All posts by CSE Blogger

A Solution to Getting to Know Your Shareholders

Reality Check: How Well Do You Know Your Shareholders?

No, really — how well?

Most public companies suffer from a lack of information that is typically found in small private companies. Small private companies experience the support of friends and family, small family offices or even venture capital firms that speculate on their behalf. Actually, public companies don’t operate much differently. They, too, experience the support of friends, family and seed investors. The difference is that one day the IPO lures a company in to go public.

The “Problem” with Going Public

It begins when bankers, institutions and small funds lead the way in offering your company to go public. Some stay for a while and some are small gain-focused funds or institutions that are out on day one, making their money on the run up of the IPO. The end result: You’re left with hundreds, if not thousands, of shareholders. You have no clue who they are, what they represent, what their expectations are and, again, who they are.

I call them “boosters.” Boosters are a group of very intelligent, well-connected individuals that operate under the acronym “IRO” as a consultant and/or firm and want to help your company find new shareholders. It’s their job to make introductions to people in their networks. If you do well in presenting your story and delivering and your guidance is on target, you will find shareholders. Rinse and repeat with non-deal-road-show investor conferences and inbound interest. Before you know it, you’ve gone from 25 friends and family investors and one local fund in your network to more than 3,000 shareholders, some of which own up to 10 percent of the company. Then it hits you: You don’t know who these people are, who knows whom and if this even affects your company.

The Solution: Shareholder ID

It’s absolutely essential to the success of your public company that once a year you conduct a sound shareholder identification analysis. If you have sustained volume and people coming in and out of the story and people accumulating more and more, then you should consider hiring a firm to help manage this for each quarter. First, a robust Shareholder ID program will identify street positons in variant forms, objecting beneficial holders (OBO) and non-objecting beneficial holders (NOBO). Then, the program will identify the registered positions analysis to see if firms and individuals show up on both lists. A robust Shareholder ID program will not only highlight the brokers and banks that hold ownership, but also the underlying shareholder(s), and if that shareholder is party to another firm or group who also owns shares in your company. This is where activists come in; this is where share voting is greatly improved; and this is where real relationships are formed.

Every shareholder has a price horizon; it’s important you know this, for many reasons. One, you should understand how much time you invest in getting to know them, what else they invest in, whom they know, where they went to school and what they model your business out to be. The more you get to know your shareholder, the more you will understand these things. The more you understand these things, the quicker you can step up the shareholder base.

The more you get to know your shareholder, the more you will understand these things.

The more you understand these things, the quicker you can step up the shareholder base.

I’m a realist, and I enter a relationship with a shareholder knowing that if she/he makes a decision to purchase some shares in my company in the open market, most likely she/he will be my friend for a short period of time. This works. I don’t want a marriage — I have one. What I do want is to make them money, plain and simple. And I do that by executing my strategy, communicating my message and delivering. No disrespect intended when I say to any shareholder, either individual or firm/institution, that I want to sell when they’re ready and move on to the next one, to build a relationship with a new one, and repeat this process again. Every now and then, however, you find fans, regardless if they are high net worth people or firms, that love your business, your industry and you. They become the glue of your shareholder base, and they are rare. You might not even know who they really are.  Do you want your company’s biggest fans to be a stranger to you and your management team? I think not!

Do you want your company’s biggest fans to be a stranger to you and your management team?

Over the past 10 years, I have met hundreds of CEOs that don’t know their shareholders, don’t understand the mechanics of their shareholder base, and refuse to invest the time or resources in learning it. By contrast, I have met a very small percentage of C-level executives who get this simple exercise and have the best shareholder bases I have ever seen.

Ask your IRO, your outsourced IR firm or even your transfer or annual meeting management company for help. If they can’t do this for you, they should refer you to a trusted company that can.

This story was featured in the Service Providers magazine.

Learn more about Accesswire at https://www.accesswire.com/ and on the CSE website at https://thecse.com/en/services/services-for-listed-companies/accesswire.

6 Steps to Maximize Your Social Media Presence

The media landscape has been completely changed with the impact of technology. Currently, it is incumbent upon companies and organizations to create their own media. Social media is a popular channel for private companies to reach a larger audience – Facebook, Twitter, LinkedIn, Instagram, Snapchat, FourSquare, you name it. Gone are the days where companies compete for top spots in yellow pages or paying massive premiums for radio ads.

The situation is a lot more complex for publicly traded companies that are heavily regulated. However, with meticulous and proper planning, your public companies can benefit massively from the wide exposure gained from advertising on various social media platforms. Specifically, LinkedIn and Twitter are two platforms that are usually very popular and well received by shareholders and investors of public companies. Depending on the industry, Facebook and Instagram can be very helpful as well, especially for companies that have a lot of B2C business.

