Notice of National Instrument, Companion Policy and Form: NI - 43-101 - Standards of Disclosure for Mineral Projects
Notice of National Instrument, Companion Policy and Form: NI - 43-101 - Standards of Disclosure for Mineral Projects
UNDER THE SECURITIES ACT
NATIONAL INSTRUMENT 43-101,
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS,
FORM 43-101F1, TECHNICAL REPORT,
AND COMPANION POLICY 43-101CP
A. Notice of National Instrument, Companion Policy, and Form (the "Instruments")
The Commission has, under section 143 of the Securities Act (the "Act"), made National Instrument 43-101 Standards of Disclosure for Mineral Projects (the "National Instrument") and Form 43-101F1 (the "Form") as a Rule under the Act. The Commission has also adopted Companion Policy 43-101 CP (the "Companion Policy").
The National Instrument, the Form, and the material required by the Act to be delivered to the Minister of Finance were delivered on November 17, 2000. The National Instrument and Form will come into force in Ontario on February 1, 2001 unless the Minister rejects the National Instrument or Form, or returns them to the Commission for further consideration. The Companion Policy is to become effective at the same time as the National Instrument and Form.
The National Instrument and Form are an initiative of the Canadian Securities Administrators ("CSA") and are expected to be adopted as rules in each of British Columbia, Alberta, Manitoba, Ontario, Nova Scotia and Newfoundland, as a Commission regulation in Saskatchewan, and as a policy in all other jurisdictions represented by the CSA.
The CSA published for comment a draft of the National Instrument first in June 1998 and then again in March 2000 (the "March 2000 Draft"). During the comment periods, the CSA received submissions from a number of commenters. Forty-seven commented on the March 2000 Draft. The names of these commenters and the summary of their comments, together with the CSA responses to those comments, are contained in Appendix A and B, respectively, of this Notice.
As a result of consideration of the comments, the CSA have made a number of amendments to the National Instrument. However, as these changes are not material, the CSA are not republishing the National Instrument and the Form for a further comment period.
Concurrently with making the National Instrument and the Form, the Commission rescinded National Policy Statement No. 2-A, "Guide For Engineers, Geologists and Prospectors Submitting Reports on Mining Properties to Canadian Provincial Securities Administrators", ("NP2-A"). The Commission also revoked section 36 of Regulation 1015 of the Revised Regulations of Ontario, 1990 (the "Regulation") and certain definitions of ore and reserves in section 37(2) of the Regulation in connection with making Rule 41-101, "General Prospectus Requirements". Notice of this rule was published October 13, 2000.
B. Substance and Purpose of National Instrument, Form and Companion Policy
The Instruments originated with the reformulation of NP2-A. NP2-A set out requirements for the preparation of technical reports that must be filed by issuers with mineral projects in connection with certain prospectus offerings.
The Instruments consolidate and expand significantly on the current disclosure and reporting requirements. The purpose of the proposed National Instrument is to enhance the accuracy and integrity of public disclosure in the mining sector.
The Instruments establish standards for all oral statements and written disclosure made by an issuer concerning mineral projects that are reasonably likely to be made available to the public. All disclosure concerning mineral projects, including oral statements and written disclosure in news releases, prospectuses and annual reports, is to be based on information prepared by or under the supervision of a qualified person. Disclosure of mineral resources and mineral reserves is to be made in accordance with industry standard definitions approved by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") and incorporated by reference into the National Instrument.
In certain circumstances, the disclosure must be supported by a written technical report prepared and certified by a qualified person in accordance with the Form and filed by the issuer with the securities regulatory authorities. In specified circumstances, the technical report must be prepared and certified by a qualified person who is independent of the issuer.
The Instruments are consistent with the recommendations of the Final Report of the TSE-OSC Mining Standards Task Force. The CSA are of the view that the Instruments will enhance investor protection and the fairness and efficiency of capital markets.
The CSA are also proposing to form a Mining Technical Advisory and Monitoring Committee (the "MTAMC") to advise the CSA on issues relating to disclosure standards for the mining industry. More information on the MTAMC is provided in a separate CSA Notice published concurrently with this Notice.
C. Summary of Changes to Instruments from the March 2000 Draft
Changes of a substantive nature that have been made to the Instruments are summarized here. Several of these changes and other changes that are less substantive in nature are discussed in greater detail in Appendix B of this Notice. For a detailed summary of the contents of the March 2000 Draft, reference should be made to the notice that was published with the March 2000 Draft.
National Instrument 43-101
1. Definition of "adjacent property"
The branch of the definition which required an adjacent property to have a boundary lying within two kilometres of the closest boundary of the property being reported on has been deleted and replaced with the requirement that an adjacent property have a boundary reasonably proximate to the closest boundary of the property being reported on. This change was made in response to comments received that a two kilometre boundary is often inappropriate depending on the scale of the property and its stage of development. As a result, a technical report may now include information on an adjacent property whose closest boundary lies more than two kilometres from the closest boundary of the property being reported on provided that it is proximate to and has geological characteristics similar to those of the property being reported on and the conditions set out in Item 17 (formerly Item 16) of the Form are complied with.
The two kilometre limit, however, has been maintained for the purpose of determining if a qualified person is independent of the issuer in section 1.5(4)(e). The term "adjacent property" is no longer used for this purpose.
2. Definition of "data verification"
The CSA have added a definition of "data verification" at the suggestion of commenters. These commenters advised that the proposed instrument should clearly cover two separate but related processes that are important: (i) the process of checking that data have been accurately transcribed from the original source; and (ii) the process of checking that the data are suitable to be used because they have been obtained from a reliable source in an appropriate manner.
The term "data verification" was chosen as it is a common industry term, and the definition was added to clarify that both processes are important for the adequate checking of data.
3. Definition of "disclosure document"
The CSA added a definition of "disclosure document" which means an annual information form, prospectus, material change report, or annual financial statement. This term appears in subsections 4.2 (1) 2 and 4.2 (1) 6 of the National Instrument. Disclosure that is incorporated by reference into, or that appears in, a preliminary short form prospectus, an annual information form, or an annual report filed after the effective date of the National Instrument, but that appeared in a disclosure document filed prior to February 1, 2001, is "grandfathered" under the National Instrument. The filing of a new technical report is not triggered unless there is new material information contained in the disclosure.
4. Definition of "exploration information"
The CSA have deleted section 1.4 of the Companion Policy and the phrase "or to expand or further develop an existing mineral resource or reserve" in the definition of "exploration information". These changes were made to recognize that exploration information may be material disclosure at any time during the life of a mineral project.
5. Definition of "feasibility study"
The CSA received several comments objecting to the reference in the definition to the feasibility study being sufficient "for a qualified person experienced in mineral production activities, acting reasonably" to make a production decision. This standard was confusing to commenters since a production decision is not made by the qualified person but by the issuer and its sources of financing and/or capital. As a result, the National Instrument was amended so that the standard for a feasibility study is that it "could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production."
6. Definition of "geoscientist"
Several commenters suggested that the definition of "geoscientist" should be deleted as it is unnecessary and inappropriate. These commenters pointed out that self regulatory associations are the appropriate bodies to determine whether an individual is eligible to be considered a geoscientist and that this was consistent with the intent of the proposed National Instrument. The CSA agree with these comments and have deleted the definition of "geoscientist".
7. Definition of "professional association"
The CSA amended the definition of "professional association" so that the period for which an association of geoscientists in Ontario will be deemed a professional association has been shortened from two years to one year. This amendment recognizes the passing, in Ontario, of the third reading of the Professional Geoscientists Act on June 22, 2000. As a result, the CSA concluded, in consultation with the Association of Professional Geoscientists of Ontario, that potential qualified persons in Ontario would be able to comply with the requirements of the definition in a shorter period of time. The two year deeming period, however, remains for associations of geoscientists to be established in other Canadian jurisdictions.
The CSA also recognize that there may be some non-Canadian residents who are not a member of a professional association as that term is defined in the National Instrument. The CSA intends to seek advice on this issue. The CSA will also follow the developments of the International Professional Geology Conference and the Council of Mining and Metallurgical Institutes (CMMI) which are exploring the concept of an international geoscientist association among qualified persons in Australia, Canada, Great Britain, South Africa and the United States, with a view to possibly recognizing certain foreign professional associations that do not meet all of the requirements of the definition, as well as develop a list of acceptable professional associations for reference purposes. In the meantime, however, issuers that wish to retain persons who are not members of an association that meets the requirements of the definition will have to consider making an application for exemptive relief. Alternatively, issuers should be aware that Canadian provincial professional associations generally permit out of province residents as members.
8. Definitions of Mineral Resources and Mineral Reserves
The CSA received many comments urging the CSA to adopt the standards for classification of mineral resources and mineral reserves recommended by the CIM. The CSA agreed in principle, that deferring to industry developed standards would be appropriate, however, the CSA faced a problem in that the CIM was in the process of revising mineral resource and mineral reserve definitions. The CSA kept in close contact with the CIM and provided comments so that the definitions would be satisfactory for securities regulatory purposes.
On August 20, 2000, the National Council of the CIM adopted new mineral resource and mineral reserve definitions. The CSA are satisfied that the definitions adopted are appropriate for use in the National Instrument and have incorporated these definitions by reference into the National Instrument in sections 1.3 and 1.4. While only the bolded definitions themselves are incorporated by reference into the National Instrument, the CSA will look to the CIM Standing Committee's report for interpretive guidance on the definitions. A copy of the definitions and the relevant interpretive guidance can be found attached as the appendix to the Companion Policy.
Some commenters have suggested that the proposed Instrument automatically incorporate changes made to the mineral resource and mineral reserve definitions by the CIM from time to time. The CSA recognize that definitions of mineral resources and mineral reserves continue to evolve in the industry. Changes to the definitions of mineral resources and mineral reserves adopted by the CIM will automatically be incorporated by reference into the rule.
9. Disclosure of Target Potential
Section 2.3 of the National Instrument was amended in response to comments that the prohibition against disclosure of an estimate of quantity or grade of a deposit unless a qualified person has estimated a mineral resource or mineral reserve, was too broad and would prohibit disclosure of target potential. Commenters argued that this information is meaningful to investors and that prohibiting it could lead to selective disclosure.
The general prohibition against disclosure of an estimate of quantity and grade that has not been classified as a mineral resource or mineral reserve by a qualified person has been maintained in subsection 2.3(1)(a). A new subsection 2.3(1)(b) was also added prohibiting the disclosure of the results of an economic evaluation which uses inferred resources as a basis for the economic evaluation.
Despite subsection 2.3(1)(a), subsection 2.3(2) permits an issuer to disclose in writing potential quantity and grade of an exploration target provided that the disclosure includes: (1) the basis for the potential; and (2) a proximate statement that potential quantity and grade is conceptual in nature and that there has been insufficient exploration to define a mineral resource on the property and it is uncertain if further exploration will result in discovery of a mineral resource on the property.
10. Disclosure of Preliminary Assessment
Despite subsection 2.3(1)(b), subsection 2.3(3) permits an issuer to disclose in writing a preliminary assessment that includes an economic evaluation which uses inferred mineral resources, provided that the preliminary assessment is a material fact or a material change in the affairs of the issuer. The disclosure includes: 1) the basis for the preliminary assessment, the qualifications and assumptions made by the qualified person, and appropriate cautionary language.
In addition, issuers that are reporting issuers in Ontario, are required to prefile the assessment and technical report for a five-day non-objection period by the Director.
Subsection 2.3(4) was also added to ensure that the terms pre-feasibility study, preliminary feasibility study and feasibility study were only to be used if the studies referred to satisfy the requirements of the relevant definitions in the National Instrument.
11. Disclosure of Historical Estimates
Section 2.4 was amended to limit the disclosure of historical estimates of mineral resources and mineral reserves to: (1) historical estimates prepared by or on behalf of a person or company other than the issuer; and (2) historical estimates that accompany disclosure of mineral reserves and mineral resources made in accordance with section 2.2.
12. Obligation to File Technical Report in Connection with a Short Form Prospectus, Annual Information Form, or Annual Report
It came to the attention of the CSA that issuers that are eligible to use the POP System in National Policy Statement No. 47 or proposed National Instrument 44-101 may never have filed a technical report or a report prepared in accordance with National Policy Statement No. 2-A. As a result, subsections 4.2(1)2 and 4.2(1)6 of the National Instrument have been amended to "grandfather" disclosure describing mineral projects on a property material to the issuer contained in a disclosure document (as well as in a report under National Policy Statement 2-A) filed before February 1, 2001.
13. Use of Foreign Codes
In accordance with comments received, the National Instrument now permits Canadian issuers to use reserve and resource definitions in certain foreign codes with respect to properties located in a foreign jurisdiction provided the disclosure based on the foreign codes is reconciled to the definitions required by the National Instrument.
The National Instrument was also amended to permit issuers to make disclosure using the resource and reserve definitions in foreign codes, in addition to being permitted to use foreign codes in technical reports, provided that the disclosure includes a reconciliation.
14. Certificates of Qualified Persons
A few commenters suggested that the requirement that the qualified person certify that the technical report was prepared in accordance with generally accepted mining industry practice was inappropriate and could create confusion. The CSA agree and deleted this requirement. The standards required of the qualified person are within the proper purview of the professional organizations.
Companion Policy 43-101 CP
1. CSA Sub-Committee and Industry Committee
Section 1.2 was inserted into the Companion Policy to recognize that mining industry standards are undergoing significant changes in Canada and internationally. The Companion Policy further states that the CSA will monitor these changes and consider recommendations from their staff and external advisors for amendments to the Instrument, from time to time.
2. CIM Mineral Resource and Mineral Reserve Definitions
The Companion Policy was amended to recognize that the Instrument incorporates the mineral resource and reserve definitions adopted by the CIM by reference. The CSA encourages issuers and qualified persons preparing technical reports to consult the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines for further guidance on the interpretation and application of these definitions. A copy of the definitions and guidelines can be found attached as the appendix to the Companion Policy.
3. Preliminary Feasibility Study
Subsection 1.6(b) of the Companion Policy was amended to advise that the considerations or assumptions underlying a study must be reasonable and sufficient for a qualified person, acting reasonably, to determine if the mineral resource may be classified as a mineral reserve in order for a study to fall within the definition.
4. Prohibited Disclosure
Section 2.3 was inserted into the Companion Policy to provide guidance on the interpretation of section 2.3 of the Instrument. The Companion Policy also advises that the limited written disclosure contemplated in subsection 2.3(2) and 2.3(3) should be sufficient to allow the reader to make a considered and balanced judgment of its significance.
Transition
The CSA anticipate that the proposed National Instrument will come into effect in February 2001. Certain transitional measures are built into the National Instrument.
The coming into force of the National Instrument would not itself necessarily trigger an immediate obligation to file a technical report prepared in accordance with the National Instrument. For most issuers affected by the National Instrument, the requirements concerning technical reports would first apply in connection with an annual report, annual information form or preliminary prospectus filed after the National Instrument comes into effect. In some cases these requirements would apply earlier, for example, in connection with disclosure of new or materially changed estimates of mineral resources and mineral reserves on a property material to the issuer, after the coming into force of the National Instrument.
D. Recission of National Policy Statements
The Commission has also rescinded NP2-A, effective on the date that the National Instrument and Form come into force.
Text of Recission of National Policy Statement No. 2-A
"National Policy Statement No. 2-A, Guide For Engineers, Geologists and Prospectors Submitting Reports on Mining Properties to Canadian Provincial Securities Administrators is rescinded."
E. Text of the Instruments
The text of the National Instrument, the Form and the Companion Policy, together with footnotes that are not part of the Instruments, follows.
