By Paul Ténière, M.Sc., P.Geo.
This is Part 3 of an article on National Instrument 43-101 (NI 43-101) compliance and disclosure matters including the importance of completing an independent peer review of your NI 43-101 technical reports, news releases, continuous disclosure documents (AIF, MD&A), websites, and corporate presentations.
A question that I receive the most as a consultant to the mining and exploration industry is what event triggers the need for an NI 43-101 technical report (or “technical report”). Typically, a trigger can be defined as a “milestone event” that results in material changes or disclosures for the company, and these can be broken down into planned and unplanned events.
A planned trigger is normally a disclosure event such as a news release, Management Discussion and Analysis (MD&A), Annual Information Form (AIF), offering document, prospectus, information circular, website, corporate presentation, social media post, etc. The disclosure of the results of a maiden mineral resource estimate, preliminary economic assessment (PEA), or a mineral reserve (prefeasibility or feasibility study) for a property material to the company are referred to as “property milestone events”.
A NI 43-101 technical report is also required when a mining or exploration company decides to go public either through an initial public offering (IPO), Capital Pool Company (CPC), reverse takeover (RTO), or direct listing on a Canadian stock exchange (e.g. CSE, TSXV, or TSX), or generally is trying to qualify for a new listing.
In most cases, a technical report must be prepared by an independent Qualified Person (QP) for all properties material to the Company and is used by Exchange geologists to determine if the company qualifies for a listing under the mining category.
An unplanned trigger can also occur, and these could include the incorrect disclosure of exploration results and historical mineral resource and mineral reserve estimates (“historical estimates”) in a news release, corporate presentation, or website. In the case of a historical resource estimate, this release of information needs to be compliant with Section 2.4 of NI 43-101 (Disclosure of Historical Estimates). If historical resource estimates are not properly disclosed under NI 43-101 there may be a public perception that the company is treating the historical resource estimate as a “current resource estimate”. Improper disclosure of results is quite common and one of the typical red flag items identified by the regulators in a disclosure review that may lead to an immediate request to file a technical report.
If historical resource estimates are not properly disclosed under NI 43-101 there may be a public perception that the company is treating the historical resource estimate as a “current resource estimate”.
All QP’s signing off on a technical report must be independent for the following triggering events:
- First-time reporting issuer in Canada (as described above);
- Filing a preliminary long form prospectus;
- First-time disclosure of a mineral resource estimate, PEA, or mineral reserve estimate; or
- If there is a >100% change to an existing mineral resource or mineral reserve estimate
Exemption from the independence requirement only applies to a producing issuer, which is defined as a mining issuer with gross revenue >$30 million in recent fiscal year, and gross revenue >$90 million in the last three fiscal years. Additional guidance on the “Independence Test” for QP’s can be found under Section 1.5 of NI 43-101 and the Companion Policy.
Technical Report Tips
Finally, below are some useful tips for QP’s preparing technical reports as provided by myself and the mining staff at the Ontario Securities Commission (OSC) including hyperlinks to pertinent documents:
- Only a Professional Geoscientist (P.Geo.) or Engineer (P.Eng.) (QP) who takes full responsibility for the information disclosed can sign off on a technical report.
- The QP must have relevant and an appropriate amount of experience in the geology and commodity being reported.
- The company must know in advance the purpose of the technical report (i.e. triggering event).
- It is best practice to setup a template for the technical report and following the Form 43-101F1 format precisely.
- Write a concise and complete summary of the significant findings and results.
- Clearly state the potential risks and uncertainties with the project.
- Have the draft technical report peer reviewed to ensure it meets the reporting requirements set out in NI 43-101 and CIM standards and policies (covered in Part 1 and 2 of this series).
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Paul Ténière, M.Sc., P.Geo. is our in-house NI 43-101 and capital markets expert, and a former mining expert at the Toronto Stock Exchange (TSX), TSX Venture Exchange, Investment Industry Regulatory Organization of Canada (IIROC) and a member of the “NI 43-101 Committee” with the Canadian Securities Commissions. Email Paul at: [email protected].