proposed changes to ni 43-101
DESCRIPTION
Proposed changes to NI 43-101. MasterMINING, May 3 and 4 , 2011. Craig Waldie, P.Geo. , Senior Geologist [email protected] Jim Whyte, P.Geo. , Senior Geologist [email protected]. - PowerPoint PPT PresentationTRANSCRIPT
PDAC2011
Proposed changes to NI 43-101
MasterMINING, May 3 and 4, 2011
Craig Waldie, P.Geo., Senior Geologist [email protected]
Jim Whyte, P.Geo., Senior Geologist [email protected]
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The views expressed in this presentation are our own and do not bind the OSC or other commission staff.
These materials are provided for general information purposes only and do not constitute legal advice.
These are the changes published April 8, 2011, which are still subject to Ministerial approval in Ontario.
Information has been summarized and paraphrased for presentation purposes.
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Agenda
National Instrument• Professional association and qualified person• All disclosure• Technical report triggers• Certificates and consents
Technical Report Form• 2 forms in 1
Companion Policy
Questions and Answers
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Fundamental Principles of NI 43-101
1. Qualified Person• Scientific and technical disclosure must be prepared by a
“Qualified Person” (QP)
2. Standards and Definitions• Adopts CIM categories of resources and reserves as a
reporting standard• Defines terms like pre-feasibility and feasibility study,
exploration information, “preliminary economic assessment”
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Fundamental Principles of NI 43-101
3. Prohibited Disclosure
• Potentially confusing and undermines the credibility of the market
• No disclosure of a quantity of mineralized material unless it is certified as a resource or reserve
• Must disclose both tonnage and grade, and show all classes of resource or reserve
• Some disclosure of non-compliant information is permitted, but always with clear cautionary language
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Fundamental Principles of NI 43-101
4. Technical Report• Form 43-101F1 – spells out the information the report
needs• Filed to support scientific and technical disclosure on a
project material to the company• Certain disclosure events trigger the requirement for a
technical report:• Financing documents, exchange listing documents• Takeover bids and directors’ circulars• Annual Information Form• Material change to resources or reserves
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Purpose of Proposed Changes
Maintain investor protection while making compliance less costly for companies
• Preserve core principles of NI 43-101• Provide more flexibility for companies and QPs• Distribute responsibility fairly between the company and QP• Reduce the scope of certain requirements• Clarify areas not having the intended effect
Changes reflect• 10 years of regulatory experience• Changes in industry practices• Stakeholder consultations in 2009• Public comments in 2010
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National Instrument
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Definitions – New and Modified
Acceptable foreign code
Advanced property
Effective date
Historical estimate
Preliminary economic assessment
Professional association
Qualified person
Specified exchange
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“Qualified Person”
Education• Engineer or geoscientist with a university degree related
to mineral exploration or mining
Experience• At least five years of experience in mineral exploration,
mine development or operation, or mineral project assessment that is relevant to professional degree, and
• Experience relevant to the subject matter of the mineral project and technical report
Accountability• In good standing with a professional association
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“Professional Association”
Remove Appendix A from National Instrument
New objective test for foreign associations• Generally accepted as a reputable professional
association• Admits individuals based on education, experience and
ethical fitness• Requires compliance with professional standards of
competence and ethics • Requires or encourages continuing professional
development• Applies disciplinary powers regardless of where the
member practises or resides
Companion Policy• Includes revised list of foreign associations and required
membership designations
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Foreign Association – Membership Class
1. Attainment of a position of responsibility; and• Exercise of independent judgment
2. A) Favourable confidential peer evaluation; or• Individual’s character, professional judgement,
experience, and ethical fitness
B) Demonstrated prominence or expertise in the field of mineral exploration or mining
• At least five years of professional experience and a level of responsibility such as:
• At least three years in a position of responsibility where the person was depended on for significant participation and decision making;
• Experience of a responsible nature and involving the exercise of independent judgment in at least three of those years;
• At least five years in a position of major responsibility, or a senior technical position of responsibility.
