Orenic/PearTree: Flow-through share market analytics Mining Q3 2014 Report

Research provided by
Flow-through share market analytics
Mining Q3 2014 Report
Exchanges: TSX, TSX-V, CSE
Sectors Covered: Flow-through
Date Range: 1 Jan. 2012 - 30 Sept. 2014 www.peartreesecurities.com

FLOW-THROUGH | September 30, 2014 | 2www.peartreesecurities.com
Market Commentary by Éric Lemieux
Mining is a major economic and social contributor to the growth and development of Canada. Today the mining industry
is challenged by market-related parameters such as poor commodity prices and relatively high input costs resulting in an
ongoing struggle to secure exploration and development financing.
To the credit of our sector resilience exploration funding has not been totally deterred as attested by the following pages
that examine flow-through financing metrics. We note that precious metals (notably gold) remain the predominant
commodity explored for by virtue of Canada’s mineral rich Archean green-stone belts and mining camps of the likes
of Red Lake, Timmins, Kirkland Lake, Cadillac, Malartic and Val d’Or. Also, two-thirds of funds raised in flow-through
financings are in the precious metal sector with nearly $900m raised since 2012.
We note that flow-through financing remains a significant source of exploration capital (albeit less robust than in previous
years). Since 2013, British Columbia, Ontario and Quebec dominate in terms of the number of transactions of 98, 86 and
139 financings totalling over $150m, $137m and $148m respectively. While gold occupies the most important sector by
orders of magnitude, historical nimbleness and chance permit explorers to stumble on other commodities while exploring.
With issuers exploring for over a dozen commodities it is inevitable that more gold and other multi-metallic wealth
creating commodities will be found and developed.

Market Commentary by Éric Lemieux Cont.
Though major discoveries have been absent in Quebec since the Éléonore discovery in 2004 by Virginia Mines (VGQ-T),
and the development of the Canadian Malartic mine by Osisko (now Osisko Royalty (OR-T)), we believe the sector in
Quebec in particular is well positioned to ‘pounce’ back. Exploration activities have been maintained and interesting
projects are emerging within the Abitibi’s Cadillac-Larder Lake Fault, the Detour Lake Trend as well as in the James Bay
area of Quebec. Certainly Plan Nord + and an emerging more conducive mineral-friendly environment being fostered by
the Philippe Couillard Government are new positive catalysts.
We expect that perseverance by all actors in the Canadian mineral industry will lead to more new, world-class discoveries
and development projects. In support of these activities are novel financing opportunities offered by PearTree enabling
global institutional and strategic investment in what has traditionally been a financing modality only available to Canadian
retail investors.
Éric Lemieux MSc, P. Geo
Mining & Exploration Analytics
PearTree Securities Inc.
eric.lemieux@peartreesecurities.com
819 314 8081

Executive Overview
Anyone who has been involved in financing a resource exploration company over the past several years is well
acquainted with how challenging it is to raise money on acceptable terms. In such environments, market participants
seek out innovative solutions. In the flow-through market, more and more players have recognized that this means the
better pricing, minimal dilution and expanded universe of buyers that PearTree’s structured flow-through financing options
deliver. We’re proud to be the sponsor of this report unique to the flow-through market and of the leading position that
PearTree has assumed in that market. With an annual growth rate of over 25% over the last 3 years (and expected to
continue at that pace for at least 3 more), PearTree has become a significant contributor to the junior exploration market.
As you will see in the following presentation, despite a continued downturn in both the number and average size of
financings, PearTree participation continues to grow. Since early 2012, the junior mining sector has experienced higher
than normal volatility, which has made capital raising activities more difficult. Both the number of financings and average
deal size have dropped annually since 2012 highlighting the difficulties in exploration financing. Unfortunately this trend
continues to be downward sloping.
Despite the fact that the ‘health’ of the market as determined by the Oreninc Index is declining, share price premiums
have increased in 2014, reducing dilution and increasing the amount of money available for exploration activities. As the
attached data highlights, PearTree is a key contributor to this market trend.
Norman Brownstein MBA, CFA
President, PearTree Securities Inc.
norman.brownstein@peartreesecurities.com
416 613 3848 x426
Lisa Davis LL.B, ICD.D.
CEO, PearTree Securities Inc.
lisa.davis@peartreesecurities.com
416 613 3848 x437

Flow-Through Dollars Raised by Province
Note: All dollars raised are listed in millions. PearTree participation includes only public company financings. Private company
financings are not included in this report.