DATED: November 17, 2000
Questions may be referred to any of:
Adrianne Rubin Hawes
Senior Legal Counsel
British Columbia Securities Commission
Telephone: (604) 899-6645
E-mail: [email protected]
Wayne Redwick
Director, Corporate Finance
British Columbia Securities Commission
Telephone: (604) 899-6699
E-mail: [email protected]
Terry Macauley
Mining Consultant
British Columbia Securities Commission
Telephone: (604) 899-6723
E-mail: [email protected]
Agnes Lau
Deputy Director, Capital Markets
Alberta Securities Commission
Telephone: (780) 422-2191
E-mail: [email protected]
Stephen Murison
Legal Counsel
Alberta Securities Commission
Telephone: (403) 297-4233
E-mail: [email protected]
Kathy Soden
Director, Corporate Finance
Ontario Securities Commission
Telephone: (416) 593-8149
E-mail: [email protected]
Doug Welsh
Legal Counsel, Corporate Finance
Ontario Securities Commission
Telephone: (416) 593-8068
E-mail: [email protected]
Deborah McCombe
Chief Mining Consultant, Corporate Finance
Ontario Securities Commission
Telephone: (416) 593-8151
E-mail: [email protected]
Pierre Martin
Legal Counsel
Commission des valeurs mobilières du Québec
Telephone: (514) 940-2199 (ext. 4557)
E-mail: [email protected]
APPENDIX A
LIST OF COMMENTS
RECEIVED ON 2000 PROPOSED RULE, 2000 PROPOSED POLICY
AND 2000 PROPOSED FORM
1. Ashton Mining of Canada Inc. by letter dated April 7, 2000
2. Association of Geoscientists of Ontario by letter dated May 24, 2000
3. Association of Professional Engineers and Geoscientists of B.C. (APEGBC) by letter dated May 31, 2000
4. Aur Resources Inc. by letters dated May 5, 2000 and June 30, 2000
5. Bema Gold Corporation by letter dated May 17, 2000
6. Best Practices Committee by letter dated June 9, 2000
7. Bottrill Geological Services by letter dated May 30, 2000
8. British Columbia and Yukon Chamber of Mines by letter dated May 30, 2000
9. Cameco Corporation by letter dated May 23, 2000
10. Canadian Advocacy Council of the Association for Investment Management and Research by letter dated May 23, 2000
11. Canadian Association of Mineral Valuators by letter dated May 23, 2000
12. Canadian Bar Association - Ontario by letters dated June 2, 2000 and June 7, 2000
13. Canadian Council of Professional Geoscientists by letter dated May 24, 2000
14. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) by letters dated May 24, 2000 and June 7, 2000
15. Canadian Venture Exchange by letter dated May 23, 2000
16. CDNX Listed Company Association by letter dated May 24, 2000
17. Chapman, J.A. Mining Services by letter dated May 17, 2000
18. Corriente Resources Inc. by letter dated May 18, 2000
19. EBL Consultants by letter dated May 16, 2000 for CVMQ
20. Falconbridge Limited by letter dated June 6, 2000
21. Fenton Scott Management Inc. by letter dated May 18, 2000
22. Géoconseil Marcel Vallée Inc by letter dated June 23, 2000
23. Gorzynski, George by letter dated May 21, 2000
24. Halton Association of Geoscientists by letters dated May 31, 2000 and June 2, 2000
25. Impact Minerals International Inc. by letter dated May 17, 2000
26. Inco Limited by letter dated June 22, 2000
27. Kimura, Ed by letter dated May 23, 2000
28. Lawrence, Ross D. by letter dated May 23, 2000
29. Macleod Dixon by letter dated May 3, 2000
30. Matrix Consultants Limited by letter dated August 14, 2000
31. MRDI Canada by letter dated May 23, 2000
32. Namco South Africa (Pty) Ltd. by letter dated 24 May 2000
33. Olson, Philip by letter dated May 17, 2000
34. Ordre des ingéniurs du Québec by letter dated June 5, 2000
35. Osler, Hoskin & Harcourt by letter dated June 9, 2000
36. Pacific Rim Mining Corp. by letter dated June 6, 2000
37. Placer Dome Inc. by letter dated May 24, 2000
38. Prospectors and Developers Association of Canada by letters dated June 8, 2000 and June 13, 2000
39. Redhawk Resources, Inc. by e-mail dated May 9, 2000
40. Rio Algom by letter dated June 1, 2000
41. Shen, Kenneth and Renneberg, Russel by letter dated May 23, 2000
42. Sinclair, A.J. by letter dated May 24, 2000
43. Sketchley, Dale A., by letter dated May 24, 2000
44. Southwestern Gold Corporation by letter dated May 31, 2000
45. Teck Corporation by letter dated May 29, 2000
46. Toronto Stock Exchange (TSE) by letter dated June 8, 2000
47. Watts, Griffis and McOuat Limited by letters dated May 24, 2000 and June 15, 2000
APPENDIX B
SUMMARY OF COMMENTS
RECEIVED ON PROPOSED NATIONAL INSTRUMENT 43-101,
COMPANION POLICY 43-101CP AND FORM 43-101F1
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
The CSA received submissions from 47 commenters on the proposed Instruments, representing a wide spectrum of industry participants, including producing issuers, exploration issuers, consulting professionals, industry associations, councils, committees and exchanges.
The CSA appreciate the attention and care taken by the commenters in their submissions. The CSA gave serious consideration to the submissions received and revised the proposed Instruments to address concerns raised, as the CSA considered appropriate. The CSA thank all of the commenters for providing their comments.
The following is a summary of the comments received on the proposed Instruments, together with the CSA's responses, organized by topic. The summary begins with general comments on the proposed Instruments and follows with a review of the comments on the proposed National Instrument, the proposed Form and the proposed Companion Policy and the CSA's response reflected in the National Instrument, the Form and the Companion Policy as adopted.
GENERAL COMMENTS
Most of the commenters were supportive of the scope and general content of the proposed Instruments, agreeing that the proposed Instruments will significantly enhance the quality and reliability of public disclosure concerning mineral projects, as well as improve the confidence of the investing public. In particular, commenters expressed support for:
• clearer and upgraded disclosure;
• qualified person eligibility and mandatory involvement;
• mandatory use of standardized terminology;
• references to Best Practices guidelines produced by industry associations; and
• the respective responsibilities of the issuers and their management and of qualified persons.
Many commenters considered the proposed Instruments much improved from the first drafts of the proposed Instruments that were published in July 1998 and from NP 2-A. Some of these commenters expressed serious concerns about certain aspects of the proposed Instruments, but for the most part, comments were directed at clarifying and improving the proposed Instruments.
However, a minority of commenters suggested that the proposed Instruments should not be adopted, expressing the following views:
• The proposed Instruments will not prevent fraud, but will hobble the exploration industry and burden it with excessive costs;
• Redirecting funds away from drilling to regulatory compliance reduces chances for exploration success;
• The market has learned a lesson from recent incidents; analysts are making demands for verification in appropriate circumstances;
• There are renowned explorationists who do not meet the definition of a qualified person;
• The proposed Instruments encroach on matters that should be left to the purview of scientific and technical professional organizations that are equipped to recommend "best practice" guidelines as they evolve from time to time, rather than codifying them into required practice;
• The proposed Instruments are an over-reaction to recent incidents and hold issuers in the mining industry and their management to higher standards, and subject them to a greater risk of liability, than issuers and management in other industries;
• The proposed Instruments do nothing to address problems created by analysts who are not qualified persons, yet are allowed to write speculative reports on mineral projects based on little information; and
• Greater emphasis should be placed on investor education and warnings.
The CSA appreciate the sincerity of these views. However, the CSA remain of the view that the Instruments are an important and necessary step in improving the credibility of disclosure and investor confidence in the capital markets, to the ultimate benefit of both investors and the mining industry as a whole.
One of the commenters stated its view that the proposed Instruments are a vast improvement over existing guidelines and rules. In the commenter's view, nothing will prevent outright fraud, but the proposed Instruments will help avoid scandals where misleading, incomplete and overzealous press releases and other disclosure statements lead to losses by innocent investors. The commenter acknowledged that the increased cost of complying with the proposed Instruments may be significant for some, but supported the higher standard of disclosure and was of the belief that there would be a net benefit to the mining industry as a result of improved investor confidence. The CSA agree with this comment.
The comments concerning the role of analysts raise an important issue. This issue is beyond the scope of the Instruments, as it is not limited to the mining industry. This issue is being addressed by the Securities Industry Committee on Analysts' Standards, a joint committee of The Toronto Stock Exchange, the Canadian Venture Exchange and the Investment Dealers Association, as a separate initiative.
The CSA place great importance on investor education. However, they do not share the view expressed by one commenter that "Buyer Beware" is an appropriate substitute for securities regulation. Many of the securities regulatory authorities are pursuing investor education initiatives in their own jurisdictions.
A commenter expressed concern that the potential effects of the proposed Instruments may not have been adequately considered by issuers in the mining industry, in view of their focus, through industry associations, on mineral reserve and mineral resource definitions. The commenter recommended that additional time be provided for comment. Other commenters expressed satisfaction with the consultation process, although one commenter expressed displeasure with respect to the consultation process in the commenter's jurisdiction where the proposed Instruments were not published. The CSA regret the commenter's experience but believe that in this instance there was a considerable degree of industry awareness of the proposals across Canada.
The CSA place great importance on public comment, and note that they have sought and considered public comment on the Instruments for over two years. Proposed drafts of the Instruments were initially published for comment July 3, 1998, and were published for comment for a second time on March 24, 2000. Moreover the issues addressed by the Instrument were also addressed by the OSC/TSE Mining Standards Task Force ("MSTF") in their interim report published for comment in June 1998, and their final report published in January 1999 (the "MSTF Report").
Some commenters recommended the establishment of an external committee to review certain matters arising in connection with the proposed Instruments and the effectiveness of the proposed Instruments. As described in the Notice, the CSA will establish an external advisory committee to monitor the application of the Instruments and to advise the CSA on industry and professional developments, and on modifications that might be appropriate, from time to time, to the terms or application of the Instruments.
NATIONAL INSTRUMENT 43-101
PART 1 APPLICATION, DEFINITIONS AND INTERPRETATION
1. Section 1.1 Application
Some commenters expressed concern that the applicability of the National Instrument to valuations would be misunderstood. They requested that this section contain clarification that: (i) the National Instrument does not mandate the manner in which a valuation report may be prepared or establish standards for valuation reports; and (ii) the National Instrument requires that mining information contained in a valuation report be supported by information contained in a technical report.
The CSA do not believe that the National Instrument supports the reading feared by the commenters and do not agree that such clarification is necessary in the National Instrument.
2. Section 1.2 Definitions - Definition of "adjacent property"
A commenter was concerned that the two kilometre boundary test in the definition of "adjacent property" may not be appropriate in all instances, but should vary depending on the scale of the property and its stage of development. This comment had also been raised with respect to the previous draft of the proposed Instruments.
The definition of "adjacent property" was used in the proposed National Instrument for two purposes. One of the purposes was to determine whether or not a qualified person would be considered not to be independent of the issuer where that is required by the National Instrument. For this purpose, the CSA require a clear geographic guideline. To avoid confusion, the term "adjacent property" is no longer used for this purpose. Instead, more detailed interpretation concerning independence is set out in subsection 1.5(e), which now specifically includes as an indicator of non-independence, the ownership of an interest in a property that has a boundary within 2 kilometres of the subject property as a basis on which a qualified person will not be considered to be independent of the issuer.
The second purpose of the term "adjacent property" was to permit disclosure of information in a technical report on a property that is not the subject property if, in the opinion of the qualified person authoring the technical report, the information is accompanied by certain required disclosure. The term "adjacent property" is now used exclusively for this purpose in the Instruments. The CSA agree that, for this purpose, a two kilometre limit may be inappropriate and have substituted reference to reasonable proximity.
3. (New) definition of "data verification"
The CSA have added a definition of data verification to the National Instrument at the suggestion of some commenters to clarify the scope of this obligation. The term "data verification" was chosen as it is a common industry term. (See also the comments relating to section 3.2 of the National Instrument.)
4. Definition of "development property"
A commenter requested that the word "demonstrated" be changed to "indicated" as in the commenter's view, the word demonstrated connotes absolute certainty which would be misleading.
The CSA are of the view that the phrase "economic viability … demonstrated by a feasibility study" reflects common industry usage and do not agree that the use of the word "demonstrated" will lead an investor to expect a guarantee of economic viability.
5. Definition of "disclosure"
A commenter suggested that the definition of "disclosure", being limited to disclosure that is intended or likely to be made public, is inconsistent with section 1.1 of the National Instrument which states that the National Instrument applies to all disclosure. The commenter suggested that the definition of "disclosure" be expanded to cover all disclosure that is actually made.
The CSA purposely limited the definition of "disclosure". The CSA do not intend the National Instrument to impose responsibility on issuers for unintended and unexpected information "leaks".
6. (New) definition of "disclosure document"
The CSA have added a new definition of "disclosure document" to the National Instrument. It is used in section 4.2 of the National Instrument in connection with the requirements for a technical report on a mineral project if disclosure has been made in one of the documents included in the definition of "disclosure document" prior to February 1, 2001, the effective date of the Instrument. Reference is made to the discussion of section 4.2 of the National Instrument below.
7. Definition of "exploration information"
A commenter pointed out that the definition of "exploration information" in the proposed National Instrument was inconsistent with section 1.4 of the proposed Companion Policy. The commenter noted that exploration information could not (i) be used to expand or develop an existing mineral resource, as the definition in the proposed National Instrument indicated; and (ii) exist before sufficient data is available to justify a mineral resource, as the proposed Companion Policy indicated. The commenter also questioned the propriety of including the reference to metallurgical information because it is a matter generally beyond the expertise of an exploration geologist.
The CSA recognize that exploration information may be material disclosure at any time during the life of a mineral project and, accordingly, the definition of "exploration information" should not be limited to information prior to the definition of a mineral resource. The CSA have deleted the phrase "or to expand or further develop an existing mineral resource or mineral reserve" in the definition of "exploration information" in the National Instrument as unnecessary. The CSA have also deleted section 1.4 of the Companion Policy as inconsistent and unnecessary.
The National Instrument retains the reference to metallurgical testing in the definition of "exploration information". The definition of "exploration information" is intended to encompass all of the types of information that may be generated in relation to the exploration of a mineral property, whether or not a particular person would be considered a qualified person with respect to each and every type of information generated. The CSA have added the word "mineralogical" to the types of information that may be generated during exploration.
8. Definition of "feasibility study"
The CSA received several comments objecting to the reference in the definition of "feasibility study" to the study being sufficient "for a qualified person experienced in mineral production activities, acting reasonably" to make a production decision. These commenters correctly pointed out that a production decision is the responsibility of an issuer's board of directors and not the responsibility of the qualified person that is the author of the technical report.
The CSA acknowledge the confusion and agree that the standard should be "sufficient detail that [the study] could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production". It is not necessary that a decision be made by a financial institution for a study to meet the definition.
The comment was received that the standard contained in the definition was inadequate for a feasibility study. Some commenters suggested that there be a more extensive definition, or even a form, of feasibility study, as there is no consensus in the industry as to the meaning of this term. Another comment was that the definition of "feasibility study" in the proposed National Instrument does not adequately reflect the level of effort required to produce a proper feasibility study. One commenter suggested a new term, "reserve assessment report", be used.
The CSA believe that the development of specific guidelines and standards for feasibility studies is a matter for professional and industry associations and not a matter for the CSA. The CSA are of the view that the standard now set out in the definition, which will interpreted in light of professional and industry practice, is appropriate for the purposes of the Instruments.
9. Definition of "geoscientist"
Several commenters suggested the deletion of the definition of "geoscientist" as unnecessary and inappropriate. These commenters pointed out that self-regulatory associations are the appropriate bodies to determine whether an individual is eligible to be considered a geoscientist and that this is consistent with the intent of the proposed National Instrument. The CSA agree with these comments and have deleted the definition of "geoscientist" from the National Instrument.
Other commenters were concerned that the definition of "geoscientist" would not be sufficiently flexible to encompass emerging disciplines in the geoscience field, and suggested that the definition be expanded. The CSA believe that these commenters' concerns are adequately addressed by the deletion of the definition.
10. Definition of "mineral project"
To conform to the definitions approved by the CIM, the term "substances" has been replaced with "material".
11. (New) definition of "preliminary assessment"
This definition was added in connection with the disclosure now permitted in section 2.3(3) of early stage property assessments, sometimes known in the industry as "scoping studies", that include economic evaluations that use inferred mineral resources under the conditions set out in that section.
12. Definition of "preliminary feasibility study" and "pre-feasibility study"
Comments received on the definition of "preliminary feasibility study" were similar to the comments received on the definition of "feasibility study". Commenters pointed out that there is no consensus in the industry as to the meaning of the term "preliminary feasibility study". Comment was also made that the definition of "preliminary feasibility study" in the proposed National Instrument does not adequately reflect the level of effort required to produce a proper preliminary feasibility study. A commenter suggested a new term, "reserve assessment report", be used. Another commenter expressed the opinion that the definition of preliminary feasibility study, taken together with the definition of mineral reserve, is circular in that each term is defined by the other.
