While investor presentations and other forms of investor relations materials provided on company websites are an effective tool for communication, mining issuers should remain alert that such materials are captured by the definition of “written disclosure” and the associated disclosure rules in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). A review of such investor presentations and other website disclosure was the subject of the recent Canadian Securities Administrators (“CSA”) Staff Notice 43-309 – Review of Website Investor Presentations by Mining Issuers (the “Staff Notice”) issued on April 9, 2015.
Overall, the CSA found that there is substantial room for improvement for mining issuers to comply with disclosure requirements. Of the 130 investor presentations reviewed, only 18% were found to be substantially compliant with NI 43-101, while 57% had issues of minor non-compliance and 25% suffered from major non-compliance concerns. The CSA sent letters to 49 mining issuers requiring them to take remedial action, including providing undertakings regarding future compliance, issuing a corrective news release and, in the most severe cases, filing or refiling a technical report.
The Staff Notice highlights the need for mining issuers to improve their disclosure in order to effectively comply with the requirements of NI 43-101. The most significant areas of non-compliance identified by the CSA review include:
- Naming the qualified person (“QP”): Of the 130 investor presentations reviewed, only 54 provided the QP’s name and relationship to the issuer. The Staff Notice states that the foundation of NI 43-101 is that scientific and technical information must be prepared or approved by a QP and that compliant disclosure must state the name of the QP and their relationship to the issuer. The CSA noted that overall compliance was significantly higher among presentations that were reviewed by a QP.
- Preliminary economic assessments (“PEA”): The Staff Notice advises issuers to ensure that disclosure of the results of a PEA provides appropriate cautionary statements for the public to understand the limitations of the results of the PEA and to highlight the viability of mineral reserves vis-à-vis mineral resources.
- Inclusion or exclusion of mineral reserves in mineral resources: The Staff Notice states that when reporting both mineral resources and mineral reserves, a clear statement as to whether the mineral resources include or exclude mineral reserves is required.
- Exploration targets: The Staff Notice states that both the potential quantity and grade of an exploration target must be expressed as ranges. In addition, accompanying statements outlining the target limitations must be provided.
- Historical estimates: The Staff Notice states that disclosure of historical estimates must include reference to the source, date, reliability and key assumptions of such estimates, and must be accompanied by the required cautionary statements.
- Overly promotional terms and potentially misleading information: The Staff Notice cautions against the use of statements that are overly promotional or misleading, which could potentially result in a misrepresentation under securities legislation. Terms such as “world class”, “spectacular and exceptional results”, “production ready”, “ore” in relation to mineral resources, and “management estimates” are specifically identified as examples of statements that could be misleading, particularly when used by exploration stage or mineral resource stage issuers.
Other notable areas mentioned for additional improvement include: (i) reporting only pre-tax financial results or providing no information about the applicable tax rate in PEAs or other economic reports; (ii) a lack of disclosure regarding assumed metal prices used for determining mineral resource estimates; and (iii) disclosure of drilling results that failed to include information on the true width of mineralized zones or failed to provide results of significantly higher grade intervals enclosed in a lower grade intersection, which were cited by the CSA as being particularly important for early stage projects.
The Staff Notice also reminds issuers that first time written disclosure of mineral resources, mineral reserves or the results of a PEA (or a change to any of these that constitutes a material change for the issuer) triggers an obligation to file a supporting technical report. The CSA cautions that they have significant concerns about PEA disclosure on mining issuers’ websites, including in investor presentations, fact sheets, and posted or linked third party reports, that is not supported by an existing technical report.
The Staff Notice should be used as a “self-assessment tool” and provides mining issuers with practical information to strengthen their compliance and improve the quality of their disclosure to investors. The Staff Notice recommends that the QP responsible for particular technical information review all investor presentations and other website disclosure prior to the posting of such materials.
The CSA has indicated that they will continue to review mining issuers’ website disclosure as part of their overall continuous disclosure review program. Issuers identified as having material disclosure deficiencies will be required to correct the deficiencies and may be subject to further sanctions depending on the severity of the non-compliance and the issuer’s response. The Staff Notice further cautions that if non-compliant disclosure is discovered in the context of a prospectus offering, the offering will likely be delayed while the deficient disclosure is corrected.
On March 31, 2015, the Canadian Securities Administrators (CSA) published a CSA Notice and Request for Comment with respect to proposed amendments to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids (MI 62-104) and changes to National Policy 62-203 – Take-Over Bids and Issuer Bids. The 90-day comment period on the proposed amendments ends on June 29, 2015.
The proposed amendments provide for significant changes to the take-over bid regime and in some cases clarify the concepts previously announced by the CSA in September 2014. Please see our detailed report, Amendments to Take-Over Bid Rules Will Deliver More Support to Boards, for an in-depth review of some of the key features of the proposed amendments.