Oreninc Index
0
20
40
60
80
100
120
140
160
180
Five-Week Moving Average Weekly State of the Market
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
20132012 2014
State of the Market Trendline
Oreninc Canadian Resource Financing Index
Note: The Oreninc Index tracks the state of the Canadian junior natural resources financing market and gives readers a snapshot
idea of fundraising confidence in a given week. A sustained market above 100 is considered healthy.

Flow-Through as Percentage of Total Funds Raised
Note: The chart represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and
September 30, 2014.
Flow-Through as Percentage of Total Funds Raised

Flow-Through Raised by Quarter: 2012 – 2014
Note: The chart represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and
September, 30, 2014. Dollars raised listed in million-dollar units.

Sector Distribution by Dollars Raised
.
Note: The charts and table represent all ﬂow-through financings across all natural resources sectors closed between January 1, 2012
and September 30, 2014. Dollars raised listed in million-dollar units.

Flow-Through Comparison by Province: 2013 – 2014
Note: Flow-through dollars raised listed in million-dollar units. “Atlantic Canada” includes the provinces of New Brunswick, Prince
Edward Island, Nova Scotia, Newfoundland, and Labrador. PearTree participation only includes public company financings. Private
company financings are not included in this report.

Dollars Raised by Offer Size
Note: The graph represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and
September 30, 2014. Dollars raised listed in million-dollar units.

Number of Financings by Offer Size
Note: The graph represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and
September 30, 2014. Dollars raised listed in million-dollar units.

Dollars Raised: Offer Size Below $5m vs. $5m+
Note: The graphs represent all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and
September 30, 2014.

Note: The graph represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012
and September 30, 2014. “Other” category includes 27 additional brokers that can be viewed on pages 18 and 19.
Broker Market Share
.

Average Fees on Brokered Financings: Q1 2012 - Q3 2013 Q3 2014
Market Cap
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0-$10 $10-$25 $25-$50 $50-$100 $100-$500 $500-$1000
Average Cash Fees: Q1 2012 - Q3 2014 Average Total Fees: Q1 2012 - Q3 2014 Average Cash Fees: Q3 2013 - Q3 2014 Average Total Fees: Q3 2013 - Q3 2014
.
All Sectors Q1 2012 – Q3 2014 Q3 2014: Brokered Fees by Company Market Cap
Note: The graph represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012
and September 30, 2014. Total fees include cash and warrants.

Brokered Financings Across All Sectors: 2014
Note:The table represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012
and September 30, 2014. Financing size and total money raised listed in million-dollar units. (1) Share Price Premium unavailable at
time of publication. (2) No financings have been completed in the Precious Metals sector in 2014 to date. +Median *Average

Brokered Financings Across All Sectors: 2013 2012
Note: The table represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012
and September 30, 2014. Financing size and total money raised listed in million-dollar units. (1) No financings were completed in the
Iron Ore/Bulk sector in 2013. (2) No financings were completed in the Precious Metals sector in 2013. +Median *Average

All Financings Across All Sectors: 2014
Note: The table represents all financings across all natural resources sectors closed between January 1, 2012 and September 30,
2014. Deal size and total money raised listed in million-dollar units. +Median *Average

All Financings Across All Sectors: 2013 2012
Note: The table represents all financings across all natural resources sectors closed between January 1, 2012 and September 30,
2014. Deal size and total money raised listed in million-dollar units. +Median *Averagev
+

FLOW-THROUGH | June 30, 2014 | 20
Broker Stats: 2012 – 2014
Note: The table represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and September 30,
2014. Dollars raised and market cap listed in million-dollar units. +Median *Average

FLOW-THROUGH | June 30, 2014 | 21
Broker Stats: 2012 – 2014 Cont.
Note: The table represents all brokered ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and September 30,
2014. Dollars raised and market cap listed in million-dollar units. (1) Fees unavailable at time of publication. (2) Share Price Premium unavailable at time
of publication. (3) Deal recorded solely at close. +Median *Average

Appendix
Additional Sector Breakdown

Average Financing Size Across Sectors: 2014
Note: The table represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2014 and September 30, 2014.
Dollars raised and average financing size listed in million-dollar units.

Note: The table represents all ﬂow-through financings across all natural resources sectors closed between January 1, 2012 and December 31, 2012.