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Applicable to All Disclosure
All technical information must be• Prepared or approved by a QP
• Addresses instances where information is not prepared by the QP
Restricted/prohibited disclosure• No economic analysis on exploration targets or
historical estimates• No gross metal values or in-situ values• No total grades or equivalent grades unless grade of
each metal disclosed (total precious metals, total rare earths, “gold-equivalent”)
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Historical Estimate
New definition• Unverified estimate prepared prior to the company
acquiring the property• No longer tied to February 1, 2001 date
Combined s. 2.4 and 4.2(2)• Source and date etc.• Cautionary statements required each time historical
estimate is disclosed
Added• Include key assumptions, parameters, methods• Comment on the work needed to upgrade and verify
the historical estimate
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Preliminary Economic Assessment
Removed several restrictions• “prior to completion of a pre-feasibility study”• “results must represent a material change”
Added• “describe the impact of the PEA on existing studies”
(prefeasibility or feasibility)• Are the mineral reserves still valid?
• Word “economic” reflects industry term (PEA)
Examples of its application:• Economic conditions change and nullify an earlier reserve
estimate• Producing mine with a newly-discovered inferred resource• Operating transitions (pit to underground, oxide to fresh)
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Written Disclosure
Qualified Person• Name and relationship of QP that prepared or approved
the technical information
Exploration information• Location, azimuth and dip of drill holes• Depth of sample intervals
Mineral resources and mineral reserves• Drafting changes
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Trigger
CASE 1
Not a material change in relation to the company
CASE 2
Material change in relation to the company
But is NOT related to 1st time or a change to resources, reserves, or a PEA
CASE 3
Material change in relation to the company
That IS related to
1st time or a change to resources, reserves, or a PEA
Keep, remove or modify the trigger?• Notice included specific questions for public comment• Solicited comments from investor advocacy groups
Remove - rely on latest AIF and disclosure record
Modify - new technical report if technical information meets Case 2 or 3
Short Form Prospectus Trigger
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Any Written Disclosure Trigger Modification of the “news release” trigger
• Back to the 2001 principle• News release, fact sheet, presentation – anything
permanent
Any first time written disclosure of any of the following that constitutes a material change in relation to the company• Mineral resource• Mineral reserve• PEA• Change in mineral resource, mineral reserve or PEA
Must file a news release when the technical report is filed on SEDAR• Alerts investors – technical report may be filed up to 45
days after disclosure
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Annual Information Form Trigger
Removed “grandfathering” exemption • Company’s disclosure should not still be relying on a
pre-2001 AIF, prospectus or material change report
May impact some large companies that have never filed a technical report on their material properties• New technical report, if triggered, is still required to be
filed at the same time as the AIF
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Property Acquisition Trigger
Acquisition of a property with a “current” technical report by another company • New filing delay – 180 days – under certain conditions
1. Technical report has been previously filed by another company that held the property
2. New company• Identifies other company and technical report title and date• Names QP who reviewed the technical report on behalf of new
company• States – to the best of the company’s knowledge, information,
and belief, there is no new material scientific or technical information that would make the disclosure of the mineral resources, mineral reserves or results of a preliminary economic assessment, inaccurate or misleading
3. New company files a new technical report supporting its disclosure within 180 days
4. Must file a news release when the technical report is filed on SEDAR
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Relying on a “Current” Technical Report
Removed requirement for QP to provide updated QP certificates and consents• Company is in the best position to determine if there is
no new material technical information• Company’s determination is transparent and open to
challenge by both investors and regulators• QP, especially if an independent contractor, should not
be obliged to babysit a project the company is managing
Requires that the company's previous technical report still support disclosure in the trigger document (AIF, circular, offering document, etc.)• No new material scientific or technical information• The company’s disclosure must still be approved by its
internal QP
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Independent QP
New exemption for “producing company” listed on a “specified exchange” that wants to become a reporting issuer in Canada
• Such companies are subject to comparable requirements under rules of the specified (foreign) exchanges
• ASX, LSE, JSX, NASDAQ, HKEX, Wallstrasseboerse
• This has been interpreted (wrongly) as an exemption from filing reports on becoming a reporting issuer
• The foreign issuer must still file technical reports on its material properties, but internal QPs can be the authors
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Foreign Codes
“Acceptable foreign code” • JORC Code• PERC Code• SAMREC Code• SEC Industry Guide 7• Certification Code• Any other code generally accepted in a foreign
