Listing Requirements: From Junior Explorer to Global Mining Company
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Listing Requirements: From Junior Explorer to Global Mining Company

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Listing Requirements for a Mining Company

Making it to the Top: Listing Requirements From Junior Explorer to Global Mining Company

Only a few companies ever meet the listing requirements of global stock exchanges, but the effort to list can be worth it.

In 2019, Newmont produced 6.3 million ounces of gold and earned a net income of $2.9B and returned $1.4B to shareholders in dividends.

This infographic from Corvus Gold looks at the requirements and stages a mining company could face along its journey from a mineral prospect to a global mining company.

The Odds of Discovery

There are 510 million km2 (196,900,000 square miles) on the surface of the Earth and the crust is on average 40 kilometers thick (24 miles). Somewhere in there lie the next deposits of gold.

Mineral exploration companies use drill bits that range in diameter from 76-320 millimeters to explore the subsurface. The deepest drill hole is the Kola Superdeep Borehole which measured 12.2 kilometers (7.6 miles). However, most mineral exploration companies rarely drill longer than a kilometer.

Finding a gold deposit, let alone an economic one is akin to using a hair to find a needle in the proverbial haystack. To mitigate this, a typical junior mining company improves its odds by building a portfolio of properties that show potential through hints of gold and other minerals revealed from surface sampling, aerial magnetic surveys, and historic data.

Then, to dig even deeper, a company can raise capital privately for the properties that show potential. Valuations of these mineral properties are largely subjective and difficult to establish. But if the company would like to raise further capital for more expensive exploration, it can tap into stock exchanges.

Canada’s Toronto (TSX) and Venture Stock Exchanges (TSXV) sit at the center of global mining finance. Over the past five years, companies listed on TSX and TSXV completed 53% of all global mining financings, amounting to $44 billion through 6,500 transactions.

Even an idiot can make a great discovery and drive a stock from three cents to three bucks, and those guys wouldn’t get funded privately. It has to be public.
– Ross Beaty, Founder, Chairman Equinox Gold

Risk Capital: TSX-V Listing Requirements

In 2020, there were 606 companies on the TSXV that have a gold property, or a property that showed potential to host a gold deposit. These companies met a minimum set of requirements to access public markets for further funding.

At this stage, a listed mining company will deploy capital to conduct geological sampling and drilling to produce technical studies that could improve the confidence of the presence of a mineable gold deposit.

If this round of work results in an improved understanding of a gold property, a company can move from Tier 2 to Tier 1 on the TSXV, allowing it to raise further capital to increase the scope of technical and economic studies.

TSX Venture Listing Requirements:

 TSXV Tier 1TSXV Tier 2
Property Requirements
  • Material interest in a Tier 1 property*
  • Significant interest in a qualifying property or, a right to earn a significant interest in a qualifying property

  • Evidence of $100,000 of exploration expenditures on the property in the past three years
Recommended Work Program
  • $500,000
  • $100,000 to $200,000
Working Capital
  • Business plan or work program

  • $200,000 in unallocated funds
  • Adequate working capital to carry out work program or execute business plan for 12 months following listing

  • $100,000 in unallocated funds
Net Tangible Assets
  • $2,000,000
  • No requirement
Capital Structure
  • Public float of 1,000,000 shares

  • 250 public shareholders amounting to 20% of issued and outstanding shares
  • Public float of 500,000 shares

  • 200 public shareholders each holding a board lot and having no resale restrictions on their shares

  • 20% of issued and outstanding shares in the hands of public shareholders
Management and Board
  • Management and board with technical and adequate experience in mining
Sponsorship
  • Sponsor may not be required
Other Criteria
  • A geological report recommending work program
Source: TMX. Figures are in CDN. *Property has a current inferred mineral resource, NI 43-101 compliant

At this point, a company should have a good understanding of the costs and methods to produce a profitable operation or the value of a resource. However, early investors take their profits and new ones are needed to take a mineral property to a mining operation.

One drill hole changes the game. It’s very hard to decide who gets to make it and who doesn’t. It’s a big gate, and yet very few make it through. But you have to let them try.
– Lukas Lundin, Chairman, Lundin Group

Financing Growth: TSX Listing Requirements

To develop and construct a mine, mining companies require larger amounts for development and construction, which requires a different class of investor and stricter requirements.

In 2020, there were 133 gold companies listed on the Toronto Stock Exchange, whose primary metal production is gold and/or own a gold property. These companies meet or exceed a set of listing requirements set out by the exchange.

The TSX has three categories of listing for mining issuers: TSX Exempt Issuers, TSX Non-Exempt Producer and TSX Non-Exempt Exploration and Development Stage. These requirements of these categories reflect the stage of development of the issuer at the time of listing. Exempt issuers are more advanced and so subject to less stringent reporting requirements.

TSX Listing Requirements:

 TSX non-exempt (Exploration & Development)TSX non-exempt (Producer)TSX exempt
Property Requirements
  • Advanced property detailed in technical report

  • Minimum 50% ownership
  • 3 years proven and probable reserves with no production decision made
  • 3 years proven and probable reserves
Recommended Work Program
  • $750,000
  • Bringing the mine into production
  • Commercial level mining operations
Working Capital and Financial Resources
  • Minimum $2,000,000
  • Sufficient funds to bring the mine into commercial production
  • Adequate working capital for all budgeted expenditures
  • Adequate working capital to carry on the business
Net Tangible Assets
  • $3,000,000
  • $4,000,000

  • Evidence indicating profitability
  • $7,500,000 net tangible assets; pre-tax profitability from ongoing operations in last fiscal year

  • Pre-tax cash flow of $700,000 in last fiscal year and average pre-tax cash flow of $500,000 for past two fiscal years
Management and Boards
  • Management, including board of directors with adequate experience and technical expertise relevant to the mining projects as well as adequate public company experience
  • At least two independent directors, a CEO, a Chief Financial Officer who is not also the CEO, and a Corporate Secretary
Distribution, Market Capitalization and Public Float
  • Minimum 1,000,000 freely tradeable shares with market value of $4,000,000
  • At least 300 public holders, each with one board lot or more
Sponsorship
  • Required
  • Not Required
Other Criteria
  • Management-prepared 18 month projection of sources and uses of funds detailing all expenditures and signed by CFO
  • Up-to-date, comprehensive technical report prepared by independent qualified person
Source: TMX. Figures are in CDN.

