SPACs Come To Canada And A Powerful Acquisition Tool Is Born

The Toronto Stock Exchange (TSX) has adopted new rules governing the listing of special purpose acquisition corporations (SPACs). These rules became effective as of December 19, 2008. In contrast to the TSX listing requirements for a company pursuing a traditional IPO (in which the listing entity is required to have an existing business and prescribed operating profits or prospects), a SPAC is essentially a publicly traded shell company or "blank-cheque company." TSX approval of the listing of SPACs follows similar approvals of the New York Stock Exchange (NYSE) and NASDAQ earlier in 2008. SPACs also trade on AMEX, AIM and Euronext.

The SPAC structure should give seasoned mining industry participants with successful track records an excellent opportunity to establish a clean, publicly listed "war chest" that can be used to make attractive acquisitions, as well as the opportunity to provide investors with a lower risk investment avenue to back these participants.