-based miner Salares Lithium and listed on the
TSX as part of that transaction (raising C$40 million) and has subsequently raised
C$80 million in a public offering;
• Extract Resources Limited, Paladin Energy, Centamin plc∗
, Perseus Mining
Limited, Western Areas NL*, Ivanhoe Australia Limited, Coalspur Mines Limited,
CGA Mining Limited, Mineral Deposits Limited, Troy Resources Limited∗
, Allied
Gold Mining Plc, Marengo Mining Limited, Mirabela Nickel Limited, Tiger
Resources Limited, Orocobre Limited, Mawson West, Magma Metals Limited,
Moly Mines Limited*, Macarthur Minerals Limited, Mariana Resources Limited,
Chalice Gold Mines Limited*, Bannerman Resources Limited*
, TriAusMin Limited,
Minemakers, Nautilus Minerals, Cerro Resources NL and Strata Minerals, which
undertook primary or secondary listings on the TSX or TSX-V but did not re-
domicile.
UK-listed mining companies listed on the TSX or TSX-V include:
• Anglo Pacific Group plc∗
, Cluff Gold plc, Noventa plc*, Horizonte Minerals plc,
Rambler Metals and Mining plc, Alexander Mining plc, Arian Silver Corporation,
Hunter Bay Minerals plc, Samco Gold Limited, Serabi Gold plc and Verde Potash
plc. In addition, Anglesey Mining plc spun out Labrador Mines Holdings Limited∗
in a C$52 million TSX IPO in 2007, which subsequently completed a C$40 million,
a C$110 million and most recently a C$72 million equity offering of common and
flow-through shares in 2010, 2011 and 2012, respectively.
Equinox Minerals and Moly Mines Limited – two case studies
Our long-time client Equinox is a good example of the benefits of a focused effort
to take advantage of the strength of the Canadian market. With the large Lumwana copper
project in Zambia to develop, Equinox took the view that it needed to look beyond the Australian
market for the substantial amounts of capital it needed to raise. Equinox re-domiciled to Canada
in July 2004 and raised an initial C$15.6 million on its Canadian IPO. Setting up an office in
Canada and working hard at communicating its story to the Canadian investing community,
∗
Denotes a client of Blakes.
6. Equinox subsequently raised over C$784 million in equity in a series of private placements and
public offerings, enabling it to fund all of the equity required for the project. In 2010 it used its
strong financial position to carry out a successful take-over of Australian Citadel Resources
which had a large copper-gold project in Saudi Arabia at the development stage. In February of
2011, Equinox launched a C$4.8 billion hostile take-over bid for copper producer Lundin Mining
Corporation but later aborted the take-over when Equinox itself became a hotly contested target.
In April 2011, Equinox rejected an unsolicited cash offer by Minmetals but later accepted a bid by
Barrick Gold for C$7.3 billion.
Moly Mines took the simpler route of a secondary listing in the fall of 2006 with a
small concurrent fund raising of A$20 million. Moly Mines spent the next several months raising
awareness about the company in the North American markets and was able to more quickly to
raise additional funds in Canada after its share price increased significantly in the spring of 2007.
This gave it the springboard to undertake a major equity raising of A$88 million at the end of
2007, enabling it to take its project to the next stage of development. Other companies like
Bannerman Resources*, Magma Metals+
and Allied Gold+
chose to list first and subsequently
raised finance when a market window opened.
Key Legal Considerations in Accessing the Canadian Capital Market
This memorandum summarises some of the key legal considerations for a
non-Canadian company contemplating the possibility of raising capital in Canada by way of a
public or private offering.
1. Regulatory Overview
Canada has a federal system of government, with power divided between the
federal government and the provinces. Securities legislation is principally governed at the
provincial level and each of the provinces and territories has its own securities legislation,
although the rules in many areas have been standardised and cooperative systems established
between the regulators (e.g., filing of a prospectus is done through a single lead jurisdiction,
which coordinates the comments of the other regulators and provides a single point of contact).
The securities laws determine whether or not a prospectus is required for a particular offering of
securities and set out the forms and procedures which apply to different forms of offerings.
These laws also establish the disclosure standards for mining and oil and gas companies.
As discussed above, there are two principal stock exchanges in Canada: the
TSX, for senior companies; and the TSX-V, for companies that are at a junior stage of
development. These exchanges (collectively, the “Canadian Exchanges”) have an ongoing role
in regulating the conduct of listed companies, but (unlike in some other countries) do not
generally play the principal role in vetting prospectuses. This role is undertaken by the provincial
securities regulators.
In addition to securities laws and stock exchange requirements, a foreign
company which is contemplating a re-domicile to Canada (as opposed to a secondary listing or
placement of its shares) will also need to take into account Canadian corporate laws.
Companies can be incorporated in Canada either at the federal level (under the Canada
Business Corporations Act, the “CBCA”) or under one of the provincial statutes. Again, there is
substantial consistency between the requirements of the different statutes, although there are
certain differences which may influence the choice of statute under which to incorporate.
7. It is possible for a foreign company to issue its shares to the public in Canada
and become a “reporting issuer” under Canadian securities laws without becoming a “Canadian
corporation”. There are a significant number of non-Canadian companies listed on the Canadian
Exchanges and the Canadian securities commissions have certain special rules and exemptions
which apply to companies whose primary market is on a foreign exchange. However, there may
still be reasons why a company would wish to shift its corporate domicile to Canada. This may
be to effect a business combination with a complementary company or because the company
makes the decision that it wishes to be listed only in a single jurisdiction and decides that
Canada offers better opportunities to enhance the value of its shares. The structuring of re-
domicile transactions is further discussed in Section 3 below.
2. Public Offerings
A marketed public offering will in most cases be necessary in order to establish a
public market in Canada for securities of a foreign company or a new Canadian holding
company. Over the past few years the practice has evolved from using a “long form” prospectus
to create the Canadian market to more issuers initially carrying out a secondary listing on the
TSX or TSX-V and subsequently filing a “short form” prospectus when the market window opens.
2.1 “Long Form” Prospectus Offering
In order to carry out a long form prospectus public offering in Canada it is
necessary to engage one or more registered dealers to act as agents or underwriters in
connection with the offering. The process typically begins with preparatory tasks in which
management is assisted by counsel, auditors, technical consultants and underwriters. Due
diligence of the issuer is customarily conducted in conjunction with the preparation of a
“preliminary prospectus”, which is filed with the Canadian securities authorities. The regulators
review the document and, after their comments are resolved by the company and its advisers, a
“final prospectus” is filed, which enables the securities to be sold to the public in Canada. It
would typically take four to six weeks to clear a prospectus with the regulators and closing
usually occurs within days following the date on which the final prospectus is filed. Depending on
the nature of the offering, the securities may be sold on an agency or underwritten basis, and
overall commissions payable to the registered dealers are comparable to those in London or
Australia.
The Canadian process for review and clearance of a prospectus is similar to the
UK where the UKLA will pre-vet a full prospectus, but with the difference that in the UK the draft
prospectus is not put on public file as a preliminary prospectus is in Canada. The Canadian
preliminary prospectus is the marketing document which is used by the company and the
underwriters to market the offering. The Canadian approach differs from Australia where there is
no pre-clearance, but instead a seven day “exposure period” during which the Australian
Securities and Investments Commission (ASIC) will “post-vet” and may require filing of a
supplemental or replacement prospectus. AIM is different still, as review and approval is the
responsibility of the NOMAD rather than a UK regulator. It is important to note that the cost of
the NOMAD is borne by the issuer so the overall cost of raising capital on AIM could be raised
significantly.
In Canada, a prospectus must contain “full, true and plain disclosure of all
material facts relating to the securities being issued” and must follow the detailed disclosure rules
set out in the securities legislation (in contrast to Australia, for example, where there is no
“check-list” for the content of a prospectus, which is similar to the approach adopted by
LSE/AIM). Canadian securities laws also prescribe a specific form in which a prospectus should
generally follow.
In the case of mining companies, the technical information on properties material
to the company contained in the prospectus must be based upon a “technical report” prepared by
or under the supervision of a “qualified person” in accordance with National Instrument 43-101,
8. the mining disclosure rule. In the case of oil and gas companies, reserves data prepared in
accordance with National Instrument 51-101 must be provided and supported by a report of a
qualified reserves evaluator or auditor. These are discussed in more detail under Section 5
below.
Generally, financial statements must be provided for the three most recently
completed financial years, together with interim financial statements if the offering takes place
more than a fixed period after the end of the prior year. Certain relief is provided for interim
financials if a foreign company was not required to prepare these under its local laws (e.g. if
under the laws of the foreign company it only had to prepare semi-annual interim statements,
rather than the quarterly statements generally required under Canadian and U.S. law). The
annual statements will need to be audited in accordance with International Financial Reporting
Standards (“IFRS”) or with acceptable foreign standards. Financial statements requirements are
discussed in more detail under Section 2.6 below.