The following post by Selina Lee-Andersen and Stephanie Axmann on our Canadian Energy Perspectives blog may be of interest to readers of this blog: BC First Nation Commences Treaty 8 Infringement Action Against Province
The article addresses the treaty rights infringement claim (Claim) commenced by Blueberry River First Nations on March 3, 2015 against the Province of British Columbia (Province). The Claim, filed March 3, 2015, alleges that the Province has breached its Treaty 8 obligations due to the cumulative impacts of provincially authorized industrial development in BRFN’s traditional territory. The article also discusses the ongoing claim commenced in 2008 by the Beaver Lake Cree Nation in Alberta alleging that cumulative effects of resource development violate its Treaty 6 rights.
The BC Court of Appeal (BCCA) has overturned a significant trial decision that had ordered the province of British Columbia (Province) to pay $1.75 million in damages to a logging company arising from a blockade by members of a Treaty 8 First Nation.
The BCCA’s decision, Moulton Contracting Ltd. v. British Columbia  could limit the potential grounds for relief by mining, forestry and other resource developers against government when blockades or other efforts by Aboriginal groups impede project development after permits are granted. Continue Reading
The federal and Ontario governments recently announced that they will commit $785,000 to fund a joint study into the viability of an all-weather road providing access to the Ring of Fire mining region in northwestern Ontario. The announcement, made on March 1st at the 2015 Prospectors and Developers Association of Canada’s (PDAC) international Convention in Toronto, was seen by many as a particularly positive step forward for the Ring of Fire project after months of stalemate as the two governments debated their respective responsibility for supporting resource development in the ore-rich region. The proposed year-long joint study contemplates the development of an east-west transportation corridor connecting the mineral deposits, which have been valued in the tens of billions of dollars, with Pickle Lake, about 500 kilometers northwest of Thunder Bay. Noront Resources and KWG Resources Inc. are two of the companies currently pursuing resource development in the region but, as Canada’s Minister of Natural Resources Ltd. and Minister for the Federal Economic Development Initiative for Northern Ontario has noted, not only mining companies stand to benefit. The proposed road would also bring much needed access to southern Canada for four First Nation communities – the Webequie, Eabametoong, Neskantaga and Nibinamik – as well the improvements to electricity reliability, healthcare, and the lower costs of food and necessities that typically accompany such access.
We are pleased to bring you the newest edition of our popular book, Mining in the Courts, Year in Review. Developed by McCarthy Tétrault, Mining in the Courts, Year in Review, Vol. V provides an overview of legal developments and case law updates on matters that impacted the mining sector in the past year. In this publication, we also offer our perspective and insights on issues important to the mining sector, and is ideal for mining executives and in-house counsel looking to understand the impact of recent decisions on their business and investment strategies.
Read more about this year’s edition
Download a copy
Please join us on Monday, March 2, 2015 at the 2015 PDAC conference, where our National Mining Group will present a program specifically tailored for in-house counsel and other decision makers in the mining industry. The program will offer panel discussions on the latest legal developments and issues facing mining companies in Canada and abroad.
Topics presented on will include:
¬ Mining in Canada in the wake of the landmark Tsilhqot’in decision on aboriginal title and the Mount Polley Mines Tailings Facility Breach
¬ Emerging issues in anti-corruption laws and policies
¬ Top legal trends in mining M&A and financing
¬ Review of important new court decisions impacting contracts, arbitration and dispute resolution in the mining industry
This program qualifies for up to 2 hours of eligible educational activity or CPD/MCE credit under the mandatory education regimes in British Columbia, Ontario and Québec.
For questions about this seminar, please contact Julie McMartin.
**Please note that you do NOT have to be a registered attendee for the PDAC Conference to attend our presentation. There is no charge to attend our event.**
Kaska Nation announces plans for new Resource Law
On January 27, 2015, the leaders of the Kaska Nation issued a news release and declaration announcing plans to develop a resource law and regulations (Kaska Resource Law). The introduction of the Kaska Resource Law is intended to provide clear direction to resource proponents seeking to operate in the Kaska Nation’s traditional territories. The Kaska Nation is comprised of the Ross River Dena Council, Liard First Nation, Daylu Dena Council, Dease River First Nation and Kwadacha First Nation, whose traditional territories extend over parts of northern British Columbia, southeastern Yukon and southwestern portions of the Northwest Territories. Continue Reading
The following article on the creation of the Société du Plan Nord was published on our firm’s Canadian Energy Perspectives blog and may be of interest to our readers. This corporation established by the Québec government will come into being on April 1, 2015 and its mission will be to contribute to the orderly development of Northern Québec.
On November 14, 2014, the Minister of International Trade announced Canada’s enhanced Corporate Social Responsibility (CSR) Strategy, “Doing Business the Canadian Way: A Strategy to Advance CSR in Canada’s Extractive Sector Abroad”. Like its predecessor, the CSR Strategy applies to all resource companies headquartered in Canada with extractive operations abroad. Continue Reading