On May 6, 2014, the TSX Venture Exchange (TSXV) amended the definition of "Tier 1 Property" contained in Policy 1.1 - Interpretation of the TSXV Corporate Finance Manual (TSXV Manual).
The TSXV views its Tier 1 as its premier tier reserved for its most advanced issuers with the most significant financial resources. As such, the listing requirements for Tier 1 issuers are more substantial than those of Tier 2 issuers (where the majority of the TSXV's listed issuers trade). On the other hand however, the TSXV affirms that Tier 1 issuers benefit from decreased filing requirements and improved service standards.
The "Tier 1 Property" definition contained in the TSXV Manual sets out the property-related criteria an issuer must satisfy to qualify to list as a Tier 1 Mining Issuer on the TSXV. The amended definition is not intended to substantially change the nature of this requirement, but instead looks to clarify ambiguities in the previous definition in an effort to provide greater interpretative certainty.
The amendments to the definition include the following:
- Material Interest: A guidance note contained in the revised definition clarifies the key considerations generally taken into account by the TSXV in assessing whether an issuer holds a material interest in a property. The note specifies that the determination of whether an issuer holds a material interest in a property will be made on the basis of the level and nature of the issuer's ownership interest in the property, and the level of control the issuer has over operations on the property. Generally, an issuer will be expected to hold at least a 50% interest in the property, and have control and direction over operations on the property. An option to acquire such interest will generally not be considered a material interest for purposes of the definition. However, the TSXV specifies that a lesser ownership interest and level of control and direction may be satisfactory for development stage and production stage companies.
- Inferred Mineral Resource: The requirement under a previous definition that the property has "potentially economic or economic mineralization" has been revised to establish a clearer standard of the property having, at a minimum, a current inferred mineral resource, as such term is defined under National Instrument 43-101 Standards of Mineral Disclosure of the Canadian Securities Administrators (NI 43-101).
- Work Program Recommendation: The revised definition still requires a NI 43-101 compliant technical report recommending a minimum $500,000 work program. However, the work program is no longer limited to a recommended drilling or other detailed sampling program, but can now also include a work program which (i) expands the disclosed mineral resource, (ii) enhances the confidence of the disclosed mineral resource, or (iii) makes an economic valuation of the disclosed mineral resource (in the form of a preliminary economic assessment or prefeasibility study for example). As was the case under the previous definition, an independent feasibility study demonstrating that the property is capable of generating positive cash flow from ongoing operations is also acceptable.
The revisions by the TSXV of the "Tier 1 Property" definition appear to provide greater certainty to issuers seeking to determine whether their property meets the listing requirements. In particular, in addition to the clarification in respect of the work program, issuers should find helpful the guidance note regarding the determination of a material interest and the use of the "inferred mineral resource" criterion.