Purchasers who acquire securities during the distribution period have a right of
rescission or, alternatively, a right of action for damages against the issuer and its directors, any
promoter, each underwriter or agent who signed the prospectus and all experts (in relation to the
expertised portion of the document) where the prospectus contains a “misrepresentation”.
Although the Canadian form requirements are more detailed than their UK or
Australian counterparts, the general disclosure standard is substantially the same, and we
understand that the UK and Australian rules equally impose liability upon the issuer and its
directors (and in certain circumstances, underwriters and other persons) where the document
contains misleading or deceptive statements. There are defences to liability in respect of a
prospectus (except for the issuer itself) where the party carried out reasonable due diligence
enquiries. The underwriters or agents of a Canadian prospectus offering and their legal counsel
will need to carry out technical, business and legal due diligence to permit themselves to take
advantage of this defence.
The due diligence process in a typical Canadian prospectus offering is generally
less formal, less complicated and less costly than a UK “verification” exercise or an Australian
“due diligence committee”, and will in many cases derive in large part from the involvement of the
brokers and their legal counsel in the drafting of the prospectus. Given the time differences
between countries such as Australia and Canada, it is generally the practice to establish an
electronic data room of key documents which all parties can access at convenient times. Legal
opinions from the issuer’s and underwriter’s counsel will invariably be acquired, and on an initial
offering local title opinions on material properties are customary.
2.2 “Short Form” Prospectus
Once a company becomes a reporting issuer in Canada, through filing a long form
prospectus or listing on a Canadian Exchange, it will be able to access the “short-form” or
“prompt offering” (POP) system, which provides for an abbreviated form of prospectus (which
incorporates the company’s existing disclosure record by reference) and an expedited review
period by the securities regulators. To quality, the company must have filed an “annual
information form” (see Section 2.4.2) or recent long-form prospectus and be in compliance with
its continuous disclosure obligations prescribed by Canadian securities regulation. Because of
the accelerated clearance process (which may be as little as a week and on average about eight
days) most short-form offerings are underwritten on a “bought deal” basis. A “bought deal”
involves a syndicate of investment dealers buying stock at a discount prior to canvassing
investors and, subject to very limited “outs”, guarantees the success of the fundraising for the
issuer.
An increasing number of foreign issuers in the resource sectors are accessing the
Canadian capital market initially by first carrying out a secondary listing on a Canadian Exchange
9. and subsequently filing a “short form” prospectus when the market window opens (e.g. recent
offerings by Azumah and Lachlan Star) .
2.3 Stock Exchange Listing
The choice in Canada is generally between the TSX or the junior exchange, the
TSX-V. This decision will depend in large part on the characteristics of the company and
whether it can satisfy the listing criteria of the TSX.
In part because of the problems experienced with some junior mining companies
in Canada in the mid-90’s, the rules of the TSX-V were tightened considerably. As a result,
compared to the rules imposed on more senior companies listed on the TSX, the TSX-V
generally imposes considerably more controls upon business and financial transactions
undertaken by companies listed on the TSX-V. Companies listed on the TSX, as the “main
board” in Canada, also tend to attract greater investor interest. Accordingly, if a foreign company
can meet the requirements of the TSX, it would, in most cases, be in its interest to list there
rather than the TSX-V. Of course, for companies that are at a more junior stage of development,
the TSX-V would be more appropriate.
Attached at Tab 2 are materials from the TSX and TSX-V which outline their
minimum listing requirements. The following are general comments with respect to these listing
requirements based on our experience:
• Both the TSX and the TSX-V are anxious to secure more listings from
good companies. In our experience, the TSX, in particular, has shown
itself to be willing to adapt its requirements to assist Australian, UK and
other foreign companies to make the transition to Canada and (if the
company is retaining its foreign exchange listing) to reconcile with the
standards of the foreign exchange. Fundamentally, the TSX is interested
to see that the company has a viable project with a meaningful resource
and that it will be able to advance within a reasonable time frame and
have sufficient funds to carry out its programme. If the TSX is convinced
that the project has merit and its principals are capable and of good
character, the TSX has shown itself to be flexible and keen to help
facilitate the listing.
• Both the TSX and the TSX-V have experienced mining and oil and gas
listing managers who will follow the application process through from start
to finish and are very responsive to questions.
• There is no equivalent to the AIM “fast track” route for companies on a
“Designated Market”, but in practice if a company is already listed on the
ASX or the LSE, the TSX/TSX-V will take considerable comfort from the
listing and expedite their review process. In addition, the TSX and TSX-V
will typically relax the management and distribution requirements.
• Both the TSX and the TSX-V will look for evidence that a satisfactory
trading market will develop in Canada within a reasonable time frame,
either through a concurrent public offering or marketing/market-making
effort conducted by the company’s broker.
• The TSX/TSX-V must be satisfied that the principals of the company are
reputable and understand their obligations to the Canadian investing
public. They consider the composition of the management and board an
important factor in the consideration of a listing application. While it is no
longer a requirement to have a particular number of Canadians on the
board of the company (other than under certain corporate statutes if the
10. company is re-domiciled in Canada), the TSX/TSX-V will generally look,
at a minimum, to see that at least two of the members of the board have
experience in the Canadian markets. In today’s environment, with a
significant number of new public resource companies, enhanced
responsibilities for directors and a limited pool of qualified directors, it may
take some time to identify suitable candidates for the board. This should
be addressed at an early stage in the planning process. More generally,
the board and management must have relevant public company
experience, there must be at least two independent directors, the
company must have a qualified Chief Financial Officer and its corporate
governance must be to an acceptable standard (e.g. independent audit
committees). The latter requirements should not cause any problems for
an Australian or UK public company.
• Preparing personal information forms (PIFs) for directors/officers and
conducting security checks can take some time and should be factored
into the timetable at an early stage.
• Sponsorship can be a significant factor in approval of a company for
listing, although may not be required for senior companies. Typically, the
broker involved in carrying out the financing associated with a listing will
act as sponsor if necessary for limited additional fees. The sponsor is
required to carry out thorough due diligence on the company (which it
would in any event do in the context of a public offering) and prepare a
report commenting on the project, management expertise and
reasonableness of projected expenditures. However, in contrast to the
“nomad” system under the AIM rules in the UK, the sponsor does not
have any on-going responsibility for the company and it is not necessary
to pay the very substantial on-going fees which nomads receive in the
UK.
• Although technical and reserve reports used as a basis for a prospectus
will generally be reviewed by the analysts at the securities commissions,
the Canadian Exchanges will review the reports to satisfy themselves that
the project and work-plan are viable. In addition to the technical side, the
Canadian Exchanges must be satisfied that the company has adequate
funds to move the project forward. The TSX requires applicants to
prepare an 18-month projection of sources and uses of funds (on a
quarterly basis). This projection must detail all planned and required
expenditures and must be certified by the CFO of the company prior to
listing.
• The Canadian Exchanges will pay close attention to title and tenement
issues and will usually want to see that a mining company holds at least
50% of its main property (although a smaller percentage may be
satisfactory if the JV partner is a party of substance). This is comparable
to the LSE Main Board but differs from the ASX rules, where this is not a
consideration. There is no similar rule for oil and gas companies.
• The formal “listing application” will generally be based on (and incorporate
by reference the relevant sections of) a prospectus or proxy circular for a
shareholders’ meeting to approve a reverse take-over (an “RTO”).
Virtually everything necessary for the review by the Canadian Exchanges
would be found in the prospectus or proxy circular, so in most cases the
listing application would not involve significant additional work. If a public
offering is not being undertaken immediately, an Annual Information Form
will need to be prepared to serve as the base document incorporated by
11. reference into the listing application. Please see Section 2.4.2 for more
information concerning the Annual Information Form.
• For issues with projects in emerging markets, see Section 2.9 below for
recent regulatory developments.
2.4 Reporting Obligations of Public Companies
Tab 3 contains a chart which Blakes prepared in conjunction with the TSX
summarising the reporting requirements of the exchange and of applicable securities laws. From
the perspective of a foreign company considering a public offering in Canada, the key question is
how its reporting standards would change if it became a public company in Canada (with or
without a concurrent listing in a foreign stock exchange). Apart from the specific disclosure
requirements triggered by filing a prospectus or other offering document, disclosure obligations
fall into two broad categories: continuous disclosure and periodic disclosure. The following is a
discussion of some important considerations based on our experience with foreign issuers.
2.4.1 Continuous Disclosure
Continuous disclosure is fundamental to each of the Canadian, Australian and UK
securities regimes. Canadian public companies are required to make prompt disclosure of any
“material changes”. These are defined as changes in the issuer’s business, operations or capital
that would reasonably be expected to have a significant effect on the market price or value of any
of its securities, and includes a decision to implement such a change by the issuer’s board of
directors or by senior management who believe that the board’s confirmation of the decision is
probable. This is similar to the requirements under the rules of the ASX, which direct a company
immediately to provide to the ASX for public release “information that a reasonable person would
expect to have a material effect on the price or value of its securities” or under the AIM rules.
