Wednesday’s announcement that the Governments of Saskatchewan and New Brunswick are joining Ontario, British Columbia and the federal government to establish the Cooperative Capital Markets Regulator is welcome news for the Canadian economy-particularly for Canada’s mineral exploration companies who require efficient capital markets to raise the money they need to discover the minerals and metals that make modern life possible.
 

While Canada is currently the best country in the world when it comes to helping mineral exploration companies raise money, it is becoming increasingly difficult to raise capital on Canada’s stock exchanges. The cost of being a publicly-listed company raising capital, for example, can amount to around $200,000 per year. Almost 60% of mineral exploration companies listed in Canada had working capital balances below $200,000 as of May 2014.
 

Now is the time for other provinces to join the four that have already signed-on to the CCMR so that Canada can finally harmonize its capital market regulations and facilitate greater access to capital for an industry that employs more than 400,000 Canadians and is an integral part of our country’s current and future prosperity.
 

From Dawson City to St John’s, exploration activity generates enormous economic opportunities, and finds the mines of the future. Eighty per cent of significant mineral discoveries in Canada over the last five years, for example, have come from so-called “junior” exploration companies-small, dynamic, entrepreneurial companies that take on the high-risk task of looking for new mineral deposits.
 

While mining will continue to play an important role in Canada’s economy into the distant future, Canada should be mindful that competition from Australia, the United Kingdom and emerging countries is increasing. Last year, Australia and Canada both attracted 13% of global exploration expenditures, a narrowing of Canada’s substantial lead in previous years.
 

Capital markets play a fundamental role in the success of Canada’s junior mining companies, and the regulations governing capital-raising have a direct impact on the amount of capital that can be raised. Much like high-tech start-ups, most junior mining companies generate no revenue-they raise funds for exploration and development from investors in Canada’s capital markets.
 

Unfortunately, the current regulatory structure with 13 regulators in Canada is fragmented and inefficient, plagued by onerous and costly regulatory requirements that weaken Canada’s status as the global leader in exploration and mining. While we welcome recent proposals to allow more Canadians to participate in the opportunities our industry presents, more needs to be done.
 

The CCMR presents a vital opportunity to support Canadian companies in raising the money they need to create jobs and drive our economy forward. That is why the Prospectors & Developers Association of Canada commends Saskatchewan, New Brunswick, British Columbia, Ontario and the federal government for working towards its creation. Moreover, while we hope that other provinces will choose to participate we also hope that they will make their participation contingent upon a commitment to design a regulatory regime that unlocks growth, not one that stifles it.
 

It goes without saying that governments must strike the correct balance between investor protection on the one hand and capital-raising and a reduced regulatory burden on the other. Canadians will not invest in an industry if they think they will be at risk of being duped, and we support strong enforcement and criminal prosecution of fraud. The best way to protect investors is to put criminals in jail, not to impose additional costs on the good guys.
 

Maintaining strong access to capital is crucial to sustaining Canada’s economic growth, as well as its standing in the global economy. We need to ensure that we take the measures necessary to strengthen this asset, or we will lose our global position and the potential economic output. The cooperative regulator creates an opportunity for Canada to strengthen its status as the best place in the world to raise money for exploration. We hope this opportunity is not wasted.
 

About the PDAC

The Prospectors & Developers Association of Canada (PDAC) is a national association representing the mineral exploration and development sector. The PDAC has more than 10,000 individual and corporate members, and encourages the highest standards of technical, environmental, safety and social practices in Canada and around the world. The PDAC also hosts the mineral industry’s largest annual convention in downtown Toronto. The PDAC 2015 Convention will take place from March 1-4, 2015