Recommended
More Related Content
Similar to TT one hour
Similar to TT one hour (20)
TT one hour
- 1. CANADIAN MINING DISCLOSURE (IN ONE HOUR!) Jeff Wilson, Ph.D, P.Geo. Director, Geology Tetra Tech Wardrop June 2012
- 2. Topics for the Hour • The Canadian Market • Regulatory Organizations • National Instrument 43-101 • The Qualified Person (QP) • Mineral Resources & Reserves • The Technical Report • Advanced property Studies
- 4. Canadian Market Characteristics • Majority of public mining companies – 1531 issuers – 58% of Public Companies – 208 new listings in 2010 • Majority of money raised – $17.8 B equity raised • Highly Liquid market – $416 B value traded • Well regulated transparent market – SEDAR – NI 43-101
- 5. Mining Markets at a Glance Source: Exchange Websites, World Federation of Exchanges, Capital IQ, as at or YTD September 30, 2011 TSX TSXV TSX&TSXV LSE AIM ASX JSE HKEx NYSE/ NYSE Amex Number of Mining Issuers Listed 367 1,262 1,629 58 144 691 57 60 138 Quoted Market Value (C$ Billions) 411.2 29.5 440.7 776.1 19.4 468.2 312.0 243.5 1,018.2 New Mining Listings 39 118 157 5 15 68 2 8 4 Equity Capital Raised (C$ Billions) 5.4 5.1 10.5 10.4 1.4 2.1 0 1.8 0.671 Number of Financings 167 1428 1595 5 110 50 0 6 1
- 6. • Canada dominates global mining equity financing • Smaller companies • Higher risk investment profile • Scandal-averse • Regulation crucial to promote investor confidence The importance of good disclosure
- 8. Regulatory Organisations • Professional Associations • CIM • Securities Commissions • Stock Exchanges • IIROC
- 9. Professional Associations • Established Provincially by law – Engineers and geoscientists Act • Self-regulatory – Bylaws of the Association • Admission by education and work experience • Adherence to professional standards – Competence and ethics • Discipline by suspension or expulsion • Grant Professional licences – P. Geo., P. Eng.
- 10. Canadian Institute of Mining, Metallurgy and Petroleum • Independent organization of mining professionals • Working definitions and procedures – Definition Standards for Mineral Resources and Mineral Reserves – Incorporated into NI 43-101 • Industry Best Practices – Exploration Best Practices Guidelines – Estimation of Mineral Resources and Mineral Reserves – Mineral Processing
- 11. Securities Commissions • Securities law governed Provincially in Canada • 13 provincial & territorial authorities – BCSC & OSC dominant in Mining • Independent government agencies – Crown Corporations – Report to Attorney General – Self-funded through Issuer fees • Enforce statutory regulations – NI 43-101
- 12. TSX Guidelines • TSX – Disclosure Standards for Companies Engaged in Mineral Exploration, Development & Production • TSX Venture Exchange – Appendix 3F Mining Standards Guidelines – Appendix 3E News Release Guidelines – Policy 3.3 Timely Disclosure
- 13. IIROC • Investment Industry Regulatory Organization of Canada • Oversees investment dealers and trading activity • Real-time trade monitoring and reviews • Imposes and lifts trading halts or delays • Administers TSX timely disclosure requirements • Reviews pre-filed press releases
- 14. When in doubt • Regulations do not cover every situation • Always variation in interpretation and application • If in doubt, go back to first principles – Professional Code of Ethics – Standard Language – Full, Plain and Transparent disclosure – Reasonable person test
- 16. National Instrument NI43-101 • Federal Instrument, Provincial law • Mandates technical disclosure • Not an engineering/geological guideline • Does not tell you how to do your job • Requires disclosure be based on – Technical report – Other information prepared by QP • Covers any written disclosure – Writing, picture, map, paper & electronic, including website
- 17. NI 43-101 Elements • National Instrument 43-101 – Standards of disclosure for Mineral Projects • Form 43-101F1 – Technical report requirements • Companion Policy 43-101CP – NI 43-101 guidance and interpretation • In force since 2001 • Revised June 30, 2011
- 18. Underlying Principles • Minimum public reporting standards – Exploration, Resources and Reserves – Transparency, Materiality, Competence, Impartiality • Classification by Resource or Reserve – Subdivision by level of certainty or confidence • Qualified Person (QP) involvement – Defined by qualifications and experience • QP & Issuer responsibilities defined • Report preparation considerations – List of items to be included
- 19. Timely disclosure and Materiality • Companies are required by law to immediately disclose a “material change” in their business • Material Change – Change in Issuer business, operations or capital – Reasonable expectation of effect on market price – Based on overall Company context • Company determines materiality – Time sensitive – Scale dependant – Historic movement triggers
