CSE Issuer Stories, Magazine

Gabriella’s Kitchen: Healthy foods and cannabis-infused products take wellness to a whole new level

When you first meet Margot Micallef, chief executive officer and co-founder of Gabriella’s Kitchen (CSE:GABY), her authenticity shines through: her firm handshake, her warm smile and her clear words.

It shines through particularly strongly when she talks about her sister: Gabriella, the namesake of Gabriella’s Kitchen. Although Gabriella passed away after a battle with cancer, she remains the company’s inspiration.

The pure-play cannabis wellness company has come a long way since creating its original award-winning skinnypasta, a high-protein, low-calorie and low-carbohydrate fresh pasta. Other product lines have been added to the shelf: noodi, gabbypasta and most recently alto, which includes the company’s cannabis-infused products. Today, the vertically integrated, branded, consumer products company focuses on utilizing cannabis for the lifestyle consumer.

Not to mention the benefit of having Micallef at the helm. Her resume is impressive, to say the least: a lawyer and philanthropist, founder of Oliver Capital Partners and a former Senior VP at Shaw Communications.

Public Entrepreneur spoke to Micallef about Gabriella’s Kitchen’s origins, its new line of cannabis products and global expansion plans, and how the company is seeking to change the conversation around cannabis health and wellness products.

Q. Can you give us some background about how Gabriella’s Kitchen started?
My sister, Gabriella, and I decided to move to a healthier lifestyle and identified a derth of products in the market, primarily around food, that supported a healthy lifestyle. We saw the business opportunity. As we were launching our business, my sister was diagnosed with stage IV lung cancer.

The diagnosis really brought home the need to change our lifestyle and focus on our health and well-being that was within our control. Her doctors couldn’t do anything for her and they told her that. The pasta line was inspired by the dietary restrictions Gabriella faced throughout her cancer journey.

The beauty of what we did was that we were able to prolong her life for five years.  She had great quality of life and really learned to value the foundation of health and wellness through diet and lifestyle.

Q. I don’t think many people realize the effort it takes to get a product on the shelf.  Can you walk us through it?
It’s tough. In order to get your product on the shelf you have to dislodge somebody else’s product.  That’s something most people don’t understand. We knew going in we were going to make amazing products, that there was a demand for these products and we were going to get them to market.  But it’s a lot more work and a lot more money and takes a lot longer than anybody thinks it’s going to.

We started it in a little retail location in Toronto — we moved to Toronto from Calgary because that was the biggest market in Canada.  We’d make the product in the back and sell it out the front. At 3:00 pm each day, Gabriella would close up and go pound the pavement — and slowly and surely, we got more retailers.  We got up to around 200 when she passed away in 2011. I ended up taking over the business in 2015. I’ve invested about $5 million and raised another $19 million to date.

Q. What have you used the funds for and walk us through how you leverage the infrastructure you have in place?
We’ve used that money primarily for product development and to build out our team and infrastructure.

That’s our differentiator.  With our strong infrastructure, we can move into any channel we want to, including the licensed cannabis channel.  We came upon the cannabis space about a year ago when we examined the healthful properties of cannabis.

In many ways, our approach was opposite that of many other companies, which have an idea, raise the money and then build the infrastructure.  We already have the infrastructure and the team with the knowhow to get the product on our shelf. Our existing business line has more than 30 unique products that cater to health-conscious consumers, whether they shop in the mainstream shopping channels or in the licensed cannabis retail channels.

Leveraging our existing infrastructure means we can move product into a channel much more rapidly than anyone else can.

Q: Talk about the cannabis space and what kind of consumers you’re looking for.
Our goal is to serve consumers wherever, however, and whenever they want to consume cannabis wellness products – and that means in the mainstream channel or in the licensed cannabis retail channel.

We’re looking at a diverse range of products as vehicles to assist them in their chosen modality for consumption.  We already know that the mainstream market is going to start carrying CBD-infused products in a big way. I believe that once federal legislation in the US changes, there will start to be a move afoot to get all cannabis infused products into mainstream channels.  We will be ready for that opportunity.

Consumers are changing their perspective on health and are looking for new ways to supplement or replace traditional medicine.

Q. Can you talk about how your team continues to be built out?
We’ve got a whole research and development department.  One to note is Mara Gordon, who is a pioneer in the cannabis space and our chief research officer. She has amassed a database of formulations and health attributes associated with the cannabis plant that she has garnered from her own experience in working with physicians, clinicians, researchers and patients over the last 10 years.

We also continue to build out our expertise in the cannabis channel, having just hired a VP sales-licensed channel and acquired Sonoma Pacific, a licensed cannabis distribution company in California.

We also have a business development team that is scouring North America for brands that we want to bring under our umbrella. We want to grow through acquisition as well as through innovation.

Q. What does your next year or two look like?
We want to be the category leader in the cannabis wellness space. Not “one of” the leaders, rather, “the” leader. We know that the category leader takes 70% of the economics off the table. We want to be the one that everybody else wants to chase.

We want to do that for two reasons. One is that we believe that when the federal landscape changes in the US and the big players move into the market, we think that they will look for acquisitions that will move the dial for them.

We believe that if we can build a significant platform in North America that we can then partner with a global player and benefit consumers in a much broader way and, of course, benefit our investors.

This story was originally published at www.proactiveinvestors.com on December 4, 2018 and featured in the Public Entrepreneur magazine.

Learn more about Gabriella’s Kitchen at https://gabriellas-kitchen.com/ and on the CSE website at https://thecse.com/en/listings/diversified-industries/gabriellas-kitchen-inc.

CSE Issuer Stories, Magazine

The CSE Year In Review

It is clear from speaking with people both inside the Canadian Securities Exchange and around the broader financial community that 2018 is going to be remembered as perhaps the most transformational year in the CSE’s history.

Huge financings, billion-dollar market caps, a steady stream of international listings, and financial institutions investing in CSE issuers like never before are only some of the talking points. Fast-growing, well-capitalized companies and strong investor interest in them have elevated the exchange to a new level.

Total capital raised by CSE issuers looks set to increase by over 500% compared to 2017, with a chance at topping the $5 billion mark.  Curaleaf Holdings certainly played its part, raising $520 million during its listing transaction in October. The company stated in a related news release that over 100 financial institutions had supported its financing.

Rapid expansion of market capitalization
“Clearly, standout events have been taking place over the last few months, with the number of very large US-based cannabis issuers that have joined the exchange,” remarks Richard Carleton, CSE Chief Executive Officer, during a discussion in late November. “We are seeing the most rapid expansion of market capitalization and impact on the exchange since our inception.”

