Miners Beware: Regulators Read Your Investor Presentations

Written By Ali J. Naushahi, Sander A.J.R. Grieve, Abbas Ali Khan and Michael N. Melanson

On April 9, 2015, the Canadian Securities Administrators (CSA) published CSA Staff Notice 43-309 - Review of Website Investor Presentations by Mining Issuers (the Staff Notice), which summarizes the findings of a review of 130 investor presentations (the Reviewed Presentations) posted on websites of pre-production stage mining issuers. The Staff Notice reminds mining issuers that investor presentations and other information found on an issuer's website constitute "written disclosure" for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and, therefore, must comply with NI 43-101's disclosure requirements as well as the forward looking information (FLI) requirements of National Instrument 51-102 – Continuous Disclosure Obligations. The Staff Notice also suggests ways to improve compliance in designing investor presentations and websites to meet disclosure obligations.

The CSA found a number of areas in which there is room for improvement for mining issuers to strengthen compliance with securities legislation and to improve their disclosure to investors; the key suggestion being having a qualified person (QP) review technical disclosure in investor presentations and in other website disclosure. In particular, the CSA found a high level of non-compliance in the following areas:

• Including preliminary economic assessment cautionary statements.
• Including the mandatory caution that mineral resources that are not mineral reserves do not have demonstrated economic viability and stating whether mineral resources include or exclude mineral reserves.
• Expressing potential quantities and grade of exploration targets as ranges and including the required cautionary statements outlining the target limitations.
• Failure to include the source, date, reliability, key assumptions and the required cautionary statements when disclosing historical estimates.
• Disclosure of quality assurance/quality control information.
• Verification of data by the QP.

In addition to those areas of a high level of non-compliance, the CSA identified a number of areas for additional improvement, including the use of only pre-tax financial results, missing material factors and assumptions used to prepare FLI disclosure, and financial results not supported by a technical report. The Staff Notice cautions that the use of certain terms and statements, such as "world-class", "spectacular", "production ready" or "ore" in relation to mineral resources, might be overly promotional or misleading.

The CSA expects mining issuers to use the Staff Notice to strengthen their compliance with securities legislation and to improve their disclosure to investors. The CSA will be continuing its review of mining issuers' website disclosure and will require deficiencies to be corrected, failing which a defaulting issuer may be placed on the reporting issuer default list or ordered to cease trade until the deficiency is corrected.

For more details about CSA's review and staff commentary, see the CSA Staff Notice.