"The mining sector has done a really good job reinventing itself over the last few years. The most recent prolonged downturn forced companies to become more financially disciplined; corporate and socially responsible; as well as more operationally efficient and thrive for gains in operational efficiencies and productivity."
How has the volatility of the pandemic impacted Toronto Stock Exchange and TSX Venture Exchange, and how has this evolved throughout the year?
We started off the year strongly, but when the pandemic hit with full force in the third week of March, North American markets tanked and the Toronto exchanges were no exception. The historical drop was followed by an unexpected historical rise, which caught a lot of people by surprise. Particularly from a precious metals standpoint, the market quickly assessed the situation and investors soon rushed to safe haven investments. Perhaps more of a surprise than this quick recovery was the rise of equity in tandem with precious metal prices.
The upward trend in the market has been consistent since then. The S&P/TSX Venture Composite Index is up 27.8% at the end of August. Of course, a lot of the mining sector is reflected in that. Across our markets compared to last year, the number of financings and new mining listings are up 33% and 59%, respectively, while the amount of capital raised is up 39%. Our pipeline supports our expectations that this positive momentum will continue. We continue to be the leading market for global mining equity.
There are 14 mining companies represented in the 2020 edition of the TSX30, compared to eight in the inaugural 2019 edition. What trends are apparent for the companies that made the list?
I think the mining sector has done a really good job reinventing itself over the last few years. The most recent prolonged downturn forced companies to become more financially disciplined; corporate and socially responsible; as well as more operationally efficient and thrive for gains in operational efficiencies and productivity. This renewed focus on creating value for all stakeholders, combined with rising metals prices, has led to the return of the generalist investor to the sector. Another consistency is the quality or strength of management across all 14 of these companies.
Another interesting observation is that half of these mining companies started out on TSX Venture Exchange (TSXV), before eventually graduating to TSX. This highlights the depth and strength of our two-tier markets. Companies at all stages of the cycle have a marketplace to grow and create value for investors. This year, there was definitely a bias towards precious metals in the TSX30, but I would not be surprised if next year this expands into base metals and battery metals-focused companies. The fundamentals for base metals, in addition to the EV revolution will no doubt be the basis for this.
What are the benefits for mining companies to list on one of the Toronto exchanges compared to other stock exchanges around the world?
We are the number one mining exchange globally, so if you are looking for equity capital, increased liquidity and global visibility; the obvious choice is to position yourself on the number one market. Our ecosystem of mining capital market advisors, research analysts, retail brokers and investors understands, interprets and supports global mining. TMX’s two-tiered system, whereby junior mining companies can strive then eventually graduate from TSXV to the TSX as they grow and develop, is not available anywhere else in the world. There are other junior markets, however nothing as integrated and robust as our two markets. Depth of market is also important to consider. Our nearest competitor has half the number of listed companies compared to TSX and TSXV. Another important factor is the global nature of our exchanges and the level of exposure and access to global capital. In October 2020, Newcrest Mining, the largest gold producer in Australia, listed on TSX “seeking global exposure”, according to their CEO.
Can you provide details about the TMX Investor Day events and the geographical regions they cover?
On October 6th, 2020, we hosted our second annual TSX Latam Mining Investor Day, showcasing a mix of TSX and TSXV-listed companies that operate in Latam, as well as a number of companies that may not yet be known to investors. Latin America is our largest geographical representation outside North America, with 22% of the mining projects represented on our markets We believe there are still significant growth opportunities in this region.
We also see growth opportunities for companies listed on other major exchanges, such as those in Australia., As more mining companies look to execute on their global expansion strategies, joining our markets is logical. On November 18th and 19th, 2020, we will be presenting the first-ever Australia Mining Investor Day to highlight projects in Australia needing higher exposure to global stakeholders/investors.
What will the new TMX Market Centre in Toronto be used for?
The TMX Market Centre will be a global beacon for mining capital markets. Located in the heart of Toronto’s financial district, this space will be a meeting place for investors, companies and stakeholders. The new centre has the largest outdoor display in the city where we highlight new issuers, market opens, and live market information. We also offer ancillary services for issuers at the TMX Market Centre, which can be rented for annual meetings with a capacity of up to 320 people, for instance.
What role do you see the mining industry playing in the development of TSX and TSXV in 2021?
Following on the lead of precious metals earlier this year, we have seen base metals start to come to life. I expect we will see this continue to build in 2021, particularly if China continues to rebound. The disconnect between supply and demand is still there, and we need to see new copper mines coming on-stream within the next three years by consensus estimates. Also, I expect precious metals to continue to perform well due to the micro concerns that are moving in tandem with macro concerns for the recovery of North America post Covid-19. Battery metals are expected to rebound at some point as the energy transition gathers pace and supply concerns level out. All of these factors contribute to a healthy outlook for the mining industry, which we expect will play a significant role in the economic recovery of many countries in a post-pandemic landscape in 2021 and beyond.