jurisdiction that is consistent with CIM Definition Standards on Mineral Resources and Mineral Reserves
Reconciliation• In response to public comment, we retained the
requirement to reconcile foreign codes to CIM definitions, in case any foreign jurisdiction later goes its own way
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Technical Report Form
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Technical Report - Form 43-101F1
New Form! Revised with assistance of mining advisory
committee (MTAMC) and public comments• Single form with better balance between exploration
and advanced properties• Broadened “Item 25-type” information for properties
with a PEA, pre-feasibility of feasibility study• Less prescriptive and improved organization• Deleted most occurrences of “must” and “details”• More guidance on certain items
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General Instructions
Objective• Summary of material technical information that is
understandable to a reasonable investor
2 forms in 1• Items 1 - 14 and 23 - 27 for all technical reports• Items 15 - 22 for “advanced properties”
• Mineral resources where potential economic viability is supported by PEA, pre-feasibility or feasibility study; or
• Mineral reserves
May refer to information from previous report if• Information is still current• Identify title, date & author of previous technical report• Summarize or quote the referenced information• QP can’t disclaim responsibility (i.e. due diligence)
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Revisions to Technical Report Form
Title, Contents Items 1-2
Summary, Introduction, Reliance
Items 3-5
Location, Access, History Items 6-8
Geology, Deposit Types, Mineralization
Items 9-11
Work Program, Results, Verification
Items 12-18
Resource and Reserve Estimates
Item 19
Conclusions, Recommendations
Items 20-22
References Item 23
Date, Signature Item 24
Development Information Item 25
Illustrations Item 26
“General Contents”
Title, Date, Signature, Contents, Illustrations
Items 1-3Summary, Introduction, Reliance
Items 4-6 Location, Access, History
Items 7-8Geology and Mineralization, Deposit Types
Items 9-13Work Program, Results, Verification
Item 14
Item 15
Mineral Resources
Mineral Reserves
Item 16-22
Mining, Recovery, Infrastructure, Markets, Contracts, Environmental, Social Impact, Economic Analysis
Items 23-26Adjacent Properties, Other Data, Conclusions, Recommendations
Item 27 References
Existing Form New Form
“Advanced Property”: Items 15 to 22
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General Contents
Title Page• No change
Date and Signature Page• Either at beginning or end of the technical report
Table of Contents• Some heading changes
Illustrations• Maps and plans – show what is significant to the stage of
activity (exploration, advanced, development)
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Summary
Added• Summarize “important” information about the property• Mineral resource and mineral reserve estimates and
removed exploration concept
Introduction
Terms of reference• Objectives and scope the technical report• Professionals involved and their responsibilities
Personal inspection• Who, when and what
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Added• Valuations for diamonds/gemstones• Commodities where pricing not publicly available
Clarified conditions for use of reliance on experts
Reliance on Other Experts
Property Description and Location
Added• Risks affecting legal access, title, ability to perform work
Deleted• How property boundaries are located• Location of mineralization, workings, natural features, etc.
(duplicates illustration requirements)
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Accessibility, Climate, Local Resources, Infrastructure and Physiography
No changes
History
New Instruction• Distinguish previous work conducted within the current
property boundary from previous work outside the property boundary
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Geological Setting and Mineralization
Combined related Items• Item 9 (Geological Setting)• Item 11 (Mineralization)• Consolidates associated information
Deposit Types
No changes
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Exploration
Combined related Items• Item 12 (Exploration)• Relevant portions of Item 14 (Sampling Method and
Approach)• Information associated with surface exploration and
sampling now under one heading
Deleted• Whether work carried our by company or contractor
• Company is ultimately responsible for its disclosure
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Combined related Items• Item 13 (Drilling)• Relevant portions of Item 14 (Sampling Method and
Approach)• Information associated with subsurface exploration and
sampling now under one heading
Added• Drill hole location, azimuth, and dip
• Properties with mineral resources may meet this requirement by providing a drill plan and representative drill sections through the mineral deposit
New Instruction• Clearly distinguish drilling results by previous owner
from results by the company
Drilling
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Sample Preparation, Analysis, Security Added
• Relationship of laboratory to the company• QA/QC action taken or recommended to provide
confidence in data collection and processing
Explicit
Deleted• Statement whether sample preparation before dispatch
to laboratory was done by an employee of the company
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Data Verification
Clarify• Steps taken by QP to verify the data in technical report
Removed• Requirement to discuss quality control
• Duplicates pervious Item
• Statement whether QP has verified the data• Replaced with opinion of QP
Added• QP’s opinion on the adequacy of the data for the
purposes used in the technical report • Reasons for limited verification or failure to verify data