Climbing 13.25% year-to-date, the total market capitalization of CSE listed is growing appreciably thanks to the contributions of several larger entrants to the marketplace. And while Curaleaf leads the way with its $2+ billion valuation, there are plenty of other issuers that qualify as solid mid-caps in the Canadian market. Microcaps still constitute the majority of listings, but bigger companies are finding the exchange to be a suitable home as well.

It’s no secret that the CSE is the go-to exchange for listing cannabis companies with operations in the United States. The CSE never shied away from the cannabis industry in Canada, and when considering how to manage prospective issuers from south of the border, exchange officials spent time with regulators and professional services providers to confirm there was a high degree of comfort with the industry’s risk profile. One of the advantages of investing in public companies, after all, is strict disclosure standards designed to ensure that investment risk can be accurately assessed.

The next development in the cannabis sector at the CSE, beyond more large listings almost ready to debut, is the development of cannabis index products in 2019. “The CSE is the only location globally where you see as heavy a concentration of US cannabis issuers, so we are the logical place for such an index to be calculated and disseminated,” notes Carleton. Could related ETFs be far behind?

Whilst cannabis stocks may be dominating the headlines, the CSE has also welcomed a strong contingent of new mining companies in 2018, a total of 57 through the end of November.

“We have in fact seen a significant number – and in absolute numbers almost a record – of mining companies get onto the exchange and receive funding this year,” says Carleton. “My sense is that some of the profits from trading in the cannabis space over the last couple of years are being applied to the mining sector.”

Tech listings have been increasing as well, even though appetite for everything blockchain has slowed compared to the enthusiasm of late 2017. Interestingly, the industry enthusiasm for cannabis might just dovetail with ongoing international outreach initiatives by the CSE to put new funding alternatives on the table in the tech space.

Canadian public equity markets a viable alternative for
US companies
Smaller companies in the US and other international markets are finding it increasingly difficult to obtain private funding as private equity funds increase in size and need to make larger investments in portfolio components. A primary Canadian listing on the CSE would be worth considering for many young growth companies.

“We are being exposed to advisors in the United States who are beginning to understand that the Canadian public equity markets are in fact a viable alternative for US companies looking for growth capital,” says Carleton. “We’ve had conversations with a number of these professionals about taking what we have learned from the capitalization efforts in the US cannabis space and applying that to companies from other sectors that perhaps have not been that well served by the venture capital and provide equity models that are the principal source of growth capital for early stage US companies.”

Speaking of tech, the CSE has an ongoing project of its own in the form of a blockchain-enabled clearing and settlement facility. The project team is in the late stages of quality assurance and plans call for moving to external testing with dealers and other interested parties before the end of 2018.

“Dealers continue to be extremely eager to get their hands on it,” Carleton explains. “They understand the business case and the client service benefits, as well as the number of companies that would like to use security tokens as a means of securing capital.  We continue to be very excited about this facility and it is going to be one of the things on the agenda for 2019.”

Continually working to improve the issuer experience is an important part of the CSE’s culture, and that’s reflected in exchange staff organizing or participating in over 80 events during 2018.

New Toronto office
The CSE seeks to make that part of its business even stronger in 2019 with relocation to a new office, the highest office floor in Toronto, no less – 72 stories up at First Canadian Place. “This was really brought on by the anticipated growth in our staffing levels, particularly in the listings regulation area,” says Carleton. “It is important that we continue to maintain high service levels for our issuers and deploy our regulatory responsibilities as an exchange.”

A full-blown market opening centre is in the works and it will be just one of several first-day activities designed to ensure that a new issuer’s launch into the public markets gets off to a good start. “The new First Canadian Place location will provide the space and a spectacular backdrop to have exactly that kind of experience.”

New issuers will be pleased to learn that they are joining an exchange that again set full-year records for trading volume, trading value, and other measures of investor participation.

Trading volume up
In the first 11 months of the year, trading volume was already 54.97% higher than the total for all of 2017, topping 27.05Bn shares. Most measures of investor activity had actually surpassed last year’s record levels by mid-summer. And with the listing application pipeline exceptionally healthy as we head into year-end, look for 2019 to be another blockbuster.

Granted, capital markets in Canada are having a better year in general, but the CSE’s pace of growth in 2018 is validation of a business model that puts the needs of issuers first.  Fund managers from around the world confirm this, sophisticated management teams who choose the CSE over multiple alternatives confirm this, and investors trading tens of millions of shares per day in individual companies confirm this.

Carleton and his team see it first-hand and fully anticipate 2019 to be another year of growth and progress in many forms. Be it cannabis and tech businesses listing from the US, Israeli companies following up on the CSE’s multiyear effort there to introduce the listing concept, or new investors learning about the many opportunities presented by CSE issuers, the outlook could hardly be brighter.

“Things are going well but we need to keep our foot on the accelerator,” Carleton concludes. “Top-quality service for our issuers, a fair and well-regulated trading environment, and continued innovation in the exchange’s technology and business practices. It has worked so far, and we are going to keep at it.”

This story was originally published at www.proactiveinvestors.com on December 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about the Canadian Securities Exchange at https://www.thecse.com/.

CSE Issuer Stories, Magazine

Permex Petroleum: Positioned for growth in the world’s hottest oil and gas region

As we close in on the final month of 2018, global oil prices have gone topsy-turvy, with predictions of $100 oil just a few weeks ago giving way to concern that the recent 25%+ drop to below $55 per barrel (for benchmark West Texas Intermediate) could grow even steeper.

In an environment with this level of volatility, junior oil and gas companies need quality assets, good financial structure and adequate funding, not to mention a reasonable degree of managerial flexibility.

These characteristics sum up Permex Petroleum’s (CSE:OIL) approach to operating successfully in today’s oil market.

Originally founded in 2013 and then restructured into a corporation in 2017 by President and Chief Executive Officer Mehran Ehsan, Permex operates primarily in the Permian Basin of Texas, which Ehsan calls one of the best environments in the oil and gas industry. The properties, projects and formations in this area are so popular that a new word has been added to industry vocabulary: ‘Permania.’

All the excitement is justified, mind you, as Ehsan explains in compelling fashion.

“Even when a downcycle occurs, the Permian continues to move forward,” says Ehsan. “The region produces over 3.3 million barrels per day, which represents over 30% of all production in the United States. Looking at reserves, proven reserves in the United States sit around 38 billion barrels, and over 10 billion of that is in the Permian.”

