On June 27, 2013, the OSC issued Staff Notice 43-705 Report
on Staff's Review of Technical Reports by Ontario Mining
Issuers summarizing the results of a review conducted on
technical reports prepared by Ontario mining issuers. The purpose
of the report was to clarify existing disclosure requirements
relating to technical reports and to alert mining issuers and
qualified persons by identifying common deficiencies to assist in
determining what information in technical reports needs to be
disclosed, enhanced or supplemented to comply with Form 43-101F1
Technical Reports. Issuers and qualified persons should
carefully consider the OSC's findings when preparing technical
reports to avoid re-filings and other delays.
Summary of Results
The OSC selected a sample of 50 technical reports to review as a
representative sample of issuers. Of the total number of technical
reports reviewed, the OSC found an unacceptable level of compliance
with Form 43-101F1, with 80% of the technical reports having some
form of non-compliance. Approximately 40% of the technical reports
reviewed had at least one major non-compliance issue that may have
a significant impact on investors. Only 20% of the technical
reports reviewed were in compliance with the requirements of Form
43-101F1. The report states that the OSC "view[s] this level
of major non-compliance with the disclosure requirements of Form
43-101F1 to be unacceptable" and that "issuers and
qualified persons need to further improve their
Major Areas of Concern
Among the most commonly occurring disclosure deficiencies, the
OSC identified the following:
I. Mineral Resource Estimate
25% of the technical reports disclosing mineral resources failed
to provide sufficient discussion of key assumptions, parameters and
methods used to estimate such mineral resources. In particular,
these reports did not provide requisite information relating to
"reasonable prospects for economic extraction", such as
cut-off grades, metal price assumptions and other constraints.
Qualified persons are encouraged to consult the Canadian
Institute of Mining, Metallurgy and Petroleum's Best Practice
Guidelines for Estimation of Mineral Resources and Mineral Reserves
for guidance in this regard.
II. Environmental Studies, Permitting and Social or Community
32% of the technical reports relating to advanced properties did
not provide adequate disclosure with respect to environmental
permits and the social/community impacts of the development,
including surface rights issues and exploration agreements with
local First Nations communities.
Issuers are reminded that they are required to file material
contracts entered in the ordinary course of business under NI
41-101, including any such contracts entered into with local First
III. Capital and Operating Costs
26% of technical reports on advanced properties did not provide
an adequate summary of capital and operating cost estimates, as
required. In this regard, common deficiencies included a failure to
provide the main components of the capital costs estimate and
justifications surrounding the determination of the estimate as
well as related assumptions.
IV. Economic Analysis
37% of technical reports on advanced properties did not provide
adequate economic analyses, including annual cash flows,
sensitivity analyses and taxes applicable to the mineral
The OSC further noted that reporting only pre-tax cash flows and
economic outcomes for advanced properties does not fulfill the
disclosure requirement and may be construed as misleading.
V. Interpretation and Conclusions
36% of technical reports reviewed failed to disclose project
specific risks and uncertainties, including the availability of
water rights, use of novel technology or the potential impact of
Qualified persons are reminded of the new requirement to discuss
any significant risks or uncertainties, including those relating to
reliability in the exploration information, mineral
resources/reserve estimates, or projected economic outcomes and any
reasonably foreseeable impacts related thereto.
The OSC will continue to actively review technical reports by
Ontario mining issuers as part of its continuous disclosure review
program. As such, issuers should anticipate staff requests for
re-filings, additional disclosure, or other staff action, where
appropriate, if the requirements of Form 43-101F1 and N1 43-101
have not been fully met.
The OSC has further indicated that the issues raised in a review
will be considered when determining whether a prospectus receipt
should be issued, and that unresolved issues may delay issuance of
such receipts, particularly for short form prospectus filings.
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