On April 9, 2015, the Canadian Securities Administrators (“CSA”) released Staff Notice 43-309 Review of Website Investor Presentations by Mining Issuers which summarizes the results of a review of investor presentations on mining issuers’ websites and provides guidance to mining issuers concerning the disclosure requirements under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). The Staff Notice was based on an assessment of 130 investor presentations on the websites of mining issuers at the pre-production stage for compliance with NI 43-101 and for compliance with the forward looking information (“FLI”) requirements. The Staff Notice is available here.
Information found on issuer websites is “written disclosure” to which the disclosure requirements of NI 43-101 apply. While most issuers are reasonably careful to ensure that formal disclosure documents filed with the regulators comply with NI 43-101 requirements, many issuers do not apply the same degree of disclosure compliance to informal documents such as investor presentations which they post on their websites. The result is that, of the 130 websites reviewed by the CSA, only 18% were found to have substantial compliance with NI 43-101.
The most common types of non-compliance identified in the Staff Notice include:
- Name of the qualified person (“QP”). Written disclosure of scientific or technical information must include the name and the relationship to the issuer of the QP.
- Preliminary economic assessment (“PEA”). Disclosure of a preliminary economic assessment must be accompanied by the cautionary statements specified in subsection 2.3(3) of NI 43-101.
- Mineral resources are not mineral reserves. Written disclosure which includes the results of an economic analysis of mineral resources must be accompanied by an equally prominent statement that the economic viability of the mineral resources has not been demonstrated by the economic analysis.
- Whether mineral resources include mineral reserves. When reporting both mineral resources and mineral reserves, the disclosure should clearly state whether mineral resources include or exclude mineral reserves. The CIM Estimation Best Practice Committee recommends that mineral resources should be reported separately and exclusive of mineral reserves.
- Exploration targets. If a mining issuer chooses to disclose an exploration target, it must provide a reasonable basis for the target and must include a statement that “the potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource" and that "it is uncertain if further exploration will result in the target being delineated as a mineral resource".
- Historical estimates. Information about the source, date, reliability, key assumptions and other factors must be provided each time a historical estimate is disclosed.
- QA/QC information. All written disclosure must include a summary of the quality assurance program and quality control measures applied during the work program being reported.
The Staff Notice also noted that a significant number of economic studies (both PEAs and pre-feasibility or feasibility studies) reported only pre-tax financial results or provided no information about the tax rate for the mineral project. In addition, the CSA noted that mineral resource and mineral reserve estimates should disclose metal or commodity price assumptions, as these are key factors in establishing the cut-off grade.
With respect to FLI, the Staff Notice states that FLI for mining issuers includes metal price assumptions used in mineral resource and mineral reserve estimates as well as other assumptions used in economic analysis and financial projections based on engineering studies.
We strongly recommend that mining issuers carefully review their websites for compliance with disclosure requirements, and establish ongoing procedures for compliance reviews before information is added to their websites.