Author: TSX Stocks

Photo: Mike Biden

The future of a Kelowna distillery is unclear after the $5 million property it has operated on, which was owned by its CEO, was recently sold in a court-ordered sale.

Forbidden Spirits has been operating out of its tasting room at 4380 Wallace Hill Road since 2019, where company founder and former Member of Parliament Blair Wilson has lived since 2010.

But in November, the 20-acre property – which includes an 8,500 square-foot house, a 3.5-acre apple orchard, the Apple Orchard RV park, equestrian facilities, and the Forbidden Spirits tasting room and production facility – was foreclosed upon after the Wilsons defaulted on their mortgage.

The property was listed as a court-ordered sale for $4.89 million, and last month, the BC Supreme Court approved a purchase offer of $5,107,000, according to the selling real estate agent Nicole Eastman.

Eastman said that while the buyer wishes to remain anonymous, Forbidden Spirits will not be permitted to continue to operate on the property.

“So, Forbidden Spirits Distillery will not live on despite the foreclosure. It was ordered to vacate and is no more,” Eastman said in an email.

Castanet reached out to Blair Wilson to see if he has plans to carry on the distillery at a new location, but he did not return Castanet’s request for comment by publication time. There’s no further information on the distillery’s website or social media, although it lists the tasting room as “temporarily closed.”

‘Does not have the financial resources’

The sale also included the “company’s fixtures,” which includes “all equipment used by the Company in relation to its business and located upon the Property,” according to a press release from the distillery last month.

Forbidden Sprits was required to vacate the property on March 6.

“Any such disruption in the Company’s operations would have a material and adverse effect on the Company,” Forbidden Spirits said in a press release

“Moreover, the Company would need to acquire new assets to replace the Company’s Fixtures. The Company does not have the financial resources to acquire such assets and the Company can provide no assurance that it will be able to raise sufficient funding to do so in the future.”

The company is publicly traded and is therefore required to publicly disclose certain information about changes to the business.

Forbidden Spirits was barred from trading its stocks on the Toronto Stock Exchange back in May 2023 for failing to file financial disclosure documents. While the BC Securities Commission partially revoked the cease trade order last summer, Forbidden Spirits says it was unable to raise sufficient funds to “complete all rectification matters required to seek a full revocation order.”

Unpaid wages

On the same day Forbidden Spirits was required to vacate the property, the Employment Standards Tribunal dismissed the company’s appeal of a previous order that the company pay its former director of operations more than $60,000 for unpaid overtime wages.

The woman, who initially worked as an executive assistant before she was promoted to director of operations, was dismissed from the company in June 2022, before she filed her unpaid wage complaint the following December.

Forbidden Spirits claimed it had paid the woman in full within 48 hours of her dismissal and that if she had worked any extra hours, she had not been authorized to do so.

But statements from three other employees, along with text message evidence, corroborated her claims that she worked many overtime hours and that her employer was aware.

“I further note that the employer was aware, at least as of May 26, 2022 (shortly before the complainant was dismissed) that the complainant was working excessive hours and that this was adversely affecting her health,” Kenneth Thornicroft of the Employment Standards Tribunal wrote in his recent appeals decision.

“In her May 26, 2022, email to [Forbidden Spirits’] CEO she indicated that she was not taking days off or holidays and was working up to 80 hours per week — it does not appear from the record that the CEO ever challenged her on that latter point.”

In September 2024, a delegate of the Director of Employment Standards ruled in the former employee’s favour, finding she was owed $50,737 in unpaid wages, $2,029 in vacation pay along with $7,746 in interest. Forbidden Spirits was also fined $1,500 for contravening the Employment Standards Act.

CANADIAN miner Lion One Metals, owner and operator of Tuvatu Gold Mine in Nadi, has reported an operating income of $C6,302,540 ($F10.5m) on the back of a $C17,993,020 ($F28.7m) revenues from gold sales for the quarter ended December 31, 2024.

The numbers represented increases of 312per cent and 72per cent respectively compared to the previous quarter and were attributed mainly to increases in gold production at the mine.

“The company is ramping up production at the Tuvatu gold mine in Fiji and this dramatic increase in mine operating income is primarily due to an increase in gold production,” Lion One announced early this month at the Toronto Stock Exchange (TSX), where it is listed.

“The company has achieved consistent quarter-over-quarter improvements in gold grades and gold recoveries since the Tuvatu processing plant was commissioned in early 2024, culminating in the record gold revenue reported for Q4 calendar year (CY) 2024.”

Lion One, founded and chaired by global mining magnate Walter Berukoff, had struck gold bonanza during its first year of mining at its Tuvatu project last year, culminating to a record quarterly gold sales of $C17,993,020 ($F28.7m) from 4741 ounces of gold sold during Q4 CY2024, according to its TSX January filing.