Facebook alone accounts for one in every six minutes spent on the internet. One in every five minutes spent on smartphones are also attributed to Facebook. Close to half of all college graduates are LinkedIn users. Over 45% of all adults who make more than $75,000 annually are on LinkedIn. Over 88% of businesses with more than 100 employees use Twitter for communication, marketing and advertising.

Here is a six-step process we have derived for maximize your social media efforts.

Step 1: Research

Find out who are talking about your company, and how. Are there any misconceptions of your business model? Are employees sharing information on the world wide web?

Always remember a cohesive social media plan should be very comprehensive. Setup alerts that track the online mentions of your company and your key executives. You will quickly find out about what people say about your company on the internet.

Step 2: Establish a Basic Presence

Make sure you secure your company’s accounts on all the major social media platforms. This is a great opportunity for your company to have a positive brand presence on the internet when people search for your name.

Step 3: Develop a Plan

Once you understand how social media can integrate with your business, you can develop a plan to achieve your objectives, and figure out how that would connect with your overall business goals. The conversation online will go on either you participate or not. Hence, if your plan is to simply continue to monitor the internet, you should at least create a social media policy.

Step 4: Engagement

If you decide to be proactive in managing your social media, you will need to figure out how much of an engagement level would you like to upkeep. While social media can be a great channel to keep your investors and key partners updated between earnings announcements, it is not necessarily worthy of an official press release. You can use your social media platforms to share press release headlines, key messages from your earnings calls, answer questions, publish white papers and offer seminars.

Step 5: Integration

Integrate your social media platforms with your digital investor relations platform (website). The website should be a hub of information that is detailed and useful. Provide regular updates of content on the site, and push the content to your social media accounts. The more your investors visit your website (also via your social media platforms), the more they will think of your website as the first source of information. Inform website visitors which social media platforms your company is active on.

Step 6: Measurement

The real value of social media programs can be measured with several metrics, gauging its progress. Many Software-as-a-Service platforms provide subscribers with analytical packages, which help you establish a baseline, target audience, and follow social media user trends over time.

Should you have any questions or if you are interested in Uptick’s Social Media Program, please do not hesitate to contact Terry Tremaine at: 604-202-7841 or terryttremaine@gmail.com

This story was featured in the Service Providers magazine.

Learn more about Uptick Media at http://uptickmail.com/ and on the CSE website at https://www.thecse.com/en/services/services-for-listed-companies/uptick-media.

Are You Protected Against Cyber Security Attacks?

No one thinks it’s going to be them. Until it is.

According to the movies, cybercriminals operate out of abandoned warehouses, target carefully selected conglomerates and use things like “worms” and “keys” to gain access. The reality, however, is that cybercriminals, using scattergun techniques like phishing, are not out for world domination but rather a more familiar motive: money.

In 2016, 24% of breaches targeted financial organizations, 15% healthcare, 12% public sector entities and 15% targeted retail and accommodations*. Whether it’s design plans, medical records or good, old-fashioned payment card details—someone, somewhere will see it as their meal ticket.

Organizations need to build a strong security posture by implementing strategies that address internal and external threats across the entire chain. It is critical to start from the premise that systems will be breached. This perspective enhances the effectiveness of decision making related to preventing, mitigating and recovering from a breach.

Another recent development makes this a pressing imperative. Canada’s new Digital Privacy Act has introduced mandatory breach notification.  In 2017organizations will be required to notify the Office of the Privacy Commissioner, as well as the individuals affected, if the organization experiences the loss or theft of personal identifiable information that puts these people at “real risk of significant harm.” Failing to do so could result in fines of up to $100,000 per offence. This comes as part The Digital Privacy Act (formerly referred to as Bill S-4) that was put into effect in June 2015.

On January 19, 2017, the Canadian Securities Administrators (CSA) published Multilateral Staff Notice 11-332, stating that they expect issuers to provide risk disclosure that is as detailed and entity specific as possible, should they determine that a cyber security risk is a material risk. In order to determine materiality, the cyber security incident requires analyzing and the probability of a breach occurring and the anticipated magnitude of its effect needs to be determined. The CSA expects issuers to disclose specific risks, rather than generic risks common to all issuers, and they expect issuers to tailor their disclosure of cyber security risks to the particular circumstance. Underestimating risks leaves enterprises highly vulnerable. Poor security can lead to painful, even catastrophic, financial and reputational losses. Moreover, data breaches and other security incidents put not just individual companies, but entire supply chains, at risk. The following are three steps to build a robust security posture that will support the goals and resilience of your organization, and assist you in determining your cyber security risk.

1. Conduct a health check of your organization’s cyber security maturity.

A health check is an assessment of an organization’s controls, security risks and threats, to define its current security posture and highlight gaps.

The health check assesses current risks to your industry and business and evaluates the strengths and weaknesses of your organization’s existing security controls.

The health check determines the impact a breach could have on your organization: operations, productivity, information assets, infrastructure, reputation, materiality of the cyber security risks and brand.

