TSX Venture Exchange’s Successful Market Model Kevan Cowan Senior Vice President TSX Venture Exchange Senior Vice President, Business Development Toronto Stock Exchange Presentation to COSRA SME Forum May 15, 2006

2 Table of Contents TSX Group – Overview TSX Venture – Market Overview TSX Venture – Listing TSX Venture – Corporate Governance Model Note: This presentation is provided for information purposes only. Neither TSX Group Inc. nor any of its affiliated companies guarantees the completeness of the information contained in this presentation and we are not responsible for any errors or omissions in or your use of, or reliance on, the information.

3 TSX Group Global Data Services Marketplace Operator Senior Listings Market ~1,500 listings Technology Services Venture Listings Market ~2,000 listings Avg market cap <$16MM Gas and electricity contract trading and clearing 3 rd largest in North America Note: As of December 31, 2005, excludes NEX Source: WFE, September % 50% 18%

4 TSX Group ranked 5 th in the world by equity capital raised 2004 Global Equity Capital Markets Deal Value (US $bn) % Share 1US Japan UK France Canada Australia Germany Italy China Taiwan Source: Dealogic Issuer Nationality

5 TSX Group finances growth companies

6 *Structured Products sector includes 22 ETFs at December 31, Market Capitalization by Sector at December 31, 2005 Toronto Stock Exchange 100% = $1.83 Trillion TSX Venture and NEX 100% = $33.3 Billion Canada’s diversified economy is reflected in the market cap of our listed issuer base

7 TSX Group listings have been robust in a North American context TSXTSX Venture * August 2005 annualized NYSE NASDAQAMEX New Listings Total Listings New Cdn Listings Total Listings New Foreign Listings

8 TSX Group’s issuer base is very strong in public SMEs Size Distribution of Listed Companies by Exchange TSX Issuers:1537US$ 1.6 T TSX Venture Issuers:2020US$28.7 B Nasdaq Issuers:3164US$3.6 T NYSE Issuers:2270US$13.3 T Amex Issuers: 595 US$86.3 B As at December 31, 2005

Listed Companies2012,0201,537 Total Market Cap$623.2 M$33.34 B$1,830.7 B Median Market Cap$0.7 M$4.8 M$143.9 M Average Market Cap$3.1 M$16.5 M$1.2 B Financings$101.1 M$6.06 B$46.16 B Average Financing$0.7 M$2.6 M$58.1 M Going Public Activity --259*223 Graduates64 to TSX Venture 46 to TSX- TSX Venture finances early stage companies * Includes IPOs, CPCs, RTOs, QTs, TSX comedowns and Other

companies 1,948 companies 47 Grads 1,421 companies Grads 201 companies 64 Grads (re-list) +4 (TSX) 2,020 companies 46 Grads +2 1,537 companies 5 to CNQ, 49 delist, 2 acquired, 2 to TSX (from TSX) 31 delist, 2 amalgamated 1 to CNQ Source: TSX Group analysis TSX Group supports capital formation and trading at various stages of development

11 Table of Contents TSX Group – Overview TSX Venture – Market Overview TSX Venture – Listing TSX Venture – Corporate Governance Model Note: This presentation is provided for information purposes only. Neither TSX Group Inc. nor any of its affiliated companies guarantees the completeness of the information contained in this presentation and we are not responsible for any errors or omissions in or your use of, or reliance on, the information.

12 Evolving a National Venture Exchange Pre-Nov.99 Idea - Bring Together 5 Junior Stock Markets · VSE · ASE · WSE · CDN · ME Nov.99 – Oct.01 Formation of CDNX Regional offices: Vancouver Calgary (HO) Winnipeg Toronto Montreal Aug.01 Acquisition By TSX Regional offices: Vancouver Calgary (HO) Winnipeg Toronto Montreal

13 To provide a quality, liquid and efficient venture capital market for publicly traded venture companies and their investors. TSX Venture's Mission

14 When More Capital is Required Start-Up Company Seed Money - Angel Investors - - Government - Private Equity - Venture Capitalists – Public Venture Capital - TSX Venture Exchange - Senior Markets - TSX - - Other - TSX Venture Exchange provides emerging companies with an alternative source of capital through access to public funds Financing Options

15 Pink sheets OTC BB Nasdaq North America Stock Markets Continuum NYSE No listing standards Senior listing standards Disclosure rules Junior listing standards Filling the gap TSX CNQ