The CSA believe that the development of specific guidelines and standards for preliminary feasibility studies is a matter for professional and industry associations and not a matter for the CSA. The CIM have approved a definition of "preliminary feasibility study" and the definition in the National Instrument was revised to conform to the CIM definition. The CSA are of the view that the definition of "preliminary feasibility study", which will be interpreted in light of professional and industry practice, is appropriate for the purposes of the National Instrument. The CSA are satisfied, as the definitions of "preliminary feasibility study" and "mineral reserve" now stand, that the definition of each term provides a sufficient standard, and that each term is related to, but not defined by, the other.
A commenter suggested that the word "ore" be changed to "mineral". This change is reflected in the new definition.
Some commenters expressed the opinion that a preliminary feasibility study is insufficient to establish mineral reserves, and that a feasibility study should be required for the establishment of mineral reserves. A commenter added that because of the allowance for "reasonable assumptions" in a preliminary feasibility study, there has been no improvement in reserve classification over NP 2-A. The CSA recognize that there is a difference of opinion in the mining industry with respect to this matter. The CSA have adopted the view of the CIM in this regard.
A commenter noted that "preliminary feasibility study" and "pre-feasibility study" are synonymous terms that are used in the industry, and suggested that the National Instrument should refer to both. The CSA agree. Both terms are now covered by the National Instrument.
13. Definition of "producing issuer"
The definition of "producing issuer" was criticized by commenters that objected to the independent report exemption available, in certain circumstances, to producing issuers and their joint venture partners. The CSA have retained the exemption, and have therefore retained the definition. This matter is fully discussed in item 30 below concerning section 5.3 of the National Instrument.
14. Definition of "professional association"
Several commenters expressed concern that the definition of "professional association" will not permit persons to be qualified persons under the National Instrument if they are members of a self-regulatory association that has not been recognized by statute. The CSA are aware that there are certain foreign jurisdictions and some Canadian provinces and territories that do not have legislation providing for the licensure of geoscientists. A commenter suggested that the National Instrument should include a list of acceptable professional associations and that an issuer should be permitted to obtain an advance ruling as to whether a particular association is acceptable.
The CSA acknowledge that there will be circumstances in which it will be appropriate for issuers to retain engineers or geoscientists in foreign jurisdictions that may not have associations that meet the definition of "professional association" in the National Instrument. At this time the CSA is not sufficiently familiar with the circumstances in foreign jurisdictions to expand the definition of "professional association" to include associations that do not meet all the conditions of the definition. Issuers that retain persons that are not members of a "professional association" may apply for an exemption from the National Instrument with the relevant Canadian securities regulatory authorities. The CSA anticipate that they will consult with the external advisory committee with respect to such applications and with respect to the treatment of foreign associations that are non-compliant with the definition. Persons resident outside Canada that wish to be considered "qualified persons" also have the option of joining a Canadian-based professional association.
Other commenters remarked that the exemption for geoscientists in Canadian jurisdictions that do not currently have statutorily recognized self-regulatory associations in place was too broad and should be limited by requiring non-statutorily recognized self-regulatory associations to be members of the Canadian Counsel of Professional Geoscientists. The CSA noted that this would result in associations in some Canadian provinces being excluded from the exemption and decided against doing so.
Commenters stated that in the case of Ontario, one year, and in the case of other Canadian jurisdictions, two years, is a sufficient time for the exemption.
15. Definition of "qualified person"
Comments on the definition of "qualified person" covered the spectrum of views:
• It is inappropriate for regulators to define and require the involvement of a qualified person; this matter should be left entirely to the judgment of the issuer's management and market forces.
• The definition of "professional association" in the proposed National Instrument unduly restricts the definition of qualified person, especially with respect to retaining geoscientists from foreign jurisdictions that do not have legislation for the licensure of geoscientists.
• There should be very limited grounds for exemption from the requirements for a qualified person to be both experienced and subject to discipline, as the concept of a qualified person is considerably weakened without both aspects. The interim exemption for geoscientists in Canadian jurisdictions that do not have legislation that provides for the licensure of geoscientists is not appropriate, and it is not necessary because all existing self-regulatory associations allow extra-provincial registration and have the ability to discipline non-resident members.
• Persons who do not meet the qualified person requirements but who have qualifications to carry out qualified person duties because of experience and knowledge should be able to register for a lifetime exemption.
• A qualified person should be required to demonstrate that he or she has maintained an up-to-date understanding of advances in his or her field and is competent in current practices.
• Only engineers should be considered qualified persons.
The CSA remain convinced that the mandatory involvement of a qualified person, and the elements of qualification, are fundamental to achieving the purposes of the Instruments.
The CSA recognize that circumstances are likely to arise in which a person should be considered the equivalent of a qualified person for purposes of the Instruments, even if the person does not satisfy all of the conditions of the definition. In this case the issuer should make an application to the appropriate securities regulatory authorities for an exemption. This is a matter on which the CSA may consult the external advisory committee.
The CSA are of the view that issues of professional competence are properly within the purview of self-regulatory associations. In addition, the issuer must satisfy itself that the qualified person chosen is appropriate for the task at hand.
Several commenters pointed out that the definition of "qualified person" in the proposed National Instrument could be interpreted in a way that was overly restrictive with respect to required experience. The CSA agree and have reformatted the definition in the National Instrument to clarify that the person must have 5 years experience, which includes experience relevant to the subject matter of the mineral project and the technical report. As noted, it is the issuer's responsibility to choose an appropriate qualified person for the task at hand.
A commenter suggested that the "qualified person" should be responsible for the accuracy and validity of all reports, including those presented by officers, directors and other interested parties. The commenter suggested that the term "qualified person" should be changed to "responsible person" in order to better describe the person's function. Persons needed for advice outside the responsible person's area of expertise would be employees or associates of the responsible person, and no disclaimers would be allowed. The CSA do not agree with the shift of responsibility suggested by this commenter. The issuer and its management should retain appropriate responsibility for the issuer's affairs, including scientific and technical disclosure.
16. Proposal for (new) definition of "valuation report"
Some commenters requested that a definition of "valuation report" be added to section 1.2 of the proposed National Instrument. The CSA do not believe it is necessary to define this term for the purposes of the Instruments. See item 1, section 1.1 Application.
17. Sections 1.3 and 1.4 - Mineral Resource and Mineral Reserve
The CSA received many comments urging the CSA to adopt the standards for classification of mineral resources and mineral reserves recommended by the CIM. Commenters were of the view that it was appropriate that scientific and technical professional associations establish the standards for estimation and classification of mineral resources and mineral reserves. They considered this matter analogous to the reliance placed on the Canadian Institute of Chartered Accountants ("CICA") for generally accepted accounting principles ("GAAP").
The CSA are generally in agreement with deferring to scientific and technical professional associations in matters regarding professional practice. However, the CSA faced a problem in this instance because at the time the proposed Instruments were published, there was no identifiable industry standard nor was there a consensus within the mining industry. Commenters themselves expressed differing views on the appropriate terminology. This problem arose from the fact that during the development of the Instruments the CIM was in the process of revising the mineral resource and mineral reserve definitions.
Several commenters were of the view that the CSA should adopt the most recent CIM Standing Committee recommendations, on the basis that the definitions adopted by the CIM Ad Hoc Committee did not reflect current industry practice or international standards. Another commenter was of the view that until those recommendations were approved by the CIM and adopted in final form, it would be inappropriate for CSA to adopt them. Other commenters did not give a clear indication of their preference as to which version of the CIM definitions CSA should adopt, but provided comments on the definitions in the proposed National Instrument which were modeled closely on the Ad Hoc definitions.
In view of the state of flux another commenter suggested that the JORC Code be used (with some minor adjustments), until new CIM definitions were approved by the CIM. Many commenters expressed concern with CSA's use of the Ad Hoc definitions as a starting point for the definitions used in the proposed National Instrument, although one commenter disagreed.
Another commenter commented that geostatistics is a scientifically flawed variant of applied statistics, and that applied statistics can support the reporting of mineral resources and mineral reserves with quantified confidence limits, notwithstanding the CIM's different views on the matter.
The CSA agree with the majority of commenters that mineral resource and mineral reserve terminology should be developed by mining industry professionals. The CSA kept in close contact with CIM to monitor its progress in the adoption of standard mineral resource and mineral reserve definitions. The CSA have carefully reviewed and provided comments to the CIM on its revised definitions.
On August 20, 2000, the CIM adopted new mineral resource and mineral reserve definitions, the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines. The CSA are satisfied that the definitions adopted are satisfactory for use in the Instruments and have incorporated these definitions, as they may be amended from time to time, by reference into the Instruments.
18. Section 1.5 Interpretation
Section 1.5 provides interpretation for identifying non-independence of a qualified person. A qualified person is not to be considered independent of an issuer if he or she has a relationship with the issuer or it affiliates.
One commenter questioned the use of a 50% equity threshold for purposes of defining control. This threshold was drawn from existing securities legislation governing parent, subsidiary and other affiliated relationships between two issuers in securities legislation. This concept is relevant to a determination of non-independence of a qualified person.
Clause 4(a) has been reformatted at the suggestion of a commenter that requested clarification.
In response to a comment received, clause (4)(c) has been amended to clarify that either an ownership or a royalty interest in the subject property may render a qualified person non-independent of the issuer in respect of a technical report.
The CSA received conflicting comments on clause (4)(d). The CSA remain of the view that the clause appropriately balances competing concerns. A qualified person who is a sole practitioner or involved in a small or medium sized consulting firm and who is actively managing a work program may receive a substantial portion of his or her income from a particular issuer. This situation may continue if, for example, the issuer chooses to retain the same qualified person to continue work on further stages of the work program in light of the qualified person's experience and knowledge of the mineral property. However, the longer the situation prevails the less independent the relationship between the qualified person and the issuer becomes. If after three years the qualified person has received a majority of his or her income from an issuer, where independence is required, the issuer must retain another qualified person.
In response to a comment received, clause (4)(e) was added to provide that a qualified person is not independent of the issuer in respect of a technical report if he or she owns or expects to obtain, or is a director, officer or other insider of an issuer that owns or expects to obtain, an ownership or royalty interest in an adjacent property.
A commenter advised that it would not consider a qualified person independent if the qualified person was commenting on his or her own work. The CSA disagree with this as a general statement and are concerned that there may be some misunderstanding in this regard. The National Instrument requires the qualified person to be independent from the issuer for certain purposes. The National Instrument does not require that the qualified person be independent from his or her own work. This would lead to a requirement that the issuer hire two independent qualified persons at all times, one to do, and one to comment, on the work done. This is not the intent of the National Instrument.
A commenter suggested that the issuer disclose the amount of fees paid to a qualified person, because if the fees were excessive, the reliability of the qualified person's opinion may be in doubt. In view of the qualified person's professional and ethical obligations, the CSA do not consider such disclosure necessary.
PART 2 REQUIREMENTS APPLICABLE TO ALL DISCLOSURE
19. General Parts 2 and 3
In response to a commenter's question, the CSA wish to clarify that the disclosure in a technical report must comply with all relevant parts of the Instrument including Parts 2 and 3, in addition to Form 43-101F1. If there is an overlap, the technical report must comply with the more stringent standard.
20. Section 2.2 All Disclosure of Mineral Resources or Mineral Reserves
Several commenters referring to subsection 2.2(b) expressed the view that the issuer should be required to net mineral reserves from mineral resources. The CSA have declined to make this change. It appears to the CSA that there is no consensus in the industry on this point. Accordingly, issuers will have the option to include mineral reserves in mineral resources or to net mineral reserves from mineral resources provided the issuer makes adequate disclosure of the practice it has followed. This is consistent with the recommendations in the MSTF Report.
Another commenter suggested that a statement of the relative risk between each of the categories and perhaps a measure of the absolute risk afforded by each category should be a requirement of each disclosure of mineral resources, mineral reserves and the evaluations that are based on them. The CSA are of the view that the definitions of these terms sufficiently address these matters.
21. Section 2.3 Prohibited Disclosure
Several commenters urged the CSA to amend this section to permit disclosure of potential quantity and grade of a possible mineral deposit that is to be the target of further exploration. They commented that:
• Investors want and need this information in order to make informed investment decisions.
• The assessment of the target will still be made by a qualified person.
• Disclosure would be made in a manner and using terms which clearly indicate the conceptual nature of the disclosure.
• If an issuer is not permitted to disclose the potential of the target for exploration:
• it will make it difficult, if not impossible, for issuers to raise exploration funds,
• it will lead to selective disclosure,
• it will drive "predictions" underground, and
• it will put investors who do not have the knowledge to understand the potential on their own at a disadvantage.
• The disclosure could include:
• the basis for the estimate,
• a statement that there is insufficient exploration to classify the deposit as a mineral resource, and
• a statement that a mineral resource may not result from further exploration .
The CSA were persuaded by these comments and section 2.3 has been amended to permit written disclosure by issuers of potential quantity and grade of a possible deposit that is the target of further exploration on this basis.
A commenter was concerned with the prohibition in the proposed National Instrument of disclosure of early phase assessments of mineral projects that contain economic evaluations based in whole or in part on inferred resources. The commenter noted that preliminary technical assessments or "scoping studies" are an important part of the project development cycle, and that issuers would continue to ensure that the mineral project has an opportunity to be viable but would not be permitted under the proposed National Instrument to disclose them.
The CSA were persuaded by this comment and have amended section 2.3 to permit written disclosure of preliminary assessments that contain economic evaluations based in whole or in part on inferred mineral resources, provided that the preliminary assessment is a material change or material fact, the disclosure includes a proximate cautionary statement, the basis for and the assumptions and qualifications of, the preliminary assessment, and a technical report is prepared and filed. Issuers that are reporting issuers in Ontario are also required under Ontario law to deliver the proposed disclosure, together with a copy of the preliminary assessment and technical report, to the Ontario regulator at least 5 days prior to the disclosure, and the regulator shall not have advised the issuer that it objects to the disclosure.
A new subsection (4) has been added to ensure that the terms "preliminary feasibility study", "pre-feasibility study" and "feasibility study" may only be used in disclosure if the study is a study described by the relevant definitions set out in the National Instrument.
22. Section 2.4 Disclosure of Historical Estimates (formerly "Exception for Disclosure of Historical Estimates")
This section has been revised to make it clear that once the National Instrument comes into effect all disclosure of mineral resources and mineral reserves must be made in accordance with the approved (CIM) definitions. However, this section goes on to allow disclosure of estimates made prior to the effective date of the Instrument in two cases:
1. the prior estimate was not made by or for the issuer; or
2. the prior estimate was made by or for the issuer and it is accompanied by an estimate made in accordance with the approved CIM definitions as required by the National Instrument.
At the suggestion of commenters, subsection (b) has been clarified to read: "confirms that the historical estimate is relevant".
PART 3 ADDITIONAL REQUIREMENTS FOR WRITTEN DISCLOSURE
23. Section 3.1 Written Disclosure to Include Name of Qualified Person
Several commenters suggested that a news release should be required to contain the name of the qualified person upon whose advice it is based, as doing so would give the disclosure greater credibility. Based on comments received on the draft of the proposed National Instrument that was published in 1998, the CSA agreed to exempt news releases from the requirement to name the qualified person applicable to other written disclosure. Those commenters were concerned that naming the qualified person in the news release may:
• result in delays in the issuer making timely disclosure in the event the qualified person was unavailable to vet the news release;
• give the false impression that the qualified person, and not the issuer and its management, is primarily responsible for the disclosure; and
• expose the qualified person to a greater risk of liability.
After considering the conflicting comments at some length, the CSA have determined not to impose the suggested additional requirement. However, the CSA note that news releases and other continuous disclosure by issuers in all industries will undergo heightened regulatory review, and regulators will be mindful of concerns expressed on this issue.
24. Section 3.2 Written Disclosure to Include Data Verification (formerly Written Disclosure to Include Data Corroboration and Other Information)
Commenters suggested that "data corroboration" be changed back to "data verification" and be used in conjunction with "data validation" as both concepts are needed to describe the process of checking data adequately and that definitions be included. These commenters pointed out that "data corroboration" is not an industry term and could cause confusion. The CSA agree. The Instrument now uses the term "data verification" and includes a definition that incorporates both concepts of data validation and data verification. See item 3, "Definition of "data verification" above.
The CSA received some comments that indicate that there may still be some misunderstanding about the qualified person's responsibility to carry out data verification or explain the failure to do so. The qualified person is responsible for carrying out procedures that are adequate in his or her professional opinion. The procedures will undoubtedly vary depending on the circumstances including whether the qualified person is obtaining or generating data directly, or is reviewing data obtained or generated by another.
