CSA seeks commentary on modernizing National Instrument 43-101

On April 14, the Canadian Securities Administrators (CSA) announced a request for comment from stakeholders regarding potential updates to the mineral disclosure requirements in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101 or the Instrument), with an emphasis on the form requirements for technical reports.

What you need to know

• Need to address changing industry dynamics. The CSA believes that given significant changes in the mining industry globally, including updates to the mineral disclosure regimes of other significant jurisdictions, as well as accumulated feedback from industry stakeholders, it is appropriate to undertake a review of key provisions of NI 43-101. The review will consider ways to update and enhance the current mineral disclosure requirements, to provide investors with more relevant and improved disclosure, while continuing to foster fair and efficient capital markets for mining issuers.
• Closing disclosure gaps. Since the previous update to NI 43-101, the CSA has identified certain consistent issues with the disclosure of mining issuers and compliance with the existing provisions of NI 43-101, particularly with early-stage mining projects.
• Consultation paper and comments. The CSA has released a consultation paper, seeking general comments on the effectiveness of NI 43-101 and areas for potential revision, as well as setting out specific questions and areas of concern relating to a number of aspects of the Instrument and the form. Stakeholders are encouraged to submit comments on the CSA consultation paper by July 13, 2022¹.

Background

• NI 43-101 governs the disclosure of scientific and technical information concerning mineral exploration, development and production activities by mining issuers. The disclosure must be based on information provided by or under the supervision of a qualified person. Pursuant to NI 43-101, mining issuers must file a technical report prepared by one or more qualified persons at certain times, using a prescribed format. NI 43-101 was first adopted in 2001, and was most recently amended in 2011.
• Since 2011, there have been a number of developments in the mining industry impacting the disclosure related to mining projects, including updates to the CIM Definition Standards for Mineral Resources and Mineral Reserves and the Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (both from the Canadian Institute of Mining, Metallurgy and Petroleum) and significant updates by other influential mining jurisdictions (including Australia and the United States) of their mineral resource/reserve reporting codes and associated disclosure standards.
• The CSA continually monitors market practice in response to the mineral disclosure requirements of NI 43-101 and has identified what they consider certain consistent deficiencies in mineral disclosure, including: the failure of qualified persons to properly assess their independence, competence, expertise and experience when delivering technical reports;
  • poor quality of scientific and technical disclosure in technical reports for early-stage exploration properties;
  • inadequate mineral resource estimation disclosure;
  • misuse of preliminary economic assessments; and
  • inadequate disclosure of all business risk related to mineral projects.

Consultation paper

In the consultation paper, the CSA sets out a number of specific questions for consideration, along with commentary from the CSA regarding investor feedback on disclosure and their observations of issuer practice. The questions cover a broad range of topics, including:

• changes to the technical report form requirements, including increased alignment with the reporting requirements of other influential mining jurisdictions;
• potential additional disclosure requirements regarding environmental and social issues and impacts on the rights of Indigenous Peoples, including mandatory disclosure requirements;
• potential changes to the Instrument designed to improve compliance with existing disclosure requirements, including disclosure regarding exploration information, mineral resource estimates, historical reserve and resource estimates and data verification;
• the role and scope of preliminary economic assessments, including preliminary economic assessments in the context of projects with current mineral reserves;
• the scope of the qualified person (QP) definition, and the role of independent QPs and executive officers acting as QPs; and
• disclosure requirements for operating and capital estimates and updates to standardize economic analyses of projects.