- 20. NI 43-101 revisions • Form 43-101F1 revised – Single report format retained – More adaptable for advanced properties • Six-month report filing delay available – Requires existing report • No more updated consents and certificates – Only with original technical report • Acceptable foreign QPs clarified – List plus list of typical requirements
- 21. NI 43-101 revisions (cont) • Producing Issuers don’t need independent QP for their reports • Royalty holders generally avoid filing reports • Historical Resource definition changed – Any third party estimate before acquisition or LOI • Acceptable Foreign Codes clarified – JORC, PERC, SAMREC , SEC 7, Certification Code (Chile), or – Any other generally accepted CRISCO code
- 23. The Qualified Person (QP) • Canadian legal concept • Additional to, and separate from, Professional Licence • Responsibilities and liabilities established by law • “A QP should be satisfied that they could face their peers and demonstrate competence and relevant experience in the commodity, type of deposit and situation under consideration” CIM Definitions Standards
- 24. What defines a QP? • Engineer or Geoscientist – Relevant Degree, or equivalent • 5 years experience relevant to degree – Exploration, development, operation, assessment • Experience relevant to project and report • In good standing with Professional Association
- 25. What is a Professional Association? • Self-regulatory – Engineers and/or geoscientists • Established by statute in Canada, or • Reputable foreign professional association • In each case – Admission by qualifications, experience and ethics – Compliance with competence and ethics standards – Professional development required or encouraged – Discipline by suspension or expulsion • Regardless of residence
- 26. Foreign jurisdiction designation • Certain foreign membership designations acceptable • Published list is now guidance • Additional list of objective membership criteria • Designation requires – Position requiring independent judgment – Favourable confidential peer evaluation, or – Recommendation by two peers, plus expertise
- 28. Statutory QP Responsibilities • Comply with Code of Ethics • Comply with licensure laws • Review and approve technical disclosure • Prepare or supervise technical reports • Verify technical data • Conduct site visits
- 29. Current Personal Inspection • QP or independent QP, must visit the site – Cannot refuse, or delegate – At least one QP must visit the site – Minimum standard – Multiple inspections for Advanced Properties • Inspection current until later material change • Issuer obliged to facilitate QP Inspection • Limited Deferral available – Early Stage seasonal weather properties only – Please don’t try it
- 30. QP Liability • Statutory liability for technical report • Common law liability to Company and Investors • Can’t disclaim statutory liability • Can’t disclaim professional responsibility • Separate liability for directors and officers • Statutory liability in secondary market • QP liability generally limited to cost of professional fees, except for fraud
- 31. QP Independence • Some reports require Independent QP – E.g., Resources, Reserves, PEA • Reasonable person test – “no circumstance that, in the opinion of a reasonable person aware of all relevant facts, could interfere with the QP’s judgment”
- 32. Guidance on Independence • Examples of Non-independence – Company employee, insider, or director – Related party employee, insider, or director – Partner of any person or company above – Securities of Issuer or related party – Property ownership, royalty, or other interest – Adjacent property ownership, royalty, or other interest – Majority of income, directly or indirectly, in the last 3 years • Current or expected – Includes options • Directly or indirectly
- 34. Mineral Resource • Concentration or occurrence – Diamonds – Natural solid inorganic material – Industrial minerals – Coal and natural solid fossilized organic material – Base and precious metals • Reasonable prospects for economic extraction • Estimated or interpreted from specific geological evidence and knowledge
- 35. Current Estimate • CIM definitions incorporated into NI43-101 – “CIM Definition Standards on Mineral Resources and Mineral Reserves” • Use CIM Best Practice Guidelines • Must be supported by assay results • Some Foreign Codes acceptable with reconciliation – JORC, PERC, SAMRAC, SEC IG 7, Chilean Code • First time disclosure pre-filed with IIROC
- 36. Mineral Resource Categories • Inferred Resource – Continuity assumed, but not verified – Little statistical grade correlation between drillholes – Insufficient for meaningful mine planning • Indicated Resource – Reasonably assumed continuity – Mine planning & economic evaluation • Measured Resource – Confirmed continuity – Production planning and economic evaluation