Even more important, according to Ehsan, is rig count, as this is a measure of investment dollars going into a region. “There are 475 rigs in the Permian, which is more than 40% of US rigs,” says Ehsan, adding that this number also represents around 20% of all oil rigs operating worldwide.

One of the oldest adages in the stock market is to buy low and sell high, and Ehsan utilizes a similar approach to execute the Permex business plan. The company adds assets to its portfolio in times of general industry distress, thus enabling it to buy properties at a discount.

Importantly, Permex only buys properties that are in production or can be brought online at Permex’s timeline and discretion.  Ehsan only considers properties that the company can produce from on day one from active wells, and potentially drill later with an exceedingly high probability of success.

“The timing of our acquisitions has been key,” Ehsan adds. “We acquired assets during a downcycle at an average cost of US$2,000 per acre, and now properties in our area go for anywhere from US$17,000 per acre to US$25,000.”

Permex is careful to only operate in regions where producing formations tend to provide some of the highest historic success ratios, low production costs, extensive infrastructure to get end-product to market, and, importantly, a regulatory regime that favours the industry instead of throwing red tape at it. West Texas and South East New Mexico tick all those boxes.

In fact, one of the formations that Permex wells produce from, the San Andres, has a breakeven cost of US$29 per barrel.

“We have eight properties in West Texas and Southeast New Mexico,” Ehsan says. “Out of those eight, six qualify for water flood EOR (enhanced oil recovery) techniques.  To date, our focus has not been to devote too much to capital expenditures. We wanted to purchase assets at a discount during an industry downcycle which caused duress for a lot of operators. Every dollar spent on Capex would have been a dollar we could have used to buy assets at a discount from such operators.”

In the last two quarters, Permex has begun to bring shut-in wells online and use water floods to pressurize reservoirs to enhance production. And the next stage of Ehsan’s strategy really enables Permex to scale its top line.

“Drilling wells in general will give us scale, however we have access to some of the best formations to drill horizontally which can provide remarkable daily production and payouts of under 10 months,” says Ehsan. “Offset operators such as Ring Energy are doing so all around our properties. We anticipate starting our horizontal drilling programs in H1 2019, which can rapidly give scale to the company.”

That timeline is prudent, as overall production in the Permian has increased to the extent that there are bottlenecks in the pipelines that transport oil to market, and the result is that producers are having to accept a discount to the standard WTI price, although it is nowhere near the discount Canadian producers are exposed to right now.

Again, this is where location comes into play, as adding pipeline capacity in Texas is much easier than it is in most other jurisdictions. Ehsan says there are four expansion projects in the works, one of which should come online in the first quarter of 2019. The added capacity should begin to shrink the price differential immediately, and eventually eliminate it altogether. This would put smiles on the faces of companies big and small, and it’s worth noting who some of the big ones operating side-by-side with Permex are.

Occidental Petroleum has a major presence in the Permian, as new chief executive officer Vicki Hollub has shifted operations from a Middle East focus to one more on domestic production, such as in the Permian. Occidental is actually a working interest partner with Permex on one of its properties. Other offset operators to Permex include large-cap oil giants such as Devon, Hess, Apache and Conoco Phillips.

Asked for some closing thoughts, Ehsan points to general investor malaise when it comes to oil and gas stocks yet sees it as an opportunity to apply some ‘Permexian’ thinking. “If you take into account our sector as a whole in the US and Canada right now, almost every company is undervalued,” Ehsan concludes. “Usually, oil and gas stocks follow the oil price, but in recent times when oil has risen, the stocks haven’t followed suit. You could say this is a great time to look at investment in the oil and gas sector, as it is ripe for the picking.”

This story was originally published at proactiveinvestors.com on January 15, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Permex Petroleum at http://www.permexpetroleum.com/. 

CSE Issuer Stories, Magazine

Cannvas MedTech: Knowledge is king in the cannabis world too, says chief of Cannvas MedTech

“We really want to be the Google of cannabis data,” is how Chief Executive Officer Shawn Moniz sums up the mission of Cannvas MedTech (CSE:MTEC), a Toronto-based startup that specializes in educating the public about marijuana.

Having watched from the sidelines as Canadian companies sprung up to offer marijuana and its associated hardware, such as vaporizers, Moniz chose the less-travelled road of education when he launched his own cannabis company.

“The benefit of being a digital reference library of cannabis is that we can go into any country and people can learn about the different uses and a safe way of using cannabis if they so choose,” he says. “We are not dependent on any type of legislation or political maneuvering because it’s education, and education has no borders.”

Cannvas MedTech went public in July on the Canadian Securities Exchange as well as the Frankfurt Stock Exchange.

“We wanted to carve a little niche for us,” Moniz says. “We found there were a whole bunch of people growing … and on the other side, everyone was getting into devices, vaporizers and oil vaporizers. But we thought we don’t really want to go into those two spaces.”

Moniz decided instead to offer straight talk about cannabis after spending five years building platforms for big pharmaceutical companies like Pfizer, AstraZeneca and Bayer – which tended to put patients first in discussions about drugs.

He was concerned that the information being disseminated about cannabis reflected the interests of the licensed producers funding it. “We saw very biased information,” he says. “There was a need that no one was willing to plug.”

“So, I said hey, why don’t we just do what I did in the digital pharma space and bring that patient-centric approach to the cannabis industry,” he adds.

At the core of Cannvas MedTech’s business is its website Cannvas.Me, which provides online cannabis courses for free. Cannvas.Me offers the chance to read about cannabis’ medical applications in materials put out by physicians along with an online cannabis course, marijuana product reviews and a cannabis strain matcher that determines which variety is suitable for a specific ailment. The goal is to reach 100,000 users of the platform by the year’s close.

As more marijuana buyers explore Cannvas MedTech’s web site, they will provide data that will power the analytical side of Cannvas’s business, which has the lofty goal of providing the equivalent of census data for the cannabis industry.

Indeed, layered just below its education platform is Cannvas Data, which uses algorithms to pull apart the research on cannabis trends and find new data that might be of use.  Via its connections to other cannabis companies, academics, doctors, and governments as well as its own web site, Cannvas management is set to ramp up its data collection around the world.