At this stage, bankers and lawyers set up the financing of a project based on geological and economic studies. Good financing terms can enhance the potential value of a mineral deposit and attract investors.

But sometimes, just this one listing is not enough to allow a company or project to meet its full potential.

Expanding Shareholders: NASDAQ and NYSE Listing Requirements

Companies that require more capital or to meet corporate governance rules in the countries they work in can seek a listing on additional stock exchange markets outside of their home countries. There are several benefits of additional listings:

  1. Gain exposure and access to more capital
  2. Help in improving a company’s structure of corporate governance
  3. Attract more and better talent
  4. Improves the reputation of a company

The NASDAQ and New York Stock Exchange (NYSE) can improve access to the American market. There are only 76 gold mining companies listed on the NASDAQ and NYSE exchanges.

 NASDAQNYSE
Pre-tax income$0 to $750,000$2,000,000
Market Capitalization$0 to $75,000,000$2,000,000
Total Assets and Revenue$0 to $75,000,000n/a
Market Value of Public Float$3,000,000 to $20,000,000$100,000,000 or $40,000,000 (if IPO)
Stockholders Equity$4,000,000No more than $60,000,000
Minimum Share Price$2 to $3$4
Operating History0 to 2 yearsn/a
Source: NASDAQ, NYSE. Figures are in USD

Increased trading, world-class investors, and a well-run operation can deliver a mining company a lot of prestige and generate significant returns.

Ultimately, the continued success of the company will rely on its ability to maintain production and continue to deliver gold to the market. This all comes back to a company’s ability to find, develop, and exploit new gold deposits.

I just want to remind you that the real wealth in the mining industry is generated by FINDING something.
– Robert Friedland, Executive Chairman, Ivanhoe Mines

Building Mineral Wealth to Last

The project development timeline and mine lifecycle is a very long one. It can take decades to move from discovery to production. Each stage requires different amounts of capital and investors.

The odds of building a mine are stacked against a junior mining company—but for the few that grow through the listing process requirements, they can become the next great investment.

A mineral discovery is rare, but a successful gold mining company is even rarer.

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Mining

Visualizing the New Era of Gold Mining

This infographic highlights the need for new gold mining projects and shows the next generation of America’s gold deposits.

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gold mining
The following content is sponsored by NOVAGOLD
gold mining

Visualizing the New Era of Gold Mining

Between 2011 and 2020, the number of major gold discoveries fell by 70% relative to 2001-2010. 

The lack of discoveries, alongside stagnating gold production, has cast a shadow of doubt on the future of gold supply. 

This infographic sponsored by Novagold highlights the need for new gold mining projects with a focus on the company’s Donlin Gold project in Alaska.

The Current State of Gold Production

Between 2010 and 2021, gold production increased steadily until 2018, before leveling and falling.

YearGold Production, tonnesYoY % Change
20102,560-
20112,6603.9%
20122,6901.1%
20132,8004.1%
20142,9906.8%
20153,1003.7%
20163,1100.3%
20173,2303.9%
20183,3002.2%
20193,3000.0%
20203,030-8.2%
20213,000-1.0%

Along with a small decrease in gold production from 2020 levels, there were no new major gold discoveries in 2021. Meanwhile, annual demand for the yellow metal increased by 10%, up from 3,651 tonnes to 4,020 tonnes

The fall in production and long-term lack of gold discoveries point towards a possible imbalance in gold supply and demand. This calls for the introduction of new gold development projects that can fill the supply-demand gap in the future. 

Sustaining Supply: Gold For the Future

Jurisdictions play an important role when looking for projects that could sustain gold production well into the future.

From political stability to trustworthy legal systems, the characteristics of a jurisdiction can make or break mining projects. Amid ongoing market uncertainty, political turmoil, and resource nationalism, projects in safe jurisdictions offer a better investment opportunity for investors and mining companies. 

As of 2021, seven of the top 10 mining jurisdictions for investment were located in North America, according to the Fraser Institute. Here’s a look at the top five gold-focused development projects in the region, based on measured and indicated (M&I) gold resources: 

ProjectM&I Gold Resource, million ounces*Grade (grams/tonne)Location
KSM88.4Moz0.51g/tBritish Columbia 🇨🇦
Donlin Gold**39.0Moz2.24g/tAlaska 🇺🇸
Livengood13.6Moz0.60g/tAlaska 🇺🇸
Côté Gold13.6Moz0.96g/tOntario 🇨🇦
Blackwater11.7Moz0.61g/tBritish Columbia 🇨🇦

*Inclusive of mineral reserves. **See cautionary statement regarding Donlin Gold’s mineral reserves and resources.

Located in Alaska, one of the world’s safest mining jurisdictions, Novagold’s Donlin Gold project has the highest average grade of gold among these major projects. For every tonne of ore, Donlin Gold offers 2.24 grams of gold, which is more than twice the global average grade of 1.03g/t. 

Additionally, Donlin Gold is the second-largest gold-focused development project in the Americas, with over 39 million ounces of gold in M&I resources inclusive of reserves. 

Novagold is focused on the Donlin Gold project in equal partnership with Barrick Gold. Click here to learn more now

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