CSA proposes major changes to Standards of Disclosure for Mineral Projects

Filing technical report with short-form prospectus
New form of technical report
Elimination of updated certificates and consents
Extended deadline to file technical report
Exemption for royalty interest holders

The Canadian Securities Administrators (CSA) recently published for public comment proposed changes to the Standards of Disclosure for Mineral Projects (National Instrument 43-101), as well as the companion policy and the prescribed form for technical reports. The proposals were developed following a far-reaching review of the existing rules and public consultations with mining industry participants. The CSA intends to create a more efficient and flexible set of rules aimed at making compliance less costly for issuers, without compromising investor protection.

Filing technical report with short-form prospectus

The CSA is seeking comments on whether to eliminate the requirement for an issuer to file a technical report when filing its preliminary short-form prospectus. At present, a technical report must be filed simultaneously to support scientific or technical information contained in a preliminary short-form prospectus, unless such information is supported by a previously filed technical report. Requiring the technical report to be filed at the same time as the prospectus has created practical difficulties for some issuers; eliminating this requirement would give issuers more time to file a technical report containing the new information.

New form of technical report

The proposals include a substantially revised form of technical report which is intended to be less prescriptive and more adaptable for advanced-stage and producing properties. Among other things, it would give qualifying persons greater discretion in disclosure, allowing them to emphasise the most relevant information in respect of a particular property.

Elimination of updated certificates and consents

The proposals would eliminate the requirement to provide updated certificates and consents for a previously filed technical report, provided that the latter was still current and satisfied applicable independence rules. This could eliminate certain timing and logistical challenges faced by issuers in financing transactions and mergers and acquisitions. The proposals would also permit the consulting firm that employed the qualified person to file the firm's consent, rather than that of the qualified person.

Extended deadline to file technical report

The proposals would allow an issuer to delay filing a technical report on a newly acquired property for a period of six months (instead of the current 45 days) if another issuer had previously filed a technical report on the same property and its report remained current.

Exemption for royalty interest holders

The proposals would exempt royalty interest holders from filing a technical report where the project operator was required to file a technical report or was a producing issuer whose securities traded on a specified exchange, provided that certain other conditions were satisfied. At present, the requirement to file a technical report applies to royalty interest holders as well as operators and producing issuers.

The proposals also include:

• an expanded requirement to file a technical report in respect of certain disclosures;
• a broader definition of the term 'qualified person' which provides more flexibility in recognising foreign qualifications and associations;
• expanded circumstances in which inferred resources can be included in an economic analysis;
• amendments to the independence requirement exemption for qualified persons, permitting greater flexibility;
• a new definition of the term 'historical estimates' that allows for reliance on more recent third-party estimates; and
• a provision that would allow an issuer to name the qualified person who approved the disclosure of the scientific and technical information as an alternative to naming the qualified person who prepared or supervised preparation of the information.

For further information on this topic please contact Andrew Grossman at Ogilvy Renault LLP by telephone (+1 416 216 4000), fax (+1 416 216 3930) or email (agrossman@ogilvyrenault.com).