Listing In London - A Discussion With Mining Journal

Gowling WLG partner and head of natural resources Charles Bond recently joined Mining Journal's head of research Chris Cann for its London Stock Exchange special.

Along with London Stock Exchange's head of business development, Tom Attenborough, and Kore Potash CEO Brad Sampson, Charles discusses the advantages of listing in London and why it's different from listing in other key resources exchanges around the world, as well as what work there is to do in this area.

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Transcript

Chris Cann: Hello and welcome to our London Stock Exchange special. My name is Chris Cann from Mining Journal. With me I have Charles Bond who is Partner and Head of Natural Resources with Gowling. I have Tom Attenborough who is Head of Business Development with the London Stock Exchange and Brad Sampson who is Chief Executive of Kore Potash.

Chris: Welcome everyone and thanks for joining us for this. I wanted to start by just covering off why listing in London is different from listing in the other key resources exchanges around the world and covering off both why you might want to do it, the advantages and also having a look at some of the areas where there might be some work to do. I think maybe I'll start with Charles given, Tom, I think you might struggle with the work to do part.

Charles Bond: So London is a premium venue for coming to market around the world and I think everyone recognises how important it is if you're in London, you know, it attracts a huge amount of institutional capital into the city here, it's got a very deep advisory base for companies and generally it has a choice of markets here as well so even if you're small or very large there's a great choice of market for you.

Chris: And how does that differ if you're...I mean Toronto has...it's a huge breadth of market. Australia would claim the same, doesn't have the institutional focus. I mean maybe looking at Toronto, why would you look at London over Toronto for example?

Charles: I think you've made one of the points there yourself which is, is the difference in investor base? Not saying Toronto and Canada doesn't have institutions but it's just the depth of them here in London and, you know, you have a lot of junior minors who go to the TSX maybe out of Vancouver or Toronto or wherever that maybe and they can raise a lot of early stage retail capital but when they get to the serious money and as course the project financing that has to go with the development and going into production of a mine tends to be a bigger market here and a better choice of market.

Chris: Ok. Tom?

Tom Attenborough: We've seen two Canadian companies list on London in the last couple of months. Pure Gold Mining listed a few weeks ago, that's gone well and, indeed, the Chief Executive of that business at the time said that one of the reasons he was doing it was really to broaden access to investors through London, add some liquidity here and give themselves a platform to raise further growth capital. This morning, actually at the Exchange, we hosted Taseko Mines, which listed today, again with a view not raising capital at this stage but to build up a presence, build up a following, take advantage of some of the factors that we have just mentioned around the quality of the eco system advisory base here, build that up over time, build liquidity and have a platform to raise capital going forward.

Chris: Brad?

Brad Sampson: I'd like to build on a comment that Charles, in particular, made. And it's not just the scale of the financial community here and the access to large amounts of capital when you need them for project development, it's a...typically in the resources space if you have an Australian company or a Canadian company you are in a resource dominated economy. You're in a market that really understands the resource space but tends to understand it very locally. What you have in London is a broadened understanding of different geography. Different political environments within which we operate and a willingness to invest across all of those boundaries and it gives us access to pools of capital that are not one sector specific and that's a big part of the reason why we came here and why Kore Potash came to the London Stock Exchange.

Chris: You're saying the...an understanding of diverse risk environments across the world but London would be most readily associated, obviously, with whatever's happening in Europe but in Africa I think mainly but then you'd have the Toronto market servicing the Americas and Australia kind of looking after that part of the world. Would that be fair or are there reasons why you would look at a London listing, maybe a primary listing ahead of doing something in different parts of the world away from Africa or is it really that kind of geography, is that the story for this market?

Brad: May I pick that up? I think it's broader than it is the latter, it's that sometimes you will see Australian companies listing on the London Stock Exchange they'll have Australian based projects in Australia but in a commodity where they feel there'll be better appreciation for the commodity, better appreciation for the investment case here in London and they will come to London and I think there are multiple examples of that happening.

Charles: I do think it's an interesting one why from geographically certainly Africa, everyone thinks that the London investors understand Africa better but having said that, there are a large number of TSX listed companies with African projects as well. So it's not always horses for courses and we've seen more recently Latin American companies looking to come to London for example. It tends to be, I think, where the money is at the right time...

Tom: Sure.

Charles: ...you know and if you can find the money in the right market then that'll be one of the factors.

Tom: Since the start of 2017 we've had 16 North American listed natural resources companies come to London and they've been from a variety of different places. As you say, Africa there is a quantum of understanding, I think, and depth of emerging market investor base in London that helps but it has been much broader than that as Charles said we've had assets from around Latin America and indeed North America, and as I say, some pure play Canadian businesses listing in London as well which I think is very interesting itself.

Chris: Picking up on one of Charles points, companies tend to follow where the money is. Tom, just from your perspective how do you ensure that there is always a flow, a steady flow of money in London for groups like, you know, Kore Potash and other resources companies to draw on if they've come to London for that deep pool. How do you make sure that's always there?

Tom: Well partly it's about the company you keep on the Exchange so we have 160-odd companies listed on market out of this sector alone it's about a half a trillion dollars; it's about 22% of the global market cap so by value it's a very, very, important sector for the London market so I think that creates itself, you know, a substantial amount of institutional interest. You know people need to look at the sector, it's a big part of the overall market. That having been said, you know, companies need to work at it. It's not just simply a question of putting a listing in place and then, you know, "build it and they will come", expecting investors to find you. Like in any other market or in any other sector you've gotta work at that, you've gotta set out your investment case in the best way you can and really work at the whole investor relations/investor engagement piece and build up that following building up that investor trust overtime.

Chris: So what kind of companies are we looking at then? I think it would be fair to say that smaller companies will tend to follow their own investor base with their own contacts in places where they've got a lot of peers also listed. I mean...