In advance of PDAC, the British Columbia Securities Commission (the BCSC) published an information notice that includes “near final” drafts of a proposed replacement of National Instrument 43-101 Standards of Disclosure for Mineral Projects and its related companion policy and form of technical report (NI 43-101 and the proposed replacement NI 43-101 and related documents, the 43-101 Amendment Proposal).
The project’s stated goal is to update and enhance the Canadian Securities Administrators’ (CSA) current mineral disclosure requirements to provide investors with more relevant and improved disclosure, while continuing to foster fair and efficient capital markets for mining issuers.
The publication of the 43-101 Amendment Proposal was done informally to allow industry participants an opportunity to discuss the proposed changes during PDAC and prior to formal publication. Once formally published, comments will be solicited.
Although still subject to change in the coming months, we summarize below the key changes introduced in the 43-101 Amendment Proposal and highlighted by the BCSC.
Key changes
According to the CSA, the 43-101 Amendment Proposal is designed principally to:
- remove or replace outdated definitions,
- modernize and streamline certain requirements to reflect industry practice,
- remove outdated requirements, and
- provide clarification and guidance on certain definitions and requirements.
Qualified person
The definition of qualified person has been amended to:
- remove the educational requirement (already covered by professional licensing criteria)
- clarify that an individual’s experience in the minerals industry must be gained after registration as a professional geologist or engineer, and
- clarify the meaning of experience relevant to the subject matter of the mineral project (set out in the Companion Policy to the 43-101 Amendment Proposal).
Amended 43-101 also clarifies that all disclosures of scientific or technical information for material or non-material projects must be based on information prepared or approved by a qualified person.
Foreign codes/CIM definitions
Since 2011, all major international mining jurisdictions, including Canada, have harmonized their definitions for mineral resources, mineral reserves and mining studies to align with those of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). The Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) is the Canadian member of CRIRSCO.
NI 43-101 currently incorporates by reference the CIM Definition Standards on Mineral Resources and Reserves, which aligns the CSA’s mining disclosure requirements with CRIRSCO standards and also permits foreign issuers to refer to similar definitions in standards in their jurisdictions.
As CIM definitions standards are deemed sufficiently similar to other jurisdictions, the CSA will no longer give the option of using definitions for mineral resources, mineral reserves and mining studies derived from foreign codes.
Royalty-issuer technical reports
Under the 43-101 Amendment Proposal, royalty-only issuers will not be required to file a technical report as is currently the case under NI 43-101. The CSA feels these reports provide limited information, as a royalty issuer’s qualified person does not usually have access to the owner’s data and cannot personally inspect or verify technical information.
Environmental and social issues/Indigenous Peoples
Disclosure requirements related to environmental, permitting and social matters in a technical report have remained largely unchanged since 2001.
As such, the dates and sources of any environmental, permitting and social reporting disclosure must now be included in technical reports under the 43-101 Amendment Proposal so the public can determine whether the information is current.
The 43-101 Amendment Proposal will also require disclosure in a technical report specifically about permits, agreements and negotiations with Indigenous Peoples, rightsholders or communities concerning the mineral project, as that disclosure is relevant in a technical report in order for investors to fully understand and appreciate the risks and uncertainties relating to a mineral project. Other information on these relationships may, however, be material and subject to other continuous disclosure obligations, irrespective of the obligations under the 43-101 Amendment Proposal.
Current personal inspection requirement
Information related to the current personal inspection of a mineral project by a qualified person must be included in the technical report under the 43-101 Amendment Proposal. Such inspection enables the qualified person to become familiar with conditions on the property, observe the property geology and mineralization, and verify the work done on the property.
NI 43-101 currently allows deferring the current personal inspection of the mineral project by a qualified person due to seasonal weather conditions, provided the personal inspection is conducted as soon as possible and the technical report is refiled, but the provision was rarely used and, when it was, it usually led to non-compliant disclosure. As such, under the 43-101 Amendment Proposal, qualified persons will not be allowed to defer a personal inspection due to seasonal weather conditions and a qualified person must personally inspect a mineral project before a technical report is filed.
Mineral resource disclosure
To address, notably, the deficiencies identified in CSA Staff Notice 43-311 Review of Mineral Resource Estimates in Technical Reports, the CSA will require under the 43-101 Amendment Proposal:
- information about how reasonable prospects for eventual economic extraction were determined,
- enhanced disclosure about the classification of mineral resource estimates,
- the issuer’s attributable percentage of resources for fractional ownerships, and
- project-specific risk disclosure requirements for mineral resource estimates.
Adjacent properties
The CSA mentions that issuers often disclose information about adjacent properties for promotional purposes. Amended 43-101 will allow such discussions provided they are not the focus of disclosure and cautionary statements that such information is not necessarily indicative of mineralization are included.
Data verification
To address inadequate disclosure of data verification, the CSA proposes the 43-101 Amendment Proposal requires specific disclosure about the data verification performed by qualified persons for each item of the technical report, not just for exploration and drilling activities. This includes additional disclosure concerning the steps taken to confirm the data was generated using standards applied in the mining industry, as well as the qualified person’s opinion on the data’s adequacy.
Disclaimers
NI 43-101 limits disclaimers in technical reports, but not in other disclosures. To address the gap, the 43-101 Amendment Proposal provides that an issuer’s disclosure may not disclaim any scientific or technical information or disclaim the reliance by any person or company. Further, the 43-101 Amendment Proposal provides that an issuer may not include any statement that disclaims any information prepared, supervised or approved by a qualified person and expressly forbids adapting the required disclosure for historical estimates to disclaim legacy exploration information not collected by the issuer.
Written disclosure and material mineral projects
Under NI 43-101 there are numerous requirements for written disclosure that only apply to material mineral projects. Under the 43-101 Amendment Proposal, prescribed requirements for written disclosure that hitherto only applied to material projects will now apply to non-material projects. These include requirements pertaining to written disclosure regarding data verification, exploration information, and mineral resources and mineral reserves.
It is, however, important to note that while the disclosure obligations are broadened, the distinction remains relevant for other obligations, including the requirement to prepare a technical report, which is limited to material properties.
For those interested in reviewing the materials published by the BCSC, they can be found here.