A commenter submitted a practice guideline. The Instruments focus on the quality and reliability of public disclosure, not on exploration and mining practices as such, which in the view of the CSA are more appropriately within the purview of professional and industry associations. The CSA encourage industry and market participants to refer to best practices guidelines published by professional and industry associations.
25. Section 3.3 Requirements Applicable to Written Disclosure of Exploration Information
Commenters pointed out that this section implied that all requirements must be met in all disclosure, including sequential news releases, which would be cumbersome. The CSA agree and have made explicit in various clauses that disclosure does not have to be repeated.
In clause (1)(a) "a summary of results" has been changed to "a summary of material results" in response to a comment received.
In accordance with the suggestions of commenters and the usage of the terms in the Best Practices Guidelines, clause (1)(c) has been revised to require a statement as to the quality assurance program and the quality control measures applied during the execution of the work.
In response to comments, the reference in clause (2)(b) to "structural controls" was changed to "geological controls". At the suggestion of a commenter the requirement to describe the parameters used to establish the sampling interval will no longer be required in all written disclosure of exploration information; however, the parameters will be required to be disclosed in a technical report.
The CSA do not agree with the comment that the wording in clause (2)(c) is appropriate for grid sample collection only.
In response to a comment, in clause (2)(d) "materially impact" has been changed to "materially affect".
Clause (2)(e) was revised to make it clear that the use of certified laboratories is not required by the National Instrument.
In response to comments, clause (2)(f) has been revised to require a listing of the lengths of individual samples or sample composites including analytical values, widths and, to the extent known, the true widths of the mineralized zone.
26. Section 3.4 Requirements Applicable to Written Disclosure of Mineral Resources and Mineral Reserves
A commenter suggested that environmental, permitting and other relevant issues required to be described by clause (d) be limited to the qualified person's knowledge. The CSA do not believe that this would be appropriate. It is the issuer's responsibility to make the disclosure, and relevant issues known to the issuer are required to be disclosed.
A commenter was of the view that the statement required by clause (e) that mineral resources which are not mineral reserves do not have demonstrated economic viability was not necessary as this concept is embodied in the definition of mineral resource. The CSA disagree. The CSA believe that the required statement will emphasize a distinction that is important to the public investor.
27. Section 3.5 Exception for Written Disclosure Already Filed
A commenter expressed the view that the conditions to the exception, set out in section 3.5, from references to previously filed disclosure as required by sections 3.4 and 3.5, will result in lengthy paragraphs of cross-references that are of limited utility. The CSA believe that the offsetting disclosure is important and have retained this requirement.
PART 4 OBLIGATION TO FILE A TECHNICAL REPORT
28. Section 4.1 Obligation to File a Technical Report Upon Becoming a Reporting Issuer
A commenter was of the view that a technical report should not be required to be filed by an issuer becoming a reporting issuer in an additional Canadian jurisdiction. The CSA are of the view that this requirement is appropriate and not unduly onerous since the issuer may rely on a previously filed technical report or a report filed prior to February 1, 2001 under NP 2-A, amended or supplemented, if necessary to reflect subsequent material changes.
29. Section 4.2 Obligation to File a Technical Report in Connection with Certain Written Disclosure Concerning Mineral Projects on Material Properties
Several commenters objected to this section requiring producing issuers to file technical reports in instances in which they are not currently required to do so. Their view is that requiring further disclosure by producing issuers is not warranted. They are of the view that the prime beneficiaries of increasing the instances in which producing issuers are required to file technical reports will be consultants and competitors, not shareholders and the public.
Some of these commenters explained that the requirement for producing issuers to produce technical reports is particularly onerous with respect to operating mines with a long production history. They commented that operating mines are also fundamentally different from new developments from a risk point of view. These commenters recommended that producing issuers should not be required to file technical reports for any mineral project that has been in operation for at least two years, unless there is a change in the mineral reserves and mineral resources of the mineral project that constitutes a material change in the affairs of the issuer.
The CSA are of the view that there is a need for industry-wide standards for disclosure of scientific and technical information in the mining industry. Generally speaking, if a property is material to an issuer, then the information required by the Form is material.
However, the CSA agree that it would be unduly onerous to require issuers to prepare and file technical reports to support disclosure that has been in the public market for a period of time. Accordingly, annual information forms ("AIF"), annual reports or short form prospectuses that include scientific and technical disclosure, that is material to the issuer, must be accompanied by a technical report if the disclosure has not been previously contained in:
1. an AIF, prospectus, material change report, or annual financial statement (a "disclosure document") filed with a securities regulatory authority before February 1, 2001; or
2. a report prepared in accordance with NP 2-A filed with a regulatory authority before February 1, 2001; or
3. a technical report filed under the National Instrument.
A commenter expressed the view that the preparation of a technical report to support each statement of a material fact concerning a material property would entail a great deal of time and expense and may restrict disclosure as issuers would avoid making statements in good faith. The CSA are of the view that the instances in which technical reports are required to be filed pursuant to the National Instrument are appropriate and that issuers should show the requisite care in disclosing material facts.
Some commenters requested that clause (1)(7) be deleted because they were concerned that the very mention of a valuation in the National Instrument might create a misunderstanding that a valuation report must be in the form of a technical report. The CSA disagree and have declined this request. The CSA believe that it is important that scientific and technical information contained in a valuation required under OSC Rule 61-501 (currently the only valuation to which the National Instrument applies) be supported by a technical report prepared in accordance with the Instruments.
The CSA received conflicting comments on clause (4)(a) of section 4.2. A commenter was of the view that technical reports should be filed concurrently with news releases announcing new or significant additional mineral resources or mineral reserves. Another commenter was of the view that 30 days would be insufficient to prepare and file a technical report in support of new or significant additional mineral resources or mineral reserves. The CSA fully considered this matter in connection with the comments received to the previous draft of the Instruments published in 1988 and continue to be of the view that 30 days is an appropriate period. Reference is made to the March 2000 Notice in this regard. The CSA also notes that the 30 day period was viewed as appropriate in the MSTF Report.
PART 5 AUTHOR OF TECHNICAL REPORT
30. General Parts 5, 6 and 7 and Form 43-101F1
A commenter was of the view that it was confusing to switch between the "author" of the technical report and the qualified person in the titles and text throughout Parts 5, 6 and 7 of the National Instrument and throughout Form 43-101F1. Because the CSA expect that the Form will be used by qualified persons in preparing their technical reports, the Form refers to the author.
31. Section 5.3 Independent Technical Report
Several commenters criticized the exception, under section 5.3, from certain requirements that a technical report be prepared by a qualified person independent of the issuer. The exception, which applies in certain cases to "producing issuers", would enable them to comply with the Instruments by filing technical reports prepared by in-house qualified persons.
This exception was the subject of significant debate in connection with the comments received to the drafts of the Instruments published in 1998 and was thoroughly considered by the CSA at that time, as noted in the March 2000 Notice. The CSA remain of the view that the exception for producing issuers, and definition of that term, appropriately balance the needs and requirements of issuers and investors and are consistent with the purposes of the Instruments.
32. PART 6 PREPARATION OF TECHNICAL REPORT (formerly NATURE OF TECHNICAL REPORT)
A commenter suggested that sections 6.1, 6.2 and 6.3 of the proposed National Instrument belong in the proposed Form to the extent not already included. The CSA agree with this comment as regards sections 6.2 and 6.3 of the proposed National Instrument (now items 22 and 5, respectively, of the Form) and have made this change.
33. Section 6.2 (formerly section 7.1) Personal Inspection
The CSA received comments from some commenters that the decision of whether or not a site visit is necessary should be left to the discretion of the qualified person, and if no site visit was made, the disclosure should include an explanation. Several other commenters suggested that there should be an alternative to the issuer having to obtain an exemption from the personal inspection requirement, with its attendant cost and delay, especially in instances, that could be listed, where there would be little benefit from the inspection.
The CSA fully considered this matter in connection with the comments received to the drafts of the Instruments published in 1998. Reference is made to the March 2000 Notice in this regard. In addition, see item 61 below with respect to Part 5 of the Companion Policy. However, this is a matter that will be monitored by the CSA, and the CSA will seek advice from its external advisory committee, should changes be advisable.
A commenter suggested that in a technical report on multiple properties, site visits should only be required to those properties that will be the focus of the majority of expenditures. The CSA do not believe that the personal inspection requirement needs to be set out in any greater detail. The manner in which a site visit is conducted is left to the discretion of the qualified person who is bound by professional standards and expected to apply professional judgment.
Another commenter expressed the view that check sampling during the personal inspection should be mandatory. The CSA considered but rejected this suggestion in connection with the drafts of the Instruments published in 1998. Sec the March 2000 Notice in this regard.
34. (New) section 6.3 Maintenance of Records
This section requires issuers to maintain assay certificates, drill logs and other records that are referenced in or support technical reports for 7 years.
35. PART 7 USE OF FOREIGN CODE (formerly section 6.4)
Part 7 has been revised to make clear that foreign issuers may make disclosure using the definitions of resources and reserves in the foreign codes, as well as file technical reports utilizing such foreign codes, provided the disclosure includes a reconciliation to the mineral resource and mineral reserve definitions in the National Instrument.
Some commenters remarked that Canadian issuers may have valid reasons to use foreign codes, and should be permitted to use foreign codes provided they reconcile the disclosure based on the foreign code against the definitions in the National Instrument. The CSA agree with this comment with respect to properties of Canadian issuers that are located in a foreign jurisdiction. Subsection 7.1(2) has been added to the National Instrument in this regard.
Another commenter noted that the reconciliation required by the proposed National Instrument may be difficult and may require two separate calculations from raw data. The CSA believe that, in most cases, a qualified person will be able to reconcile definitions in different codes without having to resort to recalculation.
A commenter expressed the view that the reconciliation requirement is an unnecessary expense and would not provide any meaningful disclosure. This commenter was concerned that differences in reporting codes and reconciliation requirements could lead to differences of opinion or interpretation with respect to what is reported by Canadian and non-Canadian mining companies.
The CSA disagree. The CSA are of the view that the use of standard definitions of mineral reserves and mineral resources is an important aspect of meaningful public disclosure, and if foreign codes are used, a reconciliation to the standard definitions must be made and disclosed. The CSA are of the view that this provision creates an even playing field between Canadian and non-Canadian issuers that access the Canadian market.
36. PART 7 (formerly PERSONAL INSPECTION)
See the discussion under item 33, "Section 6.2 Personal Inspection".
PART 8 CERTIFICATES AND CONSENTS OF QUALIFIED PERSONS FOR TECHNICAL REPORTS
37. Section 8.1 Certificates of Qualified Persons
A commenter was concerned about the qualified person being responsible for portions of the technical report that are not prepared by a qualified person. Item 5 of the Form permits the qualified person to include a disclaimer in this regard. Also, the certificate required by section 8.1 of the National Instrument specifies the portions of the technical report the qualified person has prepared.
In accordance with a suggestion received from a commenter, the beginning of section 8.1(2) has been revised to read: "The certificate for each qualified person shall state…"
In accordance with a suggestion received from a commenter, the lengthy provisions of clause 8.1(2)(f) have been replaced by referring to independence and the interpretation contained in section 1.5 of the National Instrument.
Some commenters suggested that the requirement that the qualified person certify that the technical report was prepared in accordance with generally accepted mining industry practice was inappropriate and could create confusion. The CSA agree and deleted this requirement.
38. Section 8.3 Consents of Qualified Persons
A commenter objected to the inclusion of clause (b) that requires a qualified person to confirm that the written disclosure correctly reflects the technical report, because it is the issuer's responsibility to ensure that the disclosure reflects the underlying work. The CSA agree as to the issuer's responsibility, but are of the view that it is appropriate for the issuer to be required to obtain the qualified person's confirmation in this regard.
PART 9 EXEMPTION
39. Section 9.1 Exemption
Commenters are concerned as to the costs to issuers of applying for exemptions. The CSA acknowledge these concerns, and urge issuers to make arrangements to minimize the matters for which exemptions may be required.
See also item 2, Section 1.2 "Definition of Qualified Person", and item 33, Section 6.2 "Personal Inspection".
FORM 43-101F1 TECHNICAL REPORT
40. General
Some commenters expressed strong support for the reference by the CSA to the Mineral Exploration Best Practices Guidelines.
Several commenters expressed the view that content in a technical report should be limited to information that is material to the property and to the issuer. The CSA do not agree. Once the requirement for a technical report is triggered by the disclosure set out in the National Instrument, a technical report addressing all relevant items is appropriate.
Several commenters objected to being required to disclose information that they regard as private and confidential information, in particular, the financial disclosure with respect to development and production properties described in item 24 (g), (h) and (i). Concern was also raised for producers in non-transparent oligopoly markets where price signaling will have an impact on competitive behaviour. Commenters also raised concerns about disclosing exploration information. In all cases, the concern was that the broad disclosure obligations in the Form would put issuers subject to Canadian securities regulation at a competitive disadvantage. One of these commenters concluded that if disclosure were to be required, it should be limited to material information on material properties, with the right of the issuer to disclose sensitive information to securities regulatory authorities on a confidential basis.
After serious consideration, the CSA concluded that disclosure of material information is fundamental to our securities regulatory system. The CSA do not believe it is appropriate that this requirement apply to some, but not all issuers. However, the CSA recognize that there is information that an issuer may have legitimate reasons to keep confidential for a limited period or, more rarely, indefinitely. In circumstances in which an issuer intends to make disclosure at a later time, the issuer may file the information with securities regulatory authorities on a confidential basis. Indefinite confidentiality would require an exemption from securities regulatory authorities.
INSTRUCTIONS
41. Instruction (3)
As requested by a commenter, the second sentence has been revised to clarify that explanations are required for technical terms that are unique or infrequently used.
42. Instruction (5)
A commenter suggested that this instruction should make clear that the items in the previously filed report do not need to be repeated provided they are still accurate, and only changes to these items need to be filed in the current technical report. This change has been made.
43. Proposed Instruction
A commenter requested that an instruction be added to the effect that the Instruments are not intended to restrict the ability of a mineral valuator to utilize all technical information as a basis for reaching his or her valuation opinion. The CSA do not think such a statement is necessary or appropriate as valuations are not the subject of the Form.
44. Item 4 Introduction and Terms of Reference
A commenter suggested the addition of a clause (d), requiring the disclosure of the extent of field involvement by the qualified person. This change has been made.
45. Item 6 (formerly Item 5) Property Description and Location
In clause (a), "dimensions" has been changed to "area" in accordance with the suggestion of a commenter. Clause (b) has been revised to include references to the Universal Transverse Mercator (UTM) system and to geo-political subdivisions as suggested by commenters.
In clause (d), the CSA declined to accept a commenter's suggestion to limit disclosure with respect to title "to the extent known" by the qualified person. The issuer is required to disclose the information required to be included in the technical report; and the qualified person may indicate his or her reliance on the information provided by the issuer.
At the suggestion of commenters, clauses (e) and (f) have been revised to separate information that is narrative from information that is to be shown on a map.
A commenter was concerned that the matters to be disclosed in clauses (g), (h) and (i) and in item 8 (formerly item 7) "History" would be beyond the scope of a qualified person's experience and responsibilities, especially with respect to properties in foreign jurisdictions. The CSA recognize that there will be certain information that an issuer is required to provide in a technical report for the sake of completeness that will be outside the area of expertise of the qualified person who is the author of the technical report. The qualified person may disclaim responsibility with respect to areas of the technical report outside his or her area of expertise as provided in Item 5 of the Form.
46. Item 8 (formerly item 7) History
A commenter suggested that required disclosure should be limited to prior ownership and prior work that is material. The CSA are of the view that all relevant information should be included in a technical report to assist the reader in assessing the conclusions of the technical report.
47. Item 11 (formerly item 10) Mineralization
Some technical changes have been made at the suggestion of commenters.
48. Item 12 (formerly item 11) Exploration
A commenter suggested that the title to this item be changed to "Field Surveys". The CSA have declined to make the change as the disclosure required by this item is not restricted to fieldwork.
At the suggestion of a commenter the reference to "and metallurgical or other testing" has been removed in the lead-in phrase, as such information may either be disclosed under clause (a) of this item or item 18 "Mineral Processing and Metallurgical Testing", as appropriate.
