Wednesday 30th September 2020

Resource Clips

‘Crisis’ at the TSX Venture

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With the TSXV languishing at less than half its early-2011 value, John Kaiser points out that of the roughly 1,400 TSXV companies he covers, more than half have only enough working capital “to subsist for another year.” While TSXV president John McCoach counters that “no regulatory burden has been added for the last two or three cycles,” the concern of those who generate the sector’s wealth seems to be less about the mere possibility of recovery than it is about the chances of a healthy and lasting one.

The Venture Capital Markets Association argues the juniors’ case for regulatory reform

Tangled in red tape, Canada’s junior resource companies face more than economic malaise, according to a newly formed advocacy group.

Even if venture capital companies were to delist from the TSXV in favour of the CNSX (or Aequitas Innovations’ proposed new exchange), regulation by the various provincial and territorial securities commissions in addition to the Investment Industry Regulatory Organization of Canada (IIROC) would remain. That alone, many fear, is enough to drive cash-strapped Canadian companies to foreign exchanges.

The costs of such an eventuality, Joe Martin believes, would be devastating for Canadian jobs. It’s for that reason that Martin and B&D Capital founder Don Mosher launched the VCMA on August 28. The association, in the words of its press release, “comes about from a growing concern that the rules governing access to venture capital, and ever-rising compliance costs, are harming venture cap companies and their significant contribution to jobs and growth in Canada.”

Ron MacDonald, executive chairman of American Vanadium TSXV:AVC and a former MP, describes what the association will do. “I’m working with the VCMA to put together a very reasonable and responsible lobby. I don’t want to talk just to regulators. I want to talk to the guys in Parliament, where I spent 17 years. I want to talk to the Senate Committee on Banking, Trade and Commerce. I want them to recognize the value that this sector has given to Canada for generations. It’s made this little country a big leader in the mining sector,” he says.

We always want the public interest looked after. But we don’t want to be forever feeding a bureaucracy that is disconnected from the wealth we’re trying to create.—Ron MacDonald

“I want meaningful consultation,” MacDonald emphasizes. “Meaningful consultation isn’t: ‘Here’s what we’re thinking of doing to you, give me your comment and we’ll do it anyway.’ Meaningful consultation means that the regulator has got to take the comment and if they reject it, they’ve got to explain why they’ve rejected it.”

However, MacDonald declares, there is a more basic problem that the VCMA will address.

As he says, “We don’t even know our own story in this sector! We don’t have that little document that says how many billions of dollars in wealth have been created, not just in Ontario or Quebec or British Columbia or in Canada, but around the globe! So we have to, first of all, understand what it is that we do. We have to be proud of who we are and we have to stand up and ask for recognition. So we need to lobby. We need to find out what are those two or three or four or 10 technical things that we could recommend be increased that still look after the public interest, because we always want the public interest looked after. But we don’t want to be forever feeding a bureaucracy that is disconnected from the wealth we’re trying to create.”

Sounding an optimistic note, MacDonald adds, “This is a bad situation. But out of bad situations, good things come.”

For more info visit the Venture Capital Markets Association website. To those not entirely wiped out by the downturn, the association requests donations of $100 from listed companies and $5 from individuals.

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