Patagonia Gold to delist from Toronto

Patagonia Gold (LON:PGD, TSX:PAT) is to delist from the Toronto Stock Exchange (TSX) at the close of business on 12 July.

The company’s shares will continue to be traded on London’s Alternative Investment Market (AIM).

The decision to delist from the TSX was taken because the directors of Patagonia believe the levels of trading in the company’s shares no longer justify the expenses and administrative efforts required to maintain the listing.

The directors believe that Patagonia Gold's listing on AIMprovides its shareholders with sufficient liquidity, as AIMaccounts for nearly all of the company's current trading volume.

The TSX delisting will have no impact on the group’s operations, and should not, in the opinion of the directors, hinder the company’s ability to raise new capital.

The decision highlights growing speculation about a migration of junior resource companies from the TSX, whether, as in Patagonia’s case, to concentrate dealing activity to a single exchange or, in the case of cash-strapped companies, to save money on listing costs.

Neil Gardyne of the NAMF fund, speaking at the GeoForum mining conference, reckons that 65% of the 1,300 mining exploration companies listed on the TSX have cash of US$250,000 or less.

Those sort of levels of cash are barely able to pay directors’ salaries, never mind exploration costs.

Some pundits have speculated that the Canadian regulators might act to protect investors from investing in what are essentially zombie companies.

A clear-out of mining companies from the TSX would further reduce the exchange’s appeal for resource companies and could see more dual-listed companies follow Patagonia’s lead and cut back on listing costs.

Shares in Patagonia were up 1% to 9.25p in late morning trading in London.

Patagonia, it should be noted, is not one of those companies running out of money; at the end of 2012, it had US$4.7mln in cash and said in May that its fully-funded Lomada project is set to provide free cash flow in the second half of this year.