49. Item 13 (formerly item 12) Drilling
Some commenters were of the view that this item was not sufficiently detailed and should include certain requirements such as drill logs and the relationship of drilling to surface showings, and referred the CSA to Mineral Exploration "Best Practices" Guidelines. The CSA are of the view that these matters go to the manner of how work should be done which is a matter better determined by the professional and industry associations. The CSA in section 4.1 of the Companion Policy encourage qualified persons to follow the Mineral Exploration "Best Practices" Guidelines.
50. Item 14 (formerly item 13) Sampling Method and Approach
Several technical changes suggested by commenters were made.
51. Item 15 (formerly item 14) Sample Preparation, Analyses and Security (formerly Sample Preparation and Security
At the suggestion of a commenter the title of this item has been revised.
52. Item 16 (formerly item 15) Data Verification (formerly Data Corroboration)
A commenter suggested that "quality assurance" be substituted for "quality control". The CSA have declined to make this change, but have changed the reference to "quality control measures" to be consistent with the terminology used in the Mineral Exploration "Best Practices" Guidelines.
In accordance with comments, reference to "data corroboration" has been changed to "data verification".
53. Item 17 (formerly item 16) Adjacent Properties
A commenter noted that this item does not address the issue of publicly announced information that was not prepared in compliance with the Instruments. The CSA have added clause (e) to refer to section 2.4 of the National Instrument which permits disclosure of historical estimates on the conditions set out in that section.
Another commenter suggested that this item should not be a separate item. The commenter advised that separating the disclosure called for in this item diverges from current practice, which is to give details of the geology and mineralization on an adjacent property in the relevant sections of the report discussing the property with clear disclosure that it is on an adjacent property. To minimize confusion to readers of a filed technical report, the CSA determined to require that disclosure on adjacent properties be separated and accompanied by the disclosure set out in clauses (b) through (e). Clause (d) has been added to ensure this disclosure to the reader.
54. Item 19 (formerly item 18) Mineral Resource and Mineral Reserve Estimates
Clause (i) of this item was revised to clarify that this restriction from using inferred mineral resources applies to a preliminary feasibility study and a feasibility study, but not to a preliminary assessment which may be disclosed under section 2.3 of the National Instrument.
Several commenters were of the view that the disclosure of metal equivalents permitted by clause (k) of this item should be discouraged and/or restricted. The CSA are of the view that this is a matter of best practices and should be in the discretion of the profession and industry. However, the CSA have heeded the commenters' concerns and have revised the wording of this clause to include disclosure of grade of the individual metals.
55. Item 22 (formerly item 21) Recommendations
A commenter suggested that more detail should be given concerning budgets, as a breakdown of a budget is an essential element of a technical report. The CSA agree with the importance of cost breakdowns but do not believe that more specific instructions are required in this regard.
56. Item 25 (formerly item 24) Additional Requirements for Technical Reports on Development Properties and Production Properties
Some commenters made the general comment that this section should be expanded. The CSA are of the view that the salient disclosure points for the purposes of a technical report are included in this item and no additions have been made.
Several commenters expressed their concerns over the requirements to disclose information that they consider confidential. This point has been addressed above under "General".
Several commenters objected to the forecasting required in clauses (g), (h), (i) and (j), commenting that the disclosure required goes beyond an investor's reasonable needs, will lead to unrealistic investor reliance on forecasts, will increase the risk of legal complaints against the issuer and its management and will impose an excessive burden on Canadian mining issuers compared to foreign mining issuers and issuers in other businesses. These commenters stated their view that this section is inconsistent with future-oriented financial information ("FOFI")`, which is at the issuer's option and limited to a shorter period of time.
The CSA are of the view that the information required by these clauses are material to an investor with respect to a new or materially changed development or production property and should be provided in a technical report. The CSA are satisfied that the disclosure that triggers a requirement to provide a new or updated the technical report, and this information, are appropriate. In the event an issuer disagrees, the issuer may make an application to the CSA for an appropriate exemption. The CSA do not think that the disclosure required is inconsistent with FOFI. Disclosure in technical reports has always been excluded from FOFI.
57. Item 26 (formerly item 25) Illustrations
Some commenters were concerned that a qualified person might not be able to obtain consent from the person that is the source of the information. The CSA are of the view that obtaining a person's consent, where required, provides additional credibility to the information that is being utilized and/or relied upon by the qualified person.
COMPANION POLICY 43-101CP
58. Section 1.4 Mineral Resources and Mineral Reserves Definitions (formerly section 1.3 Definitions)
Commenters suggested that the CIM definitions be incorporated by reference into the Instruments and that this section be revised accordingly. This change has been made.
59. Former Section 1.4 Interpretation
In accordance with a commenter's suggestion, this section has been deleted. (Reference is made to item 7 above with respect to the definition of "exploration information".)
60. Section 1.5(a) Non-Metallic Mineral Deposits, Industrial Minerals
A commenter expressed the view that the recognition of a viable market is insufficient to classify reserves for an industrial mineral, and that a sales contract should be required to be in place. The requirement of a sales contract for classification of industrial minerals as reserves was in the draft of the Companion Policy published in 1998, and was deleted after review and consideration of comments received. Commenters had expressed the view that requiring a sales contract to be in place in order to classify "reserves" made it very difficult or impossible for a company to secure financing. The CSA revised this section. This view was consistent with the position taken by the CIM Standing Committee on this issue, and the CSA adopted this approach. The CSA continue to be of the view that this is the appropriate approach to take at this time, as it reflects the current approach of the industry.
61. Section 2.1 Disclosure is the Responsibility of the Issuer
A commenter expressed the view that this section was not sufficient, and that instead the Instruments should specifically require the issuer to assume responsibility for the disclosure to not misuse or misquote scientific or technical advice or information received from the qualified person. The CSA are of the view that the responsibilities of the issuer, its directors and officers, and others in general securities legislation with respect to responsibility for disclosure are appropriate, and that no change to the Instruments in this regard is necessary.
62. Section 2.4(5) (formerly 2.3(5)) Materiality
A commenter suggested that this subsection be deleted in view of the questionable relevance of historic cost of mineral properties to the value that investors place on an issuer's securities. The CSA agree that book value and/or exploration expenses may not be an appropriate measure of materiality in many instances. This subsection is not intended to be used as a substitute for the determination of materiality, but is present only as guidance to assist the issuer in making the determination.
63. Section 3.2 Qualified Person
Some commenters expressed concern that this section may permit foreign practitioners that are subject to a lower standard than Canadian practitioners to be considered qualified persons under the Instrument. One commenter suggested that this section be revised so that exemptions would only be given in very specific instances and to ensure that the exemption process could not be used to circumvent standards required for Canadian licensed professionals. Another commenter suggested that this section could be interpreted as a disregard for existing professional laws regarding the practice of engineering.
The CSA expect that staff of the securities regulatory authorities that consider applications will use good judgment in considering applications by issuers to have certain requirements of the qualified person definition waived with respect to certain engineers and geoscientists that the issuer wishes to rely upon for scientific and technical information and advice and do not think it appropriate to limit the discretion of staff of the securities regulatory authorities in this regard. Issuers should be mindful of local laws governing the practice of engineering and geoscience in jurisdictions in which their properties are located.
64. Proposed new section 3.4 Disclosure of Assumptions
A commenter suggested that a new section be added advising the qualified person to lay out the assumptions and weaknesses of the model used as a basis for exploration or evaluation, and the justifications for the assumptions made where this is not implicit. The commenter was of the view that this would protect the qualified person and engender public confidence in the work. The CSA are of the view that the requirements of the Form are sufficient in this regard and trust that qualified persons will include this information where it is relevant and of assistance to the reader.
65. PART 6 (formerly PART 5) Personal Inspection
A commenter remarked that this Part appeared to be written with an exploration property in mind. The commenter suggested that guidance should be given for development and producing properties where it may be appropriate for more than one qualified person to visit the site.
The CSA have added a new section, section 6.3, to the Companion Policy to clarify that the personal inspection requirement in section 6.2 of the National Instrument sets a minimum standard, and that the issuer should have personal inspections made by qualified persons as appropriate in the circumstances.
NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
TABLE OF CONTENTS
PART TITLE
PART 1 APPLICATION, DEFINITIONS AND INTERPRETATION
1.1 Application
1.2 Definitions
1.3 Mineral Resource
1.4 Mineral Reserve -
1.5 Interpretation
PART 2 REQUIREMENTS APPLICABLE TO ALL DISCLOSURE
2.1 Requirements Applicable to All Disclosure
2.2 All Disclosure of Mineral Resources or Mineral Reserves
2.3 Prohibited Disclosure
2.4 Disclosure of Historical Estimates
PART 3 ADDITIONAL REQUIREMENTS FOR WRITTEN DISCLOSURE
3.1 Written Disclosure to Include Name of Qualified Person
3.2 Written Disclosure to Include Data Verification
3.3 Requirements Applicable to Written Disclosure of Exploration Information
3.4 Requirements Applicable to Written Disclosure of Mineral Resources and Mineral Reserves
3.5 Exception for Written Disclosure Already Filed
PART 4 OBLIGATION TO FILE A TECHNICAL REPORT
4.1 Obligation to File a Technical Report Upon Becoming a Reporting Issuer
4.2 Obligation to File a Technical Report in Connection with Certain Written Disclosure Concerning Mineral Projects on Material Properties
4.3 Required Form of Technical Report
PART 5 AUTHOR OF TECHNICAL REPORT
5.1 Prepared by a Qualified Person
5.2 Execution of Technical Report
5.3 Independent Technical Report
PART 6 PREPARATION OF TECHNICAL REPORT
6.1 Nature of the Technical Report
6.2 Personal Inspection
6.3 Maintenance of Records
PART 7 USE OF FOREIGN CODE
7.1 Use of Foreign Code
PART 8 CERTIFICATES AND CONSENTS OF QUALIFIED PERSONS FOR TECHNICAL REPORTS
8.1 Certificates of Qualified Persons
8.2 Addressed to Issuer
8.3 Consents of Qualified Persons
PART 9 EXEMPTION
9.1 Exemption
PART 10 EFFECTIVE DATE
10.1 Effective Date
NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
PART 1 APPLICATION, DEFINITIONS AND INTERPRETATION
1.1 Application - This Instrument applies to all oral statements and written disclosure of scientific or technical information, including disclosure of a mineral resource or mineral reserve, made by or on behalf of an issuer in respect of a mineral project of the issuer.
1.2 Definitions - In this Instrument
"adjacent property" means a property
(a) in which the issuer does not have an interest;
(b) that has a boundary reasonably proximate to the closest boundary of the property being reported on; and
(c) that has geological characteristics similar to those of the property being reported on;
"data verification" means the process of confirming that data has been generated with proper procedures, has been accurately transcribed from the original source and is suitable to be used;
"development property" means a property that is being prepared for mineral production and for which economic viability has been demonstrated by a feasibility study;
"disclosure" means any oral statement or written disclosure made by or on behalf of an issuer and intended to be, or reasonably likely to be, made available to the public in a Canadian jurisdiction, whether or not filed under securities legislation, but does not include written disclosure that is made available to the public only by reason of having been filed with a government or agency of government pursuant to a requirement of law other than securities legislation;
"disclosure document" means an annual information form, prospectus, material change report or annual financial statement filed with a regulator pursuant to a requirement of securities legislation;
"exploration information" means geological, geophysical, geochemical, sampling, drilling, analytical testing, assaying, mineralogical, metallurgical and other similar information concerning a particular property that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect or mineral deposit;
"feasibility study" means a comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production;
"IMM system" means the classification system and definitions for mineral resources and mineral reserves approved from time to time by The Institution of Mining and Metallurgy in the United Kingdom;
"JORC Code" means the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia as amended or supplemented;
"mineral project" means any exploration, development or production activity in respect of natural, solid, inorganic or fossilized organic, material including base and precious metals, coal and industrial minerals;
"preliminary assessment" means a preliminary assessment permitted to be disclosed pursuant to subsection 2.3(3);
"preliminary feasibility study" and "pre-feasibility study" each mean a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve;
"producing issuer" means an issuer the annual audited financial statements of which disclose
(a) gross revenues, derived from mining operations, of at least $30 million for the issuer's most recently completed financial year; and
(b) gross revenues, derived from mining operations, of at least $90 million in the aggregate for the issuer's three most recently completed financial years;
"professional association" means a self-regulatory organization of engineers, geoscientists or both engineers and geoscientists that
(a) has been given authority or recognition by statute;
(b) admits members primarily on the basis of their academic qualifications and experience;
(c) requires compliance with the professional standards of competence and ethics established by the organization; and
(d) has disciplinary powers, including the power to suspend or expel a member;
and until February 1, 2002 includes an association of geoscientists in Ontario and until February 1, 2003 includes an association of geoscientists in a Canadian jurisdiction other than Ontario that does not have a statutorily recognized self-regulatory association;
"qualified person" means an individual who
(a) is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these;
(b) has experience relevant to the subject matter of the mineral project and the technical report; and
(c) is a member in good standing of a professional association;
"quantity" means either tonnage or volume, depending on which term is the standard in the mining industry for the type of mineral;
"technical report" means a report prepared, filed and certified in accordance with this Instrument and Form 43-101F1 Technical Report;
"USGS Circular 831" means the circular published by the United States Bureau of Mines/United States Geological Survey entitled "Principles of a Resource/Reserve Classification for Minerals", as amended or supplemented; and
"written disclosure" includes any writing, picture, map or other printed representation whether produced, stored or disseminated on paper or electronically.
1.3 Mineral Resource - In this Instrument, the terms "mineral resource", "inferred mineral resource", "indicated mineral resource" and "measured mineral resource" have the meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August 20, 2000, as those definitions may be amended from time to time by the Canadian Institute of Mining, Metallurgy and Petroleum.
1.4 Mineral Reserve - In this Instrument, the terms "mineral reserve", "probable mineral reserve" and "proven mineral reserve" have the meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August 20, 2000, as those definitions may be amended from time to time by the Canadian Institute of Mining, Metallurgy and Petroleum.
1.5 Interpretation
(1) In this Instrument, a person or company is considered to be an affiliated entity of another person or company if
(a) one is a subsidiary of the other,
(b) both are subsidiaries of the same person or company, or
(c) each is controlled by the same person or company.
(2) In this Instrument, a person or company is considered to be controlled by a second person or company if
(a) in the case of a company,
(i) voting securities of the company carrying 50 percent or more of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the second person or company; and
(ii) the votes carried by such securities entitle the second person or company to elect a majority of the directors of the company;
(b) in the case of a partnership, other than a limited partnership, the second person or company holds an interest of 50 percent or more in the partnership; or
(c) in the case of a limited partnership, the general partner is the second person or company.
(3) In this Instrument, a person or company is considered to be a subsidiary entity of a second person or company, if
(a) the person or company is controlled by
(i) the second person or company, or
(ii) the second person or company and one or more other persons or companies, each of which is controlled by the second person or company, or
(iii) one or more other persons or companies, each of which is controlled by the second person or company; or
(b) the person or company is a subsidiary entity of a person or company that is itself a subsidiary entity of the second person or company.
(4) In this Instrument, a qualified person involved in the preparation of a technical report is not considered to be independent of the issuer in respect of the technical report, if
(a) the qualified person, or any affiliated entity of the qualified person, is, or by reason of an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee of
(i) the issuer,
(ii) an insider of the issuer, or
(iii) an affiliated entity of the issuer;
(b) the qualified person, or any affiliated entity of the qualified person, is, or by reason of an agreement, arrangement or understanding expects to become, a partner of any person or company referred to in paragraph (a);
(c) the qualified person, or any affiliated entity of the qualified person, owns, or by reason of an agreement, arrangement or understanding expects to receive, any securities of the issuer or of an affiliated entity of the issuer or an ownership or royalty interest in the property that is the subject of the technical report;
(d) the qualified person, or any affiliated entity of the qualified person, has received the majority of his or her income in the three years preceding the date of the technical report from one or more of the issuer and insiders and affiliated entities of the issuer; or
(e) the qualified person, or any affiliated entity of the qualified person,
(i) is, or by reason of an agreement, arrangement or understanding expects to become, an insider, affiliate or partner of the person or company which has an ownership or royalty interest in a property which has a boundary within two kilometres of the closest boundary of the property being reported on; or
(ii) has, or by reason of an agreement, arrangement or understanding expects to obtain, an ownership or royalty interest in a property which has a boundary within two kilometres of the closest boundary of the property being reported on.