As Cannvas MedTech’s business takes off, the idea is that its data will become more tailored to the marketing needs of cannabis companies and the research needs of governments, physicians and academics. Its management will be able to tell, for example, how the consumer tastes of a 25-year-old construction worker in Ontario compare to his or her counterpart in Australia. They might also be able to determine the extent to which patients at military bases are taking cannabis to address their cases of post-traumatic stress disorder.

“People educating themselves about cannabis is where we win. There’s a lack of awareness and a lack of education and the data is key to that,” notes Moniz.  

Partnerships are pivotal to the company’s ability to gather information. In one of its most prominent tie-ups to date, the company recently signed a revenue sharing agreement for Cannvas.me with the Vancouver-based e-commerce platform Namaste Technologies, which runs medical cannabis patient portal Namaste MD that has a reach extending to 20 countries and boasts a database of 1.5 million users.

Namaste has developed the country’s first cannabis telemedicine app, available on iPhone and Android devices, which allows patients to connect to doctors or nurse practitioners for consultations within minutes.

“The data is really going to set us apart within the industry. The Cannvas.me platform on a global basis will collect all of that data and feed it back into the industry,” reports Moniz.

Cannvas Connect, meanwhile, is the third branch of the business as it offers a secured network to allow for the sharing of Cannvas’s data with, say, Health Canada or the company’s other partners in academic and medical circles.

“Cannvas Data and Cannvas Connect, that’s where we have partnerships with academics and research facilities and we’re trying to do partnerships with the government in Canada,” points out Moniz. “We have analysts here providing insights and trends within the community and global markets.”

While 80% of the business is focused on Canada, the remainder is global and Moniz reports that Cannvas is already reaching out to clinics in Australia and Germany to introduce its software so Australians and Germans can have information on medical cannabis at the doctor’s office. Its management also recently travelled to Hong Kong and Japan and hosted presentations there. “In most parts of Asia, you can’t buy cannabis or legally obtain it,” says Moniz. “But playing on that education format opens up a lot of doors for us.”

The company’s goal is to have software in at least 100 clinics within the next year.

Keen to remain independent from the clutch of licensed marijuana producers who control the industry, Moniz and his management team opted to take Cannvas public instead of approaching companies for money. “We wanted to remain non-biased so the only way to do that is to make sure we got funding agnostic of any licensed producer,” he says.

Since its launch last September, Cannvas has built up a staff of 19 with offices in Vancouver and Toronto. As Cannvas widens its global reach by introducing its software in clinics around the world, it aims to become the international authority on the cannabis sector. Information will drive the company forward, along with the industry itself, Moniz believes.

“From a marketing perspective, it’s very important for the cannabis sector to know who their market is,” says Moniz. “Right now, everyone is just blasting out the same message to everyone whether you’re a medicinal or a recreational user. It’s one message fits all.”

This story was originally published at www.proactiveinvestors.com on August 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about Cannvas MedTech at https://www.cannvasmedtech.com/ and on the CSE website at https://thecse.com/en/listings/life-sciences/cannvas-medtech-inc.

CSE Issuer Stories, Magazine

One World Lithium: Explosive demand for energy storage stokes future for One World Lithium

Energy storage sounds very much like a prosaic industry, but it is poised for a boom.  One World Lithium (CSE:OWLI) hopes to be part of the explosive growth.

Tim Brock, a consultant to One World Lithium, or OWL, believes that a junior company with an eye on eventual production must strive to be a low-cost producer with a long-term supply contract.  “One World Lithium has the potential to do this,” he said.

OWL has reason to be excited, given the particulars of its Salar del Diablo property in the State of California Baja Norte, Mexico.  The project covers a large closed basin that provides a compelling exploration setting for the presence of lithium in brines. The Salar del Diablo project has the potential to be a low-cost producer, one reason being that it sits about 35km from San Felipe, a cost-efficient regional service center with a deep-water port that could ship lithium carbonate to customers in Asia and the rest of the world, Brock explained.

One World Lithium has an option to acquire up to a 90% interest from the New Energy Discovery Group.  The company currently has a 60% working interest and on completion of the initial drilling program will have earned an additional 20% working interest with an option to purchase an additional 10% on receipt of a bankable feasibility study.

OWL expects to have an OTCQB listing in September as well as to be interlisted on the Frankfurt Exchange.

Lithium has multiple industrial applications, including lithium-ion batteries, heat-resistant glass and ceramics, lithium grease lubricants, plus as an additive for iron, steel and aluminum.  All told, this creates demand greater than current world supply.

Demand for lithium-ion batteries for electric cars, storage, and mobile devices by manufacturers in Asia, Europe and North America, has mixed with supply trends to drive lithium prices significantly higher.

The price of lithium is up 870% since 2005, and 177% in the last year alone.

In addition, countries are beginning to set dates after which all vehicles sold must be non-internal combustion.

Brock believes several trends will influence the energy storage industry through 2025.

Demand for lithium carbonate will more than double to 600,000 tonnes by 2025 from 270,000 tonnes in 2018.  Meanwhile, supply should rise to between 500,000 and 700,000 tonnes in 2025, compared with about 200,000 tonnes at present.

Lithium supplies currently dominated by Albemarle Corp., SQM and FMC Corp. “may be challenged as more independent production of lithium comes on line,” Brock notes. 

All of this is keeping the energy storage industry on the boil. 

The Salar Property is slated for drill-testing in late October 2018.  Plans call for 4,000m of drilling at 11 drill site locations to intersect possible lithium bearing aquifers. The pre-drilling results from geochemical, geophysical and geological work defined over 60 sq. km of potential lithium in brine aquifers (formations). The Salar is approximately 8,000 feet deep, which gives the potential for stacking of more than one aquifer going to depth.

There are five geological conditions that must be present in order to successfully explore for a lithium-in-brine deposit.  These are a closed basin, meaning that no fluids can escape; presence of hot springs; a volcanic source of lithium; faults to transport the lithium to the Salar; and a regional heat source.  The Salar del Diablo meets all of these necessary conditions. As a comparison, these conditions are also present at the Salar de Atacama, which is a similar size to the Salar del Diablo.

OWL has been in discussions with potential buyers as well as offers to joint venture future exploration but elected to drill the property on its own.

The market is watching in anticipation as the Salar del Diablo project is one of the largest lithium-in-brine prospects to be drilled in 2018.

This story was originally published at www.proactiveinvestors.com on August 29, 2018 and featured in The Public Entrepreneur magazine.

Learn more about One World Lithium. at https://oneworldlithium.com/ and on the CSE website at https://thecse.com/en/listings/mining/one-world-lithium-inc.