16 TSX Venture financing activity $1.44 B $2.38 B $4.15 B $6.06 B

17 TSX Venture volume, value & trading Source: TSX Venture Review

18 TSX Venture graduates represent a significant portion of new listings on TSX Since 2000: 247 companies have graduated to TSX 34% of these 247 graduates (85) started as CPCs 45 companies have been merged/acquired by TSX companies Number of TSX Venture Graduates TSXV Graduates as % of TSX New Listings 40%27%23%37% 28%21%

19 TSX Venture graduates have succeeded in the senior market 28 Companies that started on TSXV are now in S&P/TSX Comp Index TSXV Companies that have been merged/acquired Aastra Technologies Limited Aber Diamond Corporation AltaGas Income Trust Baytex Energy Trust Boardwalk REIT Calloway REIT Crescent Point Energy Trust Crystallex International Corporation Daylight Energy Trust Ensign Energy Services Inc. Esprit Energy Trust Fairborne Energy Trust First Quantum Minerals Ltd. Glamis Gold Ltd. Great Canadian Gaming Corporation InterOil Corporation Intrawest Corporation Niko Resources Ltd. Pan American Silver Corp. Peyto Energy Trust Precision Drilling Trust Progress Energy Trust QLT Inc. Rider Resources Savanna Energy Services Corp. Shore Gold Inc. Trilogy Energy Trust Vermilion Energy Trust Janna Systems - acquired by Siebel Systems Diamond Fields Resources – acquired by Inco ALI Technologies – acquired by McKesson Arequipa Resources Ltd. – acquired by Barrick Diamet – acquired by BHP Jordan Petroleum – acquired by Cypress Energy PetroKazakhstan – acquired by CNPC International Ryan Energy Tech – acquired by Nabors Inds. Triple G Systems Group – acquired by GE

20 Table of Contents TSX Group – Overview TSX Venture – Market Overview TSX Venture – Listing TSX Venture – Corporate Governance Model Note: This presentation is provided for information purposes only. Neither TSX Group Inc. nor any of its affiliated companies guarantees the completeness of the information contained in this presentation and we are not responsible for any errors or omissions in or your use of, or reliance on, the information.

21 The TSX Venture Niche Project / Idea R&D or Prototype CommercialStageStableProduction OperatingHistory Private Equity Candidates Pink Sheets/OTCbb TSX Venture Candidates TSX Candidates NASDAQ Candidates NYSE Candidates

22 Financing range: $500k to $20 million Multiple financing rounds = more ground-floor investing opportunity Acquisition currency Employee stock options Mentoring role Stepping stone to senior markets – streamlined graduation path to TSX Graduates leave with a track record Why List on TSX Venture

23 How to Go Public on TSX Venture TSXVENTURETSXVENTURE TSXVENTURETSXVENTURE Capital Pool Company (CPC) Reverse Takeover (RTO) Qualifying Transaction Initial Public Offering (IPO)

24 Going Public Activity

25 Management Qualifications and Escrow Management: Board must demonstrate satisfactory overall: – business expertise – public company experience Escrow: –Management Commitment: Length of required commitment longer for emerging companies because reliance is on management abilities rather than financial situation –Value: The number of securities issued should correlate to the value of the asset or business being received

26 Our mentorship program assists listed issuers in managing public company obligations TSX Venture SUCCESS PROGRAM Venture Company Success Workshop Essentials to Success Seminar TSX Venture Speaks Financial Reporting Series Rules & Tools Workshop Expanded Mentorship Program to ~500 attendees in each of 2004 and 2005

27 Minimum Listing Requirements Tier 1: Technology or Industrial Category 1Category 2Category 3 Net Tangible Assets (incl. IPO $) $1 M$5 MN/A Earnings Before Tax$100,000N/A$200,000 Working Capital18 mos18 mos + $100K 18 mos Publicly Held Shares1 M Public Market Capitalization $1 M Number of Shareholders200 Percentage Held by Public20% * R&D MLR: Similar to Category 2 but $1,000,000 in prior R&D required and a $1,000,000 R&D program must be recommended.