2. Develop a clear security roadmap.

The health check will guide an organization by providing a clear map of priority risks and practical direction regarding where to most effectively focus cyber security budget and resources.

3. Test your organization’s vulnerability to cyber-attack.

It’s essential to supplement planning with robust testing to determine your organization’s vulnerability to cyber breaches. Intellectual property, personal information, plant systems, computer servers, and mobile devices, could all be targets for attacks.

Seek objective, trusted third party cyber security expertise to assess potential weaknesses through vulnerability assessments and penetration testing of your internal and external networks and applications.

Without adequate protection, cyber security threats can put your organizations’ operations, reputation – even its existence – at risk. Vigilant assessment, planning and testing are critical to protect the bottom line.

For more information on how you can better protect your business from cyber-attacks, contact:

Danny Timmins, CISSP, National Cyber Security Leader T: 905.607.9777E: danny.timmins@mnp.ca

About MNP

MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world.

This story was featured in the Service Providers magazine.

Learn more about MNP at https://www.mnp.ca/en and on the CSE website at https://www.thecse.com/en/services/services-for-listed-companies/mnp.

CFN Media Interview with Richard Carleton

Over the last five years, the cannabis industry has undergone a period of transformative growth, and the Canadian Securities Exchange has grown with it, providing countless opportunities for innovation, expansion, and success.

In this interview with CFN host and Managing Partner of Zuber Lawler, Tom Zuber, CSE CEO Richard Carleton discusses the impact the cannabis industry has had on the CSE, the global emergence of new cannabis markets, and the advances that have happened in the industry, both technologically and economically.

Tune in to learn why Canada continues to be a leader in the cannabis industry, the challenges and successes of opening this industry up to the investment community, and the innovative organizational structures emerging from the complicated landscape of cannabis as a consumer product. Hear Richard’s take on prohibition, ancillary cannabis companies, and the future of the European cannabis market in this exclusive, three-part interview.

Winning With Records

BENEFICIAL RECORDS
Accurate financial record keeping is the bedrock of a well-functioning business. Though some companies survive in spite of their bookkeeping inefficiencies, in most cases, poor record keeping hinders progress and affects the company’s bottom line. The benefits of superior record keeping cannot be understated.

Working Capital Management
Cash is king and good financial records are essential to strong cash management procedures.

Quick collection of accounts receivable ensures that funds flow consistently into the bank account.

Collection efforts are futile however if the financial records are incomplete and the amount and aging of receivables is incorrect.

The flip side is the management of accounts payable. Up-to-date records provide companies with a snapshot of the amount owing and how long it has been outstanding. Vendors are less willing to extend credit to businesses with a history of late or irregular payments. Credit with vendors is critical for businesses to succeed.

Even profitable companies can easily find themselves in a negative cash flow situation. Reasons for poor working capital management are plentiful: lack of credit from suppliers, substandard collection of
accounts receivable, or obsolete inventory, among others, all of which could be eliminated by maintaining proper financial records.

Price Point
Accurate financial records enable management to analyze their cost structure. Companies need a firm understanding of their underlying costs in order to price their products appropriately and attain their desired profitability. Growing businesses could have multiple product offerings and the inability to determine ideal prices for each offering will reduce the bottom line.

Financing Alternatives
Any investor, bank or business partner will require a review of the financial records before investing in an entity. Maintaining accurate financial records demonstrates sound business practices and clearly details profitability which expediates external funding.

Growth
Management can generate and analyze various reports from sound financial records in order to assess the overall health of their enterprise and plan for the future. Leadership can evaluate the stress of any desired capital spending, which positions them to capitalize on opportunities and stay ahead of the competition. Otherwise, as they say about opportunity, ‘If you don’t take it, someone else will’.

Business Valuation
Company leaders endeavor to increase the valuation of businesses for shareholders. Thorough financial records are foundational to all approaches of business valuation, whether asset-based, earnings or even market value; they allow companies to calculate their worth.

Compliance
Publicly listed companies have strict financial reporting requirements and their ability to produce accurate
and timely accounting data is key to such compliance. Besides imposing monetary penalties, the Securities Commissions can subject companies to cease trade orders for delinquent filings. The Chief Executive and Financial Officers are required to certify their company’s disclosure controls and internal controls over financial reporting, the foundation of which is a clean set of basic accounting records.

Companies must also adhere to the deadlines imposed by their taxation authorities, i.e. the filing of annual tax returns, GST/HST returns, etc. Up-to-date financial records ensure timely compliance of such demands. Failure to file on time can be very costly to a business.

Audit Efficiencies
Publicly listed entities undergo an annual audit of their financial statements. All reports that are the subject of the audit are products of the underlying accounting records. Maintaining proper records allow for smoother audits, resulting in timely filings. Accurate financial records also facilitate ‘efficient’ audits since
required information can be seamlessly provided to the auditors, lowering the overall cost of such services.

