Mining revival prompts intervention by British Columbia Securities Commission

The British Columbia Securities Commission has waved a warning flag as the province's mining sector shows signs of rebounding.

With financings on the upswing and capital pouring into companies to resuscitate projects that have been stalled for the past decade, the regulator has told companies to ensure that their corporate and technical disclosures are up to standard.

To that end, the commission is offering seminars to "help mining companies provide better continuous disclosure and reports that more accurately reflect their exploration and development activities." Chief mining adviser Greg Gosson said the invitation to the free workshops is designed as a refresher for those who are making their way back into the industry after a prolonged absence and introduce them to tougher regulations introduced in 2001 in the wave of the scandal-ridden 1997 collapse of Bre-X Minerals.

He conceded that there is no way to prevent fraud, but if Bre-X had been stopped "before it became a runaway train ... it would have just been a minor blip on the radar screen." At a time of robust commodity prices, mining has led the way in financings this year, achieving C$2.6 billion from 121 offerings over the first nine months of 2003 on the Toronto Stock Exchange and C$742 million in 1,041 financings on the Toronto Stock Exchange's venture exchange. The two exchanges list the shares of 1,030 mining companies.

With 65 percent of the mining juniors based in British Columbia, the province's securities regulator carries a heavy burden of policing the sector.

There was strong support for the commission's intervention, with Michael Greenwood, president of Canaccord Capital, telling the Financial Post that there is a danger the market could get overheated if the price of gold continues to climb.

However, he also noted that the combined capitalization of all global gold companies is less than that of Coca-Cola.