Going Public - Getting Ready to List Your Junior Mining Company
For mineral exploration companies looking to access our public venture markets in Canada, two key components to plan around are: (i) the prior expenditures on your qualifying property; and (ii) the planned phase 1 (non-contingent) work program for your qualifying property. This post will briefly highlight these requirements and certain key considerations relating to those requirements.
It is no secret that the microcap market has had its challenges recently, but we are starting to see signs of cautious optimism in the U.S. IPO market that may suggest there are better times ahead for companies looking to go public. Locally, in Q1, the TSX Venture Exchange saw an increase in (non-CPC) new listings from about 14 in Q1 2023 to 26 in Q1 2024. Regardless of where the broader market goes in the short term, the Canadian public venture market remains a unique ecosystem that is rooted in junior mining companies that require access to capital – 18 of the aforementioned 26 new listings on the TSXV in Q1 2024 were mining companies and the Canadian Securities Exchange (another indicator of Canadian public venture market activity) also continues to list a significant number of junior mining companies.
Given the need for capital and the apparent goal of government, regulators and stock exchanges to explore and develop critical minerals, reduce the regulatory burden and improve access to capital, it is evident why we will continue to see new listings of mineral exploration companies in Canada. Whether that is done by way of traditional IPO, RTO/QT or other method, it is important for companies to prepare well in advance of their target trading date. When markets pick up, it will inevitably increase the volume of listing candidates and put pressure on the stock exchanges and securities regulators to deliver on their service goals, which is why it remains important for companies to get ahead of the game and put themselves in a position to succeed.
Preparing for and delivering a well-executed listing plan is key to accessing capital on an optimal timeline and overall go-public success.
Prior Expenditures and Work Program
The minimum requirements for the two aforementioned listing criteria will depend on the stock exchange you are listing on and, in some cases, the path you choose to list. For instance, mineral exploration companies can still list on the CSE with only $75,000 in qualifying expenditures spent on a qualifying property in the past 36 months and a phase one work program of $100,000, provided that a much more restrictive escrow regime is applied to all builder shares and shares held by principals. Without applying the more restrictive escrow regime, those amounts must be at least $150,000 and $250,000 respectively, which are higher than the requirements of the TSXV ($100,000 and $200,000, respectively).
The more restrictive escrow regime may be palatable to some companies and their shareholders, but that won’t always be the case and is something that needs to be navigated in the event that path is taken. There are other key questions that may come up, depending on where your company falls in terms of its prior expenditures and work program:
- Who incurred the expenditures (listing applicant, prior owner, optionor, etc.)?
- Do the expenditures qualify for stock exchange listing purposes? For example, certain expenditures such as technical report writing costs may not qualify.
- Is your company eligible for a waiver of the prior expenditures requirement if the $75,000/$100,000/$150,000 threshold, as applicable, isn’t met?
- Will your company have adequate financial resources to cover the proposed phase 1 work program on its qualifying property, as well as property maintenance costs, G&A, etc. for the prescribed time period post-listing?
- How do prior expenditures on your company’s mineral properties potentially impact the determination of what financial statements or technical reports you may need for listing?
The building blocks of a microcap mining listing in Canada are largely based on these two listing requirements. From there, many more listing requirements and steps will unravel, so it is important to get ahead of the game with respect to those items.
It always helps to be ready to list and access capital on an efficient and timely basis by focusing early on IPO/go-public readiness, especially when capital markets begin to pick up.
If you have questions concerning the applicable listing requirements or process to list your mining company in Canada, please contact JJ Hudolin at jhudolin@dumoulinblack.com or by phone at 604-602-6823.