Golden Cross Resources Taps ICP Securities for Automated Market Making: A Strategic Move to Boost Liquidity?
14min read The junior mining sector has long been plagued by thin trading volumes and erratic price swings, making it a challenge for small-cap companies like Golden Cross Resources (TSXV: AUX) to attract institutional investors. In a bid to address these liquidity issues, Golden Cross has entered into a novel partnership with Toronto-based ICP Securities Inc., an automated market-making firm, to deploy its proprietary algorithm, ICP Premium™, to stabilize the company’s stock. The agreement, effective May 1, 2025, marks a growing trend among smaller public issuers to leverage technology-driven solutions to enhance market efficiency.
Ask Aime: "Will Golden Cross Resources' new partnership with ICP Securities Inc. help stabilize its stock?"
The Mechanics of Automated Market Making
Automated market making (AMM) uses algorithms to continuously post buy and sell orders, aiming to reduce volatility and increase trading activity by narrowing bid-ask spreads. For companies like Golden Cross, which trades on the TSX Venture Exchange (TSXV), a venue with lower liquidity than major exchanges, such services can be critical. The partnership with ICP—whose technology is designed to correct temporary supply-demand imbalances—could help Golden Cross’s shares trade more predictably, potentially attracting retail and institutional investors who shy away from thinly traded stocks.
The terms of the deal underscore a cautious approach. ICP will receive a fixed monthly fee of C$7,500, with no performance-based incentives or equity stakes tied to its success. This structure avoids potential conflicts of interest, as ICP’s compensation does not hinge on Golden Cross’s stock price or trading volume. However, the firm retains the right to acquire an equity interest in the future, though it holds none currently.
The Case for Liquidity Enhancement
The TSXV, where many junior miners list, is notorious for low trading volumes and high volatility. For instance, averaged just 150,000 shares per day, compared to 1.2 million shares for a larger peer like First Quantum Minerals (TSX:FM). Thin liquidity can deter investors, as it creates wider spreads and increased slippage costs.
ICP’s intervention aims to narrow these spreads. By systematically providing liquidity, the firm could reduce Golden Cross’s daily price volatility. Historical data from similar partnerships suggest measurable impact:
Risks and Considerations
While the partnership has clear benefits, risks remain. The fixed-fee model limits ICP’s financial incentive to aggressively boost trading activity, potentially capping its impact. Additionally, the TSXV’s overall low liquidity environment may still present challenges, even with improved order flow. There’s also the question of ICP’s track record: as a firm established in 2023, its success in stabilizing junior mining stocks is unproven at scale.
Another concern is market perception. Some investors may view the partnership as a sign of underlying weakness in Golden Cross’s fundamentals, given that the company is outsourcing liquidity management. However, the absence of equity incentives and the arm’s-length relationship between the two firms mitigate the risk of perceived manipulation.
Conclusion: A Prudent Step, but Results Will Take Time
Golden Cross’s move to partner with ICP represents a rational response to the liquidity challenges facing small-cap issuers. The fixed-fee structure reduces moral hazard, while ICP’s technology could help stabilize trading conditions. If successful, the partnership may reduce volatility and attract more consistent trading activity, as seen in cases like that of .
However, the TSXV’s broader liquidity constraints mean Golden Cross’s success will depend on more than just algorithmic trading. The company’s ability to advance its exploration projects and deliver positive news flow—such as resource upgrades or partnerships—will remain critical to sustained investor interest. For now, the ICP agreement is a prudent step toward building a more stable and investable equity profile, but it is only one piece of a larger puzzle.
In a sector where liquidity often dictates survival, Golden Cross’s bet on automation may prove a shrewd move—if the data ultimately reflects a meaningful improvement in trading conditions.
