VSE board a well-travelled route to Latin America

The Latin American Board of the Vancouver Stock Exchange (VSE) has become an important tool for junior mining companies intent on making headway into emerging markets south of the U.S. border.

The board, which was formed in March 1997, is used by the exchange to market VSE-listed companies that have the bulk of their operations in Latin America. It is also a means whereby junior companies can learn about Latin American governments, and vice versa.

“Our particular contribution is unique in that we explain how the junior exploration industry works,” says Donald Gordon, the VSE’s director of marketing. “Most of the these countries have recently opened up to foreign investment, and the Latin America Board highlights companies that are taking advantage of that openness.”

The Board is home to 51 advanced juniors with a combined market capitalization of about $3 billion. To received the advanced classification required for a listing on the board, a company must have a certain amount of net tangible assets in Latin America, as well as a well-drilled prospect, or a mine (not necessarily producing) with a life expectancy of at least three years.

“Requirements to be classified as an advanced company are very close to [the Toronto Stock Exchange’s requirements,” Gordon explains. “When a company gets to that level of standard, it’s given a greater amount of room and less stringent reporting requirements than a venture company.”

As far as striking deals in Latin America, Gordon says “there’s a certain amount of education required to get [Latin American countries] to understand what these junior miners are doing running all over the country.” To foster understanding, the Board sponsors “road shows” in which analysts, representatives of brokerage houses, accountants and lawyers travel to Latin America to meet with officials of the mining industry and government. “We explain to them how the juniors operate and work,” says Gordon.

He adds that Canadian companies need to understand the rules by which they must abide while exploring in Latin America. “You can’t sign a joint-venture deal unless the private parties know what kinds of deals the Canadians are making, and Canadians need to know what the rules are in those countries,” he says.

As a result of its increased presence south of the U.S. border, the VSE is luring more foreign investment to Latin American countries. It is even having a legislative effect. “We’ve had a lot of input into the formation of mining legislation in different countries in Latin America.”

Not only are Canadian companies increasing investment in Latin American prospects, but more companies from that part of the world are seeking Canadian investors.

“It’s not unusual for a Mexican company with a producing mine [and] a lot of other properties, to come up here,” Gordon says.

But he adds: “The concept of raising exploration funds and equity is foreign in many places of the world. [Many foreign companies] still really only understand bank and debt financing.”