Public reporting of exploration results, mineral resources and mineral (ore) reserves now benefits from considerable international conformity, thanks to the efforts of national reserves committees in Australia, Canada, South Africa, the United Kingdom/Western Europe, the United States and Chile, and of the international umbrella organization CRIRSCO (Committee for Mineral Reserves International Reporting Standards). This article compares, on a high level, the reporting environments for three countries that are of considerable influence in the mining industry.
National Instrument 43-101, Standards of Disclosure for Mineral Projects, together with Companion Policy 43-101CP and Form 43-101F1, was developed and released by the Canadian Securities Administrators (CSA) in 2001. National Instruments have legal status, an important point for companies also listed in the United States. Each of Canada’s 13 provincial/territorial securities regulators has adopted NI 43-101 and enforces compliance. Stock exchange listing rules require listed companies to comply with both listing rules and National Instruments. Market Regulation Services is a separate regulator in Canada, created when TSX became listed on its own stock exchange.
NI 43-101 incorporates, by reference, the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves, developed by CIM’s Standing Committee on Reserve Definitions. The definition standards set out definitions and guidelines for reporting of mineral resources and mineral reserves, including those applying to Qualified Persons. NI 43-101 also specifies requirements and guidelines for Qualified Persons, who must belong to one of the provincial/territorial geological, geoscientific or engineering organizations or to a Recognised Foreign Association listed in Appendix A to NI 43-101.
CIM has also published best practice guidelines, referenced by NI 43-101, for general exploration, diamond exploration and resource/ reserve estimation.
In Australia, there is one securities regulator — the Australian Securities and Investment Commission — and one national stock exchange — the Australian Securities Exchange. The JORC Code has been incorporated as an appendix to the listing rules of the Australian Securities Exchange since 1989 and of the New Zealand Stock Exchange since 1992, making compliance with the JORC Code compulsory for listed companies in Australia and New Zealand.
The JORC Code is the responsibility of the Joint Ore Reserves Committee (JORC), established in 1971, and a joint committee of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists and Minerals Council of Australia, with representation from the Australian Securities Exchange and the Financial Services Institute of Australasia.
The Australian Securities and Investment Commission oversees the operation of the Australian Securities Exchange and administers the Federal Corporations Act. While stock exchange listing rules are not part of law in Australia, the Australian Securities and Investment Commission can require compliance, thus giving them a degree of legal status. The Australian Securities Exchange Markets Supervision is a subsidiary of the Australian Securities Exchange, created when the Australian Securities Exchange listed on its own stock exchange in 2006.
A Competent Person must be a member or Fellow of AusIMM, the Australian Institute of Geoscientists or a Recognised Overseas Professional Organisation included in a list promulgated by the Australian Securities Exchange from time to time on advice from JORC. Both Recognised Overseas Professional Organisations and Recognised Foreign Associations may be self-regulatory professional organizations or statutory/semi-government organizations.
In the United States, the equivalent to the JORC Code and CIM Standards Definitions is the SME Guide for Reporting Exploration Results, Mineral Resources and Mineral Reserves, 2007 edition (SME Guide). However, public disclosure of exploration results, mineral resources and mineral reserves in the United States is regulated by the U.S. Securities and Exchange Commission. SEC does not recognize the SME Guide or similar CRIRSCO-style reporting standards, instead requiring mining companies to comply with its Industry Guide 7 (Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations) and the SEC staff interpretations of this guide.
Industry Guide 7, published more than 20 years ago and not since updated, differs significantly from CRIRSCO-style reporting standards in that it, or staff interpretation of it:
- Does not permit the reporting of mineral resources except when a company is required to do so by foreign or state law (hence the importance of the distinction between NI 43-101 being part of law and the JORC Code/Australian Securities Exchange listing rules not being part of law).
- Requires the use of commodity prices based on the average of the last three years subject to a reasonableness test, or on a contract price if the commodity is sold under contract. In other jurisdictions, management’s forward-looking prices may be used.
- Requires a feasibility study to allow publication of mineral reserve estimates for new projects. Canada requires at least a pre-feasibility study, while Australia requires an appropriate assessment and study that will have determined a technically achievable and economically viable mine plan.
- Does not recognize the Competent/ Qualified Person concept.
Industry Guide 7 is a short document and therefore requires considerable interpretation to cover the wide variety of situations found in the mining industry. SEC staff have significantly changed their interpretations of the guide over time. Unfortunately, these interpretations are usually not made public.
In April 2005, SME submitted a comprehensive document entitled, Recommendations Concerning Estimation and Reporting of Mineral Resources and Mineral Reserves, to SEC. The document aimed to bridge the gap between the SEC and industry positions, making major recommendations in the main areas of difference between Industry Guide 7 and CRIRSCO-style standards. SEC has yet to respond.
In 2005, SME established the Registered Member category, with qualification/experience requirements and an ethical control framework to allow recognition as Competent/Qualified Persons.
Greg Gosson of AMEC Americas Ltd. reviewed the Canadian portion of the article and Deborah McCombe provided editorial comment on behalf of CIM. It is important to note that laws, policies and regulations other than those summarized in this article also apply to public reporting.