General Disclaimer
Oren Inc. data is based on all representative data from the range 1/1/2012 through 30/9/2014, except as otherwise noted. Some data has been provided by PearTree
Securities Inc., the client for this report.
PearTree Securities Inc. (“PearTree”) is registered as an Exempt Market Dealer (“EMD”) in the provinces of Ontario, Quebec, British Columbia, Alberta and Manitoba. PearTree is a
subsidiary of PearTree Financial Services Ltd., an unregistered firm that consults to charities on tax and other matters related to a flow through share donation program.
PearTree has engaged Oren Inc. to prepare this presentation for general information purposes only. This document should not be considered a solicitation to purchase or sell
securities. The information provided by Peartree to Oren Inc. for the purposes of the preparation of this report has been derived from sources believed to be accurate, but cannot be
guaranteed. Any opinions or analysis herein reflect the views of Oren Inc. and not necessarily those of PearTree. Furthermore, these opinions/ analysis may be subject to change and
PearTree does not undertake to advise the reader of such changes.
This report is Copyright 2014 Oren Inc., which reserves all rights in and to this report, subject to rights retained by the client in data provided by the client. This report
MAY NOT BE REPRODUCED IN ANY FORM EXCEPT AS DIRECTED BY PEARTREE SECURITIES INC., AND IS FOR THE USE OF THE INTENDED RECIPIENT ONLY.
Oren Inc. (“Oreninc”) is a research service providing customized reports for client companies and brokers in the mining and commodities sectors, as well as producing the ODL,
a digest, updated daily, of financings in the mining and commodities space. This disclaimer statement is an integral part of our service, this report and the accompanying
presentation. Oreninc is not an investment bank and does not currently have any investment banking relationships with any of the subject companies or brokers of its reports, nor
does Oreninc make a market or act as a principal in any securities. Oreninc is not an investment broker-dealer, does not offer securities for purchase or sale, and is not licensed or
qualified to provide investment advice. Oreninc reports do not constitute a solicitation or recommendation to buy or sell any securities whatsoever.
Conflicts statement: Oreninc and its principal have a financial interest in Aston Bay Holdings Ltd. (TSX-V: BAY) (“Aston Bay”), which was not included in this report. Aston Bay is an
early-stage exploration and development company with copper and zinc projects in Nunavut, Canada.
All research reports and presentations issued and made by Oreninc are based on public information derived solely from publicly available sources such as, but not limited to, public
company filings, company news releases, and financial data. In addition, this report may include data provided by the client for this report, PearTree Securities Inc. We have not
verified the accuracy of such public information or information provided by the client, nor do we have any obligation or duty to update or correct any public information for any errors,
misstatements, or material changes to such public information. You are strongly encouraged to verify all claims through your own thorough and independent research or due diligence.
Oreninc research reports containing any valuations or fee targets and/or recommendations are believed but not guaranteed to have bases which may be substantiated as reasonable
and adequate.
Oreninc research reports are intended for informational purposes only, and are intended to inform the reader only. This Oreninc research report represents solely the Oreninc
Analyst’s opinions regarding subject companies at the time of production of the report. The OrenincAnalyst bases his or her opinions exclusively on public information or client-
provided information available at the time of production of the report. The Oreninc Analyst has not received any material non-public information regarding the subject companies or
brokers. All estimates, opinions, and/or recommendations expressed in this report are subject to change without notice, and Oreninc is under no obligation to, and may not, update the
opinions and recommendations expressed herein in light of any subsequent events. The price targets presented in Oreninc reports are based explicitly on a significant number of our
own estimates and assumptions, based solely on previously disclosed public information, and there can be no assurance that our price targets will be met, or whether the assumptions/
estimates regarding the client company’s actual financing outcomes will materialize. We may not publish any of our bases for such estimates and assumptions.

You should understand that there is no guarantee that past performance by any companies will be indicative of future results by the same or different companies. Neither
Oreninc nor any of its analysts, directors, or employees shall be liable to you, or anyone else, for any loss or damages resulting from the use of its research reports, opinions, and/
or recommendations caused in whole or in part by negligence or contingencies beyond its control in procuring, compiling, interpreting, or reporting its research contents. Oreninc
disclaims any and all liability as to the completeness or accuracy of the information contained in, and any omissions of material facts in, its reports.
Companies should not rely solely on the recommendations and opinions contained therein. Any recommendation should not be taken as a substitute for the exercise of independent
judgment and due diligence of the merits and risks of financings.
Oreninc was compensated by its client, PearTree Securities Inc., for the production of this report. Oreninc was not compensated by any other bank, investment bank,
broker, or other third party individual or entity for the production of this report. Oreninc has in place several business practices to ensure complete and objective editorial control
over its research, including, but not limited to, the following: 1) No part of Oreninc research analysts’ compensation is related to the level of investment banking fees, stock price, or
trading commission revenue generated by any of Oreninc’s clients; 2) Fees for research services are due and payable regardless of the opinion of the research; 3) Oreninc research
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General Disclaimer Cont.

Orenic/PearTree: Flow-through share market analytics Mining Q3 2014 Report

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