Canada: Canadian Securities Administrators Publish Guidance On Use And Disclosure Of "Preliminary Economic Assessments"

Last Updated: August 24 2012
Article by Stuart Breen and Irene Chen

On August 16, 2012, the Canadian Securities Administrators (the "CSA") published CSA Staff Notice 43-307 Mining Technical Reports – Preliminary Economic Assessments to clarify its position on several issues regarding the use and disclosure of "preliminary economic assessments" ("PEAs") as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The CSA advises that the definition of PEA, which was revised in 2011 to allow issuers greater flexibility in disclosing the results of PEAs, has resulted in such studies being used and disclosed by issuers in a manner, and/or in circumstances, not intended or permitted under NI 43-101. The notice is intended to help issuers better understand the appropriate use and disclosure of PEAs.

PEA as Substitute or Proxy for PFS

NI 43-101 defines a PEA as a study, other than a pre-feasibility study ("PFS") or a feasibility study ("FS"), which includes an economic analysis of the potential viability of mineral resources. Although each of these studies generally analyse and assess the same geological, engineering and economic factors, the level of detail and confidence in outcomes differs significantly for each. A PEA is a conceptual study of the potential viability of mineral resources while PFSs and FSs are more comprehensive studies which are sufficient to demonstrate the technical and economic viability of a mineral project. As such, issuers are permitted under NI 43-101 to include inferred mineral resources in a PEA, provided that certain cautionary language is included, but not in a PFS-level economic analysis.

As a result of some issuers blurring the boundaries between a PEA and a PFS or FS, the notice emphasizes that PEAs should be treated as separate and distinct from PFSs and FSs. The CSA cautions that it may challenge an issuer's disclosure if the issuer:

  1. describes the study as a PEA when it does not clearly fall into the definition of a PEA;
  2. compares the PEA or any components of it to the standards of a PFS if the study includes inferred mineral resources;
  3. states that some or all of the components of the PEA are done at the level of a PFS;
  4. does not include the cautionary statement required by section 3.4(e) of NI 43-101 with equal prominence each time it discloses the economic analysis of the mineral resources;
  5. uses the PEA as a basis to justify going directly to a FS or a production decision;
  6. discloses mining or mineable mineral resources or uses the term "ore", which is essentially treating the mineral resources as mineral reserves; or
  7. otherwise states or implies the economic or technical viability of the mineral resources has been demonstrated.

Issuers are also cautioned to ensure that any disclosure of the results of a PEA is not misleading by providing appropriate context, cautionary statements and sufficient discussion of risk in order for the public to understand the limitations of the results of the PEA.

PEA in Conjunction with PFS or FS

The definition of PEA was revised in 2011 due to industry concerns that issuers need the ability to re-scope advanced stage projects based on new information or alternative production scenarios. As such, the amended definition is based on the premise that the issuer is contemplating a significant change in the existing or proposed operation that is materially different from the previous mining study.

The CSA is concerned that in some cases, issuers are preparing PEAs in conjunction with a PFS or FS as a means of indirectly including inferred mineral resources in their PFS or FS and has indicated that it will generally consider two parallel studies done concurrently or in close time proximity to be components of the same study. Therefore, in the CSA's view, a study that includes an economic analysis of the potential viability of mineral resources that is done concurrently with or as part of a PFS or FS is not a PEA  if it:

  1. has the net effect of incorporating inferred mineral resources into the PFS or FS, even as a sensitivity analysis;
  2. updates, adds to or modifies a PFS or FS to include more optimistic assumptions and parameters not supported by the original study; or
  3. is a PFS or FS in all respects except name.

Additional Guidance for Compliance

The notice also sets out some additional comments from the CSA regarding compliance issues with respect to PEAs:

  1. PEA Disclosure and Technical Report Triggers.  In some cases, issuers are disclosing potential economic results for their material mineral properties that are not supported by a technical report.
  2. Unreasonable Assumptions and Potentially Misleading PEA Results. In some cases, issuers and qualified persons appear to be using overly optimistic or highly aggressive assumptions in the PEA or methodologies that diverge significantly from industry best practices and standards which could result in misleading disclosure. As forward-looking information must not be disclosed unless the issuer has a reasonable basis for the forward-looking information, issuers are cautioned by the CSA that any assumption under the PEA must have a reasonable basis.
  3. Improper Inclusion of By-Products. In some cases, issuers are disclosing the results of a PEA that include projected cash flows for by-product commodities that are not included in the mineral resource estimate which the CSA considers to be misleading and contrary to the definition of PEA. Issuers are cautioned against including cash flow projections for any commodity that has not been properly categorised as a measured, indicated or inferred mineral resource.
  4. Lack of Relevant Experience. In some cases, qualified persons are taking responsibility for technical reports that support the results of a PEA without having experience relevant to the subject matter of the mineral project and the technical report.

Consequences of Material Deficiencies or Errors

The CSA advises that in the event that material NI 43-101 disclosure deficiencies are identified in required documents, it will generally request that the issuer correct the deficiency by restating and re-filing the documents.  Failure to comply with such request could result in the issuer being placed on the reporting issuer default list, the issuance of a commission order requiring the issuer to re-file the documents, and/or a cease trade order being issued until the issuer corrects the deficiency. Even in cases where the deficiency has been corrected, enforcement or other regulatory action for the original breach could be pursued, depending on the circumstances.

For issuers considering a prospectus offering, the CSA also notes that any of the above-noted issues could result in delayed or prolonged review of the prospectus filing and, in the case of material deficiencies, could result in a recommendation against the issuance of a final receipt for the prospectus being made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.