Earlier this year, Canadian securities regulators, through the British Columbia Securities Commission, provided an update on their proposal to modernize and streamline Canada’s mining disclosure regime, without imposing undue regulatory burdens on market participants, but while continuing to protect investors (the Proposal).

Updated definitions and terminology

Canadian securities regulators are proposing several changes to key definitions in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101):

  • the definitions of “mineral project,” “project,” “mineral property,” and “property” would be consolidated into a single more precise defined term – “mineral project”;
  • the definitions of “early-stage exploration property” and “advanced property” would be removed to make the Technical Report Form suitable for all stages of mineral project development;
  • the definition of “qualified person” would be revised to eliminate the education requirement and clarify that required industry experience must be acquired post-registration as a professional geoscientist or engineer;
  • additionally, a qualified person would need to have appropriate experience to confidently identify assumptions and risks that could affect the reliability of data related to the mineral project;
  • the revenue threshold to qualify as a “producing issuer” would be increased to C$55 million (from C$30 million) in the most recent fiscal year and C$165 million (from C$90 million) in aggregate over the three most recent years; and
  • references to “acceptable foreign codes” would be removed (with all major mining jurisdictions having harmonized their definitions to align with the Committee for Mineral Reserves International Reporting Standards, the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) Definition Standards were deemed to be sufficiently similar to other jurisdictions).

Royalty issuer technical reports

An issuer that only has a royalty or similar interest in a mineral project would no longer be required to file a technical report, acknowledging the limited access such issuers typically have to project data and the resulting limitations on qualified person verification and personal inspection.

Written disclosure and material mineral projects

Under the current instrument, many of the prescribed requirements pertaining to scientific and technical information only apply to material projects. The Proposal would clarify that the prescribed requirements for written disclosure apply to both material and non-material projects. These requirements would apply to written disclosure regarding data verification, exploration information, and mineral resources and mineral reserves.

In line with this change, the term “material scientific and technical information” would be replaced with “relevant scientific and technical information.” This clarifies that the qualified person’s determination of what information is to be disclosed in a technical report is based on their assessment of relevance, rather than materiality.

Mineral resource disclosure

The Proposal codifies current industry practice and would require:

  • disclosure of how reasonable prospects for eventual economic extraction were determined;
  • enhanced classification detail for mineral resource estimates;
  • disclosure of the issuer’s attributable percentage of resources for fractional ownership interests; and
  • project-specific risk factors associated with mineral resource estimates.

Ability to add inferred resources to other mineral resource categories

The Proposal would remove the current restriction on adding inferred mineral resources to other resource categories (i.e., measured and indicated resources) when disclosing information about mineral resources, although issuers would still be required to disclose the number for each resource category. This change is the result of observation of industry practices, the general understanding in the industry that inferred mineral resources cannot be converted (directly) into mineral reserves and the fact that the confidence level of inferred mineral resources was increased by the CIM in 2014.

Adjacent properties

The term “adjacent property” would be removed, as it was found that issuers often provide disclosure on adjacent properties for promotional purposes.  Instead, these properties would be referred to as “neighbouring” or “analogue” projects. Disclosure focused on such properties would need to be accompanied by cautionary language indicating that mineralization on those properties is not necessarily indicative of mineralization on the issuer’s own project.

Data verification

Qualified persons would be required to disclose data verification procedures for each item in the technical report. These changes address deficiencies observed by Canadian securities regulators relating to often overlooked technical data, such as metallurgy or mining methods.

Environmental and social issues

The Proposal would enhance certain terminology, such as introducing the broad term “rightsholders” and replacing outdated terms such as “local” and “social and community impact.” Technical reports would also require the dates and sources of any environmental, permitting and social reporting disclosure to address the non-periodic, milestone-driven nature of a technical report.

Disclosure regarding Indigenous Peoples and rightsholders

Technical reports would now require specific disclosure of permits, agreements, and negotiations with Indigenous Peoples, rightsholders, or communities related to the mineral project, as such disclosure is deemed relevant in a technical report in order for an investor to fully understand the risks relating to a mineral project. This would address long-standing concerns about the adequacy and specificity of current disclosure in this area.

Personal inspection requirements

The Proposal would reinforce that at least one qualified person must conduct a personal inspection prior to the filing of a technical report and eliminate the ability to defer personal inspections due to seasonal conditions. A standalone form item would be introduced to the Technical Report Form, requiring disclosure specific to each qualified person’s personal inspection, emphasizing its importance to the technical report.

Disclaimers

The Proposal would clarify that an issuer’s disclosure, including a technical report, cannot include any disclaimer of scientific or technical information. This addresses instances where issuers have used disclaimer language in other disclosure documents without regard for the veracity of the disclosure of scientific and technical information about a mineral project.

Scoping study and other CIM-aligned changes

The term “preliminary economic assessment” would be replaced with “scoping study,” in line with updated CIM Definition Standards. Required cautionary language would remain for scoping studies, acknowledging their conceptual nature.

Additional CIM-aligned definitions incorporated by reference into NI 43-101 would include:

  • “exploration target,” replacing “target for further exploration”; and
  • “life of mine plan,” for disclosing mineral project status.

Next steps

Note that the Proposal is still subject to change and not all of the proposed changes summarized herein may ultimately be incorporated into the final revisions to NI 43-101. Once finalized, Canadian securities regulators will formally publish the Proposal and initiate a Notice and Request for Comment period. Stakeholders will be invited to provide input prior to formal adoption.

To better understand the potential impacts of the Proposal, please feel free to reach out to a member of our Capital Markets or Mining teams.