TORONTO (Reuters) – Hundreds of small mineral exploration companies may have their stock delisted by Canada’s TSX Venture Exchange in the coming months, choking off a development pipeline that has long supplied major miners with new projects.
As commodity prices boomed in the last decade, a flood of new issuers swelled the ranks of the Venture, TMX Group Inc’s exchange for small-capitalization companies, burnishing Canada’s reputation as the center of global mining finance.
But the money has dried up over the past two years, thanks to a slump in metal prices and a spike in costs. Hardest hit are the Venture-listed, exploration-stage companies that depend on equity financing to develop their properties to the point where they can build a mine or sell the asset to a major.
“There’s a crisis that’s looming,” said Joe Groia, a securities lawyer and former head of enforcement at Canada’s top securities regulator, the Ontario Securities Commission. “If we continue to not address it, what we’re going to end up with is literally hundreds of companies where boards are either going to walk away or hundreds of companies that are going to run out of money.”