Canada: British Columbia Securities Commission Releases Mining Report

On January 24, 2013, the British Columbia Securities Commission ("BCSC") released its 2012 Mining Report (the "Report"). The Report summarizes the BCSC's findings from the mining disclosure compliance reviews it conducted during 2012, and includes commentary on commonly identified deficiencies and BCSC areas of focus. This is the first time that the BCSC has produced such a report. Its purpose is to promote high quality mining disclosure by creating greater awareness of the BCSC's current views on compliance with, and interpretation of, National Instrument 43-101 and related securities reporting requirements (the "Mining Disclosure Rules").

Mining Disclosure Reviews

The Report is a compendium of mining disclosure issues and deficiencies that the BCSC has identified during its reviews of compliance by public mining companies with the Mining Disclosure Rules. These compliance reviews fall into four categories:

  • continuous disclosure reviews, in which the BCSC selects issuers for a review of their continuous disclosure reporting to ensure substantive compliance;
  • annual compliance reviews, in which a sample of randomly selected mining companies are reviewed at a high level at year end to assess their overall level of compliance with specific disclosure requirements and to monitor any trends in industry practice;
  • targeted reviews, in which the BCSC performs specific reviews of areas of mining disclosure identified as being problematic in continuous disclosure and annual compliance reviews. In most cases these reviews are conducted on issuers for which evidence of poor disclosure practice has come to the attention of the BCSC; and
  • prospectus reviews, in which the BCSC reviews the disclosure of an issuer in connection with a prospectus filing.

Topical Issues and Guidance

The Report summarizes a number of areas identified by the BCSC where there is common and recurring non-compliance with the Mining Disclosure Rules.

General observations:

  • voluntary disclosure made on websites and in investor relations materials, email promotions and corporate presentations is less likely to comply with the Mining Disclosure Rules than mandatory disclosure required to be made in news releases, technical reports, annual information forms and other continuous disclosure filings.
  • there are certain types of disclosure in which the overall level of compliance is relatively low for both required filings and voluntary disclosure. These areas include: disclosure of exploration targets; results of preliminary economic assessments ("PEAs") (usually due to failure to include required cautionary language); restricted or misleading reference to mining studies and failure to name a qualified person ("QP").

Website disclosure of PEA results is identified as being particularly problematic with only 10% of those companies reviewed having made disclosure of a PEA on a website in a manner that complies with the Mining Disclosure Rules.

The Report highlights five key topics identified by the BCSC as the source of significant and recurring deficiencies in mining disclosure:

1. Technical Report Deficiencies

Common deficiencies in technical reports identified by the BCSC and highlighted in the Report include:

  • missing or altered statements in qualification certificates and consents of QPs;
  • technical reports that are not dated, signed, or addressed to the issuer;
  • non‐compliant disclaimers of responsibility or statements of reliance;
  • technical reports that do not provide a summary of all material technical and scientific information for the entire property;
  • non‐compliant disclosure of historical estimates, exploration targets, or resources and reserves; and
  • technical reports that do not provide adequate or sufficiently transparent information on the key assumptions, parameters, and methodologies used in mineral resource estimates.

2. Industry Standards and Best Practices

The BCSC expects QPs to use procedures and methodologies that are consistent with industry best practices as established by the Canadian Institute of Mining, Metallurgy and Petroleum and other similar organizations in other jurisdictions, and to produce scientific and technical disclosure comparable to disclosure adopted by other issuers who follow industry best practices.

Where disclosure appears inconsistent with industry standards and best practices, the BCSC may invite the company and its QP to explain the inconsistency and provide examples of other credible sources that use similar approaches. The BCSC may also use technical reports from credible industry sources, such as international consulting firms and major mining companies, as a reference for industry consensus or approach to particular issues. If an issuer fails to meet industry standards and best practices with respect to a particular disclosure document, the BCSC may request that the issuer retain another QP, acceptable to the BCSC, to author or co-author the technical disclosure or to audit or verify the work of the first QP.

3. Metal Pricing Assumptions

The Report identifies metal pricing assumptions as a key disclosure issue. While there is no prescribed methodology in the Mining Disclosure Rules for the formulation of pricing assumptions, the BCSC expects such assumptions to be consistent with industry norms. Outlying metal pricing assumptions may call into question the reliability of the economic estimates that use those assumptions.

The BCSC notes in the Report that the United States Securities and Exchange Commission accepts, as the maximum metal price assumption allowed, the lesser of the three-year moving average and the current spot price and that this method has become a common industry standard.

The BCSC is also concerned about sensitivity analyses in PEAs that only disclose sensitivities to rising metal prices rather than sensitivities to both rising and declining metal prices.

4. Mineral Resource Estimation

The Report identifies three areas of concern with respect to mineral resource reporting:

  • Mineral resources, by definition, must have a reasonable prospect of economic extraction. This may require the QP to constrain the mineralization within a conceptual pit shell or mine model and might require exclusion of mineralization that falls outside these constraints. The BCSC believes that some technical reports do not adequately discuss how the QP has established a reasonable prospect of economic extraction.
  • Some QPs appear to be estimating mineral resources without the application of an appropriate geological model or consideration of geological and grade continuity between data points. The omission of these key considerations could produce estimates that do not comply with the definition of mineral resources under National Instrument 43-101 and industry best practices. The BCSC may question the compliance or the suitability of a mineral resource estimate that is based on a technical report that lacks the details of a geographical model that is consistent with the deposit type or does not apply reasonable constraints on mineralization.
  • QPs must have the relevant knowledge and experience in both mineral estimation and mineral deposit type for a particular resource estimate. With the wide availability of computer based modeling comes the risk that estimates are being made by QPs without sufficient knowledge or expertise. The QP must be satisfied that he or she has enough experience, which is relevant to the style of mineralisation, to the type of deposit that is being considered and the type of activity being carried out.

5. Mining Studies prior to mineral resource estimate

Finally, the Report addresses the issue of premature disclosure of mining studies. The BCSC believes that the disclosure of ongoing mining studies on a particular property prior to the definition of mineral resources on the property could be misleading, inconsistent with established mining industry practices and contrary to the definition of mining studies under Mineral Disclosure Rules. The BCSC's position is that an issuer's disclosure of a mining study implies that the issuer has identified a mineral resource when in fact it is only conducting exploration to establish mineral resources. An issuer on whose property a mineral resource has yet to be identified can conduct studies that may later be incorporated in a mining study but the issuer should not disclose that such studies are part of a mining study until a mineral resource has been established on the property.

It is important for mining companies to be cognizant of, and responsive to, these issues in their public disclosure about mineral exploration and development and mining activities. Issuers that fail to comply with the Mining Disclosure Rules run the risk that a regulatory review of their disclosure will identify deficiencies and instances of non-compliance.

Although non-material deficiencies may be rectified through remedial disclosure in future filings, if the identified non-compliance is regarded by the regulator as sufficiently material, the regulator may issue a cease trade order or require the issuer to take more immediate remedial measures. This may include issuing a news release to clarify, retract or update previously disclosed but non-compliant mining disclosure, which is potentially embarrassing and deleterious to the issuer's reputation.

In an equity financing scenario, a prospectus review in which material non-compliant mining disclosure is identified could have disastrous consequences and there are numerous instances in which an equity financing was delayed or abandoned because of materially non-compliant mining disclosure.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific 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.

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

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