Part three of a series on NI 43-101 myths
For most practitioners in the minerals industry, the technical report is the centrepiece of the mining disclosure rule. That’s no surprise—it’s the only securities filing mandated by the National Instrument 43-101. But because many practitioners viewed the technical report in isolation from the rest of the disclosure rule, our straw man has had his head stuffed with more myths, specifically about the technical report.
Everything has to be documented in a technical report.
This is the myth that leads to 455-page (and 78 megabyte!) reports. The report is meant to be a summary of the scientific and technical information about a mineral project, at the report’s effective date. It’s not a meticulous record of everything that’s ever gone on there, it’s a summary of the current state of play on the project.
As a project progresses—or regresses, as projects often do—old information that does not bear on its present status or on future plans no longer matters. Leave unimportant stuff out: if you have a mineral resource, no investor cares, or needs to know, about the 15 EM conductors you drilled that turned out to be pencil mines. Your five-year-old scoping study is likely outdated.
Summarize things that matter.
An updated technical report needs only the new information that triggered it.
This myth leads to the opposite problem. First, there are no “updated” technical reports. Every technical report is a new technical report that must be complete, because it supersedes any previous one.
Second, technical reports are triggered by a company’s disclosure, but not tailored to that disclosure. They need all technical information about the project, in summary form, and aren’t complete without it. Just because you’ve estimated mineral resources on a new Zone C doesn’t relieve you of summarizing the mineral resource estimates on Zones A and B, or of describing the mothballed mill you bought along with the property and expect to refurbish.
The technical report is just for the regulators.
Every securities filing is for the public, first and foremost.
Staff at the securities commissions and the exchanges may review it, but that’s to ensure it tells investors what they need to know, or to establish whether the company meets listing criteria. The principal reason securities legislation requires companies to file any document—financial statements, a prospectus, a technical report—is to provide the public with the information it needs for investment decisions.
So technical reports should be short enough to read, simple enough to understand and small enough to download. Investors have neither specialized knowledge nor unlimited time. Authors of technical reports should write for them, not for other practitioners.
If it’s been filed on SEDAR+, it’s been approved for filing by the regulators.
SEDAR+ (the revamped System for Electronic Document Analysis and Retrieval) is a central system for companies to file documents that securities legislation require and for the public to find and see those documents. SEDAR+ gets hundreds of filings a day and there’s no way securities commissions have enough staff to review everything. Never assume a filing on SEDAR+ has been reviewed by regulators.
If regulators don’t review everything that is filed, what is it that they do, anyway?
Regulators do review disclosure documents, but normally they only launch reviews of a company’s disclosure record for one of several reasons:
» A company files a prospectus to raise money, so staff review the prospectus and supporting filings;
» Regulators get a complaint that indicates a review is needed;
» For “issue-oriented” reviews, where staff select a number of companies, and examine a single aspect of those companies’ disclosure; or,
» For random or risk-based reviews of a company’s whole disclosure record.
We have to file technical reports on all our mineral projects and for all new information.
No, just on the company’s material projects—those significant enough to have a measurable effect on the company’s value or the price of its securities. And not all new information triggers the requirement to file a report, either—only new information that significantly changes the picture on the project, like new mineral resource estimates or completion of a drilling campaign.
How could the mineral project fail? It had a technical report.
Many people wrongly believe a technical report guarantees a mineral project’s significance or future viability. It does not. The technical report prepared under Form 43-101F1 is simply a disclosure document; it’s not a technical standard, nor does it provide assurance of good professional practice. The technical report is just about disclosure of information related to the mineral project so investors can make informed decisions.
We have a metallurgical report and a geotechnical report from specialist consultants. The technical report needs those as an appendix.
Absolutely not. It’s the job of the report authors to clearly summarize that work. If information is material to the project, it belongs in the text of the report, not in an appendix. Imagining that appendices are needed leads to the next myth.
The technical report has to have all the drill logs and the assay certificates to protect me from liability.
Pure nonsense. The technical report is a summary for investors, not a place to dump all your data. Practitioners protect themselves from liability by documenting and proving diligent, reasonable and prudent practice. They can do that best by retaining good records, whether in a hard drive, on optical discs or in a cardboard file box. Investors don’t need those. You do.
James Whyte, P.Geo., retired in 2023 from his role as senior geologist at the Ontario Securities Commission. Craig Waldie is a senior geologist at the Ontario Securities Commission. Both authors are writing in their private capacity.