“Lion One Metals sold approximately 4741 oz of gold and 841 oz of silver during the three-month period ending December 31, 2024,” the company stated.

Gold revenue for the quarter was enhanced by higher gold prices, improved gold grades and recoveries, and the addition of unsold gold from the previous quarter, the company added.

The mine, whose gold system is deemed comparable to that of regional giants such as Barrick Gold’s 25-million oz. Porgera mine and Newmont’s 40-million oz.-plus Lihir mine in Papua New Guinea, is currently being expanded to 600 tonnes daily by next year.

“2024 was a pivotal year for Lion One Metals as we brought the Tuvatu mine in Fiji into production at the pilot plant level,” chairman Berukoff said.

“We are delighted to have achieved consecutive increases in production every quarter throughout 2024, culminating in a record $C18.0M of quarterly revenue at the end of the year.

“As we continue to develop the mine and unlock the higher-grade portions of the deposit, we look forward to continuing this trend of increased production at Tuvatu, and ultimately doubling our plant capacity from 300 tpd to 600 tpd in 2026.”

Lion One Metals had also implemented an aggressive cost-cutting program during the six months ended December 2024, which it said resulted in a 13 per cent reduction in cost of sales per ounce of gold for Q4 CY2024 compared to the previous quarter, with more savings expected this year.

The Toronto Stock Exchange (“TSX”) has published for comment proposed amendments (the “Proposed Amendments”) to Part III – Original Listing Requirements and Part V – Special Requirements for Non-Exempt Issuers (“Part V”) of the TSX Company Manual (the “Manual”), including certain ancillary changes. Comments are due by May 5, 2025.

Proposed Amendments

The TSX recently conducted a review of its original listing requirements, which included a comparison of the requirements of other senior international exchanges, an analysis of previously granted waivers and exemptions and discussions with experts on sector-specific matters. The purpose of the review was to ensure that the rules: (i) continue to reflect the current needs and expectations of Canadian and global capital market participants; (ii) provide clear and pragmatic listing requirements; and (iii) reduce the need for discretionary waivers and exemptions, thereby reducing issuer burden, while maintaining sound requirements to protect marketplace quality.

Industrial companies

The TSX believes that the current subcategories under the “Industrial” category do not always align with the businesses of applicant issuers and are unconventional compared to the listing categories of the TSX’s peer exchanges. As a result, the TSX is proposing to change the name of the Industrial category to “Diversified” and to replace the existing subcategories with three new subcategories: (i) “Income & Revenue-Producing”; (ii) “Pre Income-Producing”; and (iii) “New Enterprise” (excluding special acquisition corporations (SPACs)). The TSX views the primary elements of a successful listing to be operations, adequate funding and market support, along with management and governance-related matters. The proposed new listing subcategories contain requirements that would provide applicants with flexibility to satisfy these criteria in a variety of ways that correspond to where they are in the business cycle.

The new requirements associated with the proposed subcategories are set out below.

Proposed Subcategories

Income & Revenue-Producing Companies (Exempt)

Operations

(a) annual audited pre-tax net income from continuing operations of C$750,000 (the “Income Test”); or

(b) annual audited revenue of C$10,000,000 (the “Revenue Test”).

Funding

(a) if the Income Test is met, evidence of an appropriate capital structure; or

(b) if the Revenue Test is met,

(i) positive pre-tax cash flow from operations in the most recently completed audited annual and interim financial statements; or

(ii) 12-month run rate calculation demonstrating sufficient funding for the period.

Market support

C$100,000,000 market capitalization.

New Enterprise Companies (Non-Exempt)

Operations

(a) management experience and expertise; and

(b) proof of business concept.

Funding

(a) equity raise of C$100,000,000 in the six months preceding the filing of the listing application along with a 12-month run rate calculation demonstrating sufficient funding to advance the project per stated targets identified in a feasibility report (the “12-month Test”); or

(b) a 24-month run rate calculation demonstrating sufficient funding to advance the project as per stated targets identified in a feasibility report (the “24-month Test”).

Market support

(a) if the 12-month Test is met, C$100,000,000 market capitalization; or

(b) if the 24-month Test is met, C$200,000,000 market capitalization.

Mining companies

The Proposed Amendments for mining companies would: (i) clarify certain terms; (ii) modernize certain requirements to better align with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”); and (iii) update certain monetary requirements to account for inflation and increase the required work program spend to better reflect current project costs. Other changes would include removing the net tangible asset requirement, adding a market capitalization requirement and framing the funding requirement in terms of a run rate calculation rather than a sources and uses of funds.

The revised criteria relating to mining companies is summarized below.