All in all, accurate and timely financial record keeping is essential for the day-to-day operations of businesses and allow for intelligent decision making by leadership for growth or potential sale.

This story was featured in the Service Providers magazine.

Learn more about Avisar at http://avisar.ca/ and on the CSE website at http://thecse.com/en/services/services-for-listed-companies/avisar.

Interview with Canadian Securities Exchange CEO Richard Carleton: H1 2019 Review

When it comes to achieving milestones at the CSE, the Exchange for Entrepreneurs is on an extended winning streak. With capital raised by CSE-listed issuers, trading value, and number of listings (more than 500!) all reaching new heights, it’s already been a strong start to 2019. Scroll on for an exclusive, in-depth interview with CSE CEO Richard Carleton as he discusses the factors contributing to this sustained positive momentum, and provides a glimpse of what’s ahead for the next half of this record-breaking year.

The first half of 2019 saw the CSE continue to grow in terms of total capital raised by issuers, trading value and a new record for the number of companies listed. Can you start by giving us the story behind the strong performance? What is allowing the CSE to consistently grow so quickly compared to other exchanges?

It is a continuation of the trends we saw establish themselves in 2018. There remains strong interest in the cannabis sector, particularly for companies working on opportunities in the United States, and increasingly now in the Caribbean Basin, South America, Europe, the Middle East and Asia. We’ve seen a considerable amount of funds raised in the sector and an increasing pace of mergers and acquisitions activity.

We’ve also seen renewed interest in the mining space.  I was looking at our year-to-date numbers the other day and to the end of June, an identical number of mining companies have joined the exchange this year as cannabis issuers. We have also welcomed a significant group of technology companies.

These are very positive trends: the diversification in the makeup of newly listed companies is healthy, and I think the rebound in the mining sector – particularly gold exploration – is something that people are going to be very interested in as the year progresses.

I recently saw comparisons showing the CSE leading other venture-focused exchanges in several categories, including average issuer market capitalization and average financing size. What’s driving these KPIs and is it sustainable?

Again, this is largely a cannabis story. If you look at our most active stocks, they tend to be from the cannabis sector. What it speaks to, in particular, is continued retail interest in the industry. It also speaks to the appeal of the issuer community we have been able to bring to the exchange. It’s a very diverse set of companies, ranging from those involved in cultivation in Canada to multistate operators in the US, and companies looking even further afield internationally.

We are also starting to see issuers with more than just cultivation.  Examples would be companies that are looking to make improvements in extraction, others in biotechnology, and yet others building brands in specific markets. These companies, in some cases, trade for $15 or $20 per share, and that positively impacts the value of trading.

Let’s run with that theme. Last year, Curaleaf’s IPO was the biggest the CSE had ever seen, at the equivalent of some CDN$520 million, and Harvest Health & Recreation announced a financing in April of this year equal to around CDN$650 million. Those are just a few examples of financings big enough to fuel sustained national or multinational growth. What are you hearing from issuers regarding who is coming into these deals, and their general experience raising large amounts of capital on the CSE?

What is interesting about these transactions – and you didn’t mention the largest of all, which is the short-form prospectus that Acreage filed with the Ontario Securities Commission recently to raise up to US$800 million – is that they really are global efforts.

We know that Canadian retail and institutions have been long-time supporters, which seems kind of funny to say for an industry that is, at best, five years old. But they continue to be a significant and core part of large financings. And we are increasingly seeing participation from the United States. Family offices, hedge funds, and high net worth individuals are backing these raises. Parsing the information after a financing closes, we also see interest from institutions and family offices in Europe and Asia. When we totaled it up last year, we saw 103 different jurisdictions around the world represented by investors in deals on the CSE. I think on a year-to-date basis it is about 83 jurisdictions represented. Basically, every part of the globe has participated in capital raises conducted through the facilities of the CSE.

Issuers have emphasized to me repeatedly that there are no concerns with the fact that their company is listed on the Canadian Securities Exchange. We are a recognized exchange around the world for a variety of tax and pension investment purposes, and because we have achieved that status our issuers find very little resistance to investment in their transactions because of their listing exchange.

The British Columbia Securities Commission is now one of your official regulators. Explain that development and what it means going forward in practical terms. Will it slow or change things in any way?

The British Columbia Securities Commission has been talking about taking on this role for as long as I have been with the Canadian Securities Exchange, and that’s about 12 years at this point. The reason is that a majority of the companies listed on the CSE are domiciled in British Columbia.

I think the commission moving now is a reflection of our relevance and continued growth in the number of listings. There are now over 250 BC companies that trade on the CSE. With so many connections to the province, I believe the commission concluded that it was in their interest to take an active role in the regulation of the exchange.

