By Zoe Grigg and Pat Stephenson - AMC Consultants

This article summarises the current reporting requirements and potential changes to Canada’s securities regulations, primarily National Instrument (NI) 43-101 (Standards of Disclosure for Mineral Projects) and its Companion Policy NI 43-101CP. Public reporting in Canada is also subject to NI 51-102 (Continuous Disclosure Obligations), NI 44-101 (Short Form Prospectus Distributions), and NI 54-101 (Rights Offerings). It should be noted that this article is intended only as a guide to public reporting requirements in Canada and it is essential that interested parties read all relevant regulatory instruments in their entirety.

Part 1: The Status Quo

NI 43-101 applies to any issuer that discloses scientific and technical information about a mineral project to the Canadian public. It applies to all mineral projects, with the extent of application subject to a materiality test in some circumstances. Table 1 describes the application of NI 43-101 throughout the mineral project development cycle. The disclosure can be oral or written and must be based on information prepared by or under the supervision of a Qualified Person. When a Technical Report is required as summarised in Table 2, it must follow Form 43-101F1. All disclosure is also subject to NI 51-102 Continuous Disclosure and to SEDAR formatting requirements for documents lodged with the Canadian Securities Administrators. Provincial or Territorial securities commission/exchange rules may also apply.

The following key terms are defined in NI 43-101:

  • Issuer – Any entity that has issued, or proposes to issue, a security.
  • Mineral Project – Includes base/precious metals, coal and industrial minerals (NI 43-101 Part 1.1 for full definition). It does not include oil and gas (NI 51-101).
  • Materiality – Would reasonably be expected to have a significant effect on the market price or value of the securities of the issuer (NI 43-101CP Part 2.4(1) & (2)).
  • Qualified Person – At least five years experience including experience relevant to the subject matter of the project and technical report and is a member of a professional association (NI 43-101 Part 1.1 for full definition).

Table 1, NI 43-101 throughout mineral project development.


Table 2, technical report triggers.

Conditional = if first preliminary assessment, mineral resource or mineral reserve for a property, or if 100% or greater change in total mineral resource or mineral reserve (See NI 43-101 Part 5.3 (1)(c)(i & ii) )

Part 2: The Future

In January 2009, the Canadian Securities Administrators (CSA), which administers NI 43-101, launched a project to revise the Instrument in response to a number of industry and regulatory concerns that have developed since it was released in 2001. AMC is one of a number of consulting groups that has been providing input to the revision process. CSA has targeted April 2010 to publish draft revisions for comment.
Although it is too early to speculate as to the nature of the changes that might be implemented, the following areas have been flagged by CSA and industry as those of particular concern:

  • Consents of Qualified Persons (QP). In particular, the requirement, seen by many as unreasonably onerous and sometimes unworkable, to file new consents and certificates for the QP each time the reporting company triggers a new technical report. This is exacerbated by movement company to company and even country to country by individual authors.
  • Triggers for technical reports. As shown above, there are currently 11 situations that trigger a requirement to file a technical report. There is some uncertainty regarding when a trigger applies, particularly when NI 43-101 is considered in combination with other reporting regulations. CSA is also considering adding triggers related to a company’s decision to commence production and to any first time disclosure of mineral reserves, mineral resources, or a preliminary assessment (as opposed to disclosure only in news releases of directors’ circulars).
  • Disclosure of “historical” resource / reserve estimates. Currently disclosure of “historical” estimates is restricted to pre-1 February 2001. CSA is considering allowing disclosure of “historical” estimates that post-date 1 February 2001 in certain circumstances.
  • Preliminary assessments. NI 43-101 prohibits the disclosure of an economic analysis that includes Inferred Resources once an issuer has completed a pre-feasibility study. This can have unintended adverse consequences, particularly where there are different mineral projects at different stages of development on the same property and / or where a project is re-evaluated as a result of changing economic conditions or the discovery of new deposits.
  • Disclaimers. Disclaimers are strictly limited in NI 43-101 reports to non-technical areas (legal, environmental, political etc) There has been debate as to whether the scope should be extended to include some specialist technical areas, such as diamond valuation.
  • Independent technical report. As shown in Slide 3 above, there are three situations where a technical report has to be prepared by a QP who is independent of the issuer. CSA is considering whether to allow producing issuers to file in-house (non-independent) technical reports for all triggers.
  • Sensitive information. Currently technical reports on development / production properties must include an economic analysis with annual cash flow forecasts using mineral reserves. There is debate as to whether this requires some producing issuers to reveal sensitive information that puts them at a competitive disadvantage to foreign competitors who are not required to disclose this information.
  • Technical report form. There is strong consensus in the industry that the current formatting requirements of technical reports as prescribed in form (43-101F1), while suitable for early stage exploration properties, are not well suited for production and development properties and that a separate form is required for these situations.
  • Size and detail of technical reports. It is generally agreed that technical reports have tended to become too big and to contain too much detail (they are, after all, intended to be summary reports).
    Recognized Foreign Associations. The current list of “Recognized Foreign Associations” to which a QP may belong is embedded within NI 43-101, which means that it cannot be modified without modifying the Instrument.

Pat Stephenson
Director, Regional Manager and Principal Geologist

Zoe Grigg