PDAC supports proposal MI 45-312 by Canadian Securities Administrators

The PDAC has long been an advocate for regulatory reforms that facilitate capital-raising. These reforms are even more necessary now, as mineral exploration companies experience a profound capital-raising crisis.

As such, PDAC strongly supports proposal MI 45-312, which would (subject to certain conditions) allow issuers listed on the TSX Venture Exchange (TSXV) to raise money by distributing securities to their existing security holders.

PDAC agrees with the CSA’s statements with respect to the investment opportunities and disadvantages that retail investors face, including that retail investors:

• must pay market price instead of the discounted price typically available in private placements to accredited investors;
• must pay brokerage commissions; and
• are unable to acquire the warrant “sweeteners” typically issued with shares in private placements to accredited investors.

Moreover, PDAC would like to highlight the fact that retail investors are often also denied the opportunity to participate in the numerous “flow-through” financings that are one of the fundamental capital raising structures used in the mining industry. While accredited investors can take advantage of these investment opportunities and the ensuing tax benefits that go with them, the retail investor is often excluded from receiving these benefits. PDAC supports any initiatives put forth by the CSA to rectify this inequality.

PDAC appreciates any initiatives designed to simplify the process of raising capital in Canada and to increase the opportunities for all investors to be able to participate in capital markets on an equitable basis.

This initiative, if implemented effectively, would allow mineral exploration companies to access capital from a wider pool of investors without compromising the integrity of Canada’s capital markets.

Our submission is available here