On April 8, 2011, the Canadian Securities Administrators (the "CSA") published a revised version of National Instrument 43-101 Standards of Disclosure for Mineral Projects and its related form of technical report and companion policy (collectively, the "Mining Rule"). The revised Mining Rule is expected to replace the current version on June 30, 2011.
The purpose of the revisions is to eliminate or reduce the scope of certain disclosure requirements, provide more flexibility to mining issuers, reflect changes that have occurred in the mining industry, and clarify or correct areas where the CSA believed the previous standards were not having the desired effect.
The most significant change to the Mining Rule is to relax the short form prospectus trigger for the requirement to file a technical report. Currently, an issuer is required to file a new technical report where a preliminary short form prospectus includes any new scientific or technical information relating to a mineral project on a property material to the issuer. Under the revised Mining Rule, issuers will not be required to file a technical report unless the new scientific or technical information constitutes a material change in the affairs of the issuer and is first time disclosure of, or a material change in, the mineral resources, mineral reserves or the results of a preliminary economic assessment in respect of a material property. The new trigger will in many cases permit short form mining issuers to access the public markets on a more cost-efficient and timely basis.
Other significant changes to the Mining Rule include the following:
- Relaxing the restrictions regarding disclosure of historical estimates to permit use of any estimates prepared prior to the issuer agreeing to acquire an interest in the related property. Previously, the use of historical estimates was limited to those prepared prior to February 1, 2001.
- Introducing a six-month time period for filing a technical report (subject to the filing of a preliminary short form prospectus) where triggered by first-time disclosure by an issuer in a press release (or other document that would not otherwise trigger the requirement to file a technical report) of scientific or technical information regarding mineral reserves, mineral resources or the results of a preliminary economic assessment on a property that constitutes a material change to the issuer, where the disclosure is, among other things, supported by a technical report filed by another issuer that holds or previously held an interest in the property.
- Exempting issuers holding royalty interests from the requirement to prepare technical reports if the owner or operator of the property is a reporting issuer in Canada or a producing issuer listed on a specified exchange (ASX, JSE, LSE, Nasdaq, NYSE or HKSE) and has disclosed the scientific and technical information that is material to the royalty holder.
- Providing that the qualified person who prepares or supervises the preparation of a technical report filed by an issuer listed on a specified exchange upon becoming a reporting issuer in Canada need not be independent.
- Expanding the list of foreign codes that may be used in technical reports and other disclosure by foreign issuers, or by Canadian issuers in respect of foreign properties. Reports prepared using acceptable foreign codes will now only be required to include reconciliations to the categories defined in the Mining Rule where there are material differences.
- Expanding the definition of "qualified persons" by including, in addition to the other criteria, a member of any foreign professional association if that professional association is generally accepted within the international mining community as reputable and the qualified person's membership designation requires attainment of a position of responsibility in the profession and a favourable peer review or recommendation.
- Eliminating the requirement for a qualified person to prepare or supervise the preparation of scientific or technical information forming the basis of disclosure (other than a technical report) provided a qualified person approves the disclosure.
- Eliminating the requirement for issuers to obtain updated consents of qualified persons where disclosure documents rely on previously filed technical reports and other changes to give issuers flexibility in circumstances where the qualified person who prepared or supervised the preparation of the scientific or technical information is no longer available.
- Prohibiting the disclosure of the gross dollar value of metal or mineral in a deposit, sampled interval or drill intersection.
- Prohibiting the disclosure of a metal or mineral equivalent grade for a multiple commodity deposit, sampled interval or drill intersection, unless the grade for each material or metal used to establish the equivalent grade is also disclosed.
The form of technical report has also been substantially modified to make it less prescriptive and more adaptable for advanced stage and producing properties in order to allow the qualified person greater discretion regarding the level of detail required under each section in the context of the particular property. In addition, producing issuers will be exempt from the requirement to include an economic analysis of their producing properties unless the report contemplates material expansion of current production.
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