Our long-standing principal regulator is the Ontario Securities Commission; the BCSC will be working with the OSC to make sure there are not any duplicative activities. As a result, I am confident that the BCSC move will not impact the operation of the exchange in any way. We have worked very closely with the OSC and BCSC over the years and will continue to do so effectively.

I hear the CSE is planning to introduce a separate tier for senior companies. What is the thinking behind that?  What benefits will it offer companies that qualify for this tier?

We find ourselves in a situation unique in Canada. Under the National Instruments that set out how companies and exchanges are regulated, it’s really divided into two worlds: venture exchanges and non-venture exchanges. The rules for companies listed on a venture exchange have a lighter touch than for companies listed on a non-venture exchange, such as the Toronto Stock Exchange. We find ourselves in the fortunate situation of having listed companies that fall into both “venture” and “non-venture” buckets.

We are not proposing any change in the way our early stage companies are regulated. We now have a substantial number of companies that have significant market capitalizations, tangible assets, and revenue coming from a variety of jurisdictions. A regulatory framework designed to oversee the operations of a junior mining exploration company really is not up to the task of overseeing the operations of a US multistate operator in the cannabis industry with a multi-billion-dollar market cap and hundreds of millions of dollars in annual revenue.

We’ve been dealing with this to date by imposing higher standards on these larger companies as they list. So, there has been no regulatory gap, but we are now in the process of introducing changes to our listing rules designed to make these higher standards official and transparent.

When the project is complete, following a process with our regulators and a public comment period, these companies will be separately identified for the information of investors. We expect that the securities of these senior issuers will be eligible for margin under IIROC rules. It will also give the exchange the ability to list special purpose acquisition corporations, which are becoming an increasingly popular vehicle for creating public companies in Canada. It will also enable us to initiate an ETF listing program, which several parties have been very interested in listing on us. It will help address concerns that institutional investors and professional investors in Canada and the US may have had about the opportunity for regulatory arbitrage between the CSE and other exchanges in Canada.

There is a lot of interest among finance industry professionals in the blockchain-based clearing and settlement system the CSE is developing. What can you tell us about your progress?

The first thing to note is that we retained Andrew Grovestine within the past three months. Andrew is an experienced brokerage industry executive and is going to lead our effort to create a settlement and clearing service in Canada based on distributed ledger technology.

Our vision here is not really to emphasize the clearing and settlement service, although it’s certainly a key component of how we believe the future is going to play out. What we are really looking to do is to provide a safe, regulated environment for the listing and trading of tokenized securities. We think this will be of real interest to companies and investors because using these tokenized securities substantially reduces costs for issuers wanting to pay dividends, royalty streams, or other entitlements a company might want to provide its shareholders. By doing it in this way we can cut the cost of capital for issuers and incent the creation of a whole range of new and interesting instruments, whether they are in the form of common equity or debt, or other types of security instruments that will be of interest to both retail and institutional investors.

One of the pieces of that puzzle is the clearing and settlement component, which will make trading more efficient by shortening the clearing and settlement cycle. It will also make the processing of entitlements to shareholders significantly more efficient. But, as I say, the real headline here is that we want to create the best structure for tokenized securities to trade in a regulated environment.

As far as where we are with the project, we are about to initiate third-party testing with the dealer community. We’ve assembled an advisory group of dealers who will help to guide us through the process and they are excited about the opportunities that this initiative could bring to the market.

The CSE has not raised new capital for many years and on the surface would seem to benefit from a stable ownership structure.  How does this help you to serve the market?

We’ve been blessed to have patient and supportive principal shareholders over my term as CEO. I’d begin with Urbana Corporation, which is Tom Caldwell’s investment fund. Mr. Caldwell, as you know, is Chairman of the Canadian Securities Exchange. Shortly after Mr. Caldwell led the recapitalization of the company he was joined by Ned Goodman, who served as Vice Chairman for a number of years.

I can’t tell you how much credibility the investments from Mr. Caldwell and Mr. Goodman brought to the organization. I think that the CSE team was always respected in the industry, but there were concerns as to whether we had the resources to stay in the game for the long haul. With the support from Mr. Caldwell and his team and Mr. Goodman’s investment, those concerns were permanently put to rest, and laid the groundwork for the growth we have enjoyed over the last several years.

Mr. Caldwell, in his presentations, talks about Urbana being “patient capital” and that has absolutely been true with us. We have been able to make investments in a variety of aspects of our business, including in trading technology and adding personnel to meet the increased pace of applications in response to the regulatory challenges this posed. We moved into our new premises in First Canadian Place at the end of January and are in the process of building a presentation centre there that will be used to host listed companies for a ceremony on their first day of trading, and also to recognize key milestones our issuers achieve.

While these investments may have been done at the expense of short-term profitability, we are again positioning the exchange to support even higher levels of growth in the future. Our shareholders have been very, very supportive.

It is definitely the spirit at the CSE to always be looking to do things better. What are you doing to keep momentum going in terms of growth and building the brand?

