Investing in the future

A Saskatchewan resource investment company helps exploration companies connect with capital markets to get project funding

Tom MacNeill founded 49 North Resources six years ago to help junior exploration companies find seed capital funding. — Photo courtesy Tom MacNeill

Saskatchewan has morphed into a natural resources powerhouse for the Canadian economy and 49 North Resources, led by Tom MacNeill, is aiding the investor support that companies need to get projects off the ground.

Potash, uranium, oil and gas, gold and diamonds are just a sampling of the resources being discovered and extracted in Saskatchewan, and organizations usually need large amounts of capital funding in order to move projects forward.

49 North acts as a first door for junior exploration companies to knock on for such funding—a resource that is desperately needed, according to MacNeill.

See a need, fill a need

After recognizing that Saskatchewan’s resource economy needed investor capital from local sources, MacNeill founded 49 North Resources in 2005.

The mining sector and capital markets had been slow to develop due to what he calls “the socialist experiments” of past left-leaning governments.

“I would peg Saskatchewan as probably the number 1 mining jurisdiction in the world because of the low sovereign risk—everything is still in the ground; a half-century of socialism kept it in the ground,” MacNeill said. “We had a government that was very active in the resource business in the 1970s and that killed our capital market. And when you kill a capital market, money doesn’t get raised, projects don’t get financed and resources stay in the ground.”

In the past, when companies needed capital funding, Vancouver or Toronto would usually be the first places they would go to seek out support, which meant that as outside capital investments flowed into Saskatchewan, the return flowed right back out, MacNeill said.

“The profit or wealth goes to where you raised the capital, so it would go back to Vancouver and investors in Vancouver would put an addition on their house or buy a car,” he said. “So really, what we’d been doing is exporting our resources in Saskatchewan through the capital market system, or lack thereof.”

This lack of a capital system, combined with the resource potential in the province, convinced MacNeill to set up 49 North as an option to financially aid startup and junior exploration companies.

“We got a whole lot of stuff in the ground that should have been being extracted already, that’s still at the exploration stage,” he said.

Method in the madness

The biggest success for MacNeill that illustrates the mandate of 49 North is the story of Athabasca Potash Inc.

MacNeill got involved with the potash mining company when it was looking for seed capital and had an enterprise value of only $300,000.

Over the next three years, 49 North worked with Athabasca to raise capital funding for resource exploration and project management while connecting with institutional banking firms and guiding the Initial Public Offering (IPO) processes.

BHP Billiton eventually noticed the potential worth of Athabasca Potash and bought out the company for $341 million.

“I’m very proud of 49 North’s involvement in that project,” MacNeill said. “I like to use the term three-three-three: we took an enterprise from $300,000 to over $300 million in just about three years, so that’s a very nice hat trick.”

A kindred affair

The MacNeill family has been involved in the resource sector for decades. Tom MacNeill’s father, Bill MacNeill, was the founder of Claude Resources, which operates Saskatchewan's longest-running gold mine. Tom's brother, Ken, is the chairman of Shore Gold Inc., a diamond exploration company also based in Saskatchewan.

It seemed only natural for Tom to follow in his dad’s footsteps into a career in resource development, after watching him tackle the challenges while growing up.

“I’ve learned a tremendous amount,” MacNeill said. “(Bill MacNeill is) an interesting character; he thinks very uniquely—an incredibly clever guy. I’ve found the path that he chose very fascinating. It can be lucrative, it can be nauseating, it can be frustrating, it can be very exciting at times—it is anything but boring.”