A New Resource for Canada Mining?

The natural resources industry is heavily reliant on ‘traditional’ sources of capital, particularly in key jurisdictions like Canada. Globally, these sources of growth capital are being depleted by a number of competing phenomena, including ETFs and new sector focuses.

In a number of key markets, this diversion of growth capital is disrupting resource companies, with mining equity financings on TSX and TSX-V falling to 2008 levels.

However, in London the picture is slightly different. The size of the London market (all share) is $4.1tn versus Canada’s $3.0tn yet there are 1/6^th the number of mining companies, with very few (42) having a market capitalization in excess of $500m.

Of the top 1,000 institutions who own LSE listed mining companies, 941 are not invested in TSX companies, although 85% of these investors are international. As well as major international funds, London offers access to unique sources of capital including UK-specific smaller company funds, special situation funds and private clients.

The Opportunity

• When an abundance of capital supply collides with a scarcity of investable companies, the result is a significant opportunity.
• This lack of competition has real benefits, not least the potential for better valuations.

We’ve seen LSE-listed companies trade at a premium across a variety of market valuation analyses.

But is it worth the time, cost, and headache?

There are some costs involved in dual listings, naturally. There is the price of the initial listing and ongoing listing expenses. Similarly, regulatory and accounting requirements may differ across jurisdictions which may necessitate local legal and finance expertise.

However, these are easily overstated and there is a large degree of fungibility between the markets and continuous disclosure obligations in Canada closely reflect those in London. Also, money can be raised at a lower rate of commission in London than in Canada which offsets the cost of listing.

More technical advantages…

• TSX/TSX-V listed companies meet LSE eligibility requirements
• No requirement to appoint a sponsor, financial advisor or Nomad
• Ongoing regulatory requirements less onerous than TSX/TSX-V
• Corporate governance follows jurisdiction of incorporation
• Canadian disclosure (including technical reports) meets LSE requirements
• No lock-in requirements
• Shareholder pre-emption rights are not required on Standard
• No requirements to follow the UK Takeover Code
• Listing takes approx. 3-4 months and can be largely based on existing disclosure.

Memery Crystal has helped dozens of companies achieve both Standard and Premium listings on the London Stock Exchange. Many were previously listed elsewhere and continue to enjoy the many advantages of dual listing.

If you have any questions on listing in London, or would like a detailed conversation to understand the impacts on your business, we’d be pleased to help or read our brief guide to achieving a standard listing on the LSE. Download the guide here.