CSE Issuer Stories, Magazine

Pacific Rim Cobalt: Cobalt and nickel covered with one prized Indonesian asset

Cobalt and nickel covered with one prized Indonesian asset

Energy storage is a technology crucial to our future, and for good reason. Affordable storage is “the missing link” between intermittent renewable power, such as solar and wind, and 24/7 reliability, according to McKinsey and Company.

Ranjeet Sundher, Chief Executive Officer of Pacific Rim Cobalt (CNSX:BOLT; OTCMKTS:PCRCF), which is developing a cobalt asset in Indonesia, says a major form of energy storage includes lithium-ion batteries, and one of the metals they rely on heavily is cobalt.

“Global demand for renewable power is fueling a massive shift from traditional energy supply chain economics, and the most widely used power source for portable applications is cobalt-reliant lithium-ion batteries,” said Sundher.

“Pacific Rim leverages the global shift to renewable energy and the electric vehicle revolution by capitalizing on two elements: cobalt and nickel. Cobalt and nickel are both essential to lithium-ion batteries.”

The mining industry veteran says lithium-ion batteries can be used to smooth the flow of power. They can be integrated into electricity systems so that if a main source of power fails, it provides a backup, improving reliability.

Despite Tesla Chief Executive Elon Musk tweeting in July that he wants cobalt out of his next-generation batteries, cutting the base metal can create safety and performance issues. For now, the supremacy of cobalt in the growing electric car market is unassailable.

“Cobalt is necessary for any lithium-ion battery with a high energy density. Essentially, any high-performance battery requires cobalt. As most of these batteries are for vehicles and phones, performance is a necessity. Therefore, you cannot get rid of cobalt,” said Sundher.

Sundher, who previously founded Indogold Exploration, a Jakarta-based mining service firm, is creating a carpe diem moment for Pacific Rim Cobalt by developing a cobalt and nickel asset in Indonesia. The Cyclops Cobalt-Nickel Project, recently renamed for its proximity to the Cyclops mountain range, is situated on the north coast of Papua Province. The project covers 5,000 hectares with nine prospects, five of them drill-tested with known cobalt-nickel mineralization.

Nearly 66% of the world’s cobalt comes from the Democratic Republic of the Congo, a country torn by a long-running civil war. This turmoil means that mining cobalt is often dangerous and subject to supply disruptions that can result in spiraling prices. Some companies call the cobalt mined in the Congo the “blood diamond of batteries” owing to harsh mining conditions and use of child labour.

In contrast, Pacific Rim Cobalt’s Cyclops Project has excellent logistics and infrastructure. Located 15 kilometres from the Sentani Airport, the project’s tidewater location offers strategic access to China, the largest battery metals market in the world.

“We have a solid growth story in the right place,” said Sundher. “We are developing our flagship cobalt asset in Indonesia. We were fortunate to pick an asset that already had a tremendous amount of work done on it – making it much easier to leverage. There have been over 850 drill holes done on our property, which allows us to talk to potential offtake partners much earlier than we normally would.”

The Canadian company has a production permit, environmental permit and sealed road access 12 months of the year to the project. “This means we can work on development without any seasonal delays,” said Sundher.  “We are currently beginning to drill 150 holes totaling 5,000 metres on our Cyclops Project and aim to make our historic estimate of 37 million metric tons at 0.11% cobalt compliant.”

The goal of the program is to establish a maiden compliant resource on the project as well as to identify target locations for extraction of mini bulk samples required for metallurgical and process testing.

With a historic estimate of 37 million metric tons grading 0.11% cobalt and 1.31% nickel at a 0.8% nickel cut-off grade, Cyclops contains significant cobalt and nickel mineralization as well as excellent infrastructure for year-round development activities.

Sundher makes clear that China is a focus of the company’s strategy for eventual supply.  “A key factor and strength of our development going forward is our proximity to China. Indonesia faces China. China is a big investor into Indonesia and they are a big consumer of cobalt,” said Sundher.

Indeed, China’s fast-growing battery industry accounts for 80% of cobalt usage. Beijing is locking down supply chains and gobbling up as much cobalt as it can.

Pacific Rim Cobalt has signed a preliminary offtake agreement with Beijing Easpring Material Technology Co. to purchase nickel sulphate and cobalt sulphate from the Cyclops project for five years from the start of commercial production. 

“This is a major milestone for us. Beijing Easpring supplies five of the world’s top six battery manufacturers. They are incredibly sophisticated and dedicated to the electric revolution. Our business model is China-facing,” said Sundher.

It’s no secret that global battery makers have been searching for ways to reduce cobalt in their batteries to cut costs.  Next year, China’s largest lithium-ion battery maker, Contemporary Amperex Technology Ltd., plans to begin producing next-generation nickel-rich batteries, called NCM 811, which are cheaper to make and have longer lifespans.

Pacific Rim Cobalt is positioned to roll with these changes in battery composition, though, as it has both cobalt and nickel in its arsenal.

“The NCM 811 chemistry does reduce the amount of cobalt, but it replaces it with nickel. We are a cobalt and nickel company, so the switch does not affect us as much as other companies,” said Sundher.

“Our preliminary offtake partner, Beijing Easpring, is one of the leaders of 811 chemistry, and it is not anticipated to be the leading battery chemistry for a number of years,” said Sundher.

“It’s Day 1 in our company and I firmly believe that any investor who is interested in cobalt and understands the cobalt supply chain should have a close look at what we are doing.”

This story was originally published at www.proactiveinvestors.com on September 10, 2018 and featured in The Public Entrepreneur magazine.

Learn more about Pacific Rim Cobalt at https://pacificrimcobalt.com/ and on the CSE website at https://thecse.com/en/listings/mining/pacific-rim-cobalt-corp.

Magazine

Public Entrepreneur Magazine – The Inspiration Issue – Now Live!

Over the inaugural year of the Public Entrepreneur Magazine, we’ve featured stories on a variety of topics including women leaders in the cannabis industry, predictions on the future of blockchain, and companies involved in battery metal exploration. Despite the diversity of industries and endeavours, companies featured across all four of these issues share one common ingredient: an inspired entrepreneur.

This issue of the magazine features interviews from a diverse range of entrepreneurs with different backgrounds in their industry. They share with us their insight, advice, inspiration, and goals for the upcoming year.

CSE-listed companies featured in this issue include:

Also featured in this issue is a Year In Review for the CSE, with 2018 considered to be its most transformational year.

