• CSA Propose Sweeping Changes to NI 43-101
  • July 1, 2010 | Author: Andrew Grossman
  • Law Firm: Ogilvy Renault LLP - Toronto Office
  • The Canadian Securities Administrators ("CSA") have recently published for public comment proposed changes to National Instrument 43- 101 - Standards of Disclosure for Mineral Projects, its Companion Policy and the prescribed form for technical reports (the "Proposals"). The Proposals were developed following public consultations with mining industry participants and a major review of the current rules. The CSA's intention in introducing the Proposals is to create a more efficient and flexible set of rules which will be less costly for issuers to comply with but without compromising investor protection. Comments on the Proposals are due by July 23, 2010.

    Highlights of the Proposals include:

    Filing of Technical Report with Short Form Prospectus
    The CSA are seeking comments on whether to eliminate the current requirement for an issuer to file a technical report at the same time it files its preliminary short form prospectus. Currently a technical report is required to be filed to support scientific or technical information contained in a preliminary short form prospectus when the prospectus is filed (unless such information is supported by a previously filed technical report). Requiring the filing of the technical report at the time of the prospectus has created practical difficulties for some issuers. Eliminating this requirement will result in issuers having more time to file a technical report containing the new information.

    A 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, qualifying persons ("QPs") will have more discretion in the disclosure to be made which will allow QPs to emphasize the most relevant information in respect of a particular property.

    Elimination of Updated Certificates and Consents
    The Proposals eliminate the requirement to provide updated certificates and consents for a previously filed technical report provided it is still current and satisfies applicable independence rules. This may eliminate certain timing and logistical challenges faced by issuers in fi nancing and M&A transactions. The Proposals also permit the consulting firm which employed the QP to file their consent rather than the consent of the individual QP.

    Extended Deadline to File Technical Report
    The Proposals 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 previously filed a technical report on the same property and such report remains current. As investors would still have access to a current technical report, investor protection would not be compromised.

    Exemption for Royalty Interest Holders
    The Proposals exempt royalty interest holders from filing a technical report where the operator of the project is required to file a technical report or is a producing issuer whose securities trade on a specified exchange and if certain other specifi ed conditions are satisfied. Under the current rules, the requirement to file a technical report applies to royalty interest holders as well as operators and producing issuers.

    Other suggested changes include (i) an expanded requirement to file a technical report in respect of certain disclosures (ii) a broader definition of QP which provides more flexibility in recognizing foreign qualifications and associations (iii) expanded circumstances where inferred resources can be included in an economic analysis (iv) amendments to the independence requirement exemption for QPs permitting greater flexibility (v) a new "historical estimates" definition which allows reliance on more recent third-party estimates; and (vi) permitting an issuer to name the QP who approved the disclosure of the scientific and technical information as an alternative to naming the QP who prepared or supervised preparation of the information.