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.

Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions