TSX Listing Application Guidance

The Toronto Stock Exchange (the “TSX”) has issued a staff notice providing guidance regarding:

  1. the meaning of “economically interesting grades” for its original listing requirements for mineral exploration and development-stage companies;
  2. financial statements submitted to the TSX in support of an original listing application (an “Application”); and
  3. the pricing of stock options, rights and other entitlements (“Options”) granted before an issuer’s initial public offering (“IPO”).

1.  Impacts of Infrastructure Considerations on the Meaning of “Economically Interesting Grades”

Issuers applying to list on the TSX under the “mineral exploration and development-stage” category must have a property where continuity of mineralization is demonstrated in three dimensions at “economically interesting grades”.

To satisfy the requirement of having “economically interesting grades” for commodities shipped in bulk, such as coal, metal concentrates, industrial minerals etc. in remote or isolated locations, issuers should establish a reasonable plan to develop or obtain access to required infrastructure (roads, railways, sea ports etc.), including a reasonable estimate of the cost associated with gaining access to necessary infrastructure.

The TSX will assess the reasonableness of such plans, taking into consideration:

  • whether infrastructure has been built over similar terrain and circumstances in the past and the cost associated with building such infrastructure,
  • whether the infrastructure will be unconventional, such as a barge canal or a slurry pipeline that brings concentrate from mines to smelters downhill, and
  • the assumptions in respect of the funding of the infrastructure, specifically whether the issuer will fund the infrastructure or rely on third parties to fund or develop the infrastructure.

These requirements do not apply to commodities that can be produced on-site in relatively small quantities, which have a high value relative to their weight and can be transported to market by air, such as gold or diamonds.

2.  Financial Statements in Support of an Application

The TSX has further provided guidance as to: i) the use of audited forecast financial statements for an Application under the forecasting profitability category; ii) the use of pro forma financial statements (“Pro Formas”) in support of an Application; and iii) accounting standards that are acceptable to the TSX in the context of an Application.

Audited Forecast Financial Statements

Issuers applying to list on the TSX under the forecasting profitability category must demonstrate that they meet certain financial tests, as evidenced by forecast financial statements covering the current or next fiscal year, accompanied by a compliant independent auditor’s opinion (an “Audited Forecast”).

The TSX will generally require sponsorship if the Audited Forecast is not published in a prospectus or other disclosure document, and is not subject to securities regulation requirements regarding future-oriented financial information.

Pro Forma Financial Statements

Pro Formas may be used by applicants, or be required by the TSX, if a significant transaction has been completed concurrently with, or will be completed shortly after, listing on the TSX.

The TSX may rely on publicly available Pro Formas, however the TSX may also require that Pro Formas not otherwise publicly available be filed in support of an Application. TSX staff may make adjustments for the TSX’s internal purposes, or require the applicant to make adjustments. The TSX may also require the sponsor or auditor to comment or provide comfort on the adjustments where the TSX relies on Pro Formas that are not publicly available.

Accounting Standards

In addition to financial statements prepared in accordance with IFRS, the TSX will accept financial statements prepared in accordance with GAAP in the United States for certain SEC issuers. Financial statements prepared in accordance with GAAP of other jurisdictions may also be acceptable.

In determining whether to accept such statements, the TSX will take into account a variety of factors, including whether the applicant is from a “designated foreign jurisdiction” or is an “SEC foreign issuer”, as defined in securities regulations. The TSX may also require a submission from the issuer’s auditors or financial advisors (including the sponsor) in support of accepting financial statements not prepared in accordance with IFRS or United States GAAP.

3.  Pricing of Stock Options Granted Prior to an IPO

The TSX generally requires that Options granted within the three months immediately before the filing of a preliminary prospectus be priced at or above the IPO price, however the TSX may consider accepting Options with an exercise price that is at least the price at which securities have been recently issued to an arm’s-length party, even if such price is lower than the IPO Price.


For more information about applying for listing on the TSX, please contact any member of the Boughton Law Securities Group.

The information contained in this update is only a summary and is not considered to be legal advice.


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