Under each system, there is provision for a limited exception to the immediate disclosure
requirement for confidential information where disclosure could be damaging to the issuer. Civil
liability may be imposed for misrepresentations in continuous disclosure documents or failure to
provide timely disclosure of material changes. These provisions have been influenced by the
Sarbanes-Oxley rules in the United States, however there are a number of defences and
procedural safeguards in the Canadian rules to avoid the frivolous and harassing law suits that
are often found in the United States.
2.4.2 Periodic Disclosure
The differences between Canada and other countries (apart from the United
States) are more marked in the area of periodic disclosure. Public companies in Canada are
required to produce not only annual financial statements and MD&A, but also quarterly financial
statements and interim MD&A, each of which must be certified by the CEO and CFO of the
company. In contrast, under the ASX rules, Australian companies are not required to prepare
quarterly interim financial statements but only semi-annual statements, although they are
required to provide quarterly activities reports and cashflow reports. UK companies are only
required to prepare semi-annual statements.
Canada also requires the preparation of certain other documents which are not
used in Australia or the UK. In particular, an “annual information form” or “AIF” will generally
have to be prepared. This is a base annual disclosure document (similar to a 10-K or 20-F in the
United States), and enables eligible companies to issue securities by way of a short-form
prospectus with abbreviated disclosure and review (the AIF and other continuous and periodic
disclosure documents being incorporated by reference into the short-form prospectus).
The AIF form requires annual disclosure regarding a mining company’s material
properties, using the technical standards of National Instrument 43-101 discussed below (in the
same way that ASX-listed companies must follow the JORC Code incorporated into Appendix
12. 5A). Oil and gas companies must prepare an annual statement of reserves data supported by a
report of an independent qualified reserves auditor or evaluator and a report of management and
directors. The reserves report must generally be prepared in accordance with National
Instrument 51-101, except for senior companies which are also reporting issuers in the United
States, which may be able to obtain an exemption permitting disclosure in accordance with SEC
standards.
In an effort to streamline the periodic and continuous disclosure requirements, the
Canadian Securities Administrators (the “CSA”) have recently proposed a set of sweeping
changes that could potentially relax the disclosure obligations for junior issuers. One of the key
proposals is to make quarterly reporting for interim financial statements and MD&A voluntary and
to replace them with a more robust semi-annual reporting requirement. Other potential changes
include a proposal to replace the AIF with an annual report that combines into a single document
various existing disclosure requirements including business, governance and executive
compensation disclosure, audited annual financial statements, MD&A and CEO/CFO
certifications.
The level of disclosure in Canadian interim and annual financial statements and
MD&A tends to be somewhat greater in our experience than in many Australian or UK
companies’ similar reports, and the regulators (and Canadian institutions) may have higher
expectations regarding the substance of disclosure. In our experience, the foreign companies
who have come to Canada have been able to adjust to the new environment and produce
documents which satisfy the Canadian market requirements and expectations, but this is an area
which requires some thought in the planning for a re-domicile or other public offering.
Time periods for disclosure also vary somewhat. If a dual listing is maintained,
this largely becomes an exercise in meeting the highest common denominator.
2.4.3 Exemptions for Foreign Companies with Limited Canadian Shareholding
Under a rule adopted by all of the Canadian securities commissions to encourage
foreign companies to access the Canadian capital markets, relief is granted from virtually all of
the formal requirements of the Canadian continuous disclosure regime for “designated foreign
issuers”.
To qualify as a “designated foreign issuer”, a company must first of all be
incorporated under the laws of a foreign jurisdiction and not be in substance a Canadian
business (which for purposes of the definition will occur if more than 50% of the voting securities
are held by Canadian residents and one of a number of other conditions, such as a majority of
Canadian directors, is satisfied). The second branch of the “designated foreign issuer” test
requires that the issuer:
• does not have a class of securities registered under section 12 of the 1934 Act in
the United States and is not required to file reports under section 15(d) of the
1934 Act;
• is subject to the disclosure requirements under the laws of a designated foreign
jurisdiction (which includes Australia and the UK); and
• has a total number of equity securities owned, directly or indirectly, by residents
of Canada that does not, as of the first day of its financial year, exceed 10% (on a
fully diluted basis) of the total number of equity securities of the company.
So long as a foreign company satisfies these tests, it can essentially comply with
the Canadian financial reporting requirements, material change, shareholder meeting and proxy
solicitation requirements and similar matters by complying with the rules of its home jurisdiction.
Documents filed with the foreign regulators are required to be filed concurrently with the
Canadian securities commissions and Canadian shareholders provided with the same
13. information as other shareholders of the company. There are some additional formal
requirements (such as inclusion of certain additional information regarding currencies and an
annual statement in a public document relating to qualification for the company as a designated
foreign issuer), but these would not impose any material additional burden on the company. The
foreign company’s officers would not be required to comply with the Canadian CEO/CFO
certification rules.
We note that even if the company exceeds the 10% limit, there are a number of
accommodations under Canadian securities legislation that may still be available to foreign
issuers (such as the ability to utilise Australian/UK GAAP with a reconciliation to IFRS/Canadian
GAAP in the notes to the financial statements). Of course, achieving a shareholder base in
excess of 10% in Canada would indicate that the listing had in fact been a success for the
company.
2.5 Halt Trading
One practical issue we have encountered includes the divergence in practice
between Australia, where trading halts of a day or more pending a material announcement are
quite common, and Canada, where the TSX strongly encourages short halts with trading
recommencing promptly with dissemination of the announcement. This is an issue that requires
some balancing of the customary approaches (although the absence of overlap in the Australian
and Canadian trading days can mitigate the problem to some extent).
2.6 Financial Statements and Auditing Issues
The Canadian Accounting Standards Board adopted IFRS as Canadian GAAP for
public companies for fiscal year beginning on or after January 1, 2011. However, the Canadian
Exchanges and the Canadian securities regulators will generally accept financial statements
prepared in accordance with U.S., UK, and Australian accounting standards, in some cases with
a reconciliation to Canadian GAAP or U.S. GAAP. Financial statements themselves do not
often in our experience raise significant issues. However, preparing Canadian-style MD&A can
require greater effort from the financial team at an Australian or UK company. Three years of
audited financials will generally be required and pro formas may be needed if a TSX listing is
coupled with a spin off, merger or aggregation of properties. Other than the results of an
economic analysis contained in a technical report prepared in accordance with National
Instrument 43-101, forecasts are uncommon in Canadian mining financings. Recent changes
proposed by the CSA, if approved, will reduce the historical financial statements to two years for
TSX-V issuers in IPOs and prospectus offerings.
In connection with the filing of a prospectus on an IPO, the auditors of the
company will be required to produce consent letters and “comfort letters” to securities regulators
and underwriters, both with respect to the statements themselves and to the preparation of any
necessary Canadian restatements or reconciliations. However, there is a no requirement for
inclusion of a “reporting accountants letter”, in contrast to the LSE and ASX. A Canadian listing
will require a company to have its auditors registered with the Canadian Public Accountability
Board.
2.7 Escrow Requirements
Under the Canadian system (like that in Australia or under the AIM rules),
securities held by directors, promoters and vendors of certain assets may be subject to escrow
for a period of time. In the case of a re-domicile transaction or secondary listing, if securities of
the predecessor had been subject to escrow for a prescribed period of time, it is unlikely that
there will be any further Canadian escrow requirements as “credit” will generally be given for the
time securities were in escrow in Australia or the UK. This may not be the case, of course, if the
foreign company is either a private company or a recently-listed issuer. However, in any event, if
the market capitalisation of the issuer is in excess of C$100 million upon listing, no escrow will be
14. required by the regulators. The underwriters or agents may require contractual lock-ups for a
limited time frame.
2.8 Settlement Issues
A foreign company listing in Canada will need to establish a co-transfer agent in
Canada for its securities to facilitate the movement of securities between each country’s clearing
and settlement services. This creates relatively few complications in our experience for
Australian companies taking on a secondary listing in Canada (or re-domiciling with a secondary
listing on the ASX). Settlement for UK companies listing in Canada has proved somewhat more
cumbersome, although initiatives are under way to overcome certain technical issues.
2.9 Emerging Markets Issuers
As a result of some well-publicized problems relating to several companies set up
to IPO Chinese businesses, the Ontario Securities Commission established a regulatory review
of “emerging markets issuers” (“EM issuers”) which issued a report in March 2012. EM issuers
for these purposes are companies whose mind and management are largely outside Canada and
whose principal active operations are in developing areas such as Asia, Africa, South America
and Eastern Europe. The focus of concern is on companies with headquarters in jurisdictions
other than Canada, the US, UK, Western Europe, Australia and New Zealand, so would not
apply to the Australian and UK companies have been the main foreign mining and oil and gas
companies coming to Canada. However, for EM issuers the review is likely to result in tightened
corporate governance, auditing and due diligence requirements and potentially stricter Exchange
rules.
