TSX leads the world in mine financings

As in South Africa, gold has been one of Canada’s most important mineral products for a long time, but in the last few years we have begun to produce diamonds too. South Africa has the distinction of being the home of the Bushveld igneous complex, which has the largest platinum reserves in the world. This is a particularly interesting distinction these days, as the price of platinum recently hit a 23-year-high.

Most Canadians have some knowledge of mining, and many — and this is one difference between Canada and South Africa — invest in mining stocks, and have been doing so for many years. Forty-six per cent of adult Canadians own equities, which means we have a vibrant retail investor base, as well as institutional investors, who understand mining and mineral exploration.

Last year, more than 11 billion mining shares traded on the TSX Group’s two stock exchanges for a total trading value of $129 billion. And South Africa would appear to be following our lead, as recent legislation there has opened up important opportunities for exploration. It will take some time for South African investors to develop expertise and comfort in the high-risk practice of investing in junior companies that explore for mineral deposits, but the groundwork has been laid.

The TSX Group’s junior market has a history that stretches back almost a hundred years, and we find that there’s always more to learn. Canada has a large support community that specializes in mining — at the exchanges and securities commissions, of course, but also among consultants, securities lawyers, investment bankers and mining analysts. It is this integrated framework of special mining experience and expertise that has created and fostered the vibrant capital markets for mining that exist in Canada.

The Toronto Stock Exchange celebrated its 150th anniversary last year, and some of the first financings the exchange carried out were for mine exploration and development. We have been a leader in mineral exploration and mine financing ever since, and currently rank as the seventh-largest stock exchange in the world and the third-largest in North America.

Mining accounts for 14% of all the issuers listed on Toronto Stock Exchange. Even more mining-oriented is the TSX Venture Exchange, which is used by early-stage companies to raise smaller amounts of capital for exploration and development. Forty-two per cent of the issuers on TSX Venture are mining-related.

Although some of the world’s largest exchanges occasionally complete a big-dollar mine financing, we believe it is the ability of junior exploration companies to raise funds that is critical to the overall success of the global mining industry. Without the financing available for skilled explorationists to find deposits, fewer mines would be built.

But not everything that happens on our exchanges is a reflection of what’s happening within Canada. Of the largest equity financings carried out on our two exchanges during the first eight months of 2003, sixteen were for foreign projects.

To the end of September 2003, our exchanges helped raise a total of more than $3.4 billion for mineral exploration and mine financing around the world. That’s more than was raised by any other exchange or exchange group in the world. By comparision, the London Stock Exchange and Alternative Investment Market, the second-largest mine-financing exchange group, helped raised $2.4 billion during that period.

Considering our position in the capital markets, you could say the TSX Group is to global mine financing as Limpopo’s Bushveld complex is to the world’s platinum reserves — which is to say the TSX Group is the richest and largest source of mining capital in the world, just as Bushveld hosts the richest and most massive platinum deposits.

— The author is the CEO of the TSX Group, and the preceding is an edited version of a speech she gave at a meeting in Toronto organized by the Canada-South Africa Chamber of Business.