Brett A. Kagetsu
Associé
Article
9
The Canadian Securities Administrators (CSA) recently published CSA Staff Notice 43-309 Review of Website Investor Presentations by Mining Issuers, which summarized the findings of a review of 130 investor presentations on mining issuers’ websites that had been conducted by the British Columbia Securities Commission, the Ontario Securities Commission and the Autorité des marchés financiers. The CSA notes that investor presentations and other forms of investor relations materials contained on mining issuers’ websites (including fact sheets, media articles and links to third-party content) fall within the definition of “written disclosure” in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and that the disclosure requirements of NI 43-101 apply to such materials.
The CSA found that there was room for improvement for mining issuers to comply with disclosure requirements. Areas in which the CSA found a high level of non-compliance with NI 43-101 are highlighted below:
The CSA also notes the following areas that required additional improvement:
The CSA also refers to technical report triggers and states that it has significant concerns when information provided on a mining issuer’s website includes PEA disclosure that is not supported by an existing technical report. The CSA further notes that disclosure of economic projections in investor presentations, fact sheets, posted or linked third-party reports, or any statements on the issuer’s website may trigger the filing of a technical report to support the disclosure. Such PEA-like economic projections often include forecast mine production rates that might contain capital costs to develop and sustain the mining operation, operating costs and projected cash flows.
The CSA notes that over 50% of investor presentations did not include information concerning the material factors and assumptions used to develop the forward-looking information (FLI) in such presentations. The CSA reminds issuers that FLI 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.
The CSA also notes that issuers, particularly those in the exploration stage or those with mineral resource estimates, have inappropriately used descriptive terms such as “world-class”, “spectacular and exceptional results”, “production ready” or “ore” in respect of their projects. The CSA points out that such statements may be overly promotional or misleading, potentially resulting in a misrepresentation under applicable Canadian securities laws.
The CSA notes that, of the 130 investor presentations reviewed, it sent letters to 49 mining issuers requiring them to amend their investor presentations and correct the non-compliant disclosure. Issuers that have received such letters are often placed on the defaulting reporting issuers list. In most cases, issuers have had to confirm that they would comply with NI 43-101 in the future, and in more serious cases, issuers have had to issue corrective news releases or file or refile technical reports (especially where there has been non-compliant disclosure of economic studies, PEAs, mineral resources, mineral reserves, exploration targets or historical estimates, or the use of overly promotional language). The CSA notes that where issuers fail to comply with its requests, the regulators may consider issuing a cease trade order until the deficiency is corrected.
The CSA states that it expected mining issuers to use the Staff Notice as a self-assessment tool to strengthen their compliance with securities laws, in particular the disclosure requirements set out in NI 43-101 and the FLI disclosure requirements.
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