Securities • Issues & Advocacy

December 23, 2005

VIA EMAIL

The Crawford Panel
c/o Nicole Murphy
1405-130 Albert Street
Ottawa, ON K1P 5G4

Dear Sirs/Mesdames:

Re: Crawford Panel

As you may be aware, the Prospectors and Developers Association of Canada (the “PDAC”) is a national organization whose membership consists of approximately 4,500 individuals and corporations who are engaged in mineral exploration and mining activities throughout the world.

Mining companies represent approximately 28% of all issuers listed on the Toronto Stock Exchange (“TSX”) and the TSX Venture Exchange (“TSX-V”). As of June 30, 2005, mining companies accounted for 46% of the market capitalization of all TSX-V listed issuers. In 2004, 51% of the equity capital raised worldwide for mining companies was for TSX and TSX-V issuers. Accordingly, the PDAC believes that securities laws that benefit mining issuers would be of net benefit to the Canadian capital markets generally.

The most important issue facing the mining exploration sector in Canada is the cost of raising capital. The main challenge at the heart of this issue is the structure of the securities regulatory regime in Canada. The current regime consists of multiple jurisdictions and multiple securities policies and regulations, which forces companies to spend unnecessary funds and time raising capital for exploration projects. The PDAC has advocated for a regulatory system in Canada that would be administered by one securities regulatory authority applying one set of rules in a consistent manner across the country.

We have attempted to influence changes to the substance of securities laws to provide (i) investors with timely and useful disclosure; (ii) our members with access to capital on a speedy, effective and cost-efficient basis; (iii) a corporate governance regime which is appropriate to the financial strength and nature of the issuer; and (iv) regulators with the enforcement tools required to safeguard the public confidence in the capital markets. A more efficient regulatory framework would make the existing securities legislation more efficient. However, even the best procedural framework could not overcome the competitive disadvantage that Canadian companies would face if we were to preserve the substance of outmoded, cumbersome and unduly restrictive legislation. The PDAC advocates the development of securities laws that ensure that the maximum amount of a company’s financial and managerial resources are available for mineral exploration and development work.

We are grateful to have the opportunity to make these written submissions to the Crawford Panel and request that we be invited to participate in one of the Panel’s roundtable discussions to be held in Toronto. As you will see from the various documents appended to this letter, we have been active participants in the debate over securities reform and have advocated for many of the same principles and changes that the Panel has proposed in its Discussion Paper.

In general we were pleased with the positions taken by the Panel in the Discussion Paper and agree that we need a single regulator applying a common body of legislation in a consistent manner. We applaud the Panel’s recognition that the single regulator should not be dominated by any one province and that there exist regional centres of regulatory expertise to draw upon.

However, we urge the Panel to consider the following in its deliberations:

• Most Canadian public companies are small and medium sized enterprises (“SMEs”). As such they need frequent and efficient access to the capital markets, have few management or financial resources to devote to unnecessary regulatory compliance and require corporate governance rules appropriate to their stage of development. The Panel should recognize that the rules applicable to large companies are not always appropriate for SMEs.

• Uniform legislation and consistent interpretation are central to the securities reform exercise. Therefore, these principles should be stated in the “purposes” or “objectives” section of the Canadian Securities Act. We note that the drafters of the Uniform Securities Legislation refused to do this notwithstanding that the purpose of the legislation was to be “uniform”.

• The inclusion of the federal government as a Participating Jurisdiction must assist in the formation of the single regulator. It should not result in a situation where Canada moves from 13 securities regulator to 14. Therefore, the Panel should recommend that if the number of Participating Jurisdictions falls below a specified number, the federal government should cease to be a Participating Jurisdiction and remove itself from the area of securities legislation.

In respect of specific submissions to the Panel, we note that we have commented on securities law reform in connection with the Wise Persons Committee (2003), the Uniform Securities Legislation (2003), the Inter-Provincial Securities Initiative (2003), the BC Model (2003) and the IDA’s Task Force to Modernize Securities Legislation (2005). Rather than repeat those submissions here, we attach them for your review.

We thank the Panel for considering our submissions. If the Panel or any of its members would like to discuss our comments further please contact Gregory Ho Yuen, Co-Chair of the PDAC’s Securities Committee at (416) 865-4534.

Yours truly,

Original signed by
Peter Dimmell
President

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