PART 2 REQUIREMENTS APPLICABLE TO ALL DISCLOSURE
2.1 Requirements Applicable to All Disclosure - An issuer shall ensure that all disclosure of a scientific or technical nature, including disclosure of a mineral resource or mineral reserve, concerning mineral projects on a property material to the issuer is based upon a technical report or other information prepared by or under the supervision of a qualified person.
2.2 All Disclosure of Mineral Resources or Mineral Reserves - An issuer shall ensure that any disclosure of a mineral resource or mineral reserve, including disclosure in a technical report filed by an issuer
(a) utilizes only the applicable mineral resource and mineral reserve categories set out in sections 1.3 and 1.4;
(b) reports each category of mineral resources and mineral reserves separately, and if both mineral resources and mineral reserves are disclosed, states the extent, if any, to which mineral reserves are included in total mineral resources; and
(c) does not add inferred mineral resources to the other categories of mineral resources.
2.3 Prohibited Disclosure
(1) An issuer shall not make any disclosure of
(a) quantity or grade of a deposit which has not been categorized as an inferred mineral resource, an indicated mineral resource, a measured mineral resource, a probable mineral reserve or a proven mineral reserve, or
(b) results of an economic evaluation which uses inferred mineral resources.
(2) Despite paragraph (1)(a), an issuer may disclose in writing the potential quantity and grade, expressed as ranges, of a possible mineral deposit that is to be the target of further exploration, provided that the disclosure includes
(a) a proximate statement that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a mineral resource on the property and that it is uncertain if further exploration will result in discovery of a mineral resource on the property, and
(b) the basis on which the disclosed potential quantity and grade has been determined.
(3) Despite paragraph (1)(b), an issuer may disclose a preliminary assessment that includes an economic evaluation which uses inferred mineral resources, provided
(a) the preliminary assessment is a material change in the affairs of the issuer or a material fact;
(b) the disclosure includes
(i) a proximate statement that the preliminary assessment is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized, and
(ii) the basis for the preliminary assessment and any qualifications and assumptions made by the qualified person; and
(c) in Ontario, if the issuer is a reporting issuer in Ontario, the issuer shall deliver to the regulator in Ontario the disclosure it proposes to make together with the preliminary assessment and the technical report required pursuant to section 4.2 at least five business days prior to making the disclosure and the regulator in Ontario shall not have advised the issuer that it objects to the disclosure.
(4) An issuer shall not use the terms preliminary feasibility study, pre-feasibility study or feasibility study when referring to a study unless the study satisfies the criteria set out in the definitions of the applicable terms in section 1.2.
2.4 Disclosure of Historical Estimates - Despite section 2.2 an issuer may disclose an estimate of mineral resources or mineral reserves made before this Instrument came into force if
(a) the estimate is an estimate of mineral resources or mineral reserves prepared by or on behalf of a person or company other than the issuer, or
(b) the estimate accompanies disclosure of an estimate of mineral resources and mineral reserves made in accordance with section 2.2
and provided that the disclosure:
(i) identifies the source of the historical estimate;
(ii) confirms that the historical estimate is relevant;
(iii) comments on the reliability of the historical estimate;
(iv) states whether the historical estimate uses categories other than the ones stipulated in sections 1.3 and 1.4 and, if so, includes an explanation of the differences; and
(v) includes any more recent estimates or data available to the issuer.
PART 3 ADDITIONAL REQUIREMENTS FOR WRITTEN DISCLOSURE
3.1 Written Disclosure to Include Name of Qualified Person - An issuer shall ensure that all written disclosure of a scientific or technical nature, other than a news release, concerning a mineral project on a property material to the issuer identifies and discloses the relationship to the issuer of the qualified person who prepared or supervised the preparation of the technical report or other information that forms the basis for the written disclosure.
3.2 Written Disclosure to Include Data Verification - An issuer shall ensure that all written disclosure of a scientific or technical nature concerning mineral projects on a property material to the issuer:
(a) states whether a qualified person has verified the data disclosed, including sampling, analytical and test data underlying the information or opinions contained in the written disclosure;
(b) describes the nature of, and any limitations on, the verification of data disclosed; and
(c) explains any failure to verify the data disclosed.
3.3 Requirements Applicable to Written Disclosure of Exploration Information
(1) An issuer shall ensure that all written disclosure containing scientific or technical exploration information concerning a property material to the issuer includes:
(a) to the extent not previously disclosed in writing and filed by the issuer, the results, or a summary of the material results, of surveys and investigations regarding the property;
(b) a summary of the interpretation of the exploration information to the extent that such interpretation has not been previously disclosed in writing and filed by the issuer; and
(c) a description of the quality assurance program and quality control measures applied during the execution of the work being reported on.
(2) An issuer shall ensure that all written disclosure containing sample or analytical or testing results on a property material to the issuer includes
(a) to the extent not previously disclosed in writing and filed by the issuer, a summary description of the geology, mineral occurrences and nature of mineralization found;
(b) to the extent not previously disclosed in writing and filed by the issuer, a summary description of rock types, geological controls and widths of mineralized zones, and the identification of any significantly higher grade intervals within a lower grade intersection;
(c) the location, number, type, nature and spacing or density of the samples collected and the location and dimensions of the area sampled;
(d) identification of any drilling, sampling, recovery or other factors that could materially affect the accuracy or reliability of the data referred to in this subsection;
(e) a summary description of the type of analytical or testing procedures utilized, sample size, the name and location of each analytical or testing laboratory used, the certification of each laboratory, if known to the issuer, and any relationship of the laboratory to the issuer; and
(f) a listing of the lengths of individual samples or sample composites with analytical values, widths and, to the extent known to the issuer, the true widths of the mineralized zone.
3.4 Requirements Applicable to Written Disclosure of Mineral Resources and Mineral Reserves - An issuer shall ensure that all written disclosure of mineral resources or mineral reserves on a property material to the issuer includes:
(a) the effective date of each estimate of mineral resources and mineral reserves;
(b) details of quantity and grade or quality of each category of mineral resources and mineral reserves;
(c) details of the key assumptions, parameters and methods used to estimate the mineral resources and mineral reserves;
(d) a general discussion of the extent to which the estimate of mineral resources and mineral reserves may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues; and
(e) a statement that mineral resources which are not mineral reserves do not have demonstrated economic viability.
3.5 Exception for Written Disclosure Already Filed - The requirements of sections 3.3 and 3.4 are satisfied by reference, in written disclosure, to a previously filed disclosure document that complies with those requirements.
PART 4 OBLIGATION TO FILE A TECHNICAL REPORT
4.1 Obligation to File a Technical Report Upon Becoming a Reporting Issuer
(1) Upon first becoming a reporting issuer in a Canadian jurisdiction an issuer shall file with the regulator in that Canadian jurisdiction a current technical report for each property material to the issuer.
(2) An issuer may satisfy the requirement of subsection (1) by filing a technical report or a report prepared and filed in accordance with National Policy Statement No. 2-A before February 1, 2001 that it has previously filed in another Canadian jurisdiction in which it is a reporting issuer, amended or supplemented, if necessary, to reflect material changes in the information contained in the technical report since the date of filing in the other Canadian jurisdiction.
4.2 Obligation to File a Technical Report in Connection with Certain Written Disclosure Concerning Mineral Projects on Material Properties
(1) An issuer shall file a current technical report to support information in the following documents filed or made available to the public in a Canadian jurisdiction describing mineral projects on a property material to the issuer:
1. A preliminary prospectus, other than a preliminary short form prospectus filed in accordance with National Instrument 44-101.
2. A preliminary short form prospectus filed in accordance with National Instrument 44-101 that includes material information concerning mining projects on material properties not contained in
(a) a disclosure document filed before February 1, 2001;
(b) a previously filed technical report; or
(c) a report prepared in accordance with National Policy Statement No. 2-A and filed with a regulator before February 1, 2001.
3. An information or proxy circular concerning a direct or indirect acquisition of a mineral property, including an acquisition of control of a person or company with an interest in the property, that upon completion of the acquisition would be material to the issuer if the consideration includes securities of the issuer or the person or company which continues to hold an interest in the property upon completion of the acquisition.
4. An offering memorandum.
5. A rights offering circular.
6. An annual information form or annual report that includes material information concerning mining projects on material properties not contained in
(a) a disclosure document filed before February 1, 2001;
(b) a previously filed technical report; or
(c) a report prepared in accordance with National Policy Statement No. 2-A and filed with a regulator before February 1, 2001.
7. A valuation required to be prepared and filed under securities legislation.
8. A directors' circular that discloses for the first time a preliminary assessment or mineral resources or mineral reserves on a property material to the issuer that constitutes a material change in respect of the affairs of the issuer, or discloses any change in a preliminary assessment or in mineral resources or mineral reserves, from the most recently filed technical report of the issuer, that constitutes a material change in respect of the affairs of the issuer.
9. A take-over bid circular that discloses a preliminary assessment or mineral resources or mineral reserves on a property material to the offeror if securities of the offeror are being offered in exchange on the take-over bid.
10. Any written disclosure, made other than in a document referred to in paragraphs 1 to 9 above, which is either
(i) first time disclosure of a preliminary assessment or mineral resources or mineral reserves on a property material to the issuer that constitutes a material change in respect of the affairs of the issuer; or
(ii) disclosure of any change in a preliminary assessment or in mineral resources and mineral reserves from the most recently filed technical report, that constitutes a material change in respect of the affairs of the issuer.
(2) If there has been a material change to the information in the technical report filed under paragraph 1 or 2 of subsection (1) before the filing of the final version of a prospectus or short form prospectus, the issuer shall file an updated technical report or an addendum to the technical report with the final version of the prospectus or short form prospectus.
(3) Subject to subsections (4), (5), and (6), the technical report required to be filed under subsection (1) shall be filed not later than the time of the filing of the document listed in subsection (1) that it supports.
(4) Despite subsection (3), a technical report concerning mineral reserves and mineral resources that supports disclosure described in paragraph 10 of subsection (1) shall
(a) be filed not later than 30 days after the disclosure; and
(b) if filed subsequent to the disclosure, be accompanied by a contemporaneous disclosure that reconciles any material differences between the technical report filed and the previous disclosure in connection with which the technical report was prepared.
(5) Despite subsection (3), if a property referred to in a document described in paragraph 6 of subsection (1) first becomes material to the issuer less than 30 days before the filing deadline for the document, the issuer shall file the technical report required by subsection (1) within 30 days of the date that the property first became material to the issuer.
(6) Despite subsection (3), a technical report that supports a directors' circular shall be filed not less than 3 business days prior to the expiry of the take-over bid.
4.3 Required Form of Technical Report - A technical report that is required to be filed under this Part shall be in accordance with Form 43-101F1.
PART 5 AUTHOR OF TECHNICAL REPORT
5.1 Prepared by a Qualified Person - A technical report shall be prepared by or under the supervision of one or more qualified persons.
5.2 Execution of Technical Report - A technical report shall be dated, signed and, if the qualified person has a seal, sealed, by the qualified person who prepared it or supervised its preparation, or if such an individual is an employee, officer, director or associate of a person or company the principal business of which is the provision of engineering or geoscientific services, by that person or company.
5.3 Independent Technical Report
(1) Subject to subsection (2), a technical report required under any of the following provisions of this Instrument shall be prepared by a qualified person that is, at the date of the technical report, independent of the issuer:
1. First-time Reporting Issuer - Subsection 4.1(1)
2. Long Form Prospectus and Valuation - Paragraphs 4.2(1)l and 7
3. Other - Paragraphs 4.2(1)2, 3, 4, 5, 6, 8, 9 and 10 if the document discloses a preliminary assessment, or mineral resources or mineral reserves on a property material to the issuer for the first time, or discloses a 100 percent or greater change, from the most recently filed technical report prepared by a qualified person who is independent of the issuer, in mineral resources or mineral reserves on a property material to the issuer
4. Reporting Issuer in
an Additional Canadian Jurisdiction - Subsection 4.1(2)
(2) A technical report required to be filed by a producing issuer under paragraphs 3 and 4 of subsection (1) is not required to be prepared by an independent qualified person.
(3) A technical report required to be filed by an issuer that is or has contracted to become a joint venture participant, concerning a property which is or will be the subject of the joint venture's activities, is not required to be prepared by an independent qualified person if the qualified person preparing the report is an employee of, or retained by, another participant in the joint venture that is a producing issuer.
PART 6 PREPARATION OF TECHNICAL REPORT
6.1 Nature of the Technical Report - A technical report shall be prepared on the basis of all available factual data that is relevant to the disclosure which it supports.
6.2 Personal Inspection - At least one qualified person preparing or supervising the preparation of the technical report shall inspect the property that is the subject of the technical report.
6.3 Maintenance of Records - The issuer shall keep copies of assay and other analytical certificates, drill logs and other information referenced in the technical report or used as a basis for the technical report for 7 years.
PART 7 USE OF FOREIGN CODE
7.1 Use of Foreign Code
(1) An issuer that is incorporated or organized in a foreign jurisdiction may make disclosure and file a technical report that utilizes the mineral resource and mineral reserve categories of the JORC Code, USGS Circular 831 or the IMM system provided that a reconciliation to the mineral resource and mineral reserve categories set out in sections 1.3 and 1.4 is filed with the technical report and certified by a qualified person. The reconciliation shall address the confidence levels required for the categorization of mineral resources and mineral reserves.
(2) An issuer that is incorporated or organized under the laws of Canada or a province or territory of Canada may make disclosure and file a technical report that utilizes the mineral resource and mineral reserve categories of the JORC Code, USGS Circular 831 or the IMM system for properties located in a foreign jurisdiction, provided that a reconciliation to the mineral resource and mineral reserve categories set out in sections 1.3 and 1.4, which reconciliation addresses the confidence levels required for the categorization of mineral resources and mineral reserves, is certified by a qualified person and is filed with the technical report.
PART 8 CERTIFICATES AND CONSENTS OF QUALIFIED PERSONS FOR TECHNICAL REPORTS
8.1 Certificates of Qualified Persons
(1) An issuer shall, when filing a technical report, also file a certificate of each of the individuals who are qualified persons and who have been primarily responsible for the technical report, or a portion of the technical report, dated, signed and, if the signatory has a seal, sealed, by the signatory.
(2) The certificate of each qualified person shall state
(a) the name, address and occupation of the qualified person;
(b) the qualified person's qualifications, including relevant experience, the name of all professional associations to which the qualified person belongs, and that the qualified person is a "qualified person" for purposes of this Instrument;
(c) the date and duration of the qualified person's most recent visits to each applicable site;
(d) the section or sections of the technical report for which the qualified person is responsible;
(e) that the qualified person is not aware of any material fact or material change with respect to the subject matter of the technical report which is not reflected in the technical report, the omission to disclose which makes the technical report misleading;
(f) if the qualified person is independent of the issuer applying the tests set out in section 1.5;
(g) what prior involvement, if any, the qualified person has had with the property that is the subject of the technical report; and
(h) that the qualified person has read this Instrument and Form 43-101F1, and the technical report has been prepared in compliance with this Instrument and Form 43-101F1.
8.2 Addressed to Issuer - All technical reports shall be addressed to the issuer.
8.3 Consents of Qualified Persons - All technical reports and addenda to technical reports that are required by this Instrument to be filed shall
(a) be accompanied by the written consent of the qualified person, addressed to the securities regulatory authorities, consenting to the filing of the technical report and to the written disclosure of the technical report and of extracts from or a summary of the technical report in the written disclosure being filed; and
(b) be accompanied by a certificate confirming that the qualified person has read the written disclosure being filed and does not have any reason to believe that there are any misrepresentations in the information derived from the technical report or that the written disclosure contains any misrepresentation of the information contained in the technical report.
PART 9 EXEMPTION
9.1 Exemption
(1) The regulator or the securities regulatory authority may, on application, grant an exemption from this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption in response to an application.
(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.
(3) Despite subsection (1), in Alberta, only the regulator may grant such an exemption.
