Provides overview of Canadian and US mining and oil and gas reserve and resource reporting requirements and best practices for reserve and resource disclosure under Multi-Jurisdictional Disclosure System (MJDS).

1. July 22, 2010 Best Practices in Mineral and Oil and Gas Reserve and Resource Estimate Reporting for Dual-Listed Canadian Mining and Oil and Gas Companies Kevin D. Cramer, Jeremy Fraiberg, Marc Kushner, and Andrea Whyte Osler, Hoskin & Harcourt LLP Eden M. Oliver Bennett Jones LLP

2. Biographies Kevin D. Cramer Kevin Cramer is a partner in Osler, Hoskin & Harcourt LLP’s New York office where he practices U.S. M&A and securities law. His experience includes work for U.S., Canadian and other foreign corporations, special committees of directors, underwriters and placement agents on public and private securities offerings, including initial public offerings and Rule 144A/Regulation S offerings of debt and equity securities; mergers and acquisitions (including “going-private” transactions); cross-border tender offers; and joint ventures. He regularly counsels clients with respect to ongoing SEC compliance and reporting requirements, including Sarbanes-Oxley policies and procedures, and NASDAQ and New York Stock Exchange listing rules. Kevin’s experience includes representing Fording Canadian Coal Trust in its acquisition by Teck Cominco and China Investment Corporation in its investment in Penn West Energy Trust. 2 Jeremy Fraiberg Jeremy is Chair of Osler’s Mining Group. His practice focuses on corporate and securities law, with a particular emphasis on mergers and acquisitions and corporate finance. Jeremy has acted for public and private companies and investment bankers on a range of acquisitions, securities offerings and other corporate transactions. He was a senior policy advisor to the “Wise Persons’ Committee”, which was appointed to recommend the best securities regulatory system for Canada. Jeremy has taught at the University of Toronto Faculty of Law on contested mergers and proxy contests and has spoken and written about a range of legal issues. After graduating from law school he served as a law clerk to Chief Justice Antonio Lamer at the Supreme Court of Canada.

3. Biographies (cont’d) Marc Kushner Marc is a partner in Osler, Hoskin & Harcourt LLP’s New York office. His practice focuses on U.S. and cross-border corporate/M&A and private equity matters, including leveraged acquisitions, divestitures, stock and asset purchases, mergers, private equity and venture capital investments, strategic alliances, joint ventures, and general corporate, securities and commercial law matters. Marc’s experience includes representing global mining and energy companies in M&A and other transactional matters. He is a member of the Corporations Law Committee of the New York State Bar Association. 3 Andrea Whyte Andrea Whyte is a partner in Osler, Hoskin & Harcourt LLP’s Calgary office. Her practice focuses on corporate finance and securities, mergers and acquisitions and general corporate and cross-border matters. She has advised Canadian public companies and Canadian and U.S. investment dealers in public and private securities offerings. Andrea has also advised Canadian and U.S. purchasers and vendors in domestic and cross-border mergers and acquisitions. She has advised U.S. investment dealers in a variety of matters including registration and trading regulations. Andrea has also practised in the firm's New York office. Her experience includes representing Shell Canada Limited in its acquisition of BlackRock Ventures Inc. and First Reserve Corporation in its acquisition of Saxon Energy Services Inc.

4. Biographies (cont’d) Eden M. Oliver Eden M. Oliver is a partner in the Toronto office of Bennett Jones LLP. Her practice focuses on complex international and domestic corporate and commercial transactions, with emphasis on the mining and energy sectors, including mergers and acquisitions, joint ventures, restructuring and financing. She represents significant public and private enterprises, banks, lenders and investors. Ms. Oliver is a member of the Ontario Bar Association (Chair of Natural Resources & Energy Section - 2001-2004); Prospectors & Developers Association of Canada (Securities Committee); Rocky Mountain Mineral Law Foundation; ABA; CIM, Mining Section; and Ontario Energy Association. She is a member of the Law Society of Upper Canada (1992) and the Law Society of Alberta (1985). Ms. Oliver has been recognized in Who’s Who Legal, Mining, 2010 and Lexpert 2009 for Mining & Electricity. 4

6. How the Multi-Jurisdictional Disclosure System (“MJDS”) facilitates access

7. Overview of Canadian and U.S. mining and oil & gas reserve and resource reporting requirements

8. Best practices for reserve and resource disclosure under MJDS

9. Key takeaways5

11. Public offerings and U.S. listings enhance potential for research analyst coverage and may result in higher valuation