28 Minimum Listing Requirements Tier 2: Technology or Industrial Category 1Category 2 Net Tangible Assets (incl. IPO $)$500,000$750,000 Earnings Before Tax$50,000N/A Prior Expenditures or RevenueN/A$250,000 Working Capital12 mos12 mos + $100K OtherN/ASufficient testing to demonstrate commercial viability Minimum IPO Price$0.15 Publicly Held Shares500,000 Number of Shareholders200 Percentage Held by Public20%

29 On-going Standards Initial Standards Toronto Stock Exchange TSX Venture Exchange Qualified management -Public company experience -Related business experience -Suitability Adequate working capital months Inverse relationship between net tangible assets and cash flow Timely and on-going disclosure Shareholder dilution limits Earnings/projected earnings required Cash flow/projected cash flow required Earnings not a requirement Cash flow not a requirement Standards common to both exchanges $3 M in revenue $3 M in assets $3 M in market cap Adequate working capital Positive pre-tax cash flow Qualified management -Changes in management must be approved/accepted Revenue requirements Continued public distribution Compliance with timely disclosure standards And they must meet our on-going standards to maintain their listing Issuers must meet our initial standards to list... Both TSX and TSX Venture have quality standards for public issuers layered on regulatory baselines

30 TSX Group’s exchanges work with securities commissions Stock Exchanges (public corporation) Standards Quality of directors and officers Original and continued listing criteria Timely and ongoing disclosure (including corporate governance) Shareholder dilution limits Quality Market Contractual enforcement (de-listing) Listed Issuers Securities Commission (government agency) Regulation Prospectus disclosure Continuous disclosure (financial and material) Investor Protection Statutory enforcement Reporting Issuers Regulatory oversight

31 Capital Pool Company® (CPC) Program Unique way to list, introduced in ,585 listed since inception 1,357 CPCs have completed qualifying transaction since 1987 More than $652 million raised in seed and IPO financings since former CPCs now on senior exchange 33% of TSX Venture Exchange graduates to Toronto Stock Exchange in 2005 were CPC issuers Compiled by TSX Group Inc. as at December 2005

32 IPO P rocess Qualifying Transaction Listing CPC Process CPC: Unique Listing Vehicle

33 Why/When a CPC Alternative access to capital; Retain higher ownership Want to be public company (M&A currency, stock options, visibility) Greater flexibility, certainty and control in the process Going public risk reduced Management Long term strategy to grow as a public company Reasonable valuation = Viable share structure Investor support Appropriate advisors (lawyer, broker, investment banker) Company Wants/ Needs Critical Success Factors Company is at too early a stage for a broadly distributed regular IPO IPO market is not strong enough in general VC financing is not viable or management prefers not to use Market appears to reward growth business of target company’s sector Market Conditions

34 Seed Financing and Prospectus Public Offering Trade as CPC Announce QT File Disclosure Statement Trade as Venture Company CPC Acquires Business (QT) Public Financing and CPC Trades Prospectus Receipt Close Transaction Seed Identify Qualifying Transaction 24 Months Maximum CPC Process Aftermarket and Growth Execute Business Plan; IR Program

35 Table of Contents TSX Group – Overview TSX Venture – Market Overview TSX Venture – Listing TSX Venture – Corporate Governance Model Note: This presentation is provided for information purposes only. Neither TSX Group Inc. nor any of its affiliated companies guarantees the completeness of the information contained in this presentation and we are not responsible for any errors or omissions in or your use of, or reliance on, the information.

36 TSX Venture governance policy highlights Directors & officers (“D&Os”) must submit personal information forms: –TSX Venture does background checks on proposed D&Os –TSX Venture can prohibit people, impose conditions on people or require that people with appropriate experience be added Minimum 3 directors - 2 of whom must be independent, e.g., cannot be employees or senior officers D&Os must be knowledgeable of and comply with securities laws (including several corporate governance rules) D&Os must disclose personal interests they have in any current or proposed transaction Management compensation must be approved by independent directors Minimum 3 person audit committee - 2 of whom must be independent

37 TSX Venture compliance Oversight of listed issuers: Monitor disclosure to ensure issuers comply, downgrade issuers as required Review complaints Analyze issuers’ corporate and financial information and recommend compliance action as needed Interview and correspond with issuer management and advisors to facilitate compliance Co-ordinate with regulators Halt trading in shares when business activity warrants

38 For more information, please contact: Kevan Cowan Senior Vice President, Business Development Toronto Stock Exchange Senior Vice President TSX Venture Exchange Disclaimer This document is for information purposes only and is not an invitation to purchase securities listed on Toronto Stock Exchange and/or TSX Venture Exchange or Natural Gas Exchange. TSX Group Inc. and its affiliates do not endorse or recommend any securities discussed. Please seek professional advice to evaluate specific securities. While the information herein is collected and compiled with care, neither TSX Group Inc. nor any of its affiliated companies represents, warrants or guarantees the accuracy or the completeness of the information. You agree not to rely on the information contained herein for any trading, business or financial purpose. This information is provided with the express condition, to which by making use thereof you expressly consent, that no liability shall be incurred by TSX Group Inc. and/or any of its affiliates as a result of any errors or inaccuracies herein or any use or reliance upon this information.