National Instrument 43-101
Encyclopedia
National Instrument 43-101 (the "NI 43-101" or the "NI") is a mineral resource classification
scheme used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities Administrators.
NI 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining entities who trade on stock exchanges overseen by the Canadian Securities Administrators
, even if they only trade on Over The Counter (OTC) derivatives or other instrumented securities.
Many publicly held Canadian mineral exploration and mining companies list on the TSX Venture Exchange
(TSX-V) or the Toronto Stock Exchange
(TSX). Some of these companies may also have listings on stock exchanges outside Canada, such as Johannesburg Stock Exchange, Australian Securities Exchange
and London Stock Exchange
.
Disclosures covered by the NI 43-101 code include press releases of mineral exploration
reports,reporting of resources and reserves
, presentations, oral comments, and websites. The NI 43-101 covers metalliferous, precious metals and solid energy commodities as well as bulk minerals, dimension stone, precious stones and mineral sands commodities.
The National Instrument 43-101 is broadly comparable to the Joint Ore Reserves Committee Code (JORC Code) which regulates the publication of mineral exploration reports on the Australian Stock Exchange
(ASX). It is also broadly comparable with the South African Code for the Reporting of Mineral Resources and Mineral Reserves (SAMREC).The reporting codes are, however, not entirely congruent in practice, in that NI 43-101 is more prescriptive in terms of the manner in which mineral exploration reporting is presented, although the content of the technical reports, and the scientific rigors to which the mineral resource classification
s within them are put, are often very similar.
For TSX listing purposes,an NI43-101 Technical Report would have to be accompanied by an Report prepared in accordance with NI43-101. For ASX listings, a JORC Mineral Resource Statement needs to be accompanied by a Valmin Valuation Report, while for JSE listings, a Competent Person's Report (CPRs), which is compliant with SAMREC and The South African Code for the Valuation of Mineral Assets (SAMVAL), needs to be submitted.
In many cases, NI 43-101 and JORC Code technical reports are considered inter-changeable and may be accepted by either regulatory body in cases of dual listed entities and, indeed, are accepted as the de-facto industry reporting standard by many other jurisdictions which lack similar rigorous reporting standards or internationally recognized industry professional bodies. The LSE, for instance, accepts CPRs, Qualified Person's Reports (QPRs), and Mineral Resource Statements, compiled using JORC, SAMREC and SAMVAL, or NI 43-101, when accompanied by a NI51-101 Valuation Form, for listing on the LSE. Likewise, the Hong Kong Stock Exchange accepts reports prepared in accordance with NI 43-101,SAMREC or JORC.
The NI 43-101 was created after the Bre-X
scandal to protect investors from unsubstantiated mineral project disclosures.
"The gold reserves at (Bre-X
's) Busang were alleged to be 200 million ounces (6,200 t), or up to 8% of the entire world's gold reserves at that time. However, it was a massive fraud and there was no gold. The core samples had been faked by salting them with outside gold. An independent lab later claimed that the faking had been poorly done, including the use of shavings from gold jewelry. In 1997, Bre-X collapsed and its shares became worthless in one of the biggest stock scandals in Canadian history."
The promulgation of a codified reporting scheme makes it more difficult for fraud to occur and reassures investors that the projects have been assessed in a scientific and professional manner. However, even properly and professionally investigated mineral deposits are not necessarily economic, nor does the presence of a NI 43-101-, JORC- or SAMREC and SAMVAL-compliant CPR or QPR necessarily mean that it is a good investment.
Similarly, the publication of a complex technical report with all the inherent jargon
, technical wording and abstract geological, metallurgical and economic information may not actually significantly advantage an investor who is not able to fully nor properly understand the content or importance of this information. In this way the NI 43-101 may not serve the interests of those it is designed to protect— the retail investors who may easily misinterpret such information.
