On October 31, 2018, the SEC released comprehensive property disclosure rules for mining registrants that represent the first major change to the rules since 1982. The new rules require companies with material mining operations to provide disclosure in their SEC filings of their mineral resources, mineral reserves and material exploration results for their material mining operations in the aggregate and for each material mining property, and to include supporting technical report summaries in the filings. The final rules depart in important respects from the rule proposal that was issued in 2016 and attracted widespread criticism.
Since 1982, property disclosures by mining registrants have been governed by Item 102 of Regulation S-K and Industry Guide 7. The new rules rescind Industry Guide 7 as of January 1, 2021 and amend Item 102 to direct mining registrants to a new Subpart 1300 of Regulation S‑K, which will contain all of the requirements for property disclosures by mining registrants from and after January 1, 2021 following the expiration of a transition period for compliance. The rules will apply to foreign private issuers as well as U.S. registrants with material mining operations or individually material mining properties.
The SEC’s overarching goals in adopting the new rules are to modernize mining disclosure requirements and to align them with international reporting standards. The rules change or remove requirements that many believe have placed U.S. mining registrants at a competitive disadvantage compared to international mining companies. One of the major changes permits mining registrants, for the first time, to report estimates of mineral resources in their SEC filings. The rules align the SEC’s disclosure regime for mining properties with long-standing international standards, including those issued by the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). The new rules, however, will impose substantial additional compliance burdens and expenses on mining registrants that currently provide property disclosure only in compliance with the U.S. mining property disclosure regime. Click here to learn more about the SEC's new mining property disclosure rules and what to consider now. The SEC's 450-page adopting release (No. 33-10570) can be found here.