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Canadian Mining Law and Finance

Presented by: Brian Abrahambrian.abraham@fmc‐law.com604‐443‐7134LinkedInVancouver, BCApril 14‐18, 2008

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“Get your facts first then you can distort them as much as you please”

Mark Twain

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Initial Financings

• Syndicate– Who, What, Where– Amounts

• Seed Capital– Exemptions– 5 cent rule with 15% founders shares

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Minimum Listing Requirements

• TSX V  TIER 2– $100K in 3 years– $200K recommended program – minimum– 12 months G and A– 12 months property payments– $500K public shareholders– $500K free trading shares– 10% public float

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Preparing for Public Financing

• 15% founders policy

• Effect on property deals

• Agents role

• Stratification of seed capital

• Due Diligence Issues

• Financial Statements, Technical Reports

• Compliance, directors, governance

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Private Placements

• Hold period

• Units

• Pricing

• Warrants– Number of warrants– Early exercise on price factors– Warrant term– Escalation of exercise price

• Brokered vs. non‐brokered

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Flow Through Shares

• Pricing premium

• Warrants

• True cost

• Effect on future financing

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Special Warrants

• Timing

• Cost

• Prospectus

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Financing Options• Joint ventures

– Shares (private placement)– Cash– Property expenditures

• Presales of concentrates• Cash for preferential treatment on concentrates/products• Ultimate purchaser deals

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Financing Options (con’t)

• Royalty carve outs and sales

• Convertible debentures– Pricing– Voting

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Risk Factors• Generic / Traditional• New considerations

– Metal prices– Capital Costs– Operating Costs– Technical professionals– Labour– Equipment

• Rolling• Fixed 

– Grey factor– Underlying agreements– Areas of interest– Confidentiality

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Technical Reports

• When are they required?

• Q.P.– Independent– Non‐independent

• Producing issuer

• Historical “reserves”

• Length & Detail

• Consents

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NI 43‐101 Reports

• Exploration

• Preliminary assessment

• Pre‐feasibility

• Feasibility study

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ClassificationsNo Economic Test• Inferred resources• Indicated resources• Measured ResourcesEconomic Test• Probable Resources• Proven Resources

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Foreign Transactions

• Tax implications

• Political risk

• Data, databases

• Government records

• Title

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MJDS Offerings

• July 1991

• Canadian Company

• 12 months continuous disclosure

• Market value

• Public float

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SEC Guide 7

• Reserves

• 3 year average price

• Environmental assessment

• Cut off grades

• Tons and grade not “contained amounts”

• Resources/reserves

• Cautionary notes

• No adjacent properties

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Sarbanes Oxley

• Certification– CEO– CFO

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Problems in Financing

• Joint venture issues

• Royalty companies

• Address in contracts

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“However beautiful the strategy you should occasionally look back at the results.”

Winston Churchill

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Canadian Mining

Law and Finance

Thank You

Brian Abraham

Brian Abrahambrian.abraham@fmc-law.com

604-443-7134LinkedIn

Vancouver, BCApril 14-18, 2008

The preceding presentation contains examples of the kinds of issues companies dealing with mining law could face. If you are faced with one of these issues, please retain  professional assistance as each situation is unique.