PART 10 EFFECTIVE DATE
10.1 Effective Date - This Instrument shall come into force on February 1, 2001.
NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
TABLE OF CONTENTS
PART TITLE
PART 1 APPLICATION, DEFINITIONS AND INTERPRETATION
1.1 Application
1.2 Definitions
1.3 Mineral Resource
1.4 Mineral Reserve -
1.5 Interpretation
PART 2 REQUIREMENTS APPLICABLE TO ALL DISCLOSURE
2.1 Requirements Applicable to All Disclosure
2.2 All Disclosure of Mineral Resources or Mineral Reserves
2.3 Prohibited Disclosure
2.4 Disclosure of Historical Estimates
PART 3 ADDITIONAL REQUIREMENTS FOR WRITTEN DISCLOSURE
3.1 Written Disclosure to Include Name of Qualified Person
3.2 Written Disclosure to Include Data Verification
3.3 Requirements Applicable to Written Disclosure of Exploration Information
3.4 Requirements Applicable to Written Disclosure of Mineral Resources and Mineral Reserves
3.5 Exception for Written Disclosure Already Filed
PART 4 OBLIGATION TO FILE A TECHNICAL REPORT
4.1 Obligation to File a Technical Report Upon Becoming a Reporting Issuer
4.2 Obligation to File a Technical Report in Connection with Certain Written Disclosure Concerning Mineral Projects on Material Properties
4.3 Required Form of Technical Report
PART 5 AUTHOR OF TECHNICAL REPORT
5.1 Prepared by a Qualified Person
5.2 Execution of Technical Report
5.3 Independent Technical Report
PART 6 PREPARATION OF TECHNICAL REPORT
6.1 Nature of the Technical Report
6.2 Personal Inspection
6.3 Maintenance of Records
PART 7 USE OF FOREIGN CODE
7.1 Use of Foreign Code
PART 8 CERTIFICATES AND CONSENTS OF QUALIFIED PERSONS FOR TECHNICAL REPORTS
8.1 Certificates of Qualified Persons
8.2 Addressed to Issuer
8.3 Consents of Qualified Persons
PART 9 EXEMPTION
9.1 Exemption
PART 10 EFFECTIVE DATE
10.1 Effective Date
FORM 43-101F1
TECHNICAL REPORT
TABLE OF CONTENTS
TITLE
CONTENTS OF THE TECHNICAL REPORT
Item 1: Title Page
Item 2: Table of Contents
Item 3: Summary
Item 4: Introduction and Terms of Reference
Item 5: Disclaimer
Item 6: Property Description and Location
Item 7: Accessibility, Climate, Local Resources, Infrastructure and Physiography
Item 8: History
Item 9: Geological Setting
Item 10: Deposit Types
Item 11: Mineralization
Item 12: Exploration
Item 13: Drilling
Item 14: Sampling Method and Approach
Item 15: Sample Preparation, Analyses and Security
Item 16: Data Verification
Item 17: Adjacent Properties
Item 18: Mineral Processing and Metallurgical Testing
Item 19: Mineral Resource and Mineral Reserve Estimates
Item 20: Other Relevant Data and Information
Item 21: Interpretation and Conclusions
Item 22: Recommendations
Item 23: References
Item 24: Date
Item 25: Additional Requirements for Technical Reports on Development Properties and Production Properties
Item 26: Illustrations
FORM 43-101F1
TECHNICAL REPORT
INSTRUCTIONS
(1) The objective of the technical report is to provide scientific and technical information concerning mineral exploration, development and production activities on a mineral property that is material to an issuer. This Form sets out specific requirements for the preparation and contents of a technical report. Item 25 of this Form includes additional requirements for technical reports on development and production properties.
(2) Terms used and not defined in this Form that are defined or interpreted in National Instrument 43-101 Standards of Disclosure for Mineral Projects (the "Instrument") shall bear that definition or interpretation. In particular, the terms "mineral resource" and "mineral reserve" and the categories of each are defined in the Instrument. In addition, a general definition instrument has been adopted as National Instrument 14-101 Definitions which contains definitions of certain terms used in more than one national instrument. Readers of this Form shall review both these national instruments for defined terms.
(3) The author preparing the technical report shall use the headings of the Items in this Form. If unique or infrequently used technical terms are required, clear and concise explanations shall be included.
(4) No disclosure need be given in respect of inapplicable items and, unless otherwise required by this Form, negative answers to items may be omitted. Disclosure included under one heading is not required to be repeated under another heading.
(5) The technical report is not required to include the information required in Items 6 through 11 of this Form to the extent that the required information has been previously filed in a report for the property being reported on, the previous report is referred to in the technical report and there has not been any change in the information.
CONTENTS OF THE TECHNICAL REPORT
Item 1: Title Page - Include a title page setting out the title of the technical report, the general location of the mineral project, the name(s) and the professional designation(s) of the authors and the effective date of the technical report.
Item 2: Table of Contents - Provide a table of contents listing the contents of the technical report, including figures and tables.
Item 3: Summary - Provide a summary which briefly describes the property, its location, ownership, geology and mineralization, the exploration concept, the status of exploration, development and operations and the author's conclusions and recommendations.
Item 4: Introduction and Terms of Reference - Include a description of
(a) the terms of reference;
(b) the purpose for which the technical report was prepared;
(c) the sources of information and data contained in the technical report or used in its preparation, with citations if applicable; and
(d) the extent of field involvement of the qualified person.
Item 5: Disclaimer - If the author of all or a portion of the technical report has relied on a report, opinion or statement of legal or other experts who are not qualified persons for information concerning legal, environmental, political or other issues and factors relevant to the technical report, the author may include a disclaimer of responsibility in which the author identifies the report, opinion or statement relied upon, the maker of that report, opinion or statement, the extent of reliance and the portions of the technical report to which the disclaimer applies.
Item 6: Property Description and Location - To the extent applicable, with respect to each property reported on, describe
(a) the area of the property in hectares or other appropriate units;
(b) the location, reported by section, township, range mining division or district, municipality, province, state, country and National Topographic System designation or Universal Transverse Mercator (UTM) system, as applicable, or by latitude and longitude;
(c) the claim numbers or equivalent, whether they are patented or unpatented, or the applicable characterization in the jurisdiction in which they are situated, and whether the claims are contiguous;
(d) the nature and extent of the issuer's title to, or interest in, the property including surface rights, the obligations that must be met to retain the property, and the expiration date of claims, licences or other property tenure rights;
(e) whether or not the property has been legally surveyed;
(f) the location of all known mineralized zones, mineral resources, mineral reserves and mine workings, existing tailing ponds, waste deposits and important natural features and improvements, relative to the outside property boundaries by showing the same on a map;
(g) to the extent known, the terms of any royalties, back-in rights, payments or other agreements and encumbrances to which the property is subject;
(h) to the extent known, all environmental liabilities to which the property is subject; and
(i) to the extent known, the permits that must be acquired to conduct the work proposed for the property, and if the permits have been obtained.
Item 7: Accessibility, Climate, Local Resources, Infrastructure and Physiography - With respect to each property reported on, describe
(a) topography, elevation and vegetation;
(b) the means of access to the property;
(c) the proximity of the property to a population centre, and the nature of transport;
(d) to the extent relevant to the mineral project, the climate and the length of the operating season; and
(e) to the extent relevant, the sufficiency of surface rights for mining operations, the availability and sources of power, water, mining personnel, potential tailings storage areas, potential waste disposal areas, heap leach pad areas and potential processing plant sites.
Item 8: History - To the extent known, with respect to each property reported on, describe
(a) the prior ownership of the property and ownership changes;
(b) the type, amount, quantity and results of exploration and/or development work undertaken by the owners and any previous owners;
(c) historical mineral resource and mineral reserve estimates, including the reliability of the historical estimates and whether the estimates are in accordance with the categories set out in sections 1.3 and 1.4 of the Instrument; and
(d) any production from the property.
INSTRUCTION: If a reporting system other than the one stipulated by the Instrument has been used, the author shall include an explanation of the differences and reliability.
Item 9: Geological Setting - Include a description of the regional, local and property geology.
Item 10: Deposit Types - Describe the mineral deposit type(s) being investigated or being explored for and the geological model or concepts being applied in the investigation and on the basis of which the exploration program is planned.
Item 11: Mineralization - Describe the mineralized zones encountered on the property, the surrounding rock types and relevant geological controls, detailing length, width, depth and continuity, together with a description of the type, character and distribution of the mineralization.
Item 12: Exploration - Describe the nature and extent of all relevant exploration work conducted by, or on behalf of, the issuer on each property being reported on, including
(a) results of surveys and investigations, and the procedures and parameters relating to the surveys and investigations;
(b) an interpretation of the exploration information;
(c) a statement as to whether the surveys and investigations have been carried out by the issuer or by a contractor and, if the latter, identifying the contractor; and
(d) a discussion of the reliability or uncertainty of the data obtained in the program.
Item 13: Drilling - Describe the type and extent of drilling including the procedures followed and a summary and interpretation of all results. The relationship between the sample length and the true thickness of the mineralization must be stated, if known, and if the orientation of the mineralization is unknown, state this.
Item 14: Sampling Method and Approach - Include
(a) a description of sampling methods and details of location, number, type, nature and spacing or density of samples collected, and the size of the area covered;
(b) identification of any drilling, sampling or recovery factors that could materially impact the accuracy and reliability of the results;
(c) a discussion of the sample quality and of whether the samples are representative and of any factors that may have resulted in sample biases;
(d) a description of rock types, geological controls, widths of mineralized zones and other parameters used to establish the sampling interval and identification of any significantly higher grade intervals within a lower grade intersection;and
(e) a list of individual samples or sample composites with values and estimated true widths.
Item 15: Sample Preparation, Analyses and Security - Describe sample preparation methods and quality control measures employed prior to dispatch of samples to an analytical or testing laboratory, the method or process of sample splitting and reduction, and the security measures taken to ensure the validity and integrity of samples taken, including
(a) if any aspect of the sample preparation was conducted by an employee, officer, director or associate of the issuer;
(b) details regarding sample preparation, assaying and analytical procedures used, including the sub-sample size, the name and location of the analytical or testing laboratories and whether the laboratories are certified by any standards association and the particulars of any certification;
(c) a summary of the nature and extent of all quality control measures employed and check assay and other check analytical and testing procedures utilized, including the results and corrective actions taken; and
(d) a statement of the author's opinion on the adequacy of sampling, sample preparation, security and analytical procedures.
Item 16: Data Verification - Include a discussion of
(a) quality control measures and data verification procedures applied;
(b) whether the author has verified the data referred to or relied upon, referring to sampling and analytical data;
(c) the nature of and any limitations on such verification; and
(d) the reasons for any failure to verify the data.
Item 17: Adjacent Properties - A technical report may include information concerning an adjacent property if
(a) such information was publicly disclosed by the owner or operator of the adjacent property;
(b) the source of the information and any relationship of the author of the information on the adjacent property to the issuer is identified;
(c) the technical report states that its author has been unable to verify the information and, in bold face type, that the information is not necessarily indicative of the mineralization on the property that is the subject of the technical report;
(d) the technical report clearly distinguishes between mineralization on the adjacent property and mineralization on the property being reported on; and
(e) if any historical estimates of mineral resources and mineral reserves are included in the technical report, they are disclosed in accordance with section 2.4 of the Instrument.
Item 18: Mineral Processing and Metallurgical Testing - Where mineral processing and/or metallurgical testing analyses have been carried out, include the results of testing and details of sample selection representativity and testing and analytical procedures.
Item 19: Mineral Resource and Mineral Reserve Estimates - Each technical report on mineral resources and mineral reserves shall
(a) use only the applicable mineral resource and mineral reserve categories set out in sections 1.3 and 1.4 of the Instrument;
(b) report each category of mineral resources and mineral reserves separately and if both mineral resources and mineral reserves are disclosed, state the extent, if any, to which mineral reserves are included in total mineral resources;
(c) not add inferred mineral resources to the other categories of mineral resources;
(d) disclose the name, qualifications and relationship, if any, to the issuer of the qualified person who estimated mineral resources and mineral reserves;
(e) include appropriate details of quantity and grade or quality for each category of mineral resources and mineral reserves;
(f) include details of the key assumptions, parameters and methods used to estimate the mineral resources and mineral reserves;
(g) include a general discussion on the extent to which the estimate of mineral resources and mineral reserves may be materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant issues;
(h) identify the extent to which the estimates of mineral resources and mineral reserves may be materially affected by mining, metallurgical, infrastructure and other relevant factors;
(i) use only indicated mineral resources, measured mineral resources, probable mineral reserves and proven mineral reserves when referring to mineral resources or mineral reserves in an economic evaluation that is used in a preliminary feasibility study or a feasibility study of a mineral project;
(j) state the grade or quality, quantity and category of the mineral resources and mineral reserves if the quantity of contained metal is reported; and
(k) when the grade for a polymetallic mineral resource or mineral reserve is reported as metal equivalent, report the individual grade of each metal, and consider and report the recoveries, refinery costs and all other relevant conversion factors in addition to metal prices and the date and sources of such prices.
INSTRUCTIONS
(1) The methods and procedures to be used in estimating mineral resources and mineral reserves are the responsibility of the authors preparing the estimate.
(2) A statement of quantity and grade or quality is an estimate and shall be rounded to reflect the fact that it is an approximation.
(3) An issuer that is incorporated or organized in a foreign jurisdiction may file a technical report that utilizes the mineral resource and mineral reserve categories of the JORC Code, USGS Circular 831 or IMM system provided that a reconciliation to the mineral resource and mineral reserve categories referred to in sections 1.3 and 1.4 of the Instrument is filed with the technical report and certified by the author. The reconciliation shall also address the confidence levels required for the categorizations of mineral resources and mineral reserves.
Item 20: Other Relevant Data and Information - Include any additional information or explanation necessary to make the technical report understandable and not misleading.
Item 21: Interpretation and Conclusions - Include the results and reasonable interpretations of all field surveys, analytical and testing data and other relevant information. Discuss the adequacy of data density and the data reliability as well as any areas of uncertainty. A technical report concerning exploration information shall include the conclusions of the author. The author must discuss whether the completed project met its original objectives.
Item 22: Recommendations - If successive phases of work are recommended, each phase must culminate in a decision point. The recommendations shall not apply to more than two phases of work. The recommendations shall state whether advancing to a subsequent phase is contingent on positive results in the previous phase. Provide particulars of the recommended programs and a breakdown of costs for each phase. A technical report that contains recommendations for expenditures on exploration or development work on a property shall include a statement by a qualified person that, in the qualified person's opinion, the character of the property is of sufficient merit to justify the program recommended.
Item 23: References - Include a detailed list of all references cited in the technical report.
Item 24: Date - Include the effective date of the technical report on both the title page and the page of the technical report that is signed. The date of signing must also be included on the signature page.
Item 25: Additional Requirements for Technical Reports on Development Properties and Production Properties - Technical reports on development properties and production properties shall also include
(a) Mining Operations - information and assumptions concerning the mining method, metallurgical processes and production forecast;
(b) Recoverability - information concerning results of all test and operating results relating to the recoverability of the valuable component or commodity and amenability of the mineralization to the proposed processing methods;
(c) Markets - information concerning the markets for the issuer's production and the nature and material terms of any agency relationships;
(d) Contracts - a discussion of whether the terms of mining, concentrating, smelting, refining, transportation, handling, sales and hedging and forward sales contracts or arrangements, rates or charges are within market parameters;
(e) Environmental Considerations - a discussion of bond posting, remediation and reclamation;
(f) Taxes - a description of the nature and rates of taxes, royalties and other government levies or interests applicable to the mineral project or to production, and to revenues or income from the mineral project;
(g) Capital and Operating Cost Estimates - capital and operating cost estimates, with the major components being set out in tabular form;
(h) Economic Analysis - an economic analysis with cash flow forecasts on an annual basis using proven mineral reserves and probable mineral reserves only, and sensitivity analyses with variants in metal prices, grade, capital and operating costs;
(i) Payback - a discussion of the payback period of capital with imputed or actual interest;
(j) Mine Life - a discussion of the expected mine life and exploration potential.
Item 26: Illustrations -
(a) Technical reports shall be illustrated by legible maps, plans and sections. All technical reports shall be accompanied by a location or index map and more detailed maps showing all important features described in the text. In addition, technical reports shall include a compilation map outlining the general geology of the property and areas of historical exploration. The location of all known mineralization, anomalies, deposits, pit limits, plant sites, tailings storage areas, waste disposal areas and all other significant features shall be shown relative to property boundaries. Maps, drawings and diagrams that have been created by the author, in whole or in part, and that are based on the work that the author has done or supervised, shall be signed and dated by the author. Where information from other sources, either government or private, is used in preparing these maps or diagrams, the source of the information shall be named.
(b) If adjacent or nearby properties have an important bearing on the potential of the property under consideration, their location and any mineralized structures common to two or more such properties shall be shown on the maps.