- 37. Mineral Reserve • Economically mineable part of M&I Resource • Requires Prefeasibility Study (PFS) • Economic extraction justified at time of reporting • Needs adequate Mining, processing, and economic information • Use term “Ore” only with mineral reserves – Implies feasibility and economic viability – Potentially misleading for resource
- 38. Reserve Categories • Probable Mineral Reserve – Economic extraction can be justified • Proven Mineral Reserve – Economic extraction is justified – Restricted to deposit where production planning is taking place – Potential viability not significantly affected by variation in estimate
- 39. Mineral Resource Categories Exploration Information Mineral Resources Measured Indicated Probable Proven Mineral Reserves Increasing geological knowledge and confidence Consideration of modifying factors (Mining, met, economic, environmental, etc. Inferred
- 41. Technical Report • Prepared and filed in accordance with NI 43-101 and Form 43-101F1 • Summary of material scientific and technical information • Specific effective date • Prepared by one or more QPs – A QP takes responsibility for every report section – QP determines material to be included • Complete and current when filed • Report triggers clearly defined NI 43-101, Instructions
- 42. NI 43-101 Report Triggers • On becoming Reporting Issuer • First-time written disclosure – Mineral resources – Mineral reserves – PEA • To support various required filings – Preliminary Prospectus/ Short form prospectus – Information or Proxy Circular – Offering Memorandum – Annual Information Filing – Take-Over Bid Circular
- 43. What is the report Filing Deadline? • In most cases, 45 days after date of the disclosure • Conditional 6-month filing delay available – Requires current existing technical report – Primarily to allow smooth property acquisitions
- 44. Technical Report Items Title Page Date and Signature Page Table of Contents Illustrations Item 1: Summary Item 2: Introduction Item 3: Reliance on Other Experts Item 4: Property Description and Location Item 5: Accessibility, Climate, Local Resources, Infrastructure and Physiography Item 6: History Item 7: Geological Setting and Mineralization Item 8: Deposit Types Item 9: Exploration Item 10: Drilling Item 11: Sample Preparation, Analyses and Security Item 12: Data Verification Item 13: Mineral Processing and Metallurgical Testing Item 14: Mineral Resource Estimates Item 15: Mineral Reserve Estimates Item 16: Mining Methods Item 17: Recovery Methods Item 18: Project Infrastructure Item 19: Market Studies and Contracts Item 20: Environmental Studies, Permitting and Social or Community Impact Item 21: Capital and Operating Costs Item 22: Economic Analysis Item 23: Adjacent Properties Item 24: Other Relevant Data and Information Item 25: Interpretation and Conclusions Item 26: Recommendations Item 27: References
- 46. Advanced Property studies • Property development is punctuated by the publication of three milestone studies – Preliminary Economic Assessment (PEA) – Pre-feasibility Study (PFS) – Feasibility (FS) • Study definitions from CIM • Independent involvement mandated by law
- 47. Preliminary Economic Assessment • Any study with an economic analysis of potential viability, other than PFS or FS – Synonymous with Scoping Study • Can be published before or after PFS/FS – Discuss PEA impact on existing FS & PFS • Measured, indicated and Inferred resources OK • CAPEX Estimate -20% to +50% • Three QPs, 2-3 months • Principal parameters assumed and/or factored
- 48. Preliminary Feasibility Study • Comprehensive study of project viability • Range of development options studied • Mining method & processing method determined • Principal parameters have some engineering basis • Greatest optimisation at this stage • Up to ten QPs, 6-9 months work • CAPEX Estimate -15% to +35% • Insufficient for bank financing – Still considerable assumptions
- 49. Feasibility Study • Comprehensive technical and economic study • Little flexibility – Mining method and process previously decided • Detailed financial analysis • CAPEX Estimate -10% to +20% • Ten or more QPs, from 9 to 12+ months • Sufficient for debt capital financing
- 50. Useful Addresses • NI 43-101 (BCSC Mining) http://www.bcsc.bc.ca/mining.asp?id=1775 • TSX Mining Guidelines http://www.tmx.com/en/pdf/Mining_Disclosure_Stds.pdf • TSX-V manual http://www.tmx.com/en/listings/venture_issuer_resources/finance_manual.html • APEGBC Act, Bylaws & Code of Ethics http://www.apeg.bc.ca/resource/publications/actbylawscode.html • CIM Standards and Guidelines http://www.cim.org/standards/ • IIROC http://www.iiroc.ca/English/Pages/home.aspx • SEDAR (Required PubCo disclosure repository) http://www.sedar.com/issuers/issuers_en.htm • Scottish news http://news.scotsman.com/scotland
- 51. There you are! Jeff Wilson, Ph.D. P.Geo. Director, Geology Tetra Tech Wardrop Phone: 604.408.3788, ext. 527 Cell: 604.418.8507 jeff.wilson@tetratech.com