EDITORIAL PAGE — Tapping our capital markets

Countries the world over are interested in luring North American mining companies to explore and develop projects in their jurisdictions, and thereby revitalize their mining industries. Evidence of this could be gleaned from a stroll through the exhibits at this year’s convention of the Prospectors & Developers Association of Canada (PDAC), held recently in Toronto.

Featured prominently were projects and prospects from such far-flung locales as Argentina, Siberia, Niger and Indonesia. The end result is that North American-based companies are being coaxed out of their own backyard to a world of opportunities. The temptation to explore for deposits in regions that have undergone little modern exploration is proving too great.

Another, more subtle, trend was discernable at this year’s convention: Foreign-based mining companies are taking notice of Canada’s capital markets, even to the extent of seeking Canadian listings in order to increase their ability to raise venture capital and fund exploration.

Take the case of Australian-based Lone Star Exploration, which recently entered into an agreement with a Canadian underwriter to raise $25.2 million, followed by another $13.8 million within a year if all warrants are exercised. The junior is exploring mineral prospects in Indonesia.

Lone Star’s president says he strongly recommends the Canadian capital markets to any junior resource company interested in increasing the value of its stock. “Canada,” he says, “is, without doubt, the world leader in raising capital for resource companies.”

Since listing on the Vancouver Stock Exchange, the company has seen the value of its shares rise higher in Canada than Down Under. Furthermore, it warns that Australia will lose many of its junior explorers to Canada because the major Australian fund managers do not provide sufficient support when those companies need capital, particularly for exploration.

North America’s pool of investment capital reflects a maturing population which, collectively, has amassed billions of dollars in savings and retirement funds. Fund managers, in turn, look to investment vehicles that have potential to provide a healthy return on investment. Major mining companies and growth-oriented juniors with solid fundamentals have provided such returns, which in turn makes more funds available for the next generation of winners.

All this is testimony to the pre-eminence of Canada’s mining industry. Vancouver, Toronto and, to a lesser extent, Montreal, are known as home to a growing variety of mining companies. They now have the potential, and the expertise, to become important financial centres, particularly in the resource sector.

What governments need to keep in mind is that competition for investment dollars will be even more fierce in the years ahead. That means we must take immediate steps to ensure that Canada, its provinces and territories, are as attractive places to invest as anywhere.