Check out the latest issue of Public Entrepreneur magazine below.

 

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

CSE Issuer Stories, Magazine

CellCube Energy Storage Systems: Smoothing the path between renewable energy and its end-user

Smoothing the path between renewable energy and its end-user

The path toward clean energy has proved to be a bumpy one. Misconceptions about the viability and reliability of renewable energy sources have sometimes hindered progress.

CellCube Energy Storage Systems Inc. (CSE:CUBE; OTCQB CECBF; Frankfurt 01X) has heard all the questions and concerns. How does solar power work when the sun goes down? How do you utilize wind power on a not-so-breezy day? The company has found that the missing link between clean, renewable energy and intermittency is in energy storage.

Despite the confusion about just how clean energy works, CellCube Chief Executive Officer Mike Neylan believes that a societal transition from fossil fuels to cleaner or renewable sources is well underway.

“The fundamental need for large-scale energy storage is driven by the increased integration of renewable energy into the electricity grid,” says Neylan.

Neylan, with over 20 years of corporate experience under his belt, has a blend of energy know-how and the financial experience to back it up. Formerly, he was a private equity portfolio manager with alternative investment manager Sprott Inc. and oversaw an investment fund focused on physical power trading when he was the chief operating officer of Aquilon Power Corp.

Renewable energy generation has been increasing, spurred on by the rapid growth in solar and wind power generation, according to a study by the International Renewable Energy Agency.

Solar power generation has increased by 31% compared with 2015 while wind power generation is up by 16%, as per the study.  A total of US$19 billion worth of public investment was put into renewables in 2016. According to Bloomberg New Energy Finance research, storage markets are estimated to reach 40GW by 2030 and are expected to spend over $100 billion in the ramp-up phase over the same period.

“Climate change is driving decarbonization and the increase of renewable sources powering the electricity grid,” says Neylan. “Consumers are looking for cleaner sources of energy with the same duration and reliability that they’re accustomed to having. Clean energy sources backed up by a long duration energy storage system fit the bill.”

Most commodities have always been able to be stored, like water in a reservoir or grain in a silo. Until relatively recently, there was little technical capacity for storing grid-scale electricity except through pumped hydro projects – which are expensive and have geographical constraints. Production would have to always meet demand to avoid waste and ensure a reliable and balanced grid.

CellCube stores energy by way of a vanadium redox flow battery, a brainchild of NASA in the 1970s.

Named after Vanadis, the Norse goddess of beauty, vanadium is a silvery, ductile metal known for its brilliant colors and for making steel stronger. Vanadium salts are non-flammable and non-explosive, increasing safety and battery life.

CellCube’s vanadium redox flow batteries provide 100% useable energy without impacting product life – there is no capacity degradation. The energy storage system comes as a containerized solution with scalable multi-unit modules that can provide grid-scale rated power and between four to eight hours of energy storage.

A battery’s cycle starts when the battery is fully charged and ends once it has been discharged, or all the stored energy has been used up, and then it’s recharged again.

Unlike other technologies on the market, CellCube’s energy storage system doesn’t suffer from cycling dependency and has a much longer lifespan – lasting more than 20,000 cycles. The battery is ideal for long-term renewable energy projects with a lifespan matching that of conventional power generation assets at 30+ years.

If there is ever a service interruption, CellCube receives an alert so that they can respond promptly and keep the energy flowing while reducing the cost of wasted energy. The battery can be looked after around-the-clock or be monitored remotely.

In the past, electricity storage was limited to small electrical-chemical batteries like lead acid or nickel-cadmium batteries. Lithium-ion batteries grew in popularity but were better suited for short-term storage. Vanadium batteries are better equipped for large-scale stationary energy storage, according to CellCube.

The Toronto-based company has original units that have been operating for nearly 10 years, or 11,000 battery cycles. In total, there are 130 installations in 24 countries, including units in the Kalahari Desert in Southern Africa and famously frigid Siberia.

Its adaptiveness to weather extremes also sets the battery apart from the competition.

While some parts of the world look toward clean energy, other parts are still in the dark. CellCube has the capacity to bring electrification to future generations in rural areas.

Excess renewable energy can be stored and then fed into a microgrid, or an electricity grid separate from the mainframe grid. A diesel generator, less expensive than gasoline but a nonrenewable form of energy, can be used to charge the CellCube, but a shift to clean energy may lead to more autonomy for distant communities.

“If you dovetail it with solar or wind, then you have a cheap, clean, renewable source of energy driving the power but used in conjunction with storage, you have a much more efficient system completely independent from the grid,” says Neylan. “So, it allows communities that are isolated in any particular way to really assume control for their own power generation systems and to do so on an economic basis and on a clean basis.”

CellCube is looking to pave the rough road to renewable energy by providing consumers in all locations and climates with cleaner energy they can depend on to power their lives in rain or shine.

This story was originally published at www.proactiveinvestors.com on August 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about CellCube Energy Storage Systems. at https://www.cellcubeenergystorage.com/ and on the CSE website at https://thecse.com/en/listings/mining/cellcube-energy-storage-systems-inc.

Press Release

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”.

NEX Exchange A NEX Group business. NEX Exchange helps its members reach investors and raise capital. As well as financial institutions and large corporates, entrepreneurs use NEX to manage their biggest financial challenges. Whether choosing to offer equity or debt products, once admitted onto our stock exchange, small and medium-sized companies have easier access to investors. Admission is straightforward and we fully support the transition to a public market environment. For the small and the ambitious, NEX Exchange is more than a source of capital – we are the platform for growth. And for investors, we offer simple access to a diverse range of dynamic companies.
For more information, go to nexexchange.com

NEX Group plc offers customers better ways to execute trades and manage risk. Our products and services underpin the entire trade lifecycle pre-, during and post-execution. Our electronic trading platforms are industry standards. Customers use our lifecycle management and information services to optimise portfolios, control risk and reduce costs. We partner with emerging technology companies to bring greater efficiency, transparency and scale to the world’s capital markets. NEX is headquartered in London with offices worldwide. NEX. Empowering markets.

CSE Performance

Year-end 2018 interview with Richard Carleton

Last month, CEO of the Canadian Securities Exchange, Richard Carleton, sat down with Peter Murray of Kiyoi Communications to discuss the record-breaking year for the CSE in 2018.

From major milestone achievements, to trends and updates in listings to where the CSE is looking next in 2019, scroll down to read the full transcript of this interview.

For ease of navigation, a list of hyperlinked topics is included below.