12. U.S. publicly traded securities can be valuable acquisition currency for Canadian companies making take-over bids

13. U.S. publicly traded securities can facilitate equity-based compensation plans for U.S. employees6

14. Benefits and Myths of Accessing the U.S. Public Markets (cont’d) Myths of accessing the U.S. markets Increased cost of preparing U.S.-style disclosure documents Increased cost of reconciling Canadian mineral reserve and mineral resource disclosure to U.S. standards Increased cost of reconciling Canadian GAAP financial statements to U.S. GAAP 7

16. Allows issuers to meet disclosure obligations in both Canada and the United States by complying with home country disclosure obligations

17. Issuers are still required to comply with certain stock exchange rules and U.S. securities legislation8 What is MJDS?

19. Must be incorporated or organized under laws of Canada/province/territories

20. Must be subject to continuous disclosure requirements for a specified period prior to U.S. listing and be in compliance

21. Must not be an investment company

22. Market cap generally of at least $75 million held by non-affiliates9 To Qualify for MJDS in the U.S.

23. How MJDS Facilitates Access (cont’d) Canadian prospectus requirements apply with only a small number of changes and additions for U.S. purposes Limited SEC review Lead Canadian securities regulator will conduct review in the same manner as for a conventional Canadian-only public offering Considerable time and cost savings for U.S. securities offerings by Canadian public companies 10 Advantages of MJDS to Canadian issuers

26. Key elements:

27. disclosure must be based on a technical report or other information prepared by or under the supervision of a “qualified person”

28. obligation to file technical reports pertaining to projects material to issuer are triggered on issuer becoming a reporting issuer, and by certain disclosure documents by issuer (e.g., a press release that contains a change in mineral resources or reserves from the most recently filed technical report that constitutes a material change in the affairs of the issuer)12 Canada: NI 43-101 Standards of Disclosure for Mineral Projects

30. general prohibition on disclosure of mineralization that does not meet definitions of measured, indicated or inferred mineral resources or proven or probable mineral reserves under CIM Standards

31. separate reporting of each category of mineralization

32. limits on disclosure of inferred mineral resources, e.g., cannot add them to other categories and limits on disclosing results of economic analysis including inferred mineral resources

33. for issuers incorporated outside Canada, or Canadian incorporated issuers with properties in a foreign jurisdiction, limited disclosure using categories under codes other than CIM Standards is permitted, provided reconciliation to CIM Standards is included13 Canada: NI 43-101 Standards of Disclosure for Mineral Projects (cont’d)

35. improved qualified person certification and consent requirements

36. extensions to certain deadlines for filing of technical reports

37. permits use of certain similar foreign jurisdiction definitions and standards

38. revised form for technical reports14 Canada: NI 43-101 Standards of Disclosure for Mineral Projects (cont’d)

40. mandates certain disclosure for each mine, plant or other significant property owned or operated, or intended to be owned or operated, by the issuer

41. limits categories of mineralization to Proven (Measured) Reserves and Probable (Indicated) Reserves

42. “Reserves” defined as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination

43. SEC position is that economic viability determined using average commodity price prevailing during the preceding three-year period15 U.S.: SEC’s Guide 7 Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations

46. reserve estimates based on average commodity price prevailing during the preceding three-year period16 Substantive differences between Canadian and U.S. standards

48. Canada (NI 43-101):

49. disclosure of “measured,” “indicated” and “inferred” mineral resources is allowed as categories of mineralization that have reasonable prospects of economic extraction but have not yet been demonstrated to be economically mineable

50. U.S. (Guide 7):

51. disclosure of mineral resources which do not qualify as proven or probable reserves is generally prohibited except where an issuer is required to do so by foreign or state law

52. SEC permits limited disclosure of “mineralized material”17 Substantive differences between Canadian and U.S. standards (cont’d)

54. Canada (NI 43-101):

55. disclosure must be based on a technical report or other information prepared by or under the supervision of a “qualified person”

56. U.S. (Guide 7):

57. disclosure of estimated proven and probable reserves must be accompanied by the name of persons making the estimates and disclosure of their relationships to the issuer18 Substantive differences between Canadian and U.S. standards (cont’d)

59. Key elements:

60. issuers must make annual filings using prescribed forms:

