EDITORIAL & OPINION — GUEST COLUMN — New disclosure rules in works

The Prospectors & Developers Association of Canada (PDAC) has been paying close attention to the regulatory developments facing the mineral exploration and mining industry.

In the period since the Bre-X scandal, we have seen: the formation of the joint Toronto Stock Exchange-Ontario Securities Commission Task Force on Mining Standards and the publication of its interim report; the promulgation of new disclosure rules on the Vancouver and Alberta stock exchanges; the proposed national escrow policy; and the release of new original listing criteria by the TSE. For the most part, these regulatory changes will force public companies to adopt field practices, analytical techniques and disclosure practices designed to standardize and ensure the quality of information released to the public.

The “Qualified Person” will be central to these legislative reforms and will be responsible for the design and implementation of programs, data integrity and the content of publicly disclosed information. The Qualified Person will have to meet certain criteria relating to education and experience and will have to belong to a recognized, self-regulated organization. In addition, regulatory recommendations suggest that the qualified person will be charged with significantly more responsibility and legal liability for the content of a company’s public disclosure and the integrity of the data obtained from its activities.

The Canadian mineral industry should know that proposed National Instrument 43-101 (NI 43-101), entitled “Standards of Disclosure for Mineral Exploration and Development and Mining Properties,” and Companion Policy 43-101CP (collectively referred to as 43-101CP) have provisions that will have a significant effect on the Canadian mineral industry and the professionals who serve it.

The purpose of NI 43-101 is to prescribe the form and content of technical reports submitted to securities regulatory authorities and to establish standards for all oral and written disclosure made by mineral exploration and mining companies and which is reasonably likely to be made available to the public. NI 43-101 is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Nova Scotia and Ontario, as a commission regulation in Saskatchewan, and as a policy in all other jurisdictions represented by the Canadian Securities Administrators (CSA).

NI 43-101 was released shortly after the publication of the task force’s interim report and reflects many of the task force’s recommendations relating to mineral exploration and testing activities of public companies, the disclosure of results from those activities, and the role of the Qualified Person in the process.

If approved in its current form, NI 43-101 will impose significant financial and time costs on issuers by requiring the preparation and filing of various technical reports on material properties; prescribe the qualifications of the engineers and geoscientists who would prepare technical reports; and set guidelines for the form of technical report and the standardization of the terms contained in them.

The full text of NI 43-101 can be found on-line at http://www.osc.gov.on.ca/en/Regulation/Rulemaking/Rules/43-101.html

The CSA is inviting written comments on NI 43-101 from all interested parties by Oct. 30, 1998. Fifteen copies of each submission should be sent to the CSA, c/o Daniel Iggers, Secretary, Ontario Securities Commission, 20 Queen St. W., Suite 800, P.O. Box 55, Toronto, Ont. M5H 3S8.

The submission should also be submitted on diskette in DOS or Windows format, preferably WordPerfect. Copies will be distributed to all jurisdictions represented by the CSA.

The PDAC will be submitting its members’ views on NI 43-101 to the CSA, and invites industry members to submit their views through the association. Please mail or fax them to the PDAC, 9th Floor, 34 King St. E., Toronto, Ont. M5C 2X8. Fax: (416) 362-0101. Copies of NI 43-101 can also be obtained from the PDAC.

Note that securities legislation in certain provinces requires that a summary of written comments be published, thus confidentiality of submissions cannot be maintained.

— The author is president of the Prospectors & Developers Association of Canada.