June 4, 2020 CSA

Toronto and Vancouver – The Canadian Securities Administrators (CSA) today published a notice that summarizes the results of a review on the mineral resource estimates disclosed in mining issuers’ technical reports. The notice explains how regulators assess mineral resource estimates and provides guidance to assist issuers on addressing common deficiencies.

Disclosure of a mineral resource estimate is an influential factor in the value that investors put on a mining issuer’s securities. The estimate is the foundation for studies that govern the design and economic feasibility of a mining project.

CSA Staff reviewed the disclosure of mineral resource estimates in 86 technical reports to assess compliance with securities regulatory requirements and for conformance to the Canadian Institute of Mining, Metallurgy and Petroleum best practices guidelines.

“Robust technical reports are essential to disclosure at key project development stages,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Our intention for publishing this guidance in the current environment is to support mining issuers in preparing their resource estimates, and to reinforce the importance of technical reports that are transparent and comply with disclosure requirements and industry best practices.”

The review found that most disclosure on mineral resource estimates was satisfactory. Some mining issuers need to improve their mineral resource estimate disclosure in the following areas:

• Reasonable prospects of eventual economic extraction: improving descriptions of the different technical and economic assumptions used to determine that the estimated mineralized material has the potential to be mined and processed economically;
• Data verification: ensuring data used to support a mineral resource estimate is adequately verified and determined suitable by the qualified person;
• Reporting results, sensitivities, risks and uncertainties: enhancing disclosure about potential risks and uncertainties specific to the mining project. Many technical reports only provided boilerplate disclosure and omitting risks specific to of the mineral resource estimate could be misleading.

Despite some deficiencies, many technical reports provided detailed and useful information on geological constraints applied to the estimate, and on statistical treatment of the data.

Based on the review, ten mining issuers amended their technical reports. The issuers were required to correct material disclosure deficiencies by re-filing the technical reports and filing a clarifying or retracting news release. Of the ten issuers, six re-filings related to inadequate disclosure and four re-filings were due to professional practice issues.

The CSA will continue to pay special attention to mineral resource estimates and the areas of deficient disclosure referenced in this review.

The notice can be found on participating CSA members’ websites.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

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