Prescribed disclosure within the National Instrument relates to;
Proscribed disclosure within the National Instrument precludes a company from reporting;
The technical information required in a Reserve declaration under the NI 43-101 exceeds that within the JORC Code, primarily by stipulating that certain geological parameters of the mineral reserve must be presented within a report, published in full, and presented in a particular way. Conversely, JORC Compliant technical reports are not commonly published in full upon the Australian Stock Exchange as this is not required by Australian regulatory authorities. Therefore, often a summary of the key points is published, which can often preserve commercially sensitive information, and oftentimes this could allow deleterious information to remain out of the public forum.
A qualified person is defined in the National Instrument as:
The requirement for a Qualified Person in the NI 43-101 is different from that required by the JORC Code, and the SAMREC and SAMVAL Codes, wherein the person must have 5 years experience relevant to the deposit type or style of mineralization but is otherwise similar in terms of who may or may not sign off on such a document.
The Qualified Person must declare whether a qualified person has verified the data disclosed, including sampling, analytical and test data underlying the information or opinions contained in the written disclosure; a description of how the data was verified and any limitations on the verification process; and an explanation of any failure to verify the data.
Mineral resource classification
Mineral resource classification is the classification of mineral deposits based on their geologic certainty and economic value.Mineral deposits can be classified as:...
scheme used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities Administrators.
NI 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining entities who trade on stock exchanges overseen by the Canadian Securities Administrators
Canadian Securities Administrators
The Canadian Securities Administrators is an association of provincial and territorial securities regulators in Canada.-List of securities regulators:* BC: British Columbia Securities Commission*: jointly regulates the TSX Venture Exchange...
, even if they only trade on Over The Counter (OTC) derivatives or other instrumented securities.
Many publicly held Canadian mineral exploration and mining companies list on the TSX Venture Exchange
TSX Venture Exchange
The TSX Venture Exchange is a stock exchange in Canada. It is headquartered in Calgary, Alberta and has offices in Toronto, Vancouver, and Montreal. All trading through the Exchange is done electronically, so the Exchange does not have a "trading floor"...
(TSX-V) or the Toronto Stock Exchange
Toronto Stock Exchange
Toronto Stock Exchange is the largest stock exchange in Canada, the third largest in North America and the seventh largest in the world by market capitalisation. Based in Canada's largest city, Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities...
(TSX). Some of these companies may also have listings on stock exchanges outside Canada, such as Johannesburg Stock Exchange, Australian Securities Exchange
Australian Securities Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
and London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
.
Disclosures covered by the NI 43-101 code include press releases of mineral exploration
Mineral exploration
Mineral exploration is the process of finding ore to mine. Mineral exploration is a much more intensive, organized and professional form of mineral prospecting and, though it frequently uses the services of prospecting, the process of mineral exploration on the whole is much more involved.-Stages...
reports,reporting of resources and reserves
Mineral resource classification
Mineral resource classification is the classification of mineral deposits based on their geologic certainty and economic value.Mineral deposits can be classified as:...
, presentations, oral comments, and websites. The NI 43-101 covers metalliferous, precious metals and solid energy commodities as well as bulk minerals, dimension stone, precious stones and mineral sands commodities.
The National Instrument 43-101 is broadly comparable to the Joint Ore Reserves Committee Code (JORC Code) which regulates the publication of mineral exploration reports on the Australian Stock Exchange
Australian Stock Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
(ASX). It is also broadly comparable with the South African Code for the Reporting of Mineral Resources and Mineral Reserves (SAMREC).The reporting codes are, however, not entirely congruent in practice, in that NI 43-101 is more prescriptive in terms of the manner in which mineral exploration reporting is presented, although the content of the technical reports, and the scientific rigors to which the mineral resource classification
Mineral resource classification
Mineral resource classification is the classification of mineral deposits based on their geologic certainty and economic value.Mineral deposits can be classified as:...
s within them are put, are often very similar.
For TSX listing purposes,an NI43-101 Technical Report would have to be accompanied by an Report prepared in accordance with NI43-101. For ASX listings, a JORC Mineral Resource Statement needs to be accompanied by a Valmin Valuation Report, while for JSE listings, a Competent Person's Report (CPRs), which is compliant with SAMREC and The South African Code for the Valuation of Mineral Assets (SAMVAL), needs to be submitted.
