Private miners overlook disclosure: legal experts

Many private Canadian mining companies may be unaware that they are subject to the same technical disclosure rules as public issuers and that they could face compliance risks under a long-established standard, lawyers at the Toronto-based firm Cassels Brock & Blackwell say.

Known as National Instrument 43-101, its rules apply when private companies make scientific or technical statements that become public — including in investor decks, offering memoranda or mergers and acquisitions materials. Once that threshold is crossed, companies might have to file a technical report on the SEDAR+ electronic filing system within 45 days.

“A core principle of NI 43-101 is that it is intended to capture information made available to the ‘public’ by issuers. Accordingly, private issuers must be mindful of both their intended and likely audience when making statements about a mineral project on a property material to the private issuer,” mining lawyers Alexander Pizale, Gregory Hogan and Christopher Harasym wrote in a recent briefing published on the firm’s website. “Caution should be exercised in all forms of communication involving scientific or technical information.”

The document outlines several situations where technical report requirements may be triggered. These include the use of offering memoranda for private placements, circulars in share-based M&A deals and public disclosure of mineral resource or preliminary economic assessment results.

Mind the audience

To avoid compliance issues, private companies are urged to limit circulation of investor documents to accredited investors and label all materials as confidential. Even a small audience could be considered “public” under the broadly defined standards, depending on who receives the information and how it’s shared.

Private firms also face practical hurdles, the lawyers note. NI 43-101 requires all technical disclosures to be prepared or approved by a qualified person. Yet many early-stage companies lack a qualified person on their staff, making timely compliance more difficult or costly.

Disclosure rules under NI 43-101 hinge on whether the disclosure is “reasonably likely” to be made available to the public in Canada, not on a company being publicly listed, the authors emphasize.

“The broad interpretation of ‘public’ by regulators means that caution is necessary,” the lawyers say. “Disclosure standards apply equally, regardless of an issuer’s reporting status.”