Issue link: http://resourceworld.uberflip.com/i/661612
16 www.resourceworld.com A P R I L / M A Y 2 0 1 6 T he TSX Venture Exchange is more than a platform to buy and sell stocks. Heavily weighted with junior mineral exploration companies, the exchange is the final result of the efforts of thousands of tal- ented people that play an important role in not only Canada's mining industry, but also in the development of the mining industry in many other countries. The Exchange is based on a solid foundation of prospectors, geologists, geo- physicists, mining engineers, accountants, corporate lawyers, auditors, consultants, drilling companies, assayers, camp manag- ers and others that come together to create a publically-trading junior exploration company. However, the spark for all this effort is generated by entrepreneurs. I see out my office window the sky- scrapers of downtown Vancouver where I am surrounded by the offices of hundreds of junior explorers, guided by men and women who are willing to raise funds to explore for economic mineral deposits. It is a fact that finding an economically viable mineral deposit is a long shot; that's just the way it is. There are numerous mineral proper- ties with good showings worth exploring but they just do not have the grade, ton- nage or some other requirement necessary to become mines. Nevertheless, histori- cally speaking, it is the juniors that have made most of the big discoveries that have turned Canada into a major mineral producer and resulted in Vancouver and Toronto hosting the world's major talent base for the mining sector – in itself a pre- cious commodity. For all this effort to come to fruition, the TSX Venture Exchange needs regula- tions that both prepares a fair playing field for investors as well as provides a suitable venue for junior explorers to trade their shares enabling exploration funds to be raised for their mineral projects. For the last few years, the downturn in commodity prices and negative investor sentiment has hammered the share prices of many junior explorers. Exploration funding is hard to find – especially if your shares are trading for pennies – all the more reason for the Venture Exchange to facilitate private placements for high-risk/ high reward projects as well as develop regulations that help, not hinder, junior explorers. John Kaiser, a respected mining sector analyst and publisher (www. kaiserresearch.com) who commands stand- ing-room only audiences at many North American investor conferences, has taken issue with some of regulations and struc- tural changes on the Venture Exchange that appear to hinder junior explorers. One of his concerns is the regulations that determine who is eligible to par- ticipate in private placement financings. Ostensibly designed to protect investors, "accredited" or "sophisticated" investors may buy private placements if he/she has a net worth in excess of $1 million not including equity in their primary resi- dence, or $200,000 earned income during the past two years. "This badly shrinks the Canadian pool of eligible placees," says Kaiser. "The situ- ation is aggravated by the CRM [Client Relationship Model] whose 'suitability' hammer discourages financial advisors from steering their accredited investor clients into resource junior private place- ments. Regulators, led by the Ontario Securities Commission, have escalated their war on the Canadian resource junior eco-system by imposing a requirement that investors accurately complete and submit to the public company an invasive questionnaire about household finances." Yet, anyone interested in high-risk/high reward odds can blow $40,000 in Las Vegas or their local casino. Yes, buying a private placement in a junior explorer may be con- sidered gambling, even though the placee actually owns part of a real company. A loser in Vegas walks away with nothing. A junior miner with a sliding share price can usually be sold before all is lost. People that want to buy junior mining private placements already know it is high risk – they don't need to be protected. This leads to another related concern for Kaiser – the Client Relationship Model. "The first structural change to hurt the resource juniors is the Client Relationship Model which requires every full service Kaiser calls for revamping the TSX Venture Exchange by Ellsworth Dickson John Kaiser "Nevertheless, historically speaking, it is the juniors that have made most of the big discoveries that have turned Canada into a major mineral producer and resulted in Vancouver and Toronto hosting the world's major talent base for the mining sector – in itself a precious commodity."