3. Structuring Issues – Re-Domicile Transactions
There are a number of alternative mechanisms that can be used to effect a re-
domicile of a company to Canada:
• export – some jurisdictions, including Canada, permit a company to “export”
to another jurisdiction, which involves the surrender of its existing corporate
charter and “transfer” of the company to a foreign jurisdiction or to be
“imported” into Canada. In this case, the company continues to exist and no
new shares are issued or exchanged as a result of the export or import. This
route is however not available for Australian or UK companies.
• plan or scheme of arrangement – under this route, the foreign company
enters into a “scheme of arrangement” under its corporate legislation, which
generally involves the holding of a court-supervised shareholders’ meeting
with detailed disclosure provided to shareholders regarding the transaction.
There would typically be an “implementation/acquisition” agreement with a
Canadian company (either an existing public company, in the event the
transaction was structured as a RTO as discussed later in this section, or a
new Canadian company incorporated to become the public vehicle). Upon
completion of the scheme, shareholders of the foreign company exchange
their shares for securities of the Canadian company, which becomes the sole
shareholder of the foreign company. If the acquisition is made by an existing
Canadian public company, it would be required to hold its own shareholders’
meeting to approve the transaction. The scheme of arrangement route has
been used in Australia-to-Canada re-domicile transactions.
• take-over bid – in countries where neither an export nor a plan or scheme of
arrangement is available, and the company to be re-domiciled has a large
number of shareholders, a take-over bid may be used to effect the re-
domicile. This was the mechanism used by Kenor ASA (“Kenor”) in 2004 to
15. shift its domicile from Norway to Canada into the new public company Guinor
Gold Corporation.
• private acquisition by share exchange – the last alternative is to simply
provide for shares of the foreign company to be acquired by the Canadian
entity, either by an existing public company or a new company which would
carry out a financing in order to achieve the necessary public distribution, in
consideration for shares of the Canadian company. This route may be
suitable if the non-Canadian company is a private company, and there are a
number of precedents for its use in Canada. It obviously has the advantage
of avoiding the need for a local court procedure, but could raise other issues
from a Canadian perspective (e.g., acquiror’s shareholders’ approval may be
required).
Each of the above alternatives has different legal, practical and cost implications,
and the final decision depends upon the particular corporate regime of the company’s jurisdiction
of incorporation and tax considerations. For an Australian or UK public company, the scheme of
arrangement route would most likely be the way to re-domicile to Canada, while for a private
company a negotiated share purchase would likely be the preferred choice.
The second major structural issue for a foreign company wishing to re-domicile to
Canada to consider is whether it would establish its Canadian presence and distribute its
securities through an initial public offering of shares by a newly incorporated company (as was
done by Anvil Mining, Equinox and OceanaGold) or carry out a “reverse take-over” of an existing
Canadian public company or business combination (as was done in the Champion/Red Back,
Ausam, Moto and UrAsia transactions). In a RTO the shares of the foreign company would be
sold, or transferred under an arrangement or similar procedure, to a listed Canadian “shell”
company, which typically will have ceased to carry on an active business (often a failed tech
business) but remains listed or has a sufficient number of public shareholders to satisfy the
distribution requirements of the Canadian Exchanges. This usually has the effect of giving
control of the shell to the shareholders of the vendor company. The foreign company would
continue as a subsidiary of the Canadian public company.
In either case, it will likely be necessary to file a prospectus and carry out a public
offering in Canada (or a large private placement) in order to achieve the required shareholder
base/distribution to support a liquid market on the TSX or TSX-V and create investor interest in
the company.
There are advantages and disadvantages associated with each alternative.
Adopting the RTO approach gives the foreign company an existing Canadian
public vehicle with a reporting history and a measure of public distribution to assist in satisfying
the listing requirements of the relevant exchange. Depending upon the company, it may also
provide the foreign company with cash and/or management/director expertise. For example, in
the case of the Champion/Red Back transaction, the Canadian company had material properties
and management expertise and was able to raise additional cash by way of a private placement
before the completion of the RTO. Its directors and senior management complemented those of
Red Back and the combined company was therefore able to draw upon the resources of its two
predecessors to turn the merged company into a potentially stronger vehicle. The Talison
Lithium and Salares Lithium merger in 2010 has a number of the same features.
At the junior end of the spectrum, the TSX-V has a class of companies known as
“Capital Pool Companies” (“CPCs”), which are allowed to raise up to a maximum of C$4.75
million of capital and then undertake a “qualifying transaction”, such as the purchase of a mining
property. The advantage of these shells is that they will be clean vehicles, but as they have
limited funds and shareholders and the principals behind them look for a material return for their
efforts in establishing the companies, the benefits may not outweigh the costs in going this route.
16. If a “qualifying transaction” proves unsuccessful, the former CPC may be useful for a RTO, as
was the case for Rugby and WCB. A CPC was used to create a new public company (Palmarejo
Silver and Gold Corporation) to spin out certain assets of the Australian Bolnisi Gold NL.
The principal drawback of the RTO route, of course, is that it involves another
party in the process, with which negotiations must be carried out and which frequently will try to
extract a price for its involvement in the proposal that may or may not be proportionate to the
value of the shell. Each party will need to conduct due diligence on the other’s properties and
business and, unless the shell is “clean”, potential liabilities will need to be addressed. The
Canadian public company will generally need to hold a shareholders’ meeting to approve the
transaction with prospectus level disclosure regarding the foreign target provided in an
information circular. This adds a further level of cost and complexity to the transaction. Each of
the Canadian Exchanges imposes controls on RTOs, including the review and acceptance by the
Canadian Exchange of the disclosure documents provided to the shareholders.
Taking the route of forming a newly incorporated company avoids these
complications, but does mean that as a practical matter the company will likely need to carry out
a public offering concurrently with or shortly after the re-domicile to build its Canadian
shareholder base and satisfy the minimum distribution requirements of the Canadian Exchanges.
(This may not always be necessary as evidence in the Kenor/Guinor transaction where Kenor
already had a very significant percentage of its shareholder base in Canada, although it still
chose to carry out a C$34 million fundraising to solidify that base.) The requirement of public
distribution is a significant difference between the Canadian Exchanges and AIM in London
(although AIM is re-thinking its position in this area). However, without a liquid market there is
little point in undertaking the expense of a listing, so the distribution requirements of the
Canadian Exchanges may not be a practical concern.
For foreign companies at the junior end of the spectrum, which do not have
existing Canadian shareholders, a RTO will likely be the preferred alternative. For a larger
company, establishing a new vehicle may be preferable unless it can find a merger candidate
which would bring additional value to the combined entity.
If a foreign company undertakes a re-domicile transaction using a new Canadian
company, it will be necessary to incorporate and organise this company. In a RTO transaction,
the existing board would likely be replaced or restructured and changes made to the corporate
documents. In either case, the company will have to establish or update its internal corporate
governance regime (board committees, insider trading policies, stock option plans, etc.). Many
of these agreements, such as stock option plans, now follow a fairly standard format in Canada,
although in our experience some modest adjustments will need to be made if the company
wishes to retain a concurrent listing in Australia or London.
Irrespective of the route followed, the composition of the board of directors will
need to be considered. Although it is possible to incorporate in some provincial corporate
jurisdictions in Canada (such as British Columbia, New Brunswick or the Yukon) which do not
require Canadian directors, for both “prestige” and “optical” reasons (to show commitment to
Canada) it will be desirable to include a number of Canadians on the board. Certain provincial
corporate statutes, such as the federal CBCA and the Ontario OBCA, require the company to
have at least 25 per cent of its directors as Canadian residents. This permits a reasonable
balance to be established between Canadian names and international directors. One or more
Canadian directors may also assist in raising awareness of the company and its project to
achieve strong liquidity. This may be of particular significance where the Canadian listing has
not been accompanied by a marketed public offering.
In developing the slate for the board, it is also necessary to take into account the
rules under Canadian securities regulation requiring independent directors both on the board and
on various committees, and specifying (in the case of the audit committee) that those nominees
have appropriate financial expertise.
17. 4. Private Placement
As is the case in countries like the U.S., the UK and Australia, exemptions from
the Canadian prospectus requirements are available for distributions to certain buyers, generally
insurance companies, pension and mutual funds and high net worth individuals. These
distributions are generally known as “private placements”. An offering made by way of private
placement will not subject the issuer to on-going reporting requirements. Buyers of securities of
a foreign company that is not listed in Canada will be subject to resale restrictions in Canada, but
so long as the Canadian shareholding is less than 10% at the date of issue, the purchaser is able
to freely resell on a foreign exchange such as the ASX or AIM.