61. Statement of Reserves Data and Other Information

62. Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor

63. Report of Management and Directors on Oil and Gas Disclosure19 Canada: NI 51-101 Standards of Disclosure for Oil and Gas Activities

64. Canadian and U.S. Reserve and Resource Reporting Requirements (Oil & Gas) Canada: NI 51-101 Standards of Disclosure for Oil and Gas Activities (cont’d) The regulator may grant an exemption from NI 51-101 in whole or in part Existing exemption orders permitting issuers to comply with US disclosure requirements typically contain termination provisions triggered after any substantive amendments New exemption orders will require issuers to demonstrate strong justification for granting of relief 20

66. prohibition against addition across resource categories

67. When a high estimate is disclosed, must be disclosure of corresponding low and best case estimates; and if an estimate of proved plus probable plus possible reserves is disclosed, must disclose proved and proved plus probable reserves

68. Required disclosure of significant factors or uncertainties relevant to properties with no attributed reserves21 Canada: NI 51-101 Standards of Disclosure for Oil and Gas Activities (cont’d)

70. New definitions/ classifications based on NI 51-101 and the Petroleum Resources Management System (PRMS); greater harmonization with Canadian disclosure regime

71. Key elements:

72. permits disclosure of “probable” and “possible” reserves in addition to “proved” reserves

73. Reserves calculated using average of first-day-of-the-month price of each month during preceding 12-month period

74. permits the use of new technologies to establish oil and gas reserves (former system relied on actual production or flow tests)22 U.S.: SEC Rule 4-10 of Regulation S-X; Regulation S-K (the “Final Rule”)

76. Canada (NI 51-101):

77. requires disclosure of proved and probable reserves

78. U.S. (Final Rule):

79. requires disclosure of proved reserves

80. Disclosure of resources:

81. Canada (NI 51-101):

82. permits the disclosure of certain resources

83. U.S. (Final Rule):

84. prohibits the disclosure of resources23 Substantive differences between Canadian and U.S. standards

86. Canada (NI 51-101):

87. requires aggregate disclosure

88. U.S. (Final Rule):

89. prohibits aggregate disclosure

90. Commodity prices used to value reserves:

91. Canada (NI 51-101):

92. requires use of forecast prices

93. U.S. (Final Rule):

94. requires the price to be based on an average of the first-day-of-the-month price of each month during the preceding 12-month period24 Substantive differences between Canadian and U.S. standards (cont’d)

96. Canada (NI 51-101):

97. reserve and production information is disclosed on a gross and net basis

98. U.S. (Final Rule):

99. requires reserve and production information to be disclosed on a net basis

100. Independence of reserve data

101. Canada (N1 51-101):

102. requires reserves data to be audited or evaluated by an independent person

103. U.S. (Final Rule):

104. permits disclosure of internally-generated reserve data25 Substantive differences between Canadian and U.S. standards (cont’d)

106. Compliance is required for all written and oral disclosure of scientific and technical information, including disclosures made within:

107. securities offerings materials

108. annual reporting and continuous disclosure documents

109. investor presentations

110. press releases

111. Websites

112. Customary for companies to include cautionary language in disclosures to alert the reader that reporting is only in accordance with Canadian disclosure requirements26

114. Explains the differences between the Canadian and U.S. requirements

115. Provide warnings against reliance on resources, which are generally not permitted to be disclosed by the U.S. standards27

117. Using cautionary language in the definitions found in the “Glossary of Terms” (common among mining companies but not oil and gas companies)

118. Including an explanation of the differences between Canadian and U.S. requirements within the “Risk Factor” section of the AIF28 Best Practices for Reserve and Resource Disclosure Under MJDS (cont’d)

120. repeating cautionary language wherever reserve and resource estimates are discussed29 Best Practices for Reserve and Resource Disclosure Under MJDS (cont’d)

122. Recommended best practice:

123. cautionary language should appear close to any reserve and resource estimate disclosure

124. descriptions of material differences should not be hidden as a “Disclaimer” or “Legal” hyperlink at the bottom of the page30

125. Key Takeaways 31 As a result of MJDS, Canadian mining and oil & gas companies contemplating public sale of securities in the U.S. and a listing on a U.S. stock exchange can meet mining and oil & gas disclosure obligations in the U.S. by complying with Canadian disclosure rules in NI 43-101 (mining) or NI 51-101 (oil & gas) Recommended best practices for MJDS cross border mining, and oil & gas disclosure are set out in our paper.

126. Thank You 32