Recession spells big drop in new mining stock listings

Hit by the economic recession, a slump in the gold market and the elimination of tax-related exploration incentives, mining companies are becoming increasingly shy about coming to the market with new share issues. As a result, the number of new mining company listings on Canada’s four stock exchanges has declined steadily over the past three years, and market watchers aren’t expecting much improvement in the foreseeable future. Because of the general slowdown in economic activity, only 94 new mining company listings were reported on the Toronto, Montreal, Vancouver and Alberta exchanges last year, compared with 317 in 1988. Although recent offerings by Saskatchewan uranium miner Cameco (TSE) and Yukon gold explorer Wheaton River Minerals (TSE) were fully subscribed, 1991 is also expected to be a quiet year for new listings. The largest decline was on the traditionally resource-oriented Alberta exchange where the number of new mining company listings was down by 80% to six in 1990 compared with 30 in 1988. Despite interest in the Eskay Creek gold discovery, new mine listings on the Vancouver exchange fell 73% within the past three years to 61 from 232. However, Tanya Sarkis, a listings officer in Vancouver said that on a percentage basis, mining has held steady at around 70% of all companies listed during the same period. On The Toronto Stock Exchange, Canada’s largest market, new entries from the mining sector fell to 19 in 1990 from 29 in 1988, representing a decrease of 34%. John Drury, a technical consultant at the Ontario Securities Commission attributed the decrease to a lack of public interest in high-risk exploration stocks. “For the moment, lotteries seem to have taken that part of the business away,” he told The Northern Miner. According to a spokesman at Wheaton River Minerals, a company formed to take a new look at the former Mount Skukum gold mine and mill near Whitehorse, Yukon, it took 56 brokers to sell an initial public offering of 2.5 million units priced at 50 cents each. “In previous years it would have taken about five brokers to sell the same issue,” said Wheaton Chairman Ian McDonald. Meanwhile, The Montreal Exchange, which was hard hit by the slump in the gold market, saw its new listings fall between 1988 and 1990 to eight from 26, representing a drop of 69%. Canchrome Mines (ME) and Cameco are the only two mining companies to have succeeded in getting their shares listed on the Montreal Exchange this year.