The Canadian provinces have adopted a uniform exemption regime to largely
standardise exemptions across the country. The exemptions include sales to “accredited
investors”, which are defined in a way very similar to the corresponding exemption from U.S.
securities laws and to the Australian exemptions for “sophisticated investors” and “professional
investors”. Exemptions are also available for distributions made in an aggregate amount of at
least C$150,000 (known as the minimum amount exemption), on the premise that purchasers
who can afford to make such investments should be able to protect themselves. However, the
CSA have recently announced that they are reviewing the criteria for the accredited investors
and the minimum amount exemption. There are concerns that the size of the investment alone
does not assure investor sophistication or access to information and that the current thresholds
may be too low, allowing unsophisticated, retail investors to participate in the exempt market.
Private placements can be effected very quickly in Canada and there are minimal
formal requirements. If an offering memorandum is used to market the securities, it must
generally be filed with the securities commissions in the province in which the private placements
are made, and in certain provinces there may be statutory rights of action granted in a case of
misrepresentations (similar to those given in respect of prospectuses). However, there is no
mandatory form for offering memoranda under the accredited investor or C$150,000 exemptions
and it is possible to make a private placement without using an offering memorandum at all (for
example, using simply the existing public disclosure documents of the foreign company plus a
standard Canadian “wrapper”). A private placement is usually made through a broker which will
enter into an engagement or agency letter and may require some due diligence to satisfy itself of
the accuracy of the offering memorandum or public disclosure record. A report of the trades
must generally be filed and modest fees paid to the securities regulators.
For mining companies, technical information contained in an offering
memorandum regarding a material property previously had to be made on the basis of a
technical report in compliance with National Instrument 43-101 (see Section 5.1 for more details).
This requirement was removed in 2005 and a technical report is no longer required so long as
sales are only made to “accredited investors” (however, technical information disclosed in the
offering memorandum must still comply with the standards prescribed under National Instrument
43-101 and may for reporting issuers trigger a requirement to file a new technical report within a
presentation period if it contains first time disclosure or a change in mineral resources, mineral
reserves or a preliminary economic assessment representing a material change to the issuer).
For oil and gas companies, the technical disclosure standard is National
Instrument 51-101. However, National Instrument 51-101 only applies to “reporting issuers” in
Canada, so private placements by foreign oil and gas companies which have not listed or
otherwise became a public company in Canada (e.g. by filing a prospectus) do not trigger the
need for a separate reserves report (see Section 5.2 for more details).
18. 5. Technical Standards
5.1 National Instrument 43-101 – Standards for Disclosure for Mineral Projects
Where a foreign company raises capital by way of an initial listing on the TSX or
TSX-V, a RTO transaction requiring approval of the shareholders of the Canadian public
company, or a public offering by way of prospectus, it will need to prepare and file technical
reports on its material properties in compliance with the Canadian rules on mining disclosure
standards. These standards are set out in National Instrument 43-101 – Standards of Disclosure
for Mineral Projects (“NI 43-101”). Tab 4 includes an article prepared by Blakes for the Mining
Journal at the time of the introduction of the rule which summarises its key elements. Also
enclosed are articles we prepared for the Mining Journal summarising subsequent reforms to the
Instrument, and the latest amendments made on June 30, 2011.
Technical reports under NI 43-101 must be prepared for all material properties of
the company. The materiality of a property is determined on both a qualitative and quantitative
test. Materiality is determined by the issuer and the Companion Policy to NI 43-101 provides the
following guidance:
“Materiality – An issuer should determine materiality in the context of the
issuer’s overall business and financial condition taking into account
qualitative and quantitative factors, assessed in respect of the issuer as a
whole.
In making materiality judgements, an issuer should consider a number of factors
that cannot be captured in a simple bright-line standard or test, including the
potential effect on both the market price and value of the issuer’s securities in
light of the current market activity. An assessment of materiality depends on the
context. Information that is immaterial today could be material tomorrow; an item
of information that is immaterial alone could be material if it is aggregated with
other items.
Property Material to the Issuer – An actively trading mining issuer, in most
circumstances, will have at least one material property. We will generally
assess an issuer’s view of the materiality of a property based on the
issuer’s disclosure record, its deployment of resources, and other
indicators. For example, we will likely conclude that a property is material
if:
(a) the issuer’s disclosure record is focused on the property;
(b) the issuer’s disclosure indicates or suggests the results are
significant or important;
(c) the cumulative and projected acquisition costs or proposed
exploration expenditures are significant compared to the issuer’s
other material properties; or
(d) the issuer is raising significant money or devoting significant
resources to the exploration and development of the property.
In determining if a property is material, the issuer should consider how
important or significant the property is to the issuer’s overall business and
in comparison to its other properties. For example:
(e) more advanced stage properties will, in most cases, be more
material than earlier stage properties;
(f) historical expenditures or book value might not be a good
indicator of materiality for an inactive property if the issuer is
focussing its resources on new properties;
19. (g) a small interest in a sizeable property might, in the circumstances,
not be material to the issuer;
(h) a royalty or similar interest in an advanced property could be
material to the issuer in comparison to its active projects; or
(i) several non-material properties in an area or region, when taken
as a whole, could be material to the issuer. “
Until December 31, 2005, the Companion Policy to NI 43-101 did provide a
“bright-line” test as to materiality. It provided that a property would not be material if the value of
the consideration paid or required to be paid for the property, including exploration expenditures
required to be made during the next 12 months, was less than 10 percent of the book value of
the total of the issuer’s mineral properties and related property, plant and equipment. While this
test has been specifically abandoned by the CSA, it may still be useful guidance.
Generally, an issuer has an obligation to file a technical report (1) upon becoming
a reporting issuer in Canada or (2) if scientific or technical information that relates to a mineral
project on a property material to the issuer is filed or made available to the public in Canada.
The technical report must be prepared by or under the supervision of a “qualified person”. In
most cases, the qualified person must also be independent of the issuer. However, a “producing
issuer” is generally exempt from the independent requirement unless its obligation to file a
technical report arises upon becoming a reporting issuer in Canada (and, in this case, an
exemption is available if its securities trade on a “specified exchange” – ASX, LSE (main board),
Nasdaq, NYSE, HKSE or Johannesburg Stock Exchange).
Most technical consultants providing advice to Australian or UK companies will
satisfy the requirements for being a qualified person by virtue of their education, work
experience, and their membership in a professional association, such as the Australiasian
Institute of Mining and Metallurgy (AusIMM) or the Australasian Institute of Geo Scientists (AIG).
The technical report must be prepared in compliance with NI 43-101, and
disclosure of reserves and resources must conform to the definitions adopted by the Canadian
Institute of Mining and Metallurgy (CIM) or certain permitted foreign standards, including the
JORC Code, the SAMREC Code and SEC Industry Guide 7 (provided a reconciliation to the CIM
standards is provided). NI 43-101 contains a specific form for the technical report which must be
followed, regardless of whether the resources and reserves are classified in accordance with the
NI 43-101 standards or other foreign standards, and preparation of an appropriate technical
report will be in most cases the first critical path item for a foreign company considering a
Canadian transaction. There are also certain differences between different standards in the
approach to resource reporting and the preparation of economic models which need to be
considered in contemplating a Canadian offering.
In our experience, if the company has recently completed a feasibility study or
similar exercise the process should be significantly easier, although even in this case there will
be a reasonable amount of work required to adapt the existing information to the format of a
NI 43-101 report. Having said that, NI 43-101 is highly regarded worldwide and most
international mining consulting firms have been involved in transactions in Canada and are
familiar with this reporting standard.
In comparing the Canadian requirements in NI 43-101 and the Australian
requirements of the ASX listing rules and the JORC Code (2004 revision), the following points
should be noted:
• the substantive reserve and resource definitions are very similar, one
(perhaps theoretical) difference being that NI 43-101 requires you to have
at least a preliminary feasibility study in place to put an ore body into the
reserve category, while this is still not required even under the 2004
20. revisions to the JORC Code. In our experience, NI 43-101 and JORC will
almost invariably produce the same reserve and resource figures;
• The definitions of “qualified person” under NI 43-101 and “competent
person” under JORC are very similar as well, particularly now that the
2004 revisions to JORC have come into force, which formally recognised
foreign qualifications on the same basis as NI 43-101. However, a critical
distinction between the two regimes is that in many cases NI 43-101
requires a technical report to be prepared by or under the supervision of
an “independent” qualified person. This contrasts with JORC, where the
information may be prepared under the supervision of a “competent
person” employed by the company. Thus it may be necessary for an
Australian company to have technical information on its material
properties “expertised” by an outside consultant to comply with the
Canadian rules;
• NI 43-101 also goes beyond the JORC and the ASX rules to require the
delivery of a formal technical report in a variety of particular situations and
to prescribe its content; and
• NI 43-101 establishes specific rules for the use of technical information
which are not addressed specifically in the JORC Code or ASX
requirements (e.g. restrictions on the use of “inferred resources” in an
economic analysis).
