A large gold hoax perpetrated by a Canadian mining junior 25 years ago caused repercussions that still echo through the Canadian mining sector today. The NI 43-101 technical report is one of the mining industry’s biggest weapons against future fraud.
While few would equate today’s technical reports with preventing another mining scandal, National Instrument 43-101 (or NI 43-101), came into effect in 2001, at a time when the Canadian mining sector had been devasted by the exit of investor money as a result of a large gold hoax. The exploration manager for a small Canadian mining junior called Bre-X Minerals Ltd, had been salting the drill core with placer gold from artisanal miners.
Fast forward to the present, and the NI 43-101 technical report has become such a part of the Canadian mining fabric, that many view a mining company’s technical report primarily as a marketing document which showcases to the public the future economic viability of their mineral project.
NI 43-101 is securities law in Canada and applies to any technical disclosure made by mining companies in Canada. So, although it is very useful for mining companies to produce technical reports to keep the public informed about their project’s potential, regulators remain focused on protecting investors by ensuring that technical disclosure is not misleading.
Identifying the risk with technical reports
The goal of the NI 43-101 technical report is to derisk anything that might negatively affect investor confidence in mining markets by providing investors with balanced, accurate and understandable information about the mineral assets of a mining company.
Many mining companies worry that if they don’t have a compliant technical report, regulators will come after them. However, the greater risk with regards to a company’s technical report comes months or even years later when they are trying to raise capital and rely on the report to support another form of disclosure such as a prospectus or information circular.
When a company contemplates raising capital or entering into a property agreement, provincial securities regulators and stock exchanges may also review the technical report against the requirements of NI 43-101 before giving permission to the company to complete a transaction. If the review indicates the report is not compliant with NI 43-101, the mining company is required to address any issues and file an amended report before the transaction can proceed.
The last thing a company needs is a technical report with poor disclosure, as a review by regulators can result in delays of several weeks to months as the company fixes the report. This lost time can sometimes result in a company losing a deal as financing has gone elsewhere! A report done right saves time, money, and potentially the project in the long run.
Investing in your success
At Ausenco, we recognise that clients need a robust report they can rely on now, and into the future. Today, we produce 50+ technical reports globally each year, ranging from Preliminary Economic Assessments (PEAs) through to complex Feasibility Studies (FS).
Treating each study as if it were our own project, we are fully committed to ensuring its success. Ausenco has invested time and resources into building a Compliance Framework and Governance team that works with our study management group to provide a trustworthy and reliable service when delivering technical reports for our clients.
I am pleased to be leading the Compliance and Governance team here at Ausenco. As a seasoned expert, I am focused on ensuring assumptions in the report are clear, positive and negative inputs are identified, and there is an actionable path to providing balanced disclosure.
Technical reports are multidisciplinary by nature. We are often working with clients, other consulting firms and various departments within Ausenco to collate information and present it in compliance with NI 43-101. In addition, all technical reports are signed off by multiple Qualified Persons or QPs, with each having expertise in some aspect of the technical report.
When a study begins, we work with the study management team, clients and other contributors to ensure the content going into the technical report meets NI 43-101 requirements, and time and money aren’t[KS1] wasted on generating anything unnecessary. This approach ensures clients have a technical report with the right data that can be relied on for any future disclosure obligations.
As the technical report nears completion, I work with senior study management team members on QA/QCing the technical report to ensure all disclosure requirements are met. Most errors at this point are purely unintentional, including cautionary statements being missed, non-compliant language used or key assumptions omitted.
I am an active member of the Mining Technical Advisory and Monitoring Committee, a forum for communication between the CSA and the mining industry, and the CIM Mineral Resource Mineral Reserve Committee, which helps to formulate standards, definitions and guidelines for the mining industry. Through these committees, I ensure Ausenco is providing current ideas and advice from regulators to our clients and report contributors, and I play an active role in providing feedback to help shape technical disclosure in the future.
In addition to helping clients with technical reports, we have also assisted clients who are listed on stock exchanges outside of Canada to assess their risks and opportunities across different disclosure regimes - such as the SK 1300 technical report in the United States, or the JORC Code in Australia.