In many cases, NI 43-101 and JORC Code technical reports are considered inter-changeable and may be accepted by either regulatory body in cases of dual listed entities and, indeed, are accepted as the de-facto industry reporting standard by many other jurisdictions which lack similar rigorous reporting standards or internationally recognized industry professional bodies. The LSE, for instance, accepts CPRs, Qualified Person's Reports (QPRs), and Mineral Resource Statements, compiled using JORC, SAMREC and SAMVAL, or NI 43-101, when accompanied by a NI51-101 Valuation Form, for listing on the LSE. Likewise, the Hong Kong Stock Exchange accepts reports prepared in accordance with NI 43-101,SAMREC or JORC.
Purpose
Plainly put, the purpose of the National Instrument 43-101 is to ensure that misleading, erroneous or fraudulent information relating to mineral properties is not published and promoted to investors on the stock exchanges overseen by the Canadian Securities Authority.The NI 43-101 was created after the Bre-X
Bre-X
Bre-X was a group of companies in Canada. A major part of the group, Bre-X Minerals Ltd. based in Calgary, was involved in a major gold mining scandal when it was reported to be sitting on an enormous gold deposit at Busang, Indonesia...
scandal to protect investors from unsubstantiated mineral project disclosures.
"The gold reserves at (Bre-X
Bre-X
Bre-X was a group of companies in Canada. A major part of the group, Bre-X Minerals Ltd. based in Calgary, was involved in a major gold mining scandal when it was reported to be sitting on an enormous gold deposit at Busang, Indonesia...
's) Busang were alleged to be 200 million ounces (6,200 t), or up to 8% of the entire world's gold reserves at that time. However, it was a massive fraud and there was no gold. The core samples had been faked by salting them with outside gold. An independent lab later claimed that the faking had been poorly done, including the use of shavings from gold jewelry. In 1997, Bre-X collapsed and its shares became worthless in one of the biggest stock scandals in Canadian history."
The promulgation of a codified reporting scheme makes it more difficult for fraud to occur and reassures investors that the projects have been assessed in a scientific and professional manner. However, even properly and professionally investigated mineral deposits are not necessarily economic, nor does the presence of a NI 43-101-, JORC- or SAMREC and SAMVAL-compliant CPR or QPR necessarily mean that it is a good investment.
Similarly, the publication of a complex technical report with all the inherent jargon
Jargon
Jargon is terminology which is especially defined in relationship to a specific activity, profession, group, or event. The philosophe Condillac observed in 1782 that "Every science requires a special language because every science has its own ideas." As a rationalist member of the Enlightenment he...
, technical wording and abstract geological, metallurgical and economic information may not actually significantly advantage an investor who is not able to fully nor properly understand the content or importance of this information. In this way the NI 43-101 may not serve the interests of those it is designed to protect— the retail investors who may easily misinterpret such information.