(c) If the potential merit of a property is predicated on geophysical or geochemical results, maps showing the results of surveys and their interpretations shall be included in the technical report.
(d) Maps shall include a scale in bar form and an arrow indicating North. Information taken from government maps or from drawings of other engineers or geoscientists shall be acknowledged on the map.
COMPANION POLICY 43-101CP
TO NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
PART 1 PURPOSE AND DEFINITIONS
1.1 Purpose - This companion policy sets out the views of the Canadian Securities Administrators (the "CSA") as to the manner in which certain provisions of National Instrument 43-101 (the "Instrument") are to be interpreted and applied.
1.2 Evolving Industry Standards and Modifications to the Instrument - Mining industry practice and professional standards are evolving in Canada and internationally. The Canadian securities regulatory authorities will monitor developments in these fields and will solicit and consider recommendations from their staff and external advisers, from time to time, as to whether modifications to the Instrument are appropriate.
1.3 Application of the Instrument - The Instrument does not apply to disclosure concerning petroleum, natural gas, bituminous sands or shales, groundwater or other substances that do not fall within the meaning of the term "mineral resource" in section 1.3 of the Instrument. The Instrument establishes standards for all oral statements and written disclosure of scientific and technical information regarding mineral projects, including disclosure in news releases, prospectuses and annual reports, and requires that the disclosure be based on a technical report or other information prepared by or under the supervision of a qualified person. In the circumstances set out in section 5.3 of the Instrument, the technical report that is required to be filed must be prepared by a qualified person who is independent of the issuer, the property and any adjacent property.
1.4 Mineral Resources and Mineral Reserves Definitions - The Instrument incorporates by reference the definitions and categories of mineral resources and mineral reserves as set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves Definitions and Guidelines (the "CIM Standards") adopted by the CIM Council on August 20, 2000. These definitions, together with guidance on their interpretation and application prepared by the CIM, are reproduced in the Appendix to this Companion Policy. Issuers, qualified persons and other market participants are encouraged to consult the CIM Standards for guidance.
Any changes made by the CIM to these definitions in the future will automatically be incorporated by reference into the Instrument.
1.5 Non-Metallic Mineral Deposits - Issuers making disclosure regarding the following commodities are encouraged to follow these additional guidelines:
(a) Industrial Minerals - For an industrial mineral deposit to be classified as a mineral resource, there should be recognition by the qualified person preparing the quantity and quality estimate that there is a viable market for the product or that a market can be reasonably developed. For an industrial mineral deposit to be classified as a mineral reserve, the qualified person preparing the estimate should be satisfied, following a thorough review of specific and identifiable markets for the product, that there is, at the date of the technical report, a viable market for the product and that the product can be mined and sold at a profit.
(b) Coal - Technical reports on coal resources and reserves should conform to the definitions and guidelines of Paper 88-21 of the Geological Survey of Canada: A Standardized Coal Resource/Reserve Reporting System for Canada, as amended, supplemented or replaced; and
(c) Diamonds - Technical reports on the resources and reserves of diamond deposits should conform to the Guidelines for Reporting of Diamond Exploration Results, Identified Mineral Resources and Ore Reserves, published by the Association of Professional Engineers, Geologists and Geophysicists of the Northwest Territories, as amended, supplemented or replaced.
1.6 Objective Standard of Reasonableness
(a) The Instrument requires the application of an objective standard of reasonableness in determining such things as whether a statement constitutes "disclosure" and is thereby subject to the requirements of the Instrument. Where a determination turns on reasonableness, the test is an objective, rather than subjective one in that it turns on what a person acting reasonably would conclude. It is not sufficient for an officer of an issuer or a qualified person to determine that he or she personally believes the matter under consideration. The person must form an opinion as to what a reasonable person would believe in the circumstances. Formulating the definitions using an objective test rather than a subjective test strengthens the basis upon which the regulator may object to a person's application of the definition in particular circumstances.
(b) The definition of "preliminary feasibility study" and "pre-feasibility study" requires the application of an objective test. For a study to fall within the definition, the considerations or assumptions underlying the study must be reasonable and sufficient for a qualified person, acting reasonably, to determine if the mineral resource may be classified as a mineral reserve.
PART 2 DISCLOSURE
2.1 Disclosure is the Responsibility of the Issuer - Primary responsibility for public disclosure remains with the issuer and its directors and officers. The qualified person is responsible for preparing the technical report and providing scientific and technical advice in accordance with applicable professional standards. The proper use, by or on behalf of the issuer, of the technical report and other scientific and technical information provided by the qualified person is the responsibility of the issuer and its directors and officers. The onus is on the issuer and its directors and officers and, in the case of a document filed with a regulator, each signatory of the document, to ensure that disclosure in the document is consistent with the related technical report or advice. Issuers are strongly urged to have the qualified person review disclosure that summarizes or restates the technical report or the technical advice or opinion to ensure that the disclosure accurately reflects the qualified person's work.
2.2 Use of Plain Language - Disclosure made by or on behalf of an issuer regarding mineral projects on properties material to the issuer should be understandable. Written disclosure should be presented in an easy to read format using clear and unambiguous language. Wherever possible, data should be presented in table format. The CSA recognize that the technical report required by the Instrument is a document that does not lend itself well to a "plain language" format and therefore urge issuers to consult the responsible qualified person when restating the data and conclusions from a technical report in plain language for use in other public disclosure.
2.3 Prohibited Disclosure
(1) Paragraph 2.2(c) of the Instrument prohibits the addition of inferred mineral resources to the other categories of mineral resources. Issuers are cautioned not to show a sum of mineral resources, or to refer to an aggregate number of mineral resources that includes inferred mineral resources.
(2) Issuers are reminded that any disclosure of a target of further exploration pursuant to subsection 2.3(2) or a of preliminary assessment pursuant to subsection 2.3(3) must be based on information prepared by or under the supervision of a qualified person.
2.4 Materiality
(1) Materiality should be determined in the context of the particular issuer's overall business and financial condition taking into account quantitative and qualitative factors. Materiality is a matter of judgment in the particular circumstances and should be determined in relation to the significance of the information to investors, analysts and other users of the disclosure.
(2) In assessing materiality, issuers should refer to the definition of "material fact" in securities legislation, which in most jurisdictions means a fact that significantly affects or would reasonably be expected to have a significant effect on the market price or value of the securities of the issuer.
(3) Materiality of a property should be assessed in light of the extent of the interest in the property held, or to be acquired, by the issuer. A small interest in a sizeable property may, in the circumstances, not be material to the issuer.
(4) In assessing whether interests represented by multiple claims or other documents of title constitute a single property for the purpose of the Instrument, issuers should be guided by the reasonable understanding and expectations of investors.
(5) Subject to developments not reflected in the issuer's financial statements, for purposes of the Instrument, a property will generally not be considered material to an issuer if the book value of the property, as reflected in the issuer's most recently filed financial statements or the value of the consideration paid or required to be paid for the property, including exploration expenditures required to be made during the next 12 months, is less than 10 percent of the book value of the total of the issuer's mineral properties and related property, plant and equipment.
2.5 Material Information not yet Confirmed by a Qualified Person - Issuers are reminded that they have an obligation under securities legislation to disclose material facts and to make timely disclosure of material changes. The Canadian securities regulatory authorities recognize that there may be circumstances in which the issuer expects that certain information concerning a mineral project may be material notwithstanding the fact that a qualified person has not prepared or supervised the preparation of the information. In this situation the Canadian securities regulatory authorities suggest that issuers file a confidential material change report concerning this information while a qualified person reviews the situation. Once a qualified person has confirmed the information, a the issuer may issue a news release and the basis of confidentiality will end.
2.6 Exception in Section 3.5 of the Instrument - Section 3.5 of the Instrument provides that the disclosure requirement of sections 3.3 and 3.4 of the Instrument may be satisfied by referring to a previously filed document that includes the required disclosure. Issuers relying on this exception are reminded that all disclosure should provide sufficient information to permit market participants to make informed investment decisions and should not present or omit information in a manner that is misleading.
2.7 Meaning of Current Technical Report - In the view of the CSA, the "current technical report" referred to in sections 4.2 and 4.3 of the Instrument is a technical report that contains all information required under the Form 43-101F1 in respect of the subject property as at the date on which the technical report is filed. A technical report may constitute a current technical report, even if prepared considerably before the filing date, if the information in the technical report remains accurate and does not omit materially new information as at the date of filing.
2.8 Exceptions from Requirement for Technical Report with Annual Information Form, Annual Report and Preliminary Short Form Prospectus if Information Previously Disclosed - If an issuer has disclosed scientific and technical information on a mineral property in a disclosure document (as defined in section 1.2 of the Instrument), or in a technical report prepared in accordance with National Policy No. 2-A filed before February 1, 2001, the issuer will not be required to prepare and file a technical report with the issuer's annual information form, annual report or preliminary short form prospectus, unless the annual information form, annual report or preliminary short form prospectus contains new and material scientific and technical information about that mineral property.
PART 3 AUTHOR OF THE TECHNICAL REPORT
3.1 Selection of Qualified Person - It is the responsibility of the issuer and its directors and officers to appoint a qualified person with experience and competence appropriate for the subject matter of the technical report.
3.2 Qualified Person - Section 2.1 of the Instrument requires that all disclosure be based upon a technical report or other information prepared by or under the supervision of a qualified person and section 5.1 of the Instrument provides that a technical report must be prepared by or under the supervision of one or more qualified persons. The Canadian securities regulatory authorities recognize that certain individuals who currently provide technical expertise to issuers will not be considered qualified persons for purposes of the Instrument. These individuals may have the necessary experience and expertise but may lack the professional accreditation because of differences in provincial registration requirements or for other reasons. Application can be made by an issuer under section 9.1 of the Instrument for an exemption from the requirement for involvement of a qualified person and the acceptance of another person. The application should demonstrate the person's competence and qualification to prepare the technical report or other information in support of the disclosure despite the fact that he or she is not a member of a professional association or otherwise does not meet the requirements set out in the definition in the Instrument of qualified person.
3.3 Independence of Qualified Person
(1) Paragraph 1.5(4)(c) of the Instrument provides that a qualified person is not considered to be independent of the issuer if the qualified person, or any affiliated entity of the qualified person, owns or by reason of an agreement, arrangement or undertaking expects to receive any securities of the issuer or an affiliated entity of the issuer or an interest in the property that is the subject of the technical report. The Canadian securities regulatory authorities recognize that issuers undergoing restructuring may settle outstanding debt to a qualified person with securities. In these circumstances, an issuer may apply for an exemption under section 9.1 of the Instrument to preserve the independence of the qualified person with respect to the issuer.
(2) There may be circumstances in which the staff at the securities regulatory authorities question the objectivity of the author of the technical report. The issuer may be asked to provide further information, additional disclosure or the opinion of another qualified person to address concerns about possible bias or partiality on the part of the original author.
PART 4 PREPARATION OF TECHNICAL REPORT
4.1 "Best Practices" Guidelines - Issuers and authors shall follow the Mineral Exploration "Best Practices" Guidelines prepared on the recommendation of the TSE-OSC Mining Standards Task Force by a committee comprised of mining and exploration industry professionals and regulators. These Guidelines were published in June, 2000.
PART 5 USE OF INFORMATION
5.1 Use of Information - The Instrument requires that technical reports be prepared and filed with Canadian securities regulatory authorities to support certain disclosure of mineral exploration, development and production activities and results in order to permit the public and analysts to have access to information that will assist them in making investment decisions and recommendations. Persons and companies, including registrants, who wish to make use of information concerning mineral exploration, development and production activities and results including mineral resource and mineral reserve estimates are encouraged to review the technical reports that will be on the public file for the issuer and if they are summarizing or referring to this information they are strongly encouraged to use the applicable mineral resource and mineral reserve categories and terminology found in the technical report.
PART 6 PERSONAL INSPECTION
6.1 Personal Inspection- Canadian securities regulatory authorities consider personal inspection particularly important because it enables the qualified person to become familiar with conditions on the property, to observe the geology and mineralization, to verify the work done, and on that basis to design or review and recommend to the issuer an appropriate exploration or development program. It is the responsibility of the issuer to arrange its affairs so that a property inspection can be carried out by a qualified person.
6.2 Exemption from Personal Inspection Requirement - There may be circumstances in which it is not possible or beneficial for a qualified person to inspect the property. In such instances the qualified person or the issuer should apply in writing to the securities regulatory authority for relief, stating the reasons why a personal inspection is considered impossible or not beneficial. It would likely be a condition of any such relief that the technical report state that no inspection was carried out by a qualified person and provide reasons.
6.3 Responsibility of the Issuer - The requirement set out in section 6.2 of the Instrument sets a minimum standard for personal inspection. The issuer should have property inspections conducted by one or more qualified persons as appropriate, taking into account the work being carried out on the property and the technical report being prepared by the qualified person or persons.
PART 7 REGULATORY REVIEW
7.1 Review
(1) Disclosure and technical reports filed under the Instrument may be subject to review by Canadian securities regulatory authorities.
(2) An issuer that files a technical report that does not meet the requirements of the Instrument will be in breach of securities legislation. The issuer may be required to issue or file corrected disclosure, file a revised technical report or file revised consents, and may be subject to other sanctions.
COMPANION POLICY 43-101CP
TO NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
TABLE OF CONTENTS
PART TITLE
PART 1 PURPOSE AND DEFINITIONS
1.1 Purpose
1.2 Evolving Industry Standards and Modifications to the Instrument
1.3 Application of the Instrument
1.4 Mineral Resources and Mineral Reserves Definitions
1.5 Non-Metallic Mineral Deposits
1.6 Objective Standard of Reasonableness
PART 2 DISCLOSURE
2.1 Disclosure is the Responsibility of the Issuer
2.2 Use of Plain Language
2.3 Prohibited Disclosure
2.4 Materiality
2.5 Material Information not yet Confirmed by a Qualified Person
2.6 Exception in Section 3.5 of the Instrument
2.7 Meaning of Current Technical Report
2.8 Exceptions from Requirement for Technical Report with Annual Information Form, Annual Report and Preliminary Short Form Prospectus if Information Previously Disclosed
PART 3 AUTHOR OF THE TECHNICAL REPORT
3.1 Selection of Qualified Person
3.2 Qualified Person
3.3 Independence of Qualified Person
PART 4 PREPARATION OF TECHNICAL REPORT
4.1 "Best Practices" Guidelines
PART 5 USE OF INFORMATION
5.1 Use of Information
PART 6 PERSONAL INSPECTION
6.1 Personal Inspection
6.2 Exemption from Personal Inspection Requirement
6.3 Responsibility of the Issuer
PART 7 REGULATORY REVIEW
7.1 Review
Canadian Institute of Mining, Metallurgy and Petroleum - Definitions
Adopted by CIM Council August 20, 2000
Mineral Resource
Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.
The term Mineral Resource covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which Mineral Reserves may subsequently be defined by the consideration and application of technical, economic, legal, environmental, socio-economic and governmental factors. The phrase 'reasonable prospects for economic extraction' implies a judgement by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction. A Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions, might become economically extractable. These assumptions must be presented explicitly in both public and technical reports.
Inferred Mineral Resource
An 'Inferred Mineral Resource' is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Due to the uncertainty which may attach to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.
Indicated Mineral Resource
An 'Indicated Mineral Resource' is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for major development decisions.
Measured Mineral Resource
A 'Measured Mineral Resource' is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineralization or other natural material of economic interest may be classified as a Measured Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such that the tonnage and grade of the mineralization can be estimated to within close limits and that variation from the estimate would not significantly affect potential economic viability. This category requires a high level of confidence in, and understanding of, the geology and controls of the mineral deposit.
Mineral Reserve
Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.
Mineral Reserves are those parts of Mineral Resources which, after the application of all mining factors, result in an estimated tonnage and grade which, in the opinion of the Qualified Person(s) making the estimates, is the basis of an economically viable project after taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-economic and government factors. Mineral Reserves are inclusive of diluting material that will be mined in conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent facility. The term 'Mineral Reserve' need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals.
Probable Mineral Reserve
A 'Probable Mineral Reserve' is the economically mineable part of an Indicated, and in some circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve
A 'Proven Mineral Reserve' is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
Application of the Proven Mineral reserve category implies that the Qualified Person has the highest degree of confidence in the estimate with the consequent expectation in the minds of the readers of the report. The term should be restricted to that part of the deposit where production planning is taking place and for which any variation in the estimate would not significantly affect potential economic viability.