We understand that the ASX is considering certain changes to its listing rules
which could eliminate some of these differences, although we note that the ASX appears to have
rejected the notion of requiring Canadian-style technical reports.
5.2 National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities
If a foreign oil and gas company intends to become listed in Canada or issue
securities to the public by way of a prospectus, it will need to comply with National Instrument 51-
101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) of the CSA. This
Instrument was introduced in late 2003 and substantially amended the Canadian disclosure
regime for oil and gas companies and subsequently updated again on December 28, 2007 and
December 30, 2010. In addition to NI 51-101, the CSA have issued certain administrative
notices dealing with the disclosure of resources, which supplement the requirements contained in
NI 51-101. A summary of the Instrument is included at Tab 5 and below is a highlight of some
practical considerations.
NI 51-101 requires the company to disclose estimated oil and gas reserves data
and other relevant information as at its most recent financial year-end in a prescribed form in
connection with the filing of annual financial statements or (on an IPO) the filing of a prospectus.
The estimates must be prepared or audited in accordance with the standards of the Canadian Oil
and Gas Evaluation Handbook (the “COGE Handbook”).
The statement must be supported by a report on reserves data prepared by a
qualified reserves evaluator or auditor (each of whom is independent of the issuer), who must in
aggregate have evaluated or audited at least 75% of the future net revenue attributable to proved
plus probable reserves and reviewed the balance. The evaluator or auditor must possess
appropriate professional qualifications and experience and be a member in good standing of a
recognised professional organisation (i.e. APEGGA or other provincial equivalent). Only
Canadian professional organisations were initially recognised and foreign evaluators need to
apply for recognition. Orders have subsequently been granted recognising a number of US and
UK associations as acceptable professional organisations. Several orders have been issued
21. permitting use of European evaluators and we should not expect any problems in recognising
Australian or UK qualified evaluators.
Lastly, management and directors must prepare a report which acknowledges
their responsibility in relation to the preparation and disclosure of information and the review of
the procedures relating to the evaluation. This report must be signed by the issuer’s Chief
Executive Officer and one other senior officer, together with any two directors.
NI 51-101 contemplates the possibility of discretionary exemption orders being
granted from certain of its requirements. In particular, exemptions from some of the
requirements may be available for issuers which have securities registered in the United States
and comply with the requirements of the SEC. Exemptions may also be available from the
requirement to use independent qualified reserves evaluators in the case of senior producing
issuers (i.e. those producing more than 100,000 BOEs per day), which can demonstrate their
capability to estimate their own reserves and future net revenues in accordance with the COGE
Handbook. Several orders have been granted exempting U.S. listed companies (including
Burlington Resources Canada, Southern Petroleum Limited, Ivanhoe Energy, Ecopetrol S.A.,
Nexen, Ultra Petroleum Corp. and BG Group plc) which had a very small percentage of their
shareholders in Canada from some or all of NI 51-101, so long as the Canadian shareholding
was less than a prescribed level (generally, 10% for full exemption) and they complied with US
securities disclosure requirements. A similar exemption from the requirements of NI 51-101 has
been granted to two UK issuers (Salamander Energy plc and EnQuest plc) listed on the main
board of the LSE where the Canadian shareholding was less than 10%.
6. Planning
If a foreign company is contemplating raising funds in Canada, the first step is to
familiarise itself with the Canadian market and to start building relationships with brokers and
institutional investors who will take an interest in its securities. While a private placement of
securities can be effected in Canada relatively quickly and with limited formalities, a public
offering or re-domicile will be a significantly more substantial exercise. If this is to be undertaken,
the next priority will be to assess the company’s properties and the technical and reserve
reporting requirements, and to start the process of converting technical and reserve reports into
ones which meet the Canadian standards where required. In most cases, financial statement
preparation will not be a major issue for an Australian or UK company, but it will be important to
determine from the company’s auditors and financial/tax advisers that preparation of the required
statements will not produce any significant problems and that any re-domicile will not trigger any
tax complications for the issuer or its securities. If a RTO transaction is contemplated, the
process of identifying the Canadian target and conducting negotiations for the business
combination and mutual due diligence can take more time than one might expect.
It will obviously be critical to the success of a public offering as well to obtain the
commitment of one or more Canadian investment dealers who can advise as to the appetite in
Canada for securities of the company and assist in developing a business plan to raise the
necessary capital and effect the desired listing in Canada. The support of well-regarded
investment dealers will also be critical to the development of a strong after-market in the
company’s securities.
David Glennie (London)/John Wilkin (Toronto)/Bob Wooder (Vancouver)
Blake, Cassels & Graydon LLP
22. David is the Office Managing Partner of our European office. His practice focuses on international
mergers and acquisitions and corporate finance, with particular expertise in natural resource
transactions, including numerous domestic and international public and private financings and
acquisitions.
Recent transactions include advising:
• Acron JSC and Devonian Potash on the C$260-million sale of potash permits in Saskatchewan
to Yanzhou Coal, and acting for Acron JSC on a separate joint venture over other potash permits
with Rio Tinto
• Solway Group on the C$170-million purchase of the Fenix ferro-nickel project in Guatemala
• Equinox Minerals on its A$1.2-billion take-over of Citadel Resource Group
• Orange-Nassau Energie on its C$102-million take-over of Cirrus Energy
• Initial public offerings on the Toronto Stock Exchange (TSX) of Frontier Rare Earths and Talison
Lithium
• Randgold Resources on its US$578-million take-over of Moto Goldmines
• Secondary listings on the TSX of U.K.-listed Anglo Pacific Group and Noventa and Australian
Securities Exchange-listed Chalice Gold, Western Areas, Bannerman and Moly Mines
• Schneider Electric Industries on its C$500-million acquisition of Xantrex Technology
• Lonmin in its US$263-million take-over of the Canada-listed Southern Platinum and C$475-
million take-over of AfriOre
Awards and Recognition
• David has been recognized as a leading Canadian lawyer in the following publications:
• Law Business Research's The International Who's Who of Mining Lawyers 2011
• Law Business Research's The International Who's Who of Oil and Gas Lawyers 2011
• Chambers Global: The World's Leading Lawyers for Business 2011 (Corporate: Leading Foreign
Firms in London: Leading Individuals (U.K.))
Professional Activities
David writes and speaks on numerous financial, tax and acquisition-related topics and is also a former
president of the Financial Services Commission of the Union Internationale des Avocats.
Publications
• Co-author - "License to Explore", Mining Journal, January 2012.
• Author - "Investing in Africa - Joint Ventures", Presented at IBA Africa Regional Forum, Nairobi,
December 2011.
David G. Glennie
Office Managing Partner, London
Blake, Cassels & Graydon LLP
Canadian Barristers & Solicitors
5th
Floor
23 College Hill
London
EC4R 2RP
United Kingdom
Tel: +44(0)20 7429 3555
Email: david.glennie@blakes.com
Areas of Practice
Securities
Mergers and Acquisitions
Mining
Oil & Gas
International
23. • Co-author - "The Saudi Arabian Mining Code", Blakes Bulletin on Gulf Practice/Mining,
November 2011.
• Co-author - "Amendments to Rules Regarding Standards of Disclosure for Mineral Projects Set
to Come into Force", Blakes Bulletin on Securities Regulation, May 2011.
• Co-author - "NI 43-101 Regulation Update", Mining Journal, April 28, 2011.
• Co-author - "A More Flexible Regime", Mining Journal, April 2011.
Education
Admitted to the Ontario Bar - 1982
LL.B., University of Toronto - 1980
M.A., University of Toronto - 1977
B.A., University of Toronto - 1976
24. John D. Wilkin
Partner, Toronto
Blake, Cassels & Graydon LLP
199 Bay Street
Suite 4000, Commerce Court West
Toronto ON M5L 1A9
Canada
Tel: +(416) 863-2785
Email: john.wilkin@blakes.com
Areas of Practice
Corporate Finance & Securities
Regulation,
Mergers & Acquisitions,
Business,
Mining
John’s practice focuses on domestic and cross-border mergers and acquisitions and corporate
finance transactions for public companies. He also advises Canadian and international companies on
a wide range of corporate governance and securities law compliance matters. John has significant
transactional experience in the mining, telecommunications, financial services and manufacturing
sectors. He regularly advises purchasers, vendors and target companies in connection with public
and private mergers and acquisitions transactions, and acts for both issuers and underwriters on
public offerings and private placements.
