Russia’s stock market could soon gain a new class of public companies. Moscow Exchange is developing a dedicated segment for junior mineral exploration companies, potentially giving retail investors access to the high-risk but potentially high-return business of discovering new mineral deposits. There are currently no junior exploration companies listed in Russia, compared with roughly 1,000 in Canada.
Natalia Loginova, Director of Moscow Exchange’s Issuer Relations Department, outlined the project at the annual Media Days seminar. According to her, the exchange has already begun preparing prospective issuers for public listings.
The defining feature of the planned segment will be stricter disclosure requirements. These will not simply duplicate regulations imposed by the Bank of Russia, but will include additional listing rules established by the exchange itself. Junior companies will be required to provide detailed information both when they enter the market and throughout their entire period as listed issuers.
Loginova highlighted the scale of the international gap. Around 1,000 junior mining companies are publicly traded in Canada, approximately 800 in Australia, and about 40 in South Africa. Russia currently has none.
The reason for launching the initiative is straightforward. Russia’s economy has historically relied heavily on its mineral resources, but many easily accessible large deposits are becoming depleted. Without continued exploration and expansion of the mineral resource base, the operating lifespan of mining companies will gradually shrink. Major mining companies generally avoid the earliest stages of exploration because the geological and financial risks are too high. Around the world, those risks are often taken on by junior mining companies, which raise capital by issuing shares to public-market investors.
Moscow Exchange wants to create a mechanism that would allow Russian exploration teams to raise funds through the public markets while giving investors access to a category of geological risk that is currently available mainly through private transactions.
The launch of a dedicated junior mining segment could become a turning point for Russia’s exploration industry. If successful, the initiative could create a domestic pipeline of new mineral discoveries funded not only by the government and specialized investment funds, but also by thousands of private investors.
Source: zolteh.ru
Image: Oleg Yakovlev / RBC
