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CSA issues report card on resource estimate disclosure

by Greg Klein | June 5, 2020

CSA issues report card on resource estimate methodology

Projects involving precious metals and B.C.-headquartered
companies predominated among the 86 deposits under scrutiny.
(Chart: Canadian Securities Administrators)

 

How well do early-stage explorers reveal the technical data and economic assumptions behind their 43-101 resource estimates? A review by the Canadian Securities Administrators found their technical reports generally satisfactory, although often lacking in data verification as well as discussions of economic prospects and cutoff grades.

Completed in late 2018 but not reported until June 4, the study examined 86 technical reports. As a result, 10 were sent back to the issuers to be amended and re-filed. Six of those were cited for inadequate disclosure and the other four required revisions to their resource estimates. Conducting the study were seven staffers from securities commissions in British Columbia, Ontario and Quebec.

CSA issues report card on resource estimate methodology

The review looked at 33 aspects of seven broad issues of disclosure: the QP’s experience; data verification; mineralogical controls and geological model; data analysis; resource estimation and classification; reasonable economic prospect of eventual mining; and reporting sensitivities, risks and uncertainties.

Among problematic areas was data verification, a vital issue concerning results from previous operators. The study found the process inadequate for recent data in over 20% of reports, and over 30% for historic data.

In several cases economic prospects were stymied by insufficient info regarding metallurgy, costs, prices and restraints. Reporting of overall sensitivity and risks was another issue of concern, especially where companies used boilerplate language instead of discussing risks specific to their projects.

Cutoff grades didn’t always have the base case emphasized, the study found, and not all cutoff grades came with a necessary discussion of reasonable economic prospects.

But the study found good work too. “Despite some deficiencies, many technical reports provided detailed and useful information on geological constraints applied to the estimate, and on statistical treatment of the data.”

“Robust technical reports are essential to disclosure at key project development stages,” noted Louis Morisset, CSA chairperson and president/CEO of l’Autorité des marchés financiers. “Our intention for publishing this guidance in the current environment is to support mining issuers in preparing their resource estimates, and to reinforce the importance of technical reports that are transparent and comply with disclosure requirements and industry best practices.”

As part of their ongoing disclosure review, securities commissions staff “will pay special attention to [mineral resource estimates] and the areas of inadequate disclosure identified,” the report added.

Download the CSA Review of Mineral Resource Estimates in Technical Reports.

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