The following discussion and guidance focuses on areas to which, in AMC’s experience, regulators pay particular attention when reviewing Technical Reports prepared under NI 43-101. It is not intended as a replacement for guidance contained in NI 43-101 and its companion documents, to which those preparing Technical Reports should always refer (see list at the end of the article).
This article is based on a presentation by Mort Shannon to the annual meeting of the American Exploration and Mining Association in Spokane, Washington, in December 2015. The Item Number, where shown in the following table, refers to Form 43-101F1.
|Item No||Issue||Discussion / Guidance||Reference|
|All||Reporting terminology||Tonnage / grade estimates may only be referred to as “Mineral Resources” or “Mineral Reserves”. Terms such as “geological resources”, “diluted resources”, “mineable resources”, “mineral inventory” “ore reserves”, etc. are not allowed.
Take particular caution with PEAs as these must not contain Mineral Reserves or anything that a reader might construe as a Mineral Reserve.
If the report contains a production schedule that includes tonnages and grades, AMC recommended practice is to include a prominent and proximal cautionary note that the scheduled tonnes and grade do not represent an estimate of Mineral Reserves.
|NI 43-101 2.2
|All||Cautionary language||The following statement is required when reporting the potential quantity and grade for an exploration target: “The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource” and that “it is uncertain if further exploration will result in the target being delineated as a mineral resource”.||NI 43-101 2.3 (2) (a)
|The following statement is required when reporting the results of a PEA that includes or is based on Inferred Resources: “The preliminary economic assessment is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized”.||NI 43-101 2.3 (3) (a)
|The following statement is required when reporting historical estimates: “A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves” and “the issuer is not treating the historical estimate as current mineral resources or mineral reserves”.||NI 43-101 2.4 (g)|
|The following statement is required when reporting the results of an economic analysis of Mineral Resources: “Mineral resources that are not mineral reserves do not have demonstrated economic viability”.||NI 43-101 3.4 (e)
|The cautionary statements must be included each time the triggering statement is made||43-101 CP
|All||Property v Project||Technical Report must cover entire Property, not just a single project on the Property.
|NI 43-101 does not define “Property”, but 43-101CP says: “We consider a property, in the context of the Instrument, to include multiple mineral claims or other documents of title that are contiguous or in such close proximity that any underlying mineral deposits would likely be developed using common infrastructure”.
If outputs from several mines or projects are likely to be treated through common treatment plant, the mines / projects would be regarded as being part of single Property.
|All||PEA v PFS v FS||Section 2.3(1)(b) does not allow the inclusion of Inferred Resources in a PFS-level or FS-level economic analysis.
But Section 2.3(3) does allow the inclusion of Inferred Resources in a PEA.
|NI 43-101 2.3 (1) (b)
|However, CSA warns that “issuers that blur the boundary between a PEA and a PFS by stating that some or all of the components of the PEA are done at the level of a PFS, run the risk that we may challenge whether the study meets the definition of a PEA”.
CSA is particularly alert to PEAs that appear to be at a PFS (or FS) level, but that give the impression of having been defined as a PEA for the sole purpose of including Inferred Resources.
If one of the Technical Report recommendations is to go from a PEA straight to an FS, AMC recommends that the reasoning is clearly explained. Otherwise, regulators may interpret it as indicating that the PEA is, in fact, a PFS.
|CSA Staff Notice 43-307 (16 August 2012)|
|All||Impact of PEA on previous PFS or FS||If the results of a PEA that includes Inferred Resources are disclosed after a PFS or FS that establishes Mineral Reserves have been completed (for example, if the PEA relates to the development of a satellite deposit), The disclosure must include a discussion of the impact of the PEA on the PFS or FS and Mineral Reserves.||NI 43-101 2.3.3 (c)
|3||Reliance on other experts||QPs can only rely on other experts in the areas of:
Disclaiming responsibility for technical and scientific information, other than environmental, is expressly prohibited.
It is also inappropriate to include in Item 3 references to reliance on information provided by the Issuer in regard to items for which the QP is responsible.
|Guidance to Item 3 in Form 43-101F1|
|11 12||Opinions of QP||The QP must express an opinion:
||Guidance to Items 11 and 12 in Form 43-101F1|
|14||Mineral Resource statement||A clear statement should be included as to whether Mineral Resources include or exclude those Resources converted to Mineral Reserves.
CIM Best Practice recommendation is that Mineral Resources should be reported separately and exclusive of Mineral Reserves.
Ensure that the Issuer’s percentage interest in the property and the Mineral Resources / Reserves is stated.
|CIM Estimation of Mineral Resources and Mineral Reserves, Best Practice Guidelines|
|14 15||Discussion of factors affecting Mineral Resource and Mineral Reserve statements||Under Item 14, a general discussion must be included on the extent to which the Mineral Resource estimates could be materially affected by environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors.
Under Item 15, a general discussion must be included on the extent to which the Mineral Reserve estimates could be materially affected by mining, metallurgical, infrastructure, permitting, and other relevant factors.
|Guidance to Items 14 and 15 in Form 43-101F1|
|14 15 22||Metal prices||NI 43-101 does not mandate how metal prices are to be determined.
However, it clear from experience that regulators will question prices they consider to be out of date or substantially at variance with metal price projections in general use by the industry at the time.
|22||Economics to include tax||An economic assessment must include post-tax results (can be in addition to pre-tax results).||Guidance to Item 22 in Form 43-101F1|
|26||Recommended work programs to include costings||Recommended work programs must be accompanied by a breakdown of estimated costs for each phase.||Guidance to Item 26 in Form 43-101F1|
|All||Making reports too BIG||Technical Reports are meant to be summary reports, and excessive content can detract from their purpose and usefulness.
Best practice is to include only that information required to make the report understandable and not misleading, and to maintain internal files of supporting information.
|Instructions (1), (3) and (8) of Form 43-101F1
|All||Illustrations||Illustrations must be legible and suitable for electronic filing. Maps must be dated and include a legend, author or information source, a scale in bar or grid form, and an arrow indicating north.||Instructions to Form 43-101F1|
AMC’s principal recommendation:
Read and be familiar with NI 43-101, 43-101CP, Form 43-101F1, CIM Best Practice Guidelines and other guidance published by CIM and regulatory authorities from time to time.
National Instrument 43-101, Standards of Disclosure for Mineral Projects, June 2011
Companion Policy 43-101CP to National Instrument 43-101, Standards of Disclosure for Mineral Projects, June 2011
Form 43-101F1 – Technical Report, June 2011
CIM Definition Standards for Mineral Resources and Mineral Reserves, developed by CIM Standing Committee on Reserve Definitions, May 2014
CIM Estimation of Mineral Resources and Mineral Reserves, Best Practice Guidelines
CSA Staff Notice 43-307. Mining Technical Reports – Preliminary Economic Assessments, August 2012
British Columbia Securities Commission – 2012 Mining Report, January 2013.
National Policy 51-201, Disclosure Standards
National Instrument 51-102, Continuous Disclosure Obligations
Useful link: http://www.bcsc.bc.ca/For_Companies/Mining/
Geology Manager / Principal Geologist