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TSX Guidance on "Economically Interesting Grades"


Lawyer Neill May
Area Corporate Finance and Securities, Mining and Natural Resources


In response to uncertainty in the marketplace about the listing standards for exploration and development stage mining issuers, the Toronto Stock Exchange (TSX) has released a staff notice (the "Notice") providing guidance on the meaning of the key phrase “economically interesting grades.”

The “Advanced Property” Requirement

The TSX currently has three subcategories for listing in the mining category: (i) producing mining companies, (ii) exempt mining companies and (iii) mineral exploration and development stage companies.  Issuers applying to list on the TSX under the mineral exploration and development-stage category must have a property with continuity of mineralization demonstrated in three dimensions at “economically interesting grades” (an “Advanced Property”), as reflected in a report by an independent qualified person (a “Technical Report”).

The Notice focuses on the TSX’s consideration of infrastructure as a factor in determining whether a project qualifies as an Advanced Property (other factors include mineralization, commodity grades, current and forecast commodity prices, geology and size of the deposit, and location).

The Relevance of Infrastructure

The TSX’s view is that a lack of infrastructure may prevent an issuer’s property from qualifying as an “Advanced Property” where the required infrastructure costs make the extraction of the resource uneconomic.  This is particularly true where (i) the project is located in a remote, relatively inaccessible area, and (ii) the resource is a commodity shipped in bulk, such as coal, iron ore, base and precious metal concentrates, and industrial materials such as sand and gravel, limestone, commercial clay and gypsum (“Bulk Commodities”).

The TSX expects issuers with Bulk Commodity projects in remote locations to produce a reasonable plan to develop or gain access to the required infrastructure, including a cost estimate (though an applicant need not have the necessary funds on hand to develop the infrastructure as a condition of listing). In evaluating the reasonableness of the plan, the TSX will consider:

  • whether the proposed infrastructure has been built in similar circumstances and the costs associated with building such infrastructure;
  • whether the proposed infrastructure will be unconventional; and
  • the assumptions in respect of funding the infrastructure, and specifically whether the applicant will rely on third parties to fund or develop it.

The TSX’s position is not that issuers have to ship Bulk Commodities from remote areas will not be listed, but that such issuers need to have a reasonable and achievable plan for transportation.

CIM Standards

The TSX noted that generally a project will be considered an “Advanced Property” if it has “mineral reserves” or “mineral resources” (as those standards are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, or CIM, which establishes definitions and guidelines for the reporting of exploration information, mineral resources and mineral reserves in Canada).

The Notice encourages prospective applicants to submit Technical Reports to obtain a preliminary opinion as to whether a particular project qualifies as an “Advanced  Property.”

Please contact any member of our Mining and Natural Resources Group to discuss these latest developments.