February 23, 2021
The Ontario Capital Markets Modernization Taskforce has published a report which calls for 74 reforms to the province’s capital markets that aim to make raising capital attainable for issuers of all sizes in public markets (read our full analysis on the Taskforce’s recommendations here).
“I think the mining industry will welcome a taskforce turning its mind to ways to streamline the capital raising process … and be pleased to see a recognition that for smaller companies, we should actually consider how we can make capital raising easier,” Michael said.
Michael also noted that the trend to secure financing through private capital has extended to the junior mining sector.
“In 2020 there were opportunities for developers to raise capital because of the underlying economics and the commodity prices for precious metals in particular … [But] there has been generally, if you look at the trend over the past 10 years, a real increase and prevalence in private sources of capital funding project development,” he said.
“The prevalence of that alternate financing model has mirrored the challenges of the public markets described by the taskforce.”
Michael pointed out that private capital is however more expensive than public capital.
“Access to the public capital markets allows you to build a better overall blend of capital structure. Even though there’s a lot of work to do to put meat on these proposals, [the mining industry] will really welcome that direction,” Michael said.
Michael also hailed the task force’s recommendations to require publicly listed Canadian issuers to disclose information on board diversity, and environmental, social and governance risk.
“Those are two areas where the mining industry is very focused now, because of certain perceived true or false shortcomings historically,” Michael said.
“I think the industry and investor groups will welcome that, and in some cases investors and issuers themselves welcome some clarity about expectations for disclosure and expectations for reporting because it allows them to get on with the business of affecting change and disclosing that change in a matter that’s consistent across the industry.”
To find out more about the evolution of the Canadian mining industry, read the Q1 Torys Quarterly article “Canada-U.S. plan to limit reliance on other countries for critical minerals”.