TORONTO (miningweekly.com) – Proposals to reduce the burden of securities regulations on Ontario’s mining and exploration companies will alleviate some of the compliance pressures; however, the overall regulatory environment will remain rigorous as the industry continues to be held to high standards, Goodmans partner Kari MacKay recently told an audience at the Canada-South Africa Chamber of Business’ ‘Innovative Financing’ symposium.

MacKay’s law firm focuses on corporate and securities law, with particular emphasis on mergers and acquisitions, corporate finance and corporate governance, mainly in the natural resources sector.

“The weight of our regulatory framework is [fully] felt by the capital-intensive mining industry, [for example -] the securities regulatory regime is complex, costly and time-consuming, especially when funding is critical,” she said last week.

“But [Ontario’s] securities administrators have heard some of the concerns and have introduced proposed amendments to address some of the complaints,” MacKay explained. “The proposed prospectus exemptions are the result of a review that was started back in 2011. They are intended to facilitate capital formation, particularly for start-ups and small- and medium-sized issuers.”

One of the proposals outlined an offering memorandum exemption. “[This] would be similar to other provinces and provide reporting and nonreporting issuers with the opportunity to raise funds up to a particular annual cap per investor,” she stated.

Among the other proposals, crowd funding was being evaluated. “The crowd funding proposals are the most innovative of the bunch,” MacKay said. “[They] would allow issuers who satisfy certain criteria to raise up to $1.5-million by using the funding portal.”

Away from the proposals, compliance costs would remain. “There’s a plethora of restrictions on offerings; [there’s] the continuous disclosure obligations imposed once public; and there are risks associated with offerings. [Plus there] are the costs of defending class actions, which seem to be on the rise with every hiccup in results,” she said.

“But this shouldn’t be interpreted as a criticism of our regime; it’s simply the reality in which we operate,” MacKay stressed. “For instance, there’s no doubt that [National Instrument 43-101], although a significant regulatory imposition, imposes discipline that is recognised around the world and has contributed significantly to the TSX and Canadian markets being so dominant in the mining space.”

“The reality is that, in addition to the securities regime, we have a regulatory framework that governs all aspects of operating in the mining industry,” she said.

MacKay noted various forms of alternative financings were available, including streaming deals. “Streaming companies tend to be more accessible in the early stage and are not entirely risk averse."

The continued growth in the size and scale of streaming deals could be expected, with diversification beyond precious metals increasingly likely. As an example, MacKay highlighted the streaming agreement within Quebec-focused Stornoway Diamond’s financing deal announced in April for its Renard diamond mine.

Looking to the future, further advances in alternative financing were likely, she added. “Every stage of the mining cycle requires critical amounts of capital and I’ve no doubt that the industry will continue to move forward with innovative financing techniques.”