  1. Standout achievements in 2018
  2. Increased size of listed companies
  3. US cannabis companies choosing to list on the CSE
  4. Status on listings outside of cannabis
  5. Growth of institutional investment
  6. Managing margin eligibility of CSE-listed securities
  7. Updates on blockchain-enabled clearing & settlement
  8. Moving to a new office
  9. Focus on the future
PM: As we approach the end of 2018, the CSE is positioned to report another year of records in trading volume, trading value, financings, and other metrics illustrating the exchange’s success. What achievements stand out in your mind, and why are they important to your vision for where the CSE is going?

RC: Clearly, standout events have been taking place over the last few months, with the number of very large US-based cannabis issuers that have joined the CSE. It is companies such as Curaleaf, Harvest Health, Acreage, Green Brands, and more to come over the next few months. We are seeing the most rapid expansion of market capitalization and impact on the exchange since our inception.

I will say that the opportunity to work with management teams who are representing, in some respects, the pinnacle of US business is one that the CSE really values. Finance professionals and advisors are involved from bulge-bracket US brokers. And there are experts highly experienced in consumer products and the consumer packaging industry from companies such as Procter & Gamble.

The opportunity to work with people of this calibre is validation of the proposition that the CSE has been working to build and illustrates that we are headed in the right direction.

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PM: Cannabis continues to be a big driver of the growth being experienced by the CSE. In 2018, the sector brought several of the largest financings to ever take place on the exchange, and some of the issuers have market caps that place them well beyond the microcap category. Does the increasing size of the average listed company present any new opportunities or challenges?

 

RC: I don’t know that the increasing size presents any unique challenges. Certainly, what it means is that, given the size of the financings and the overall enterprise value of these companies, we are seeing, for the first time, significant institutional participation. This is a very important development, because last year and in the early part of this year the money was principally coming out of the retail space or Canadian accredited investors through private placement financings.

What we are seeing now is institutions from Europe, the United States, Canada and Asia participating in these financings. And this really is the first time we have had this community involved with the Canadian Securities Exchange.

We are being exposed to advisors in the United States who are beginning to understand that the Canadian public equity markets are in fact a viable alternative for US companies looking for growth capital. We’ve had conversations with a number of these professionals about taking what we have learned from the capitalization efforts in the US cannabis space and applying that to companies from other sectors that perhaps have not been that well served by the venture capital and private equity models that are the principal source of growth capital for early stage US companies.

That is a thesis we have had for a number of years and I think the cannabis industry is bringing the capabilities of our market to light. And not just of the Canadian Securities Exchange, but really the whole ecosystem that we represent, be it the investment dealers or the law firms that work with these issuers. We really do hope to leverage the relationships that we have built in the cannabis space to bring a whole new category of companies into the Canadian public equity markets.

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PM: The CSE remains the best choice for companies in the cannabis sector looking to list in Canada, especially those with assets in the United States. What will be the approach to protecting the CSE’s lead in cannabis listings if the US chooses to make cannabis legal on a federal level, thus opening the door to cannabis companies listing on US exchanges?

 

RC: We have been asked this question quite frequently over the last little while, and I think the answer falls somewhere along the following lines. In my experience in the exchange business in Canada, people have always looked at market share of trading for inter-listed companies between Canada and the United States and tried to think about how to change that dynamic. How do we increase market share?  How do we increase order flow from the United States?

The simple fact of the matter is that the percentage of market share is almost exactly the same as the percentage of the country of residence of the shareholders.

To illustrate, if a company has 50% of its shareholders resident in Canada and 50% in the United States, the market share of trading if the company is listed on both a Canadian and US exchange is about 50/50. There is not a lot you can do about that because of regulations that make it difficult for dealers in the United States to route client order flow to Canada, and Canadian dealers to route order flow to the United States.

There is a little bit of a closed shop operating. What we will have to do is look at which companies have a predominantly Canadian shareholder base and convince them to retain their Canadian listing as and when regulations are further loosened in the United States and cannabis is removed from Schedule 1 of the Controlled Substances Act.

One of the other things we are going to be looking to do is develop some index products early in 2019 around the US cannabis space. We are the only location globally where you see as heavy a concentration of US cannabis issuers, so we are the logical place for that index to be calculated and disseminated.

Obviously, what we would like to see is exchange traded fund products developed off that index, so that people are able to not just purchase the equities of individual companies but diversify across the entire sector with an exchange traded fund product. That is another way in which we hope to increase the stickiness, if you will, of the relationships we develop with these issuers.

And last, but not least, we want to continue to build deep relationships with the management teams of these companies and put ourselves in that situation kind of like Nasdaq back in the day, when Microsoft and Cisco and Intel and Apple and all of those companies didn’t qualify for the New York Stock Exchange. And when they did, and the New York Stock Exchange knocked on their door and said, “Hey, Mr. Gates, it’s time to move up to the Big Board,” Bill Gates said, “No thanks, we are very well served by our present exchange relationship.”  So, that is the kind of brand loyalty we would like to build with these management teams and service them well into the future regardless of how the regulatory landscape changes.

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PM: How about other industry sectors on the exchange?

 

RC: It is interesting because the cannabis space has obviously had the headlines, but we have in fact seen a significant number – and in absolute numbers almost a record – of mining companies get onto the exchange and receive funding this year.

My sense is that some of the profits from trading in the cannabis space over the last couple of years are being applied to the mining sector. Notwithstanding the fact that there is a drag on the mining sector right now because of the low price of most of the commodities, we are seeing mining companies get funded and come onto the exchange at a higher rate than in many years. And as I say, it gets a little bit lost in the shuffle of all the cannabis news, but they are getting funded in quite considerable numbers at this point.

In tech, we are seeing some struggles in the crypto space and that seems to have put a chill on the entire blockchain sector, which was red hot just a year ago. But we are also seeing a number of technology stories get funded. We would like to see more and that is one of the great focuses of our efforts with the new business relationships we are developing in the United States. Having a pipeline of companies in the tech sector from the US come public here would be very interesting for investors.

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PM: The amount of capital being raised by companies on the exchange continues to skyrocket – it looks as if the final number for 2018 is going to settle somewhere around $5 billion. You can’t reach this level without funds playing a big part. Can you comment on the changing role of institutional investors in the CSE marketplace?

