CSA Publishes Consultation Paper on Standards of Disclosure for Mineral Projects
On April 14, 2022, the Canadian Securities Administrators (the “CSA”) published Consultation Paper 43-401 – Consultation on National Instrument 43-101 Standards of Disclosure for Mineral Projects (the “Consultation Paper”) for a comment period of 90 days.
Recognizing that the mining industry has experienced a number of changes since the mineral disclosure requirements under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and Form 43-101F1 – Technical Report (collectively, the “mineral disclosure requirements”) were last amended in June 2011, the purpose of the Consultation Paper is to obtain feedback from stakeholders as to the efficacy of several key provisions of National Instrument 43-101, priority areas for revision, and whether regulatory changes would address concerns previously expressed by stakeholders, in order to assist the CSA in considering ways to update and enhance the current mineral disclosure requirements.
The Consultation Paper arrives on the heels of recent incremental initiatives by the CSA and the Ontario Securities Commission (the “OSC”) to streamline capital raising activities for mining issuers, such as reconsidering the utility of consents from technical report authors in connection with short form prospectus offerings and the OSC’s adoption in 2019 of a pre-filing review process for mining issuers that are contemplating a short form prospectus offering.
The Consultation Paper sets out an extensive set of questions, across many different elements of the mineral disclosure requirements, for stakeholder consideration and feedback.
Many of the questions posed within the Consultation Paper relate to the clarity, sufficiency and suitability of disclosure requirements in respect of which the CSA has previously monitored compliance (through for example continuous disclosure, prospectus and targeted reviews) and expressed concerns. Such requirements include those relating to:
- data verification procedures
- exploration information
- historical estimates
- preliminary economic assessments, including the use thereof in conjunction with pre-feasibility and feasibility studies
- qualified person credentials
- mineral resources estimation, including disclosure related to reasonable prospects for eventual economic extraction
- disclosure of project specific risks for mineral projects and the estimation of mineral resources and reserves
In addition to questions oriented towards areas of concern previously identified by the CSA, the Consultation Paper also poses questions more broadly related to improving and modernizing the mineral disclosure requirements. The areas covered by such questions include considering whether:
- there is an alternate way to present technical information that would be easier, clearer and more accessible for investors to use than the current technical report form requirements
- there should be greater alignment of the mineral disclosure requirements with the disclosure requirements in other influential mining jurisdictions
- the current personal inspection requirement in respect of mineral projects can be fulfilled through the use of remote technologies (in lieu of physical site visits)
- directors and officers of an issuer should be disqualified from authoring technical reports
- enhanced disclosure of environmental, social and indigenous matters should be required for technical reports, in order for investors to for example better understand the risks and uncertainties for a mineral project that arise as a result of the rights of Indigenous Peoples on whose traditional territory the mineral project lies and whether qualified persons or other experts should be required to validate such risks and uncertainties
- improvements can be made to the current technical report form requirements for capital and operating cost estimates and for economic analysis
- there are other mineral disclosure requirements that the CSA should consider removing or modifying because they do not assist investors or serve to protect the integrity of the mining capital markets
Importantly, in addition to feedback as to such fairly broad questions, the Consultation Paper also invites stakeholders to provide any general feedback that they may have.
The comment period will end on July 13, 2022. We support the CSA in undertaking the consultation process and in being open to considering ways in which the mineral disclosure requirements can be streamlined so as to continue to provide meaningful information to investors but to also help maintain Canada’s position as a favourable jurisdiction for mining capital formation activities. This is of particular importance at this time considering the overhauls by other influential mining jurisdictions (including Australia and the United States) of their mineral resource/mineral reserve reporting codes and associated disclosure standards. We are supportive of there being greater alignment of Canadian mineral disclosure requirements with those applicable in other influential mining jurisdictions, which would be valued by for example international mining issuers and supporting industry participants, such as qualified persons, in being able to efficiently satisfy their Canadian public reporting obligations.
 The CSA for example notes that since 2011, there has been an update to the CIM mineral resource and mineral reserve reporting standards and estimation guidelines and to similar international public reporting standards, emerging demand for commodities related to the growth in green energy and carbon neutral initiatives and increased investor awareness of the risks related to mineral project development, including demand for information about the environmental and social impacts.
 See Part 9 of CSA Notice and Request for Comment - Proposed Amendments to National Instrument 51-102 Continuous Disclosure Obligations and Other Amendments and Changes Relating to Annual and Interim Filings of Non-Investment Fund Reporting Issuers and Seeking Feedback on a Proposed Framework for Semi-Annual Reporting – Venture Issuers on a Voluntary Basis.
 See OSC Staff Notice 43-706 – Pre-filing Review of Mining Technical Disclosure. The pre-filing review process adopted by the OSC complements a similar program adopted by the British Columbia Securities Commission (the “BCSC”) in 2009.
 See for example, CSA Staff Notice 43-307 – Mining Technical Reports – Preliminary Economic Assessments, CSA Staff Notice 43-309 – Review of Website Investor Presentations by Mining Issuers, CSA Staff Notice 43-311 – Review of Mineral Resource Estimates in Technical Reports, OSC Staff Notice 43-705 – Report on Staff’s Review of Technical Reports by Ontario Mining Issuers, and the British Columbia Securities Commission’s 2012 Mining Report published in January 2013.