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2011 Mineral Processing and
Metallurgical Testing Expanded requirements
• This is the description of metallurgical testing – for advanced projects, plant design has its own section (17)
• Nature and extent of testing and summary of results• Basis for assumptions/predictions of recoveries• Representativeness of test samples to types/styles of
mineralization and mineral deposit as a whole• Any deleterious elements or processing factors
potentially affecting economic extraction
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Mineral Resource Estimates
Separate item for mineral resources
Summarize• Key assumptions, parameters, and methods for a
reasonably informed reader to understand how mineral resources were estimated
• Comply with disclosure required by s. 2.2, 2.3, and 3.4
New Instruction• With multiple cut-off grades, highlight base case cut-off• All estimates resulting from each cut-off grade must
meet test of “reasonable prospects of economic extraction”
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2011 Additional Requirements for
“Advanced Properties” Items 15 to 22
• Concept of an “advanced property”• Addresses industry concerns about modify existing Form• Generally replaces Item 25-type information
Items• Mineral Reserve Estimates• Mining Methods• Recovery Methods• Project Infrastructure• Market Studies and Contracts• Environmental Studies, Permitting and Social or
Community Impact• Capital and Operating Costs• Economic Analysis
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Mineral Reserve Estimates
Separate item for mineral reserves
Summarize• Key assumptions, parameters, and methods for a
reasonably informed reader to understand how mineral reserves were estimated
• Comply with disclosure required by s. 2.2, 2.3, and 3.4• Discuss extent to which mineral reserves could be
materially affected by:• Mining• Metallurgical• Infrastructure• Permitting• Other relevant factors
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Mining Methods
Based on Items 25(a) and (j) of Old Form
Summarize• Current/proposed mining method• Geotechnical and hydrological aspects of the mine• Stripping and underground development issues• Mining fleet and machinery requirements• Production rates, dilution and mine life
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Recovery Methods
Based on Items 25(a) and (b) of Old Form
Summarize• Issues specific to plant design and flow sheet• Recoverability and amenability of mineralization to the
recovery process• Requirements for energy, water and process materials
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Project Infrastructure
New requirement – not in Item 25 of Old Form
Infrastructure is critical to project costs
Summary of logistics issues such as• Roads, rail and port facilities• Dams, dumps, stockpiles and leach pads• Tailings disposal, pipelines and power
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Market Studies and Contracts
Based on Items 25(c) and (d) of Old Form
Market studies• Summary of markets for commodities produced• Nature of studies completed
• Marketing and product specification requirements• Commodity price projections
• Confirm QP has reviewed the studies• Results support assumptions in technical report
Contracts• Identify material contracts in place or under negotiation• Indicate if terms are within industry standards
Removed from April 2010 draft• Disclosure of contract terms and results of studies
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2011 Environmental Studies, Permitting
and Social or Community Impact Based on Item 25(e) of Old Form
Summarize• Environmental issues impacting extraction of the
mineral deposit• Tailings disposal, site monitoring, water management • Permit requirements and status of permits• Mine closure requirements and costs
Added• “Social license”• Social or community related plans• Status of negotiations or agreements with communities
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Capital and Operating Costs
Based on Item 25(g) of Old Form
Summarize• Capital and operating costs in tabular form• Explain and justify the basis for cost estimates
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Economic Analysis
Based on Items 25 (f), (h), (i) and (j) of Old Form
Summarize• Clear statement and justification for main assumptions• Cash flow forecasts on annual basis • NPV, IRR and payback• Taxes, royalties and government levies• Sensitivity or other analyses and impact of the results
New Instruction• Producing issuers may exclude the economic analysis for
properties in production, unless a material expansion is planned
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Adjacent Properties
Relocated this Item
Drafting change
Other Relevant Data and Information
No change
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Interpretation and Conclusions
Modified• More applicable to various stages of project development• Less emphasis on exploration projects
Added• Identify significant risks and uncertainties• Discuss potential impacts of these risks to the projects
potential viability or continued viability
Removed• Whether completed work met its original objectives
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Recommendations
New Instruction• If no work program or budget is proposed – explain why
References
No changes
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Companion Policy
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Companion Policy
Restructured to track sections in NI 43-101• 2.4 of NI 43-101 guidance in 2.4 of 43-101CP
Provides more guidance and interpretation• Material property• Cautionary language• Technical report triggers• Certificates and consents
Appendix A• Revised list of foreign associations and required
membership designations
Appendix B• Template for QP Consent
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Questions?