As people who follow our Instagram and Twitter accounts know, we have been racking up the frequent flyer miles over the past couple of years. There is a concerted effort by the team to get out there and tell the story of the Canadian Securities Exchange to influencers, be it lawyers, accountants or investment dealers and bankers. We’ve been doing a lot of work with the community to ensure they understand who we are and what our value proposition is. We also, of course, engage in direct sales work with individual companies that are looking to access the Canadian public capital markets.

That has been a big part of our success over the last few years, but the thing that I think truly sets us apart from most securities exchanges – not just in Canada but around the world – is that we are the only start-up exchange in recent memory that has really had an impact on the local capital market. People see that and see the success we’ve had and understand that it reflects the CSE team’s experience, knowledge and commitment to customer service.

The other thing I attribute it to is the fact that we are entrepreneurs ourselves. I have noted in past interviews how most of the team here has been through the lean times and worked with us through multiple fundraising efforts. We have done exactly the same thing that the entrepreneurs who come to us to list their companies do.  We’ve done the investor pitch decks, we’ve signed the NDAs, we’ve done the presentations, we’ve had the door slammed in our face.  That gives our team insight into the challenges that an entrepreneur faces as they try to raise money to achieve their business goals. Understanding where they are and knowing that we have been in their proverbial shoes builds an energy around the organization that people sense and really take a high degree of comfort in.

We’re doing all of the other things I mentioned, such as building a presentation centre for listing ceremonies. We built a podcast studio and are releasing podcasts at a furious rate through the various media we use to distribute them. Our initiatives via the Internet and social media are developing a real following.

It’s not any one thing, I think it’s a combination of all those things that gives people the sense that we are on the right track and that this organization is really going places.

The Public Entrepreneur Magazine – The US Cannabis Issue – Now Live!

Welcome to the latest issue of Public Entrepreneur Magazine, your source for in-depth stories from entrepreneurs across a diverse range of industries.

In this second issue of 2019, we delve into the rapidly-growing US cannabis industry, with exclusive insights from inspired entrepreneurs into how they’re sowing the seeds of success in this market space.

CSE-listed companies featured in this issue include:

Check out the latest issue of Public Entrepreneur magazine below.

(Trouble accessing the publication below? CLICK HERE TO ACCESS THE ISSUE)

Public Entrepreneur Magazine – The Mining Issue – Now Live!

Welcome to the Public Entrepreneur magazine, our fifth issue and the start of our second year of publishing. We are thrilled with the positive response our magazine has received in its first year, and are excited to continue to bring our readers stories of entrepreneurship that inspire us to live up to the mantle of being Canada’s Exchange for Entrepreneurs.

Now that this magazine is officially part of an annual cycle, it’s important to acknowledge the inspiration for this “PDAC” edition. For those that aren’t familiar, PDAC is short for Prospectors & Developers Association of Canada. The annual PDAC Convention in Toronto is one of the largest and longest running mineral exploration conferences in the world. Started in 1932, the conference now boasts over 1,000 exhibitors, 3,500 investors, and over 25,000 attendees.

This issue of the magazine features interviews from professionals in the mining industry in companies that are publicly traded in Canada and represent a healthy cross section of geographical footprints and mineral asset types.

CSE-listed companies featured in this issue include:

Delrey Metals (CSE:DLRY)
Irving Resources (CSE:IRV)
Idaho Champion Gold Mines (CSE:ITKO)
MegumaGold (CSE:NSAU)
Go Cobalt (CSE:GOCO)

Another trend is also taking shape across the sector from both the financial and operations sides of the business. With this issue’s cover story on “The New Faces of Mining,” this edition of the magazine drills down into stories about a new generation of influential young professionals: millennials. With experience under their belts and different perspectives and beliefs about the direction the industry should be headed in, these individuals are beginning to exert influence and prompting change in an industry that operates as a bedrock for the Canadian capital markets.

Check out the latest issue of Public Entrepreneur Magazine below:

(Trouble accessing the publication? CLICK HERE TO ACCESS THE ISSUE)

NEX Exchange welcomes its first dual-listed Canadian stock

NEX Exchange, a NEX Group business which operates a regulated, UK stock exchange for small and medium companies, announces today that Auxico Resources Canada Inc. (“Auxico”) has been admitted to trading on the NEX Exchange Growth Market.  

Auxico was founded in 2014 and is involved in the acquisition, exploration and development of precious (gold and silver) and base metals (coltan) in Colombia and Mexico.  Its main operation is the 100% interest in the Mexican Zamora Silver-Gold Property, which has high grade silver and gold reserves.

Auxico’s primary listing is on the Canadian Securities Exchange and this is the first Canadian company to become dual-listed on NEX Exchange using the fast-track procedure which NEX Exchange has established across various stock exchanges around the world.

