Although there are literally hundreds of reports filed annually to comply with NI 43-101 requirements, it doesn’t mean that the reports are all fulfilling the intent of the regulation. I’ve heard plenty of people complain that they see reports that are poor quality, sparking questions of “how do these reports make it onto SEDAR?”. Since I’ve already thrown around terms like “NI 43-101” and “SEDAR” without references or explanations, I’m going to warn you upfront that this blog is addressed to people who are already familiar with NI 43-101 and, more specifically, work on projects or work at companies that are subject to those regulations.
Misconception 1. Reports are reviewed and approved by the regulatory agency prior to publication on SEDAR. Thus, reports on SEDAR are in compliance with NI 43-101.
A lot of people expect that there is someone at the Canadian Securities Commission or the respective provincial securities commission is reviewing each report for compliance. Not at all! There are technical staff employed by the Canadian government, but they are few compared to the number of mining companies listed on the stock exchange (Figure 1).
Figure 1. Number of technical staff overseeing NI 43-101.
Source: Craig Waldie, OSC, PDAC 2018 workshop, Mining disclosure essentials.
Occasionally, an issuer will end up on the “red flag” list due to some previous problems and their submittals will get a review, but the majority of reports published on SEDAR are reviewed only by the QPs and issuing company. That means that the issuer needs to be very careful in selecting QPs who are diligent about preparing a submittal that meets the expectations of NI 43-101.
In fact, companies shouldn’t publish that their reports are in compliance with NI 43-101, because there is no mechanism to validate compliance. Reports are prepared in accordance with guidelines of NI 43-101. There is a fine line there to indicate that NI 43-101 requirements are the guiding criteria without stating “compliance”, which means that someone has approved the submittal.
The ultimate responsibility for compliance with NI 43-101 is with the issuer. There are a multiple of disclosure requirements (some technical, some not). And of course for the technical items, the QP also has a responsibility to prepare their written disclosure correctly, but the availability of data (and the quality of data) can be a large factor that is related to the issuer. So it’s a 2-way street with the issuer selecting a QP and providing information, and the QP doing their part correctly.
In my next blog, I’ll address another misconception: the regulations provide a “check-the-box” procedure on how to do a mineral resource estimation.