Financing of mineral exploration activities
Funds raised in the Québec capital market
by mineral exploration companies are used to carry out numerous
exploration and development projects in the province. This financing
is in the form of common shares, flow-through shares or debentures.
- During the first nine months of 2004, financing raised from
the Québec capital market for exploration and development
projects totalled $47.1 million, compared to the $36.4 million
raised during the corresponding period of 2003. Mineral exploration
companies plan to use 34% of this funding for projects in Québec.
- A total of $3 million in flow-through shares were purchased
directly by private investors in Québec during the first
nine months of 2004. According to information filed with the Autorité
des marchés financiers during the final months of
the year, the proceeds of flow-through share offerings to Québec
investors should total between $20 million and $25 million in
- To this amount must be added the funds raised by flow-through
limited partnerships across the country (which were especially
active in 2004) from Québec private investors, a portion
of which goes to Québec in the form of flow-through investments
in mineral exploration companies. These limited partnerships are
expected to invest between $20 million and $25 million in the
flow-through share offerings of mineral exploration companies
- Sodemex and Sodemex II made equity investments amounting to
nearly $4 million in 22 exploration companies, with roughly
85% of this amount being destined for projects in Québec.
- The Solidarity
Fund QFL, including the regional funds of Abitibi-Témiscamingue,
Nord-du-Québec and Côte-Nord, invested $2.2 million
in the capital stock and debentures of 10 exploration companies.
- The Diversification of Exploration Investment Partnership
a partnership dedicated to the diversification of exploration
investment, signed more than $6 million in investment agreements
with 19 exploration companies in the first nine months of 2004.
- Flow-through and non-flow-through financing sought outside
Québec by exploration companies operating in Québec
should reach levels comparable to or higher than those seen in
The price outlook for the key mineral commodities and the tax incentives
provided in Québec are the main factors that explain the
high level of financing raised in Québec for mineral exploration.
Changes in the securities regulation context in 2004 likewise facilitated
access to funds for a number of companies.
- Last spring, the Autorité des marchés financiers
announced that it would exempt companies from the provisions of
Québec Policy Statement Q-4 dealing with the distribution of securities
of mining exploration and development companies operating in the
primary sector. It also announced that, with a view to harmonizing
procedures with other jurisdictions in Canada, it would in future
grant a discretionary exemption for any financing raised from
a person who qualify as accredited investors, as defined
in Multilateral Instrument 45-103, Capital Raising Exemption.
- The work to simplify the securities regulation system and harmonize
the regulations will continue in 2005. One of the changes envisaged
is a passport model for securities regulation that would give
issuers access to the capital markets of all participating provinces
and territories through the securities regulator in their primary
jurisdiction. To find out more, visit the Web site of the Autorité
des marchés financiers.