The Ontario Securities Commission (OSC) has published OSC Staff Notice 43-705 Report on Staff’s Review of Technical Reports by Ontario Mining Issuers, which sets out the results of its compliance review of technical reports.
It also provides further guidance for complying with National Instrument 43-101 Standards of Disclosure for Mineral Projects.
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OSC Staff reviewed 50 technical reports filed by Ontario mining issuers to assess whether they complied with recent revisions to NI 43-101, adopted by CSA on June 30, 2011. The OSC’s review results document says, “The goal of the…revisions [to NI 43-101] was to maintain [its] benefits, including investor protection, transparent disclosure and promoting market integrity.”
It adds the CSA wished to make “compliance simpler in some areas and less costly for mining issuers. NI 43-101 applies to all disclosure of scientific or technical information made by an issuer, including disclosure of mineral resources and mineral reserves, and requires a technical report be filed on a material mineral property when triggered by NI 43-101.”
These reports must be prepared by or under the supervision of a qualified person, or must be approved by a qualified person.
During the OSC’s review of reports, staff identified an unacceptable level of compliance regarding the new requirements. Specifically, the regulator was looking at: whether firms were using the revised form; if they’d complied with revised definitions of qualified persons and professional associations; and at whether they were meeting the requirement to file a technical report.
Unfortunately, the regulator found 80% of the total number of technical reports reviewed had some form of non-compliance with the disclosure requirements, and approximately 40% had at least one major non-compliance concern.
In most cases, OSC noted there were “significant deficiencies” when it came to the following sections of technical reports:
- mineral resource estimates
- environmental studies, permitting and social or community impact
- capital and operating costs
- economic analysis
- interpretation and conclusions
“Technical reports are fundamental disclosure documents and ensuring compliance among mining issuers is critical,” says Huston Loke, director of corporate finance. “It’s important that investors have accurate and meaningful information about material mineral properties in order to make informed investment decisions.”
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OSC staff will continue to monitor technical reports filed by Ontario mining issuers as part of its continuous disclosure program, and will take regulatory action as appropriate where securities requirements are not met.
The review results state, “Issuers should anticipate staff requests for refilings, additional disclosure, or other staff action, where appropriate, if an issuer and qualified person hasn’t fully met the requirements of Form 43-101F1 and NI 43-101.”
It adds, “Please note the issues raised in a review will be taken into consideration when determining whether a prospectus receipt should be issued. Unresolved issues may delay the prospectus receipt, particularly for short form prospectus’.”
The results of the review are set out in OSC Staff Notice 43-705 and the guidance provided should be used as a tool by mining issuers when preparing their technical reports.