From 2002 to 2004, John worked in the Firm's London office, where his practice was exclusively
devoted to advising on international mergers and acquisitions, and acting for underwriters and issuers
in connection with international financings by Canadian companies, the distribution of foreign
company securities in Canada and Euro note offerings. His practice continues to have a strong
international focus, and he regularly acts for clients and on transactions in Australia, Europe, the
United States and Africa.
Recent transactions include advising:
Mergers & Acquisitions and Reorganization Transactions
• Equinox Minerals Limited on its A$1.2-billion acquisition of Citadel Resource Group Limited
• Talison Lithium Limited on its C$47.9-million acquisition and related C$40-million financing of
Salares Lithium Inc. and concurrent C$327.4-million listing on the Toronto Stock Exchange
• Bell Aliant Regional Communications Income Fund on its conversion to a corporation to form
Bell Aliant Inc.
• GrainCorp Limited on its A$757-million acquisition of United Malt Holdings, including Canada
Malting Co. Limited
• Mineralogy Pty Ltd. on its C$100-million unsolicited bid for Waratah Coal Inc.
• Kazakhmys PLC on its C$290-million acquisition of Eurasia Gold Inc.
• Crescent Gold Limited in connection with the A$122-million acquisition of control by Deutsche
Bank AG
• Financial advisers to boards of directors in connection with the provision of fairness opinions
on various M&A transactions
Corporate Finance
• Underwriters in connection with the initial public offering (IPO) of Labrador Iron Mines
Holdings Limited and its two subsequent public offerings of common shares and flow-through
shares aggregating approximately C$215-million
• Talison Lithium Limited on its C$80-million public offering of ordinary shares
• Northland Resources S.A. on its C$256-million global public offering of shares
• Equinox Minerals Limited on its IPO and four subsequent public equity offerings aggregating
approximately C$675-million
• Avnel Gold Mining Limited on its IPO and subsequent rights offering and private placements
aggregating approximately C$40-million
• Issuers and underwriters in connection with Canadian and cross-border private placements
25. Advisory
Various public companies, including Bell Aliant Inc., BHP Billiton plc, CI Financial Corp., Equinox
Minerals Limited, Kazakhmys PLC, Talison Lithium Limited, Northland Resources S.A., HudBay
Minerals Ltd., Crescent Gold Limited and Avnel Gold Mining Limited on strategic advisory and
securities compliance matters, including corporate governance, continuous disclosure obligations and
shareholder meetings
Awards and Recognition
• Chambers Global: The World's Leading Lawyers for Business 2012 as a leading individual in
Projects & Energy: Mining & Minerals (Projects: Global-wide) 2012
• Lexpert magazine’s “Rising Stars: Leading Lawyers Under 40" 2011
John has taught a range of international and corporate law subjects at law schools in Canada and the
U.K. In 2002/03, he was an adjunct faculty member of the University of King's College London School
of Law, where he taught private international law. He has also delivered lectures and seminars at
Osgoode Hall Law School on international transactions, mining transactions, securities law and
income trusts. John has written several articles and chapters for publications on M&A, corporate
governance and securities law topics. He holds a master's degree in law from the University of
Oxford.
Publications
• Co-author - "Multijurisdictional M&A Transactions Involving Canadian Resource Companies -
Challenges And Best Practices For Effectively Managing Legal Roles And Responsibilities",
American Bar Association International Mergers & Acquisitions Sub-committee, Toronto,
August 5, 2011.
• Co-author - "Amendments to Rules Regarding Standards of Disclosure for Mineral Projects
Set to Come into Force", Blakes Bulletin on Securities Regulation, May 2011.
• Co-author - "Amendments Proposed to Rules Regarding Standards of Disclosure for Mineral
Projects", Blakes Bulletin on Securities Regulation, April 2010.
Education
B.C.L. (with Distinction), University of Oxford - 2001
Admitted to the Ontario Bar - 1999
LL.B., Dalhousie Law School - 1997
B.Com. (Hons.), Queen's University - 1994
B.A. (with Distinction), Queen's University - 1994
26. Bob Wooder
Partner, Vancouver
Blake, Cassels & GraydonLLP
595 Burrard Street
P.O. Box 49314
Suite 2600, Three Bentall Centre
Vancouver, BC V7X 1L3
Canada
Tel: +(604) 631-3330
Email: bob.wooder@blakes.com
Areas of Practice
Corporate Finance & Securities
Regulation
Business
Mining
Bob Wooder is a Partner in the Securities Group. His practice focuses on corporate finance and
mergers and acquisitions. Bob practised in the Firm's office in London, England, for four years, where
he advised exclusively on international equity and debt financings, acquisitions and divestitures.
Recently, Bob has advised on the following transactions:
• Capstone Mining in connection with its C$710-million acquisition of Far West Mining and its
simultaneous strategic alliance with Korea Resources Corporation
• The Special Committee of Hathor Exploration in connection with the hostile take-over bid by
Cameco, which, after an auction, resulted in a friendly acquisition by Rio Tinto for C$654-
million
• The Special Committee of Extorre Gold Mines in connection with its purchase by Yamana
Gold for C$414-million
• The Underwriters in connection with offerings by Silver Wheaton totalling US$575-million
• Brazauro Resources in connection with its acquisition by Eldorado Gold for C$122-million
• Silverstone Resources in connection with its purchase by Silver Wheaton for C$205-million
• Lithium One Inc. in connection with its acquisition by Galaxy Resources for C$112-million in
exchangeable shares
• The Underwriters in connection with block trade of C$500-million of shares of Osisko
Resources by Goldcorp Inc.
• Capstone Mining Corp. with respect to its C$300-million business combination with
Sherwood Copper Corporation
• The Underwriters in connection with a C$265-million initial public offering of Pretium
Resources, a subsequent secondary offering raising proceeds of C$115-million and a follow-
on offering of C$80-million
• The Underwriters in connection with a C$300-million financing by Primero Mining Corp., the
proceeds of which were used to fund its C$500-million acquisition of the San Dimas mine
from Goldcorp
• Valley High in connection with its acquisition by Levon Resources for C$118-million
• The Underwriters in connection with C$213-million financing by Keegan Resources
• The Underwriters in connection with the C$130-million financing by Bear Creek Mining
• The Underwriters in connection with a C$184-million bought deal financing of Baja Mining
• The Special Committee of Brett Resources in connection with its acquisition by Osisko by way
of take-over bid for C$308-million
• The Special Committee of Aura Minerals in connection with purchase of the San Andres
Mine, the Sao Francisco Mine and the Sao Vicente Mine for C$240-million
27. • Northern Orion in connection with its C$10-billion combination with Yamana Gold and
Meridian
• Lundin Mining in connection with its C$1.7-billion acquisition of Tenke Mining
• Centenario Copper in connection with its purchase by Quadra Mining for C$106-million
• Red Back Mining in connection with its C$375-million financing and acquisition of Tasiast
assets
• The Special Committee of Cumberland Resources in connection with its purchase by Agnico-
Eagle of Cumberland for C$710-million
Awards and Recognition
• The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada 2012
• Chambers Global: The World's Leading Lawyers for Business
• The Canadian Legal Lexpert Directory 2012
• The Best Lawyers in Canada 2012
• Law Business Research's The International Who's Who of Mergers and Acquisitions Lawyers
2012
• The 2012 Lexpert Guide to the Leading US/Canada Cross-border Corporate Lawyers in
Canada
• Lexpert magazine’s “Rising Stars: Leading Lawyers Under 40" 2008
Publications
• Co-author - "Amendments to Rules Regarding Standards of Disclosure for Mineral Projects
Set to Come into Force", Blakes Bulletin on Securities Regulation, May 2011.
Education
Admitted to the Bar of British Columbia - 1995
LL.B., Osgoode Hall Law School - 1994
28. Global Leader in Mining
Benefit from TMX Expertise in Mining
• Best access in the world for capital for junior explorers
• Alternative IPO routes using Capital Pool Company (CPC) Program and Special Purpose Acquisition Corporation (SPAC)
• 86 billion mining shares traded on Toronto Stock Exchange and TSX Venture Exchange
• Over 200 analysts cover TSX and TSXV listed mining companies
Mining Markets at a Glance - 2011
$12.5
$11.9
Glencore IPO $9.5 billion
$3.4
$1.8
$1.4
Number of
Financings 2,021
TSX/TSXV LSE/AIM ASX HKEx NYSE
142 63 7 3
$0.723
Other
15
Source: Gamah International, compiled by TMX Group.