NEX Exchange provides access to capital and liquidity and the Growth Market is the market for early stage, entrepreneurial companies seeking access to growth capital.

NEX Exchange already has a number of mining companies on its markets and gaining a dual-listing broadens the range of potential investors for Auxico at a time when the company is looking to expand and attract investors globally.

As well as the Canadian Securities Exchange, companies listed on the following markets are eligible to apply for a fast-track admissions process on NEX Exchange:

  • AIM Market and Main Market – London Stock Exchange
  • Australian Securities Exchange (ASX)
  • NASDAQ US
  • TSX Venture Exchange (TSXV)

Patrick Birley, Chief Executive of NEX Exchange said: “We are delighted to welcome Auxico Resources as our first dual quoted stock with the Canadian Securities Exchange. We have long admired the approach of the CSE and hope that by working together we can offer dual quoted companies greater access to a wide range of investors.”

Richard Carleton, CEO of the Canadian Securities Exchange, said: “We congratulate the team at Auxico Resources for taking advantage of the fast-track procedure we have developed with our colleagues at the NEX Exchange.  The listing will open new opportunities for capital raising and secondary market liquidity in the UK for Auxico. We hope that Auxico will be the first of many CSE issuers to join the NEX Exchange”.

Pierre Gauthier, Chairman & CEO of Auxico, said: “The dual listing of Auxico’s common shares on the NEX Exchange will provide our Company with access to the capital markets of London, one of the largest financial markets in the world. Access to growth capital from London, through the NEX Exchange, will help Auxico to advance its business plans in Colombia and Mexico, where we have access to significant opportunities in the mining sector. In addition, a NEX Exchange listing makes sense for our Company as a significant portion of our common shares are already held by residents of the UK.”

Guy Miller of Peterhouse Capital Limited, corporate adviser to Auxico, said: “This is an exciting transaction for NEX Exchange and for us as corporate adviser and believe that Auxico’s quote will open opportunities for UK based investors to be able to invest seamlessly into this Canadian listed company, and set a precedent for further Canadian companies to follow”.

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Interview with Mehran Ehsan, President & CEO, Permex Petroleum Corporation

Earlier this month, Peter Murray of Kiyoi Communications, sat down with President and CEO of Permex Petroleum Corp. (CSE:OIL), Mehran Ehsan, to discuss the dynamics of the oil markets; how Permex has navigated growing in a challenging environment and where he sees Permex’s opportunities to continued growth.

Peter Murray (PM)  We’re going to discuss a range of topics, including the state of North American oil markets and how to make money in the current environment.  But let’s begin by having you explain who Permex Petroleum is and the company’s strategy for making the most of opportunities in your industry.  What makes Permex different?

Mehran Ehsan (ME) Permex Petroleum is a uniquely positioned junior oil and gas company with assets and operations across the Permian Basin of West Texas, and the Delaware sub-basin of southeast New Mexico.  We own and operate on state, federal and private land.

The unique value proposition that Permex offers is a reflection of three main factors.

Number one is the timing of our acquisitions.  The company began acquiring assets in one of the worst cycles in history.  During the downturn of the past three years Permex picked up a hawkish position by targeting companies with quite a bit of leverage.  Typically, we were purchasing assets at 10 cents to 20 cents on the dollar.

The second aspect that makes us unique is geography and geology.  As for location, we are in the Permian, and the Permian is the most superior basin in the world.  Most of the investment made by the oil industry during the downcycle was in the Permian, and Permex has been in the Permian since we began.  From a geology standpoint, the best-producing formations in the Permian Basin are the Bone Springs, the Wolfcamps, and the San Andres.  Having these formations within your reservoir is key to succeeding in this region.  Permex has all three of these within its various properties.

The final thing that makes Permex unique, and ahead of our competition in the junior space, is our structure.  Every entrepreneur and CEO thinks they have a good structure, and they quite well might.  With ours, we have 35 million shares outstanding, we have absolutely no debt, and I think we are truly undervalued given where we’re headed.

(PM) How did you develop your insight and strategy for the company?  Was it a single member of the team who had this vision, or was it more of a group decision?

(ME) The board and executive team have over 240 years of combined experience in the oil and gas sector.  Some of us have been through multiple cycles and we’ve seen big peaks and valleys.  And with each valley we’ve witnessed devastation within the industry, but on the flipside is opportunity.  However, these opportunities do not come every year.  They only come every eight years or every 10 years.  For Permex, the timing has been excellent to take advantage of market conditions.  Everyone in the company sees it.

(PM) Can you give us an example of a deal that you’ve done and how it reflects that approach of trying to take advantage of conditions within the industry?

(ME) Let’s look at our most recent acquisition.  We took an approximately 48% working interest in the ODC and Taylor unit in Gaines County, West Texas.  The other main partner on the field is Occidental Petroleum.  What we ended up paying for this asset was about US$1.9 million.  The field is already in production.