 

RC: As I mentioned, we are seeing great institutional participation in financing transactions as they get larger and larger. And one headline from the Curaleaf financing, which was approximately $520 million, was that there was something like a hundred institutions, as I understand it, on the investor list. We know that institutions have increasingly participated in the space as the year has progressed. Large institutions from all over the world are beginning to participate in this space, and as I mentioned we want to work with these people, ensure they have a good experience, and that they are prepared to back CSE listed stories again in the future.

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PM: Marginability is an important issue for many large investors and the CSE has been working to achieve some changes in the way this is managed. Why is this issue important and what can you tell us about where the discussion is headed?

 

RC: The marginability issue has a number of different components to it, but you can essentially look at things in two ways. If the shares of a company are not margin-eligible, it means an investor cannot hold the shares in a margin account, and the dealer cannot lend them money to purchase the shares. Instead, the investor must use cash to purchase them.

Many higher priced securities are margin-eligible. With these securities, an investor doesn’t have to use most, or all, of the money in their account to make a purchase and can instead borrow from their broker.

The other way this impacts issuers is that the dealer is required to post capital with the clearing house against the possibility of failure on the other side of the trade. And that is what people mean when they refer to T+2: the transaction is only finally settled after two days plus the day of the trade, when it clears with securities and cash changing hands.

The dealers are required to post capital against the potential of that trade failing – in effect one side not showing up with the stock or cash to settle it.

For margin-eligible securities, they don’t have to post the full amount. The idea is that it is not volatile, there is lots of value there, the likelihood of failure is low, and if there was a default you could sell the shares to get the money.

For companies that aren’t margin-eligible, the dealers have to post 135% of the trade value with the clearing house. To be eligible, a stock has to trade at a price higher than $3.00, so there is a relatively small number of stocks trading on the CSE that qualify.

We are looking to help dealers free up capital in two ways. One is being able to provide customer service in their margin accounts. And the second way is to reduce the capital posted at the clearing house in the two-day settlement cycle.

We are working with regulators to remedy this situation as quickly as we can. And we have reason to believe that we have made a good deal of progress. When change takes place, it certainly should increase the liquidity of the stocks. It will certainly make them less expensive for people to trade. And it should bring even more participation in CSE names.

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PM: What can you tell us about the blockchain-enabled clearing and settlement facility you have been working on?

 

RC: We are in the late stages of quality assurance on the new system. We have been working with our developer to make some changes on the robustness of the system. And this is really in anticipation of questions and comments we would receive from the users and from the regulators.

We hope to get the system up in our external test environment so that dealers and some other interested parties can begin testing in their own environments before Christmas. And at that point we will be working closely with them to understand what our timelines are from an implementation perspective. We have to respect the amount of work the dealers will have to do to integrate their existing cash management systems and client reporting systems into our clearing settlement facility. We’re hopeful that the effort will not be too lengthy and we’re pleased that there is a relatively small number of vendors who provide the services. So, it’s not a case where 125 dealers suddenly have to make changes, but one where a small number of vendors have to make changes that will then be extended to the entire industry.

Dealers continue to be extremely eager to get their hands on it. They understand the business case and the client service benefits, as well as the number of companies that would like to use security tokens as a means of securing capital. We continue to be very excited about this facility and it is going to be one of the things on the agenda for 2019.

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PM: The exchange’s Toronto team is relocating to a new space early in 2019 — First Canadian Place. Insofar as you can comment, how well is the exchange doing as a business, and how does this provide you with new and/or better resources to make the organization even stronger?

 

RC: We are a private company, so our financials are not available publicly. I will say, and this should come as no surprise to anybody, that with the volume of trading and listings we’ve had this year, as well as continued strong performance from our market information businesses, the exchange is on very solid financial footing.

We will be moving to new premises early in the New Year. This was really brought on by the anticipated growth in our staffing levels, particularly in the listings regulation area. It is important that we continue to maintain high service levels for our issuers and deploy our regulatory responsibilities as an exchange.

At this point, it is a pretty tight fit for the team at our present location. As well, and I think this is one of the important incentives for us to move to new premises, we really want to provide a better listings and presentation experience for our issuers. Everybody expects a bell-ringing or market-opening ceremony with a proper backdrop. The new First Canadian Place location will give the space and a spectacular backdrop to have exactly that kind of experience for the issuers. We really want to be able to step up our game with providing companies a memorable experience on their first day of trading, or whenever they have the opportunity to visit the exchange and have their listing recognized by us and the rest of the community. We are all really excited about moving into the new premises, probably at some point toward the end of January.

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PM: As we head into 2019, what can issuers and investors anticipate from the CSE?  And looking further into the future, how is the CSE positioning itself to keep momentum going into 2020 and beyond?

 

RC: We covered the outlook in some detail already, but I’ll elaborate on a few items. The blockchain initiative will be a significant focus for the organization as we move into 2019. And it will take much of the year before it is ready. That will give us a great platform to track new and interesting securities in the marketplace.

I also mentioned new index products with a cannabis focus. Again, we are the most logical source in the world to provide those sorts of index products. And clearly our motivation there is to provide those indices as an underlying interest for ETF products. My sense from traveling in the US recently is that we have many more companies of significant size, business operations and profits who will be looking to come into the Canadian market to fund further growth and provide liquidity for their early stage investors.

Over and above that, we will be building out the CSE team. We plan to pay particular attention to the continuous disclosure program for existing companies. As we attract issuers with larger and more complex business operations, we need to do more work with them to ensure they stay on top of their continuous disclosure requirements under the Ontario Securities Act.

We hope that we can realize improvements to margin eligibility for stocks early in 2019 and we believe that would further improve liquidity in the marketplace.

We will continue to build relationships with markets around the world. As I think is well known at this point, we have a close working relationship with the OTC Markets Group in the United States. CSE issuers have had a very positive experience working with them in building liquidity, adding to the shareholder base, and as a platform for fundraising activities in the US. And we are looking to build partnerships in the UK, in Australia and the European Union to provide similar managed relationships with marketplaces in those jurisdictions.

Having a dual-listing or an over-the-counter arrangement really does help the ability of companies to raise funds in those marketplaces. And given the existence of sophisticated arbitrage trading, it can help to build an even better liquidity profile.

Building relationships with more international companies choosing to access Canadian markets for capital to expand their businesses is also an important agenda item. I visited Israel twice this year and we expect to see the first Israeli companies list toward the end of this year or early in 2019. We will see a healthy cohort of companies from Israel – some of them are in technology, some are in the cannabis space. We want to see people in different markets around the world look to Canada and our world-leading position in small-cap finance to help them secure growth capital.

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