TSX & NYSE/NYSE
TSX TSXV TSXV LSE AIM ASX JSE HKEx Amex
Number of Mining Issuers Listed 371 1275 1646 44 147 700 56 69 141
Quoted Market Cap. (C$ Billions) 398.4 28.4 426.8 413.6 25.4 464.4 324.5 247.6 1,137.1
New Mining Listings 49 152 201 3 17 79 2 12 8
Source: Exchange Websites, World Federation of Exchanges, Capital IQ
Unless otherwise noted, all stats are as at or YTD December 31, 2011
Equities
Toronto Stock Exchange
TSX Venture Exchange
TMX Select
Equicom
TMX Group Derivatives
Montréal Exchange
CDCC
Montréal Climate Exchange
Fixed Income
Shorcan
Energy
NGX
Data
TMX Datalinx
TMX Atrium
PC Bond
Toronto Stock Exchange and TSX Venture Exchange are home
to 58% of the world's public mining companies
• 201 new mining listings
• $12.5 billion in equity capital raised
Mining Equity Financings (C$B) - 2011
90% of all global equity financings
were done on TSX and TSXV in 2011,
making up nearly 40% of the
world's mining equity capital
30. (1) “G&A” means general and administrative expenses.
(2) “advanced exploration property” refers to one on which a zone of mineralization has
been demonstrated in three dimensions with reasonable continuity indicated. The
mineralization identified has economically interesting grades.
(3) A company must hold or have the right to earn and maintain a 50% interest in the
property. Companies holding less than a 50% interest will be considered on a case-
by-case basis looking at program size stage of advancement of the property and
strategic alliances.
(4) “Tier 1 property” means a property that has substantial geological merit and is:
(a) a property in which the Issuer holds a material interest; and
(b) a property on which previous exploration, including detailed surface geological,
geophysical and/or geochemical surveying and at least an initial phase of drilling
or other detailed sampling (such as trench or underground opening sampling),
has been completed;
(c) a property on which drilling or other detailed sampling on the property has
identified potentially economic or economic materialization; and
(d) an independent geological report recommends a minimum $500,000 Phase
1drilling (or other form of detailed sampling) program based on the merits of
previous exploration results; or an independent, positive, feasibility study
demonstrates that the property is capable of generating positive cash flow from
ongoing operations.
(5) “significant interest” means at least 50% interest
(6) “geological report” or “technical report”, in the case of a mining property, is a report
prepared in accordance with National Instrument 43-101 – Standards of Disclosure
for Mineral Projects or any successor instrument.
*
Mining Disclosure Standards
National Instrument 43-101 is the Canadian Securities Administrators’ (“CSA”) policy that governs the scientific and technical
disclosure for mineral projects made by mineral exploration and mining companies, including the preparation of technical
reports. The instrument covers oral statements as well as written documents and websites. NI 43-101 requires that all
technical disclosure be prepared by or under the supervision of a “qualified person.” Issuers are required to make disclosure
of reserves and resources using definitions approved by the Canadian Institute of Mining, Metallurgy and Petroleum.
NI 43-101 is available at:
http://www.osc.gov.on.ca/en/SecuritiesLaw_rule_20051223_43-101_mineral-projects.jsp
Frequently Asked Questions at
http://www.osc.gov.on.ca/en/Regulation/Rulemaking/Notices/csanotices/2003/csan_43-302_faq-43_101_20030124.htm#faq
LISTING REQUIREMENTS FOR EXPLORATION & MINING COMPANIES
Property
Requirements
TSX Venture
Tier 2
Significant interest5
in a
qualifying property or, at
discretion of the Exchange, a
right to earn a significant
interest5
in a qualifying
property; sufficient evidence
of no less than $100,000 of
exploration expenditures on
the qualifying property in
the past three years
Material interest in a Tier 1
property 4
Advanced Exploration
Property2
Minimum 50%
ownership in the property3
Three years proven and
probable reserves as
estimated by an
independent qualified
person (if not in production,
a production decision made)
Three years proven and
probable reserves as
estimated by an
independent qualified
person
Recommended
Work Program
$200,000 on the qualifying
property as recommended by
geological report6
$500,000 on the Tier 1
property4
as recommended
by geological report
$750,000 on advanced
exploration property2
as
recommended in independent
technical report6
Bringing the mine into
commercial production
Commercial level mining
operations
TSX Venture
Tier 1
TSX Non-exempt
Exploration and
Development Stage
TSX
Non-exempt
Producer
TSX Exempt
Working Capital
and Financial
Resources
Adequate working capital
and financial resources to
carry out stated work
program or execute business
plan for 12 months following
listing; $100,000 in
unallocated funds
Adequate working capital
and financial resources to
carry out stated work
program or execute business
plan for 18 months following
listing; $200,000 in
unallocated funds
Minimum $2.0 million
working capital, but
sufficient to complete
recommended programs,
plus 18 months G&A,
anticipated property
payments and capital
expenditures. Appropriate
capital structure
Adequate funds to bring the
property into commercial
production; plus adequate
working capital for all
budgeted capital
expenditures and to carry on
the business. Appropriate
capital structure
Net Tangible Assets,
Earnings or Revenue
No requirement$2,000,000 net tangible
assets
$3,000,000 net tangible
assets
$4,000,000 net tangible
assets; evidence indicating a
reasonable likelihood of
future profitability
supported by a feasibility
study or historical
production and financial
performance
$7,500,000 net tangible
assets; pre-tax profitability
from ongoing operations in
last fiscal year; pre-tax cash
flow of $700,000 in last
fiscal year and average of
$500,000 for past two fiscal
years
Other Criteria Geological report6
recommending completion of
work program
Up-to-date, comprehensive
technical report6
prepared
by independent qualified
person
Distribution,
Market Capitalization
and Public Float
Public float of 500,000
shares; 200 public
shareholders each holding a
board lot and having no
resale restrictions on their
shares; 20% of issued and
outstanding shares in the
hands of public shareholders
Public float of 1,000,000
shares; 250 public
shareholders each holding a
board lot and having no
resale restrictions on their
shares; 20% of issued and
outstanding shares in the
hands of public shareholders
$4,000,000 publicly held 1,000,000 free trading public shares; 300 public holders with
board lots
Sponsorship Sponsor report may be required Required (may be waived if sufficient previous 3rd
party due
diligence)
Not required
Up-to-date, comprehensive technical report6
prepared
by independent qualified person and 18 month projection
(by quarter) of sources and uses of funds, signed by CFO
Adequate working capital to
carry on the business.
Appropriate capital
structure.
Management and
Board of Directors
Management, including board of directors, should have adequate experience and technical expertise relevant to the company's business and
industry as well as adequate public company experience. Companies are required to have at least two independent directors.
All amounts are expressed in Canadian dollars.
The foregoing is a summary of the applicable listing requirements only.
For detailed listing requirements, refer ro the TSX Venture Exchange Corporate Finance Manual
and the Toronto Stock Exchange Manual, both of which are available at go to www.tmx.com
31. Discover TMX, a World Leading Marketplace for Oil & Gas
UK/Europe:
TSX: 15 Companies
TSXV: 30 Companies
South America:
TSX: 12 Companies
TSXV: 28 Companies
Russia &
CIS Countries:
TSX: 5 Companies
TSXV: 2 Companies
Africa:
TSX: 14 Companies
TSXV: 19 Companies
Middle East:
TSX: 7 Companies
TSXV: 17 Companies
India/Asia:
TSX: 9 Companies
TSXV: 9 Companies
Australia/NZ/PNG:
TSX: 3 Companies
TSXV: 11 Companies
US:
TSX: 22 Companies
TSXV: 55 Companies
Mexico,
Central America
& Caribbean:
TSX: 2 Companies
TSXV: 6 Companies
TMX Group is an integrated, multi-asset class exchange group, which owns and operates equities, derivatives, fixed income
and energy markets. TMX’s equity exchanges, Toronto Stock Exchange and TSX Venture Exchange, are world-class markets
that provide access to financings from under $1 million to over $1 billion and everything in between.
With more oil and gas companies listed on Toronto Stock Exchange and TSX Venture Exchange than any other public
marketplace, TMX is a global leader in the energy sector.
• Largest stock exchange in North America by number of listings
• 1st in the world for oil & gas and home to more of the world’s public oil & gas companies than any other exchange
• 8th largest stock exchange in the world by equity capital raised; 7th by issuer market capitalization
• Proven track record of graduations from TSX Venture Exchange up to Toronto Stock Exchange
As at December 31, 2011:
TMX Oil & Gas Issuers with Global Operations
Global Properties • Global Investments • Global Visibility
Canada:
TSX: 92 Companies
TSXV: 175 Companies
Equities
Toronto Stock Exchange
TSX Venture Exchange
TMX Select
Equicom
TMX Group Derivatives
Montréal Exchange
CDCC
Montréal Climate Exchange
Fixed Income
Shorcan
Energy
NGX
Data
TMX Datalinx
TMX Atrium
PC Bond
$10.1B Oil & Gas
Equity Raised
405 Oil & Gas
Issuers
49 New
Oil & Gas
Listings
$304B
Value Traded
Source: TSX Market Intelligence Group analysis of Company Websites as at December 31, 2011
Note: A single company may have operations or assets in multiple countries