Canada: Clarifying The Preliminary Economic Assessment Under Regulation 43-101

Last Updated: March 13 2013
Article by Sébastien Vézina

Last August 16, the Canadian Securities Administrators ("CSA") published CSA Staff Notice 43-307, Mining Technical Reports – Preliminary Economic Assessments ("Notice 43-307″) to clarify various issues surrounding the use and disclosure of a "preliminary economic assessment" as defined in Regulation 43-101 respecting Standards of Disclosure for Mineral Projects ("Regulation 43-101″).

In June 2011, the CSA amended Regulation 43-101 to protect investors from uncorroborated assertions about mineral resources and with a view to balancing compliance costs and regulatory efficiency.

At that time, the CSA amended the definition of the expression "preliminary economic assessment" so that issuers could announce the results of conceptual or preliminary economic studies in a broader range of situations. One year later, the CSA noticed that some issuers were disclosing preliminary economic assessments in situations and using terms and conditions that were neither contemplated in nor permitted by the new regulation.

As always, with a view to helping our clients stay ahead of the game in developing their mining projects, below is a brief overview of the CSA staff's position, as set out in Notice 43-307, that will certainly help issuers to better understand the application and limits of this type of study.

Notice 43-107 can be consulted on the websites of CSA members and the Autorité des marchés financiers (press here for a direct link).

A preliminary economic assessment is not a pre-feasibility study

CSA staff note that a preliminary economic assessment cannot be a pre-feasibility or feasibility study and that it cannot therefore be prepared using the same criteria. A preliminary study is a study that contains an economic analysis of the potential viability of the mineral resources. On the other hand, pre-feasibility and feasibility studies are more exhaustive studies showing the technical and economic viability of a mining project.

To ensure that a preliminary assessment is not equated with a pre-feasibility study, CSA staff recommend that issuers ensure the results of their assessment include the cautionary language required by section 3.4 of Regulation 43-101, indicating that the economic viability of the mineral resources has not been demonstrated. Also, it would be prudent to include a detailed description of the risks associated with the project in the assessment so that the public is able to understand the importance and limits of its results.

Importance of not including inferred mineral resources in a pre-feasibility or feasibility study

CSA staff consider that a preliminary economic assessment is, by definition, a study other than a pre-feasibility or feasibility study. Two parallel studies done at, or nearly at, the same time are not in substance separate studies, but components of the same study. Thus, the staff indicate that a preliminary economic assessment done concurrently with a pre-feasibility or feasibility study will likely be treated as a pre-feasibility or feasibility study if it:

  • has the effect of incorporating inferred mineral resources into the pre-feasibility or feasibility study;
  • updates a pre-feasibility or feasibility study to include more optimistic or even more aggressive assumptions and parameters than the initial study;
  • is essentially a pre-feasibility or feasibility study in all respects but name.

Disclosure of preliminary economic assessment — factors triggering requirement to file a technical report

Notice 43-307 points out that issuers are in some cases disclosing potential economic outcomes relating to their material mining properties which are not supported by a technical report,in accordance with paragraph 4.2(1)(j) of Regulation 43-101.

An issuer may trigger the obligation to file a technical report if the information disclosed in its economic assessment is:

  • contained in the issuer's corporate presentations, fact sheets, investor relations materials or any statement on the issuer's website;
  • posted or linked from third party documents, reports or articles or otherwise adopted and disseminated by the issuer.

Overly optimistic or aggressive results of preliminary economic assessment

According to Part 4A of Regulation 51-102 respecting Continuous Disclosure Obligations, an issuer may not disclose forward-looking information unless it has a reasonable basis for such information. The notice states that some issuers and qualified persons seem to be using overly optimistic or highly aggressive assumptions in their preliminary economic assessments. CSA staff therefore highlight the importance of ensuring there is a reasonable basis for any assumption made in a preliminary assessment in the context of the mining project.

The staff reserves the right, at their discretion, to challenge certain assumptions that could be misleading and to ask the qualified person to explain or justify them.

Preliminary economic assessment and disclosure of by-products

CSA staff consider that including projected cash flows for by-product commodities in a preliminary economic assessment that are not included in the mineral resource estimate is misleading and contrary to the definition of preliminary economic assessment because these commodities are not part of the mineral resource.

Relevant experience of qualified persons

Notice 43-307 reminds us that individuals who take responsibility for drafting part or all of the technical report supporting the results of a preliminary economic assessment are required to have experience relevant to the subject matter of the mining project and the technical report.


Issuers must ensure that they comply with the requirements under Regulation 43-101 when preparing their assessments and studies. Where the regulatory authorities identify material deficiencies or errors and the issuer fails to comply with the request to remedy the situation, CSA staff may:

  • seek an order from a securities regulator requiring the issuer to file new documents;
  • issue a cease trade order against the issuer until it corrects the deficiency;
  • if the issuer is considering making a prospectus offering and the deficiencies are material, recommend not issuing a receipt for the prospectus.

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.

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.