Proposed Amendments

Producing Mining Companies (Non-Exempt)

(a) proven and probable reserves to provide a mine life of at least three years on a Qualifying Property, detailed in a report by an independent qualified person, together with evidence satisfactory to the TSX indicating a reasonable likelihood of future profitability supported by a feasibility study or documented historical production and financial performance;

(b) either be in production or have made a production decision on the Qualifying Property referred to above;

(c) an 18-month run rate calculation demonstrating:

(i) sufficient funding to bring the Qualifying Property into commercial production; and

(ii) adequate working capital to fund all budgeted capital expenditures and carry on the business, signed by a qualified person;

(d) evidence of an appropriate capital structure; and

(e) market capitalization of at least C$50,000,000.

Mineral Exploration and Development-Stage Companies (Non-Exempt)

(a) an advanced property, detailed in a report prepared by an independent qualified person. The TSX will generally consider a Qualifying Property to be sufficiently advanced if it has or is supported by a current mineral resource estimate and/or a current reserve estimate, as defined in NI 43-101;

(b) planned work program of exploration and/or development, of at least C$5,000,000 that is satisfactory to the TSX, will sufficiently advance the property and is recommended by a qualified person;

(c) an 18-month run rate calculation demonstrating sufficient funds to:

(i) complete the planned program of exploration and/or development on the company’s property; and

(ii) meet estimated general and administrative costs, anticipated property payments and capital expenditures for the period, signed by a qualified person;

(d) evidence of an appropriate capital structure; and

(e) market capitalization of at least C$50,000,000.

Senior Mining Companies (Exempt)

(a) annual audited pre-tax net income from continuing operations in the fiscal year immediately preceding the filing of the listing application;

(b) pre-tax cash flow from operations of C$1,250,000 in the fiscal year immediately preceding the filing of the listing application and an average pre-tax cash flow from operations of C$900,000 for the two fiscal years immediately preceding the filing of the listing application;

(c) proven and probable reserves to provide a mine life of at least three years, detailed in a report prepared by an independent qualified person;

(d) adequate working capital to carry on the business and an appropriate capital structure; and

(e) market capitalization of at least C$100,000,000.

Oil and gas companies

The TSX is proposing significant increases to the proved developed reserves requirement and intends to restructure the listing requirements for oil and gas companies in the same manner as the Diversified category (i.e., to include requirements for operations (reserves), funding (production or cash flow) and market support (market capitalization)).

The revised criteria, which would include the removal of the “Oil and Gas Development Stage Companies” subcategory, is summarized below.

Proposed Amendments

Oil and Gas Companies (Non-Exempt)

(a) proved and probable reserves of C$100,000,000, the majority of which is proved;

(b) either (i) positive pre-tax cash flow from operations evidenced in the most recently completed audited annual and interim financial statements or (ii) a 12-month run rate calculation demonstrating sufficient funding for the period; and

(c) market capitalization of at least C$50,000,000.

Senior Oil and Gas Companies (Exempt)

(a) proved reserves of C$100,000,000;

(b) both (i) average production rate of 10,000 boepd for the most recently completed quarter and (ii) positive pre-tax cash flow from operations evidenced in the most recently completed audited annual and interim statements; and

(c) market capitalization of at least C$100,000,000.

Public float

The Proposed Amendments would remove the C$4 million public float requirement in sections 310, 315 and 320 of the Manual. Given the proposed minimum market capitalization requirements of C$50-$200 million (depending on the listing category), the TSX believes that the C$4 million public float requirement may no longer be viewed as a meaningful threshold impacting liquidity.

Sponsorship

The TSX is proposing to make the sponsorship requirements simpler and more transparent and to decouple sponsorship from the determination of whether an issuer is Exempt or Non-Exempt. Sponsorship would be required for all applications:

• submitted without the issuer having filed a prospectus for an offering of securities underwritten by a participating organization of the TSX within six months of the listing date, unless graduating from the TSX Venture Exchange;
• related to an emerging market jurisdiction;
• that involve governance issues for which the TSX requires additional commentary;
• that, based on the TSX’s review of management personal information forms and experience, require additional commentary; or
• that, based on the TSX’s review of title and ownership of a resource property, require additional commentary.

The TSX would maintain discretion to require sponsorship for other reasons.

Special requirements for Non-Exempt issuers

The TSX is proposing to remove Part V from the Manual. Part V is intended to protect minority security holders of Non-Exempt issuers in connection with transactions between the issuer and related parties that do not involve the issuance or potential issuance of listed securities. Since the implementation of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, security holders are protected under securities law, and the TSX believes that it would be redundant and burdensome for both issuers and TSX staff to continue to comply with Part V of the Manual.

What’s Next?

Subject to regulatory approval, the Proposed Amendments are expected to become effective in the second quarter of 2025. If the Proposed Amendments are implemented, the TSX intends to conduct a similar analysis of the continued listing requirements.

[View source.]