One question that we’re often asked by issuers and mining industry professionals is: When amending a technical report, is it a requirement that the issuer replace the report that is currently filed on SEDAR with a fully revised report, or can an issuer simply create and file an addendum?
From the inception of NI 43-101, the fundamental underlying principle has always been that an investor should be able to go to the SEDAR website and pull up one single comprehensive and current technical report to minimize the risk that people might otherwise not have current information in front of them, or might not have all of the current information – not to mention that it could be difficult to piece together multiple documents filed at different times. The requirement (discussed in section 4.2(8) of Companion Policy 43-101CP) is that any time an issuer is required to file a technical report, it must file one complete and current report, containing all material scientific and technical information about the mineral project. As a general rule, then, there will only be one current technical report on a mineral project at any given point in time. When a new technical report is filed in respect of a mineral project, it will supersede the one most recently filed, and for those parts of the last report that are still current and relevant, the new report will reproduce these sections in the new report so that there is no need to refer to the previously filed technical report.
An issue that comes up in this context relates to the authorship of the “new” technical report. If the qualified person(s) who authored the last report are the same qualified persons authoring the amended aspects of the new report, this is straightforward – such qualified persons will simply take responsibility for the entire new report. However, even if the authors of the new report are not the authors of the prior report, every section of the new technical report nonetheless must be certified by a qualified person. The new authors will typically take responsibility for the complete new report in this situation, but this requires additional work on their part in verifying the work that was previously done by the former authors. In some cases, former authors may be co-authors of the new report, responsible for certain sections, provided that those sections are unaffected by the amendments.
Despite the general rule that there should only be one current technical report for a mineral project, there is a limited provision for addenda (discussed in section 4.2(9) of Companion Policy 43-101CP) that is rarely used in practice. Section 4.2(3) of NI 43-101 allows for an addendum to a technical report to be filed, as opposed to a full new report, if new material scientific or technical information becomes available during the course of a prospectus offering prior to obtaining a final prospectus receipt. This is the only exception to the requirement that there be a single current technical report on a mineral project. Even though this exception exists, it is rarely used because it is often easier to simply restate the current report and add in the new material scientific or technical information if the authors of a technical report remain the same, as is commonly the case. Generally, despite the existence of this exception, our view is that an addendum should only be used in a situation where there is no practical alternative to doing so.
One such situation may arise where a qualified person that did not also author the original technical report relating to a mineral project is responsible for the work relating to the new material or scientific information that becomes available during the course of a prospectus offering. In this situation it may not be practical or desirable for such qualified person to take responsibility for any aspects of work that was previously done by the authors of the technical report. Although having a single complete report is generally preferable, this is one situation where an addendum is likely the only practical option.
If you are availing yourself of the addendum exemption, the following guidelines may be helpful:
- The qualified persons authoring the addendum should provide a certificate in the form required by Part 8 of NI 43-101 to be filed with the addendum.
- All qualified persons (authors of the technical report and the addendum) should provide consents to the technical disclosure included in the final prospectus, clearly identifying the sections of the technical report or addendum such qualified person is responsible for. A qualified person must take responsibility for each section of the report and addendum.
- The addendum should be submitted with a cover letter stating the reasons for filing an addendum instead of a new complete technical report.
- The prospectus should identify both the technical report and the addendum by their SEDAR filing dates.
The format of the addendum should be as follows:
- Title page identifying the document as an addendum, referring to the original technical report (identified by title, author(s) and date) and showing the addendum author(s) and effective date of the addendum.
- Table of contents showing only the Form 43-101F1 items the addendum addresses and listing any figures and/or tables.
- Introductory section stating the reason the addendum was filed, identifying the original technical report (noting its filing date on SEDAR) and identifying any sections of the original report the addendum supersedes or modifies.
- The body of the addendum complying with the form requirements of Form 43-101F1, with respect to the form items covered by the addendum.
- Certificates in the form prescribed by Part 8 of NI 43-101.