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May 25, 2022

CSA Seeks Stakeholder Feedback on National Instrument 43-101 Standards of Disclosure for Mineral Projects

By Adria Leung Lim, Jeffrey K. Merk and Joshua Ward

The Canadian Securities Administrators (the “CSA”) recently published Consultation Paper 43-401 – Consultation on National Instrument 43-101 Standards of Disclosure for Mineral Projects (the “Consultation Paper”) to obtain stakeholder feedback about the efficacy of several key provisions of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and answer whether regulatory changes in priority areas would address concerns with the current disclosure standards. The Consultation Paper – published on April 14, 2022 – marks the beginning of a 90-day period for stakeholders to submit their comments. The purpose of this feedback is to assist the CSA in considering ways to update and enhance the current mineral disclosure requirements set out under NI 43-101.

Context

NI 43-101 is the principal Canadian securities law instrument regulating the disclosure of scientific and technical information related to mineral exploration, development and production activities by mining issuers for a mineral project on a property material to the issuer. NI 43-101 sets out the rules and guidelines for reporting such information, whether in offering documents, written reports, websites, press releases, oral statements or other continuous disclosure documents required under applicable securities laws in Canada. Disclosure under NI 43-101 requires the supervision of a “qualified person” (as defined under NI 43-101) and the use of prescribed terminology. It also requires a mining issuer to publicly file a Form 43-101F1 Technical Report in specific circumstances.

In the most recent amendments to NI 43-101 in 2011, the CSA, amongst other things, eliminated or reduced the scope of certain requirements and provided more flexibility to mining issuers and qualified persons in certain areas to reflect changes that had occurred in the mining industry from NI 43-101’s initial adoption in 2001. The mining industry has experienced several further changes since the last revision to NI 43-101, such as the emerging demand for commodities related to the growth in green energy and carbon-neutral initiatives and an increased investor awareness relating to environmental, social and governance (ESG) impacts tied to the mining industry. During this period, the CSA has monitored mineral disclosure under NI 43-101 through various review structures and identified several areas of disclosure deficiency. The deficiencies noted by the CSA include, amongst other things, failures taken by qualified persons in the preparation of technical reports, poor quality of scientific and technical disclosure and various types of inadequate disclosure. In addition to these deficiencies, the CSA has acknowledged that other influential mining jurisdictions, such as Australia and the United States, have recently revamped their mining disclosure procedures.

The Consultation Paper

The Consultation Paper sets the stage for an overhaul of the standards of disclosure for mineral requirements in Canada. The Consultation Paper does this by asking stakeholders for their input on how to best improve and modernize the disclosure requirements concerning mineral projects in a series of 38 questions categorized under the broad headings of:

  • Improvements and Modernization of NI 43-101
  • Data Verification Disclosure Requirements
  • Historical Estimate Disclosure Requirements
  • Preliminary Economic Assessments
  • Qualified Person Definition
  • Current Personal Inspections
  • Exploration Information
  • Mineral Resource / Mineral Reserve Estimation
  • Environmental and Social Disclosure
  • Rights of Indigenous Peoples
  • Capital and Operating Costs, Economic Analysis

Conclusion

Given that the latest revision to NI 43-101 was more than a decade ago and that several other mining jurisdictions have overhauled their own standards of disclosure, it is likely that the CSA will propose amending the disclosure requirements for mineral projects upon considering the feedback of stakeholders. Potential amendments are likely to address the key areas identified in the questions posed to stakeholders, such as environmental, social, governance, technical, economic and technological concerns, as well as target the various disclosure deficiencies outlined by the CSA. The Consultation Paper also seeks to continue to foster fair and efficient capital markets for mining issuers by providing investors with more relevant and improved mining disclosure. The Consultation Paper invites stakeholders to provide the CSA with their feedback on the current disclosure requirements for mineral projects until the end of the comment period on July 13, 2022.

 

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