Prompted by the Bre-X Minerals debacle, the Commission des valeurs mobiliers du Quebec (CVMQ) has introduced new regulations designed to boost the credibility of mining companies in the Quebec securities market.
In looking for ways to help the mining industry continue to finance development, the CVMQ consulted the Association des prospecteurs du Quebec, the ministre des Ressources naturelles, the Association minire du Quebec and the Montreal Exchange. The regulatory measures proposed by the CVMQ include the following:
* The announcement of reserves should be backed by a geological report by an independent expert.
* The independent expert must be an engineer or geologist with a university degree and a membership in a professional association, and must have seven years of experience.
* The reserve report must employ recognized methodology and standard terminology and criteria.
* The author is required to outline all aspects of the sampling procedure in the report.
* Any resource or reserve calculation methods that differ from Canadian standards must be mentioned in the report.
* An announcement concerning results must disclose certain technical information relating to the type of drilling, the location of the boreholes and the sampling and storage method.
* Companies which conduct exploration or mining activities outside of Canada must have at least two independent board members residing in Canada.
* A prospectus or offering memorandum from such companies must mention all legal requirements relating to mining exploration that exist in the country in which the company is active, and must characterize risk factors such as expropriation and potential taxation-related problems. An independent opinion on ownership title in the country must be included as well.
* A placement carried out by an offering memorandum must be accompanied by a geological report prepared by an independent expert. Additional documentation must be included if the placement involves persons outside of Quebec and an increase of more than 25% in the number of outstanding shares.
* A mining company must disclose the results of its exploration activities to its shareholders in its annual report.
“Adopting these fair and specific rules in the near future should have a positive impact on this sector of activity,” CVMQ Chairman Jean Martel said.
The CVMQ will advise the mining industry once the recommendations have been made final.
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