Toronto’s Global Reach
Companies headquartered in the city with operations abroad
Over 1,340 Canadian mining and exploration companies held Canadian Mining Assets (CMAs) abroad, valued at over C$273 billion in 2020. This was a 3.7% rise comparatively to 2019. The Canadian mining footprint expanded to 97 countries in 2020, and foreign assets accounted for nearly 66% of total CMAs value. When it comes to Ontario, with nearly half of global public mining companies listed on the TSX and TSX-V, miners and investors from around the world recognize the province as the global mining hub for finance. About 37% of the global equity capital raised for the mining sector was raised within the TSX universe over the last five years. With investors recognizing the key role that mining will play in the global landscape in the next few decades, looking for companies governed by high ESG standards is paramount, and Ontario has a long list on the menu. Foreign Investment Promotion and Protection Agreements (FIPAs) as well as Free Trade Agreements (FTAs) open channels for unrivalled opportunities within the mining market for the international investor community.
PearTree Securities has become the largest source of flow-through capital in the country, with over US$2 billion raised for exploration and development. The flow-through model relies on philanthropists buying shares to donate to a charity of choice. The non-profits then sell on those shares to Canadian or international investors or institutions. “Since buyers are purchasing the shares stripped of their Canadian tax value, there is an opportunity for a larger universe of global investors to acquire equity at discounted prices,” said Lisa Davis, PearTree’s CEO.
"In Ecuador, mining is the responsibility of the national government as there is no provincial input or permitting regulation. The national government is extremely focused on bringing in tax dollars and FDI into the country. Companies build their own social license to operate, and most developments have the support of local communities surrounding projects."
Christian Kargl-Simard, President & CEO, Adventus Mining Corporation
For Canadian residents, cash-donation tax costs can be reduced from an average of C$0.50 cents on the dollar to about C$0.10 cents after tax. “They are getting both a donation tax credit and the tax benefits of a flow-through share subscription,” added Davis.
Making use of the flow-through model, Red Pine Exploration entered an agreement with Haywood Securities for a private placement financing to secure the consolidation of its Wawa gold project. “Shares in the offering qualified as standard flow-through and charity flow-through shares. […] The premium on charity flow-through is quite significant at approximately 35%,” said Quentin Yarie, president and CEO of the company.
To calculate tax credits, one must take into account the 100% federal flow-through deduction, plus a 15% tax credit, in addition to a 5% Ontario Focused Flow-Through Share Tax Credit (OFFTS) for eligible individuals. According to the Ontario government: “The amount of the OFFTS tax credit in a tax year will reduce the balance in an individual's cumulative federal Canadian Exploration Expense pool in the year following the tax credit claim.” With over US$15 billion in financing activity in 2020, US-based Roth Capital Partners is a leading underwriter focused on companies with a market cap of under US$1 billion. “Roth has taken an interest in working with Canadian mining companies since mining makes up roughly 15% of the aggregate Canadian public markets and because of the relevance of the sector in the transition economy. Its goal is to help companies access new pools of capital .US capital markets are somewhere between 20 and 35 times the size of Canadian capital markets,” said Braden Fletcher, president of Roth Canada.
"The current administration in Mexico has not really done anything drastic to change things, but they have created a lot of headline noise, which is challenging. Mining is too important to the Mexican economy for the government to do any harm to it."
Taj Singh, President & CEO, Discovery Silver Corp.
With a leadership in best practices within the sector, miners from around the world often look to Canada for pathways in innovation, technology, sustainability and community relations. Many service providers, such as AMC Consultants, which is originally Australian, view Canada as a key market. AMC started with an office in B.C. in 2007 and then Toronto in 2011. “Ontario specifically is of great significance to the company, as it has a rich mineral endowment making it an attractive location for investment by Canadian as well as international mining companies,” said Francis McCann, general manager, Toronto, AMC Consultants. Companies, such as Anaconda Mining, have chosen to base their headquarters in Ontario, while operating across Canada. The TSX-listed emerging gold producer in Newfoundland and Nova Scotia is focused on growing and developing the Goldboro project. “The Environmental Assessment Registration Document will be submitted to the government around Q2 of 2022, which starts the final permitting process and is expected to last 18 months. The project should be shovel ready by the end of 2023,” said Kevin Bullock, President and CEO.
TSX-listed Mandalay Resources has the world’s second highest-grade gold mine, Chesterfield, in Victoria, Australia, with all-in sustaining costs of about US$1,000/oz. Mandalay is currently not interested in a dual listing with the ASX due to the cost and added layers of challenges when reporting. “Toronto provides companies with access to industry funds, networks and communications with mining-focused institutions that are not available elsewhere easily,” said Dominic Duffy, president and CEO of Mandalay Resources.
“The TSX uses NI 43-101 for mineral resource and ore reserves reporting while the ASX uses the JORC code. The TSX also requires quarterly financial results, while the ASX requires quarterly reports without a lot of financial detail,” said Jake Klein, executive chairman of Evolution Mining.
Focused on the 4 million oz Au Ikkari discovery in Finland, Rupert Resources caught the attention of Agnico Eagle, which invested in the company in 2020. CEO James Withall said: “We have been able to raise C$48 million to continue exploration, with 60% of our budget allocated to Ikkari, 40% allocated to our regional program and on making further discoveries of scale.” Rupert Resources is funded until the end of Q2 2023 and looking for partners for its assets in Canada.
TSX-listed Steppe Gold operates the ATO gold mine in Mongolia, and the company has created a joint venture with the provincial government to unlock the Uudam Khundii (UK) project – the first time the Mongolian government has invested in a gold company with its new sovereign funds. Eventually, Steppe wishes to enter a dual listing with the Mongolian Stock Exchange (MSE). “Since our first gold pour, all of our gold has been sold domestically through the central banks. This allows us to have a rapid sale cycle while increasing the government’s reserves,” said Aneel Waraich, Steppe Gold’s EVP.
Although some Ontario mining companies have faced challenges of perception when getting involved with Chinese investors, such as Power Metals Corp. partnering with Beijing-based Sinomine Resource Group, it has not been a deterrent. “We had a little bit of pushback, […] and people thought that they were taking over our minerals, but it is not the truth,” said Johnathan More, chairman, Power Metals Corp. “Canada, the US and Australia are looking closely at identifying the Critical Minerals in their countries to attempt to decrease their reliance on China,” said Keith Spence, CEO and partner, Global Mining Capital.
Mining companies from around the globe look to Ontario as a source of know-how, stability, technological leadership and finance. As the race to secure critical minerals continues, Ontario’s ESG standards will give the province a competitive edge when compared to many Asian counterparts. Although still in its infancy stages, the province’s experience and professionalism is bound to make the battery metals sector prosper.
The continued support by the federal and provincial governments makes Ontario a very attractive investment destination and mining base. Incentives, such as the Mineral Exploration Tax Credit (METC), which helps companies raise capital by giving tax credits to investors, the Scientific Research and Experimental Development (SR&ED) Program, which grants income-tax credits and refunds for certain R&D Canadian expenditure, and the Accelerated Capital Cost Allowances (ACCA), which can make way for a depreciation allowance of the total asset cost, draw international attention. It is a location where capital pools can be accessed and innovation is developed."
In the same way that the MICA network was created across Canada to develop and optimize processes in mining, Ontario is actively collaborating with international Universities, research labs, innovation hubs and multi-disciplinary professionals to leverage on combined expertise for a mining future. The province's far-reaching, global network allows it to stay on the cutting edge of new technologies and innovation on the world stage.
Image courtesy of Steppe Gold