Opinion: Red tape bleeding life from B.C.’s resource opportunities – by Mark Redcliffe (Vancouver Sun – October 27, 2013)


Cost of compliance: Growing regulatory burden is moving the industry unnecessarily toward a bleak future

Costlier and additional regulatory requirements are exacerbating harsh economic realities for B.C.’s resource sector and independent brokerage business. With junior companies on the precipice, Canada’s growing regulatory burden is moving the industry unnecessarily toward a future far more bleak than 2008’s notorious global market free-fall.

The fallout several years ago was as severe as it was quick. Junior exploration companies and senior producers were soon lifted by strong bull markets for commodities, including gold and silver, copper, uranium preceding Fukushima, and oil. However, due to slow economic growth and global financial issues during the last two years, investors don’t want to risk their capital. As a result, share prices have bottomed out, and there are no immediate lifelines on the horizon.

This scenario has acutely impacted the long, mutually beneficial and dependent relationship between B.C.’s junior companies and independent brokerages — venture companies have no operating revenues and rely on equity financings for their operational needs; we historically underwrite these essential transactions.

These financings allow locally based exploration companies to create real value from the ground up — for communities and shareholders — in B.C., Canada and the world. New discoveries are advanced, while at the same time supporting a wide realm of trades, professional and technical services in this province — legal, accounting, engineering, geology, fabricating, drilling, logistics, banking, brokerage, and more.

One need only look at B.C.-headquartered companies listed on the TSX, TSX Venture and CNSX exchanges to realize the importance the resource industry plays in our provincial economy, directly and indirectly.

With our province’s small and medium-sized resource companies in survival mode, national and provincial governing bodies have made the untimely decision to release for comment a massive increase in new and anticipated securities rules. In 2013, there have been a total of 74 rules out for comment compared with only 28 in all of 2007. In addition to these new rules, new tax reporting obligations (both foreign and domestic) continue to further minimize revenue margins at independent brokerages.

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