Mining in Focus: Latin America

Tara Amiri 0:08
Hello, I'm Tara Amiri and I'm a partner in the Vancouver office of Gowling WLG.

Warren Cass 0:12
And I'm Warren Cass. I'm a Toronto based partner. We are members of the Gowling WLG mining Group. We specialize in corporate finance, securities and mergers and acquisitions.

Tara Amiri 0:23
Welcome to part one of our three part mining focus mini series focusing on Latin America will be giving you practical useful tips for successfully listing your Latin American mining capital. In Canada.

Warren Cass 0:35
It's all about preparation, what to consider evaluating your team and recruiting appropriate expertise.

Tara Amiri 0:42
If you're in the exploration or the development stage was mineral projects in Latin America, or a mining company looking for corporate finances securities expertise, we're sure you'll find this session particularly helpful. The whole series covers listing your Latin American mining company and advice on accessing the Canadian capital markets. We'll talk about M&A issues specifically affecting your company's mining projects, and key issues that arise from mining operations. So if you're a Canadian company, looking to get into the market, or in Latin America wondering what's concerning issue in Canada, this series is for you. 

Warren Cass 1:17
Let's get started. In our experience, it's easy for issuers to underestimate the time and steps involved in getting ready to go public. Advanced preparation will help avoid delays and ensure that you can take advantage of favorable market conditions. Mining companies wishing to go public in Canada must have a significant interest in at least one qualifying mineral property and an NI 43 101 compliant technical report for each property material to the business. 43 101 is a national instrument that governs the disclosure of scientific and technical information for mineral projects made by companies that are public in Canada. Any technical disclosure that you make about your property, such as disclosure of mineral reserves and resources, development plans and mining plans must comply with 43 101 and in many cases must be supported by a 43 101 technical report. Your company's 43 101 report is also relevant to the minimum working capital that you will need to list on the stock exchange. If your project is at the exploration or development stage, you will need sufficient capital to execute the work plan recommended in your technical report for between 12 and 18 months after listing depending on the stock exchange you choose. If you have an advanced property that is not yet in commercial production and are looking to list on the TSX you will need at least three years of proven and probable reserves as described in the technical reports plus sufficient funds to bring your property into commercial production and the ability to fund plant expenditures for 18 months after listing.

Tara Amiri 2:48
As a public company in Canada, you can only have one 43 101 Technical record per property at that time. Your company may have alternative line plants and work projects in mind. But remember, you will only be able to disclose and market a ... If it's described in your property's current technical report. You will also need a qualified person or a QP to sign off on all of your technical disclosure both in your listing disclosure document and afterwards. The QP will also be an important participant in the underwriters diligence under 43 101 technical reports. It will have to help legal counsel field questions from the relevant Stock Exchange and the securities regulators. So be sure to recruit a QP who is qualified under acceptable standards, or make alternative arrangements for an external QP to be very available while you recruit one a QP with experience a Canadian public company disclosure is ideal. Although a person may hold credentials that qualify them as a QP. They may not have practical experience the Canadian disclosure regime, which is critical.

Warren Cass 3:53
Planning for due diligence is important. Build a data room. Know which members of your team are responsible to answer questions on various topics. Of course, your QP will be involved in questions about mining and exploration operations. But you'll also need to answer questions about regulatory compliance, permitting, financial labor legal and corporate matters and your ESG programs. You'll also want to review your material operating permits, make sure that they're all up to date and none of them are in default.

Tara Amiri 4:26
Thanks, Warren. Let's talk about financial statement requirements. Your company's financial statements must generally be prepared in accordance with Canadian IFRS must be audited by a firm that's a member of the Canadian public accountability board. Issuers should also have a CFO who's familiar with IFRS and has prior experience working with public companies. The TSX customarily requires issuers to have a CPA as their CFO. If not, they will want to know how to ensure it will bring sufficient experience and expertise with Canadian public company financial reporting requirements, and audit practices to bear.

Warren Cass 5:02
That's a good point Tara, it's important to consider the composition of your board and management team as a whole, and the expertise that they bring to bear. Exchanges and securities regulators will want to see a team with significant public company experience and a track record of success. As a public company in Canada, you must have sufficient number of independent, financially illiterate directors to satisfy various Stock Exchange requirements and securities laws. For example, you'll need an audit committee of the board. Companies listening on a senior Stock Exchange must have an audit committee composed of at least three members, all of whom must be independent and financially literate. Companies listing on a junior exchange will need at least two directors who satisfy the applicable independence requirements, in addition to any financial literacy requirements established by the relevant exchange.

Tara Amiri 5:50
In addition, companies organized or operating in emerging markets which generally includes Latin America need to demonstrate their ability to satisfy additional requirements and provide enhanced disclosure, including with respect to internal controls, related party transactions and communications. Directors and management's will have to have adequate past experience into jurisdictions where you operate and with North American public companies. A few of the relevant instruments are listed on the current slide. As you can see, these requirements can be many and vary, and it may take time and resources to ensure the requirements are satisfied.

Warren Cass 6:28
Now we are aware that things happen in the going public process. It is critical that you maintain an open dialogue with your Canadian Securities lawyers, tell them everything that's happening. There are heightened disclosure obligations as you go public. The requirements are complex. Changes in your company's situation may be in negotiations with underwriters, stock exchanges or securities regulators. Your prospectus or other disclosure document may also need to be amended. Your lawyers can help you understand your obligations, identify and manage potential conflicts and timing issues and raise any issues for discussion with the appropriate third parties at the right time.

Tara Amiri 7:05
We hope this video has been interesting and informative. There are two more in the series. Video two features practical M&A tips for mining companies operating in Latin America, being aware of the potential problems or the politics of the region. Video three tells you about the key operational issues for mining companies in Latin America. Thanks for joining us.