Junior Exploration Sector

http://business.financialpost.com/news

Canada’s junior stock exchange continues to plumb new depths that would have seemed unimaginable even a few years ago.

The S&P/TSX Venture Composite Index sunk below 500 points for the first time on Monday, hitting a record low of 495.14 before closing at 496.18. To put it in context, the Venture is down 29 per cent since the start of the year, and a staggering 85 per cent since its peak in 2007.

What may be most distressing is the way it has dropped. Since mid-2011, the index has been in a slow and relentless downward trend as investors have gradually capitulated and moved their money elsewhere.

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The National Post is Canada’s second largest national paper.

It was the fullest expression of Canadian corporate nationalism. A convergence of the mightiest financial poobahs in the country: bank executives, public pension managers, regulators, politicians — all out to protect the vital organs of Canadian capitalism, the nation’s stock exchanges, from the foul clutches of a foreign company.

“We must ensure,” said Jim Prentice, then vice-chair of Canadian Imperial Bank of Commerce, “that the so-called ‘mind and management’ of Canadian finance do not migrate to London, or for that matter to New York or Hong Kong.”

That was in March 2011. More than four years have passed since Prentice, along with TD Bank CEO Ed Clark and others, joined forces to thwart a proposed merger of the TMX with the London Stock Exchange.

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The National Post is Canada’s second largest national paper.

Canada’s junior mining sector is waiting with bated breath to see if Justin Trudeau’s incoming Liberal government will maintain a tax credit that has helped companies raise billions for exploration.

Miners argue that the 15-per-cent Mineral Exploration Tax Credit (METC) is an invaluable tool that encourages companies to work in Canada and helps keep the sector active during commodity downturns, including the current one. But there are detractors in the academic community who say it is just another inefficient benefit that favours one industry over another.

During the federal election campaign, the Liberals were the one major party that did not form a strong position on the METC, which is set to expire in March. The Conservatives said they would extend the credit for three years, and increase it to 25 per cent for remote projects, like Northern Ontario’s “Ring of Fire.” The NDP mused about making the METC permanent.

Rod Thomas, president of the Prospectors & Developers Association of Canada (PDAC), said he is optimistic the Liberals will continue with it. “I think they recognize it is vital to the industry,” he said in an interview.

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