Rob Peterman will be participating as a speaker at Mexico Mining Forum 2019, at the Sheraton Maria Isabel hotel in Mexico City this February 6! Don’t miss out on your chance to rub shoulders with the industry’s leaders at the launch of the new edition of Mexico Mining Review. Register here!
TMX Group facilitates listings on TSX and TSXV. It is ranked 9th in the world, with market capitalization of US$2.3 trillion as of September 2018. Fifty-nine percent of global mining financing was done through the TSX and TSXV in 2017. Mexico Mining Review sat down with Loui Anastasopolous, President of Capital Formation and Rob Peterman, Vice President of Global Business Development on their recent trip to Mexico City to find out about the main mining financing trends and how geopolitical uncertainty is affecting exchanges globally.
Q: What are the main financing trends impacting the mining industry and how is the TMX Group responding to these?
RP: I think the mining industry has some work to do in terms of regaining the faith of investors. It has been a challenging period for the industry and I think one of the major trends is a great deal of activity on TSX Venture Exchange (TSXV). This indicates many exploration-level listings, which is essentially a return of risk capital. We have seen over 40 mining companies go public in the last year. But I think we are seeing challenges in the larger financing deals for the mining sector. The biggest hurdle is returning trust to the sector and for the sector to prove how it will grow and return capital to shareholders.
LA: I think it is fair to say that companies have been able to find financing, albeit in smaller amounts and on the TSXV side. I agree that there must be a return of confidence to the sector but I believe it is already coming back, although slowly. Last year we saw it ebb and flow and, although it feels like a quiet period right now, we have yet to see how the market will settle.
I think the industry has had to make a concerted effort to prove to investors that it is becoming more optimized and productive given that it lost access to many of the pools of capital it used to have. Having re-examined their business plans, some have pivoted and some have stayed the course. But getting that confidence back takes time and as commodity prices bounce back, we will also see confidence returning.
Q: Given the global geopolitical volatility, what steps can be taken to mitigate losses?
LA: We have been living through a down cycle in the last seven years. After the commodities super-cycle that lasted 12-13 years, we have had to pivot as any other business would. In cycles like this, we need to pay more attention to other sectors. Although we are still fully dedicated to resources and energy, we have looked a lot at technology and innovation. Much of what we do is global, so many of our opportunities are taking place outside Canada. We are not only diversifying industries but we are also diversifying in terms of the jurisdictions where we reach out to attract listings.
Q: What value does the TSX and TSXV offer to miners, particularly compared to other exchanges?
LA: Toronto is known for its strength in resources because the community understands mining companies in Canada. Whether a banker, lawyer or a retail investor, the ecosystem is conducive to supporting mining. There is no problem accessing capital because the community understands the dynamics and the risk involved. There is a strong part of our retail ecosystem that is very specific to Canada, whereby it is common for people to hold personal trading accounts and make investments in securities. We are known as a pre-eminent global mining exchange with over 50 percent of the world’s mining companies listed with us. Close to 40 percent of all equity capital raised in mining globally happens on our markets. The virtues of our exchanges and unique two-tiered ecosystem are evident to those looking to enter the space and raise capital.
RP: National Instrument (NI) 43-101 is a Canadian mineral resource classification and it allows companies to get the best possible valuation for their business. We allow investors to compare one mining company to others through this instrument, and this allows companies to get the best possible valuation for their assets, both in the ground and in production.
LA: The differentiator with NI 43-101 is that it allows companies to market a property based on inferred resources. That is somewhat unique to our market and helps drive valuations in mining. If you can get the best valuation for your property, that makes it the natural place to raise capital.
Q: What lessons can the BMV learn from the TSX to attract more mining companies?
LA: If you look at the five or six mining companies listed on the local exchange here, they have a very large, US$50-100 billion market cap. We have US$30-40 billion market cap companies too but our strength lies in small to midcap companies. We are almost chasing a different type of company and it is the uniqueness of Canada that allows us to do business with companies as small as US$3 million in market cap up to US$40 billion. That does not exist outside Canada.
This is an exclusive preview of the 2020 edition of Mexico Mining Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy Mexico Mining Review or access our digital copy of the 2019 edition.