58 Appendix B Toronto Stock Exchange Listing Requirements for Oil and Gas (Exploration or Producing) Companies TSX NON-EXEMPT OIL AND GAS DEVELOPMENT STAGE ISSUERS9 TSX NON-EXEMPT OIL AND GAS PRODUCING ISSUERS TSX EXEMPT OIL AND GAS ISSUERS4 Net Tangible Assets, Earnings or Revenue No requirements. Pre-tax profitability from ongoing operations in last fiscal year. Pre-tax cash flow from ongoing operations of $700,000 in last fiscal year and average pre-tax cash flow from ongoing operations of $500,000 for the past two fiscal years. Working Capital and Financial Resources Adequate funds to either: (a) execute the development plan and cover all other capital expenditures & G&A1 and debt service expenses, for 18 months with a contingency allowance; OR (b) bring the property into commercial production, and adequate working capital to fund all budgeted capital expenditures and carry on the business. 18 month projection of sources and uses of funds signed by CFO;6 appropriate capital structure. Adequate funds to execute the program and cover all other capital expenditures and G&A1 and debt service expenses for 18 months with a contingency allowance; 18 month projection of sources and uses of funds signed by CFO; appropriate capital structure. Adequate working capital to carry on the business. Appropriate capital structure. Distribution, Market Capitalization and Public Float At least 1,000,000 freely tradable shares with an aggregate market value of $4,000,000; minimum 300 public holders, each with one board lot or more. Minimum market value of the issued securities that are to be listed of at least $200,000,000. At least 1,000,000 freely tradable shares with an aggregate market value of $4,000,000; minimum 300 public holders, each with one board lot or more. Sponsorship Sponsor report may be required (generally not required for IPOs or TSXV Graduates) Not required. Property Requirements Contingent resources7 of $500,000,000.8 $3,000,000 proved developed reserves.2, 5 $7,500,000 proved developed reserves.2, 5 Recommended Work Program Clearly defined development plan, satisfactory to TSX, which can reasonably be expected to advance the property. Clearly defined program to increase reserves. Management and Board of Directors Management, including the board of directors, should have adequate experience and technical expertise relevant to the company’s oil and gas projects as well as adequate public company experience. Companies are required to have at least two independent directors. Other Criteria Up-to-date technical report prepared by an independent technical consultant (NI 51-1013). (1) The Exchange strongly recommends pre-consultation with the Exchange for any applicant applying under this listing category. Generally, this category will be limited to issuers with unconventional oil & gas assets, such as oil sands. (2) Exceptional circumstances may justify the granting of Exempt status notwithstanding the minimum requirements – generally an affiliation with an established business and/or exceptionally strong financial position is required. (3) “G&A” means general and administrative expenses. (4) This projection must also include actual financial results for the most recently completed quarter. (5) “Contingent resources” are defined in accordance with Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101; however, the Exchange in its discretion may exclude certain resources classified as contingent resources after taking into consideration the nature of the contingency. The Exchange will use the best-case estimate for contingent resources, prepared in accordance with National Instrument 51-101. (6) The Company must submit a technical report prepared by an independent technical consultant that conforms to National Instrument 51-101 and be acceptable to the Exchange. Reports prepared in conformity with other reporting systems deemed by the Exchange to be the equivalent of National Instrument 51-101 will normally be acceptable also. The value of the resources should be calculated as the best-case estimate of the net present value of future cash flows before income taxes, prepared on a forecast basis, and discounted at a rate of 10%. The Exchange may, at its discretion, also require the provision of a price sensitivity analysis. (7) “Proved developed reserves” are defined as those reserves that are expected to be recovered from existing wells and installed facilities, or, if facilities have not been installed, that would involve low expenditure, when compared to the cost of drilling a well, to put the reserves on production. (8) Reserve value of pre-tax net present value of future cash flows using a 10% discount rate: forecast pricing assumptions are used. (9) “NI 51-101” National Instrument 51-101 – Standards of Disclosure for Oil & Gas Activities – available at: http://www.osc.gov.on.ca/ The foregoing is a summary of the applicable listing requirements only. For detailed listing requirements, refer to the TSX Company Manual which is available at www.tsx.com.
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