To illustrate the value we were able to add, you essentially divide the price paid for the total field by the amount of production you get, and this yields a number called “per flowing barrel.”  We ended up paying $11,000 to $15,000 per flowing barrel.  To put that in context, the market right now is around $45,000.

Currently in our area, you see acreage going anywhere from $500 to as high as $10,000 per acre, yet we paid $500 to $700 per acre.  That is another testament to us entering the market during a downcycle and buying it at a discount.

(PM) That seems an obvious strategy – buy low and sell high.  Why don’t lots of other entities do what Permex does?

(ME) Actually, I think quite a few companies do use a similar approach.  You don’t have to look far for a good example.  Ring Energy started in 2002 and has just grown and grown.  In the last downturn it expanded substantially by taking advantage of the cycle.

The main reason we don’t see this happening all the time is that it is not simply a matter of buying low and selling high – there is more to it.  You can buy low in the wrong environment and the wrong location and it doesn’t matter if the market comes back up because you won’t benefit from it.

To give you an example, in the Canadian environment right now there is too much regulation, too much red tape, and taxes are too high.

(PM) Can you give us some insight into the different regional oil markets in North America?  What would be your Top 3 jurisdictions and are there some areas or types of plays you would avoid?

(ME) First of all, we don’t do anything offshore.  Looking at opportunities onshore, we are quite biased toward the Permian Basin, and I’ll give you valid reasons why we think that way.  Out of 22 billion barrels of proven reserves in the United States, 9.8 billion belong to the Permian Basin, or over 44%.  Looking at US production, 3.2 million barrels a day is produced in the Permian, compared to 10 million to 11 million in the entire US.  That means that around 30% of production in the United States comes from the Permian, which is just a portion of West Texas.

Looking at the number of rigs now actively drilling, which indicates where investment is going, in the Permian it’s 471 rigs, which represents over 42% of rigs in the US, and over 22% of global rigs.  That is why the Permian is our top choice.  This is the gem of the United States, if not North America.  There is nothing comparable to it.  In fact, the Ghawar Field in Saudi Arabia would be the first comparison that comes to mind, and some believe this is a better field even than that.

The next one we would look at is the Scoop/Stack play of Oklahoma.  There has been some development there, some horizontal drilling within those formations and basins and they are quite lucrative.

And lastly, we would consider the Bakken.  The Bakken has become more efficient, although the grade of oil is a little different.  It is not as high a grade, so refining can be an issue at times.  That would be an area we would review.

Unfortunately, there is no Canadian play in our Top 3, and the reason is geopolitics, red tape, and not enough infrastructure to take your product to market.  As a result, junior companies cannot compete with juniors operating in the Permian.  The only ones in Canada that will continue to be successful are mid-caps and large-caps which monopolize this market and take advantage of what the government puts out there to block juniors.

Canada has abundant reserves in the ground and we would love to tap into them to benefit the Canadian economy as well as Permex and our shareholders.  But until some of the governmental agencies change and we begin to see some federal and provincial agreements, we won’t be willing to move into the domestic market.  As a junior we just cannot get involved, unfortunately, because at the end of the day it is the bottom line that matters for shareholders.

(PM) What is the medium- to long-term outlook for Permex?  And how large can the company ultimately become?

(ME) Our focus right now is on developing our fields.  Scaling up production, in other words.

The second goal will be continuing to build reserves by adding landholdings and leaseholds.  In the medium term, we believe the company can reach a market capitalization far higher than where we currently stand with an appropriate injection of capital into various sectors within our development plays.

The long-term goal is for Permex to rank among midsize producers, or perhaps even alongside the big boys.  There are many companies that six or seven years ago started on the same path and followed the same formation, and they are now reaching that $800-900 million market cap.  Ultimately, either a large-cap takes us out, or we become one ourselves.

(PM) You mentioned earlier the depth of experience on the Permex team.  Are there any new lessons you have learned since Permex was established?

(ME) One of the main things I would point out is what we think is the Achilles heel for many oil companies, which is not having the ability to be flexible during a downcycle.  Many companies fail not because their operations are bad or they are too leveraged, but because they cannot quickly adapt to a lower-price environment.  Being fluid and flexible is the key to surviving in this industry.  In our opinion, you need to have a lean company and a low burn rate to be able to weather some of these storms, and if you don’t then there are real issues.

(PM) Do you have any advice for entrepreneurs who are looking at the oil market – or any type of business for that matter – and trying to determine the best way to move forward on an opportunity that they have perceived?

(ME) I consider myself a contrarian, so I do not have a herd mentality whatsoever and I believe that if an entrepreneur wants to get into any sector they have to have a unique value proposition and showcase why their project and their company is ahead of the curve.  This is particularly true in the oil industry, as our deliverables are much closer at hand than in many other businesses.  Oil companies really need to be on top of their game in terms of defining and demonstrating a unique value proposition.