June/July 2010

Regulatory realignment

An expert perspective on proposed NI 43-101 revisions

By D. Zlotnikov

In April, the Canadian Securities Administrators (CSA) completed a year-long revision process of National Instrument 43-101. So what were some of the issues the revisions addressed? Deborah McCombe, executive vice-president at geological and mining consultancy Scott Wilson Roscoe Postle Associates, Inc., and a major contributor to CIM Special Volume 56, Mineral Resources/Reserves and Valuation Standards, pointed to the section governing consents of Qualified Persons as the most significant change in the proposed revisions.

Currently, McCombe explained, the author of the technical report would have to sign off on any new publically released document referencing that report. Mining companies have faced the problem of getting in touch with the author, sometimes years after the fact. This has been especially acute in time-sensitive situations, such as limited financing windows or acquisition talks. The changing reality at the property is a further complication, McCombe added. The Qualified Person who authored the report — and who bears legal responsibility for its accuracy — may require a site visit to ensure the original report is still up to date.

The new rules would lighten the load while retaining the same chain of accountability. To achieve this, McCombe said, the Qualified Person would be signing off on technical disclosure in the technical report and accompanying disclosure when the report is initially filed on SEDAR. The proposed revision would also eliminate the requirement for updated consents from the Qualified Person who first prepared the report. The burden for ensuring the report is up to date would shift from its author to the mining company and its in-house Qualified Person.

Who constitutes a “Qualified Person” under the Instrument, particularly with respect to the requirement of membership in a professional association may also change.

“Right now, in addition to the Canadian professional associations, there is a prescriptive list of recognized foreign associations and designations the Qualified Person must have, as part of NI 43-101; this list is currently  included in the Instrument and is therefore securities law,”  McCombe said.

This made the Instrument largely unable to respond to evolving professional associations and certification in the field; amending the list would have required changes at the legislative level every time a new professional association had to be added.

Under the new rules, as the list of foreign associations will now be part of the Companion Policy and guidance not law, McCombe explained, the regulators “will be able to modify the list as new professional associations are set up,” streamlining the process.

The CSA is soliciting comment from all interested parties, with the amendments available on the websites of the Alberta, British Columbia, New Brunswick, Ontario, Quebec and Saskatchewan securities commissions. The comment period closes on July 23rd.

Be sure to read the “Standards” column on page 48 for additional information on the proposed NI 43-101 revisions.


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