Canada’s junior mining sector should be booming. Gold prices are near record highs, demand for critical minerals essential to the energy transition is surging and the country has world-class geology. Yet financing for exploration companies is as challenging as it has ever been, institutional interest is muted and even high-quality projects struggle to attract capital.
To understand this disconnect, we spoke with Richard Carleton, CEO of the Canadian Securities Exchange (CSE), about the barriers holding the sector back and the reforms that could unlock the next wave of discovery.
Do you believe Canada’s junior mining sector is at an inflection point?
Historically, strong commodity prices have typically triggered a wave of exploration financing. Retail and institutional capital would flow in, projects got drilled and discoveries were made. Today, the macro conditions are about as good as we’ve ever seen yet the money isn’t flowing.
The reasons are complex, but they fall into three categories:
Let’s start with investor pathways. What’s changed?
Thirty years ago, retail investors, through the funds managed by professional investment advisers, were the lifeblood of the junior sector. CEOs would go on roadshows, meet local investment advisors and build books for IPOs, secondary rounds or private placements. That pathway doesn’t exist on nearly the same scale anymore.
Most retail dollars have migrated into discount brokerages. These platforms, however, don’t allow clients to participate in IPOs or private placements. Meanwhile, compliance guardrails, such as the know-your-client (KYC) and know-your-product rules, as well as liability concerns on the part of many investment dealers make it extremely difficult for advisors to recommend specific junior mining stocks. The capital that once fueled exploration has been effectively cut off.
How could this be fixed?
Advisors would benefit from clearer guidance under the client relationship model. If advisors knew what constitutes appropriate due diligence, i.e. the “know-your-product” obligation, I believe they’d be more comfortable recommending credible juniors.
And we need new mechanisms for retail investors at discount brokerages to engage with these opportunities. Why not create the conditions for investors to participate in these broader distributions? For example, where investors can hear CEO presentations, ask questions and then participate in compliant pre-IPO or IPO rounds. That’s where the retail money is today, but it’s locked out of the capital formation process.
The second issue is market structure. What are issuers telling you?
Many new issuers are shocked to learn their stock could trade on more than a dozen Canadian venues, not just the CSE. But because of how market data is priced, unless they pay extra, they can’t see the full picture of how (and where) their stock is trading at any given time. If you can’t see it, the natural assumption is that someone’s working against you.
Then there’s short selling. The rules are clear: abusive short selling is not permitted. But issuers don’t believe those rules are being enforced by the industry and that perception alone damages trust.
What changes would restore confidence?
First, regulators must demonstrate that the rules already in place are being effectively enforced. Abusive short selling is against the law, full stop. If issuers believe otherwise, that’s a serious credibility issue and something that deserves serious response.
Second, as the saying goes, sunlight is the best disinfectant. Canada needs a consolidated tape – a single feed of all trades and quotes across venues. It works in the United States, and it would bring much-needed transparency to our markets.
The third challenge is misaligned incentives between government, majors and juniors. Can you explain?
Juniors are taking on the risk of advancing projects, but they face long permitting timelines, infrastructure gaps and limited domestic refining capacity. Majors, meanwhile, are still cautious after past cycles where their investment decisions ultimately didn’t pan out.
Government wants to support critical minerals, but ribbon-cutting ceremonies don’t address the big bottlenecks. If Canada is serious about being a reliable supplier, we need significant, long-term investment in power, rail, roads, ports and refining capacity.
What role could government play?
Beyond infrastructure and permitting reform, government could look at stabilising commodity markets. Right now, a single entity, China, can dictate market direction and has the ability to undermine projects – nickel is a good example. If Canada, the United States, the European Union, and other allies created strategic reserves or set floor prices for critical minerals, it would shield domestic projects from short-term commodity price manipulation and give juniors the confidence to move from the exploration to the production phase.
If you had to point to the single most important step to revitalise the sector, what would it be?
Rebuilding trust and access. If we can restore investor pathways, bring transparency to market structure, and align government policy with industry needs, the capital will follow. Canada has the geology, the projects and the skilled people. The question is whether our market frameworks evolve fast enough to let those strengths translate into discovery and production.
Final Word
Nobody set out to cut off the lifeblood of the junior markets, but that’s what happened. Now we have to consciously decide to fix it. If we don’t, the next generation of discoveries - and the wealth they create - may not be Canadian stories at all.