The Canadian Securities Administrators has recently adopted amendment to NI 43-101 Standards of Disclosure for Mineral Projects. The changes were released after consultation with market participants and came into force on June 30, 2011.
The summary below addresses the key amendments to the previous version of NI 43-101. Readers are invited to review the revised NI 43-101, the companion policy and consequential amendments as published on the websites of the securities commissions or contact our office for additional information.
In response to the delays associated with locating the qualified person to sign an experts’ consent in connection with the filing of a short form prospectus, experts’ consents will be able to be signed by the firm that employs the qualified person as long as certain requirements are met.
Under the former NI 43-101, an issuer has an exemption from the requirement of filing a technical report (as triggered by the filing of certain disclosure documents) if it has a previously filed technical report with respect to which there has been no material changes in scientific and technical information and provides an updated certificate and consent from each applicable qualified person with respect to the technical report. Under the new NI 43-101, an issuer does not need to obtain the updated certificates and consents. It is not required to file a new technical report as long as: (a) it has previously filed a technical report that supports the scientific or technical information in the disclosure document; (b) at the date of filing of the document, there is no new material scientific information concerning the subject property not included in the previously filed technical report; and (c) the previously filed technical report meets the applicable independence requirements.
Acceptable Foreign Code
Under the new NI 43-101, an issuer that is (a) incorporated or organized in a foreign jurisdiction; or (b) is incorporated or organized under the laws of Canada or a jurisdiction of Canada, for its properties located in a foreign jurisdiction, can make disclosure and file a technical report under an “acceptable foreign code” as opposed to the three prescribed codes under the former NI 43-101. The definition of an “acceptable foreign code” includes:
- the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves;
- the Pan-European Code for Reporting of Exploration Results, Mineral Resources and Reserves;
- the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves;
- SEC Industry Guide 7 (Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations); and
- the Certification Code for Exploration Prospectus, Mineral Resources and Ore Reserves (Chile).
In addition, the term “acceptable foreign code” also allows for other codes as long as they are generally accepted in a foreign jurisdiction and have definitions of mineral resources and mineral reserves consistent with such definitions in NI 43-101.
If an acceptable foreign code is used for a technical report, the report must include a reconciliation of any material differences in the mineral resource and mineral reserve categories used in the report and the categories set out in NI 43-101 (according to the CIM Definition Standards).
Obligation to File a Technical Report
Under the new NI 43-101, a technical report is only required when a preliminary short form prospectus is filed where the preliminary short form prospectus discloses (i) for the first time mineral resources, mineral reserves, or the results of a preliminary economic assessment that constitutes a material change in relation to the issuer; or (ii) a material change in the information noted in (i). This change narrows the scenarios in which a technical report is required to be filed in connection with a preliminary short form prospectus.
Restricted Disclosure and Historical Estimates
The new NI 43-101 provides additional technical information that cannot be disclosed. Two additional areas of restricted disclosure are (i) the gross value of metal or mineral in a deposit or a sampled interval or drill intersection, and (ii) a metal or mineral equivalent grade for a multiple commodity deposit, sampled interval, or drill intersection, unless the disclosure also discloses the grade of each metal or mineral used to establish the metal or mineral equivalent grade.
In addition, the new NI 43-101 provides additional requirements for the issuer with respect to the disclosure of historical estimates. For example, the disclosure needs to provide the key assumptions, parameters and methods used to prepare the historical estimate, to the extent known. The definition of historical estimate was amended to allow certain estimates made after February 1, 2001 to be considered “historical estimates”.
Definition of Qualified Person
The definition of a “qualified person” has been amended to include, among other things, requirements for a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining. The definition also includes certain requirements pertaining to an individual who has a membership designation in a professional association in a foreign jurisdiction.
Approval of Technical Information
The former NI 43-101 required that any written disclosure with scientific or technical information about a mineral project on a material property must include the name and relationship to the issuer of the qualified person who prepared or supervised the preparation of the information that forms the basis for the written disclosure. Under the new NI 43-101, the name of the qualified person who approved the written disclosure can be used in lieu of the individual who prepared or supervised the preparation of the information.
First-Time Disclosure – Filing Timelines for Technical Report and Six-Month Filing Delay
Under both the former and new NI 43-101, an issuer must file a technical report if certain triggering documents that are filed contain scientific or technical information relating to mineral project on a property material to the issuer. Under the new NI 43-101, if the triggering disclosure is first time disclosure and is also contained in a preliminary short form prospectus, the technical report must be filed the earlier of 45 days after the date of the disclosure and the date of filing of the preliminary short form prospectus. If the triggering first-time disclosure is also contained in a directors’ circular, the technical report must be filed the earlier of 45 days after the date of the disclosure and 3 business days before the expiry of the take-over bid. In all other cases of first-time disclosure, the technical report must be filed within 45 days of the date of the disclosure. The new NI 43-101 also includes a provision extending the deadline of filing the technical report with respect to first-time disclosure to 180 days if certain conditions are met. For example, one of the conditions is that another issuer has filed a technical report with respect to the applicable disclosure.
Some of the additional amendments to NI 43-101 relate to technical reports by producing issuers, exemptions for royalty or similar interests, additional requirements applicable to written disclosure of exploration information and certain triggered news releases reconciling differences with respect to mineral resource and mineral reserve estimates. There are further changes to Form 43-101F1, the companion policy and other national instruments as a result the amendments to NI 43-101. For example, the new Form provides the report author with more discretion on certain disclosure matters and, in general, is more appropriate for mineral projects in their production phase in comparison to the former Form.