Are you complying with NI 43-101?

13 février 2013

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According to the BCSC’s recently issued 2012 Mining Report (the Report) when it comes to compliance with NI 43-101, many issuers are not doing so well.  In a sample of mineral disclosure reviewed during the period 2009 to 2012, disclosure in required filings was only 65% compliant, while voluntary disclosure was only 50% compliant.  In fact, certain types of disclosure were found to be even far less compliant – for example, website disclosure of preliminary economic assessments (PEAs) was only 10% compliant.

Most often, non-compliant disclosure comes to light in contexts when an issuer has the least time to address the issue and correct it, such as during a financing transaction or during a M&A deal requiring prospectus-level disclosure.  If, for example, an issuer finds that it must file a new technical report in one of these contexts, it may have a show-stopper on its hands.  So, whether or not the statistics in the Report seem relevant to your specific situation, they are good reason to review your NI 43-101 disclosure for compliance.

The Report discusses the most common findings, including:

  • Failure to file current or fully compliant technical reports
  • Failure to disclose PEAs, historical estimates and exploration target information correctly; and
  • Non-compliant disclosure of mineral reserves and mineral resources.

The Report highlights the distinctly lower level of compliance in “voluntary” disclosure, including websites, corporate presentations and investor relations materials.  In these contexts, in addition to the above deficiencies, the BCSC found that issuers frequently fail to name the qualified person (QP) who has reviewed the disclosure, and fail to correctly disclose the applicable quality assurance/quality control results and laboratory procedures.

In addition to regular ongoing annual compliance reviews of randomly selected issuers, in 2011 the BCSC also began to conduct targeted reviews of specific types of mining disclosure the BCSC identified as regularly problematic, such as some of the deficiencies noted above.  The targeted review process has so far resulted in the placement of 34 of 82 companies onto the defaulting issuers list, the issuance of 13 additional correction request letters, and the issuance of a total of 31 clarifying press releases.  The targeted review process and specific deficiencies are discussed in detail in the Report.

Separately from the annual compliance and targeted reviews, during the period from 2008 to 2012, the BCSC conducted over 400 prospectus filing technical NI 43-101 reviews, resulting in the amendment of a large number technical reports.

Common technical report deficiencies noted in the Report, in addition to those noted above, include:

  • Missing or altered statements in the certificates and consents of QPs (the text of the certificates and consents is provided in NI 43-101 and the Companion Policy);
  • Failure to date, address to the company or sign the technical report;
  • Non-compliant disclaimers and inappropriate use of the reliance upon experts section; and
  • Insufficient disclosure of assumptions, parameters and methodologies used in mineral resources estimates.

The Report also gives insight into key approaches currently taken by the securities regulators under NI 43-101, on fundamental issues.  We will discuss these in upcoming posts.

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