Stipulations
NI 43-101 stipulates and codifies the form and content of a compliant report (i.e.; a report that complies with the Reporting Standard).Prescribed disclosure within the National Instrument relates to;
- All disclosure of scientific or technical information, including disclosure of a mineral resource or mineral reserve, concerning a mineral project on a property material to the issuer must be based upon information prepared by or under the supervision of a qualified person
- What the National Instrument is to be used for, such as which types of mineral properties must be covered by a compliant report
- Prescribes the terminology to be used to describe various features, both geologically and financially, within the report
- Stipulates the type of information to be discussed and the technical data which must be portrayed, for various levels of reporting
- Prescribes a list of approved Competent Persons, and the definition of Groups and Associations which may qualify to certify such a person as "Qualified"
- Prescribes that a Qualified Person vouches for the accuracy and completeness of the contained information and the manner in which it is presented
- Provides guidance on reporting Historical mineral resource estimates
Proscribed disclosure within the National Instrument precludes a company from reporting;
- quantity, grade, or metal or mineral content of a deposit that has not been categorized as an inferred mineral resource, an indicated mineral resource, a measured mineral resource, a probable mineral reserve or a proven mineral reserve
- results of an economic analysis that includes inferred mineral resources
- allows for the potential grade, quantity and metal or mineral content of an exploration property, provided that a qualifying statement is made as to this being conceptual in nature
- the term preliminary feasibility study, pre-feasibility study or feasibility study when referring to a study unless the study satisfies the criteria set out in the National Instrument
Comparison with the JORC Code
The National Instrument 43-101 requires substantially more technical disclosure to the market than the equivalent JORC Code, because the JORC Code is primarily a code for reporting the status of a mineral resource, whereas the NI 43-101 is a code of securities disclosure. This distinction is based on the derivation of the two codes: the JORC Code is derived from the Joint Ore Reporting Committee, an independent mineral industry body formed from industry professional associations; The NI 43-101 is a code derived from the Canadian Securities Authorities. The JORC Code, were it equal with the NI 43-101 would be derived from the Australian Securities and Investment Commission, not the relevant industry bodies.The technical information required in a Reserve declaration under the NI 43-101 exceeds that within the JORC Code, primarily by stipulating that certain geological parameters of the mineral reserve must be presented within a report, published in full, and presented in a particular way. Conversely, JORC Compliant technical reports are not commonly published in full upon the Australian Stock Exchange as this is not required by Australian regulatory authorities. Therefore, often a summary of the key points is published, which can often preserve commercially sensitive information, and oftentimes this could allow deleterious information to remain out of the public forum.
Qualified Persons Statement
The instrument requires that a "qualified person" be attributed to the information. This Qualified Person, in the spirit of the National Instrument, is required to be a reputable professional who is knowledgeable of the mineral property concerned, and who has sufficient experience and qualifications to make the statements which are made within the report. Often the Qualified Person need not be the author of the report, but in attributing the report as being compliant with the National Instrument, they are vouching for it. This is a matter of professional integrity and carries legal risk, as misleading statements can result in legal sanctions in Canadian and other jurisdictions.A qualified person is defined in the National Instrument as:
- is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these;
- has experience relevant to the subject matter of the mineral project and the technical report; and
- is in good standing with a professional association and, in the case of a foreign association (is of recognised stature within that Organisation)
The requirement for a Qualified Person in the NI 43-101 is different from that required by the JORC Code, and the SAMREC and SAMVAL Codes, wherein the person must have 5 years experience relevant to the deposit type or style of mineralization but is otherwise similar in terms of who may or may not sign off on such a document.
The Qualified Person must declare whether a qualified person has verified the data disclosed, including sampling, analytical and test data underlying the information or opinions contained in the written disclosure; a description of how the data was verified and any limitations on the verification process; and an explanation of any failure to verify the data.
External links
- National Instrument 43-101
- The Canadian Council of Professional Geoscientists CCPG
- Association of Professional Geoscientists of Ontario (APGO)
- NI 43-101 Guidelines (PDF)
- JORC Code
- U.S. Geological Survey Circular 831, Principles of a Resource/Reserve Classification for Minerals
- Canadian Institute of Mining, Metallurgy and Petroleum - CIM Definition Standards - On Mineral Resources and Mineral Reserves (PDF Format)
- The South African SAMREC and SAMVAL Codes
See also
- Mineral resource classificationMineral resource classificationMineral resource classification is the classification of mineral deposits based on their geologic certainty and economic value.Mineral deposits can be classified as:...
- Definition of OreOreAn ore is a type of rock that contains minerals with important elements including metals. The ores are extracted through mining; these are then refined to extract the valuable element....
- Mineral explorationMineral explorationMineral exploration is the process of finding ore to mine. Mineral exploration is a much more intensive, organized and professional form of mineral prospecting and, though it frequently uses the services of prospecting, the process of mineral exploration on the whole is much more involved.-Stages...