12

• APRIL 18 , 2014

THE LAWYERS WEEKLY

Focus

MINING LAW

What every engineer needs to know about NI 43-101
ognized professional that is a member of an accepted professional association with sufficient experience in the areas relevant to the technical report. Consulting engineers should regularly review the list of accepted professional associations to ensure their employees meet with NI 43-101 requirements for qualified persons. This is particularly important if a consulting engineer has employees qualified in foreign jurisdictions. As a final note, although compliance with NI 43-101 is the responsibility of the mining issuer, the consulting engineer should also be aware of the issues outlined above in order to avoid potential problems for the mining issuer with the securities regulatory authorities. Proper care and attention by the consulting engineer will ensure that (where feasible) the project can move forward without unnecessary delay or remedial measures from the securities regulatory authorities.
Kevin Sorochan is a member of the national capital markets, securities and mining groups in the Vancouver office of Miller Thomson. Chad Eggerman is a member of the national energy & natural resources and construction & infrastructure groups in the Saskatoon office of Miller Thomson.

Kevin Sorochan Chad Eggerman
ining and mineral exploraM tion companies that are reporting issuers in Canada must

follow specific rules for scientific and technical disclosure detailed in National Instrument 43-101 — ​ Standards of Disclosure for Mineral Projects. It is imperative that a consulting engineer be familiar with the requirements, standards and principles set out in NI 43-101 when preparing a technical report on behalf of a mining issuer. NI 43-101 principles are derived from industry standards and best practices and include legal terminology and specific mining concepts. The principles are broadly stated and are not intended to address specific situations. It is important for consulting engineers to note that although the obligation to comply with NI 43-101 is an obligation of the mining issuer itself, a consulting engineer engaged by a mining issuer to prepare a technical report will need to follow the requirements, standards and principles of NI 43-101 in fulfilling its engagement. The following is a summary of some of the key issues and obligations facing a consulting engineer when preparing a technical report for a mining issuer. Determine the type of technical report required Depending on where a property sits in the development cycle, a mining issuer may have need of a variety of different types of technical reports. These include a pre-feasibility study (PFS), a feasibility study (FS) and a preliminary economic assessment (PEA), each of which provide an assessment of the viability of the project and will include a review of economic, environmental and permitting issues. NI 43-101 adopts and incorporates the definitions of PFS and FS from the Canadian Institute of Mining, Metallurgy and Petroleum. The key distinction between a PFS and a FS is that the results of the latter may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with or finance the development of the project. A PEA is also specifically defined in NI 43-101, with the key distinguishing feature being that unlike a FS or PFS, a PEA may

MAMMAMAART / ISTOCKPhOTO.COM

include inferred mineral resources. A PEA may only include inferred mineral resources with the inclusion of cautionary language as mandated by NI 43-101, something which a consulting engineer must be aware of when preparing the PEA. Avoid misleading information For a consulting engineering preparing a technical report on a mining project, it is critical that it is not in any way misleading. A technical report may be misleading in any number of ways: n Most commonly, if it is not current. For example, if a consulting engineer is preparing a technical report at the same time as exploration is being undertaken, this may be viewed with concern by the securities regulatory authorities, as the technical report would not include all known technical information regarding the property. n In another common scenario, a consulting engineer may also be requested to provide an updated technical report in the context of a mining issuer becoming a reporting issuer, or in relation to an acquisition transaction. In those instances, the consulting engineer should carefully review the currency of the technical information in the technical report and ensure that the effective date of the report is set appropriately  —  this may include a requirement that the consulting engineer be engaged by the mining issuer to update the technical report to ensure that it is not misleading. n Technical information may be misleading if historical technical information is included in a technical report without the inclusion of cautionary language as mandated by NI 43-101. n The securities regulatory authorities have also recently

expressed concern if a PFS or FS is undertaken by a consulting engineer on behalf of a mining issuer before there has been sufficient work to determine if the property in question has measured and indicated mineral resources (M&I). The potential for a PFS or FS to be misleading is most apparent when there are no identified M&I resources. In this situation the public may be misled into believing a property is economically viable when in fact it is too early to make that determination.

n A PFS or FS may also be mis-

leading if it appears that exploration may not be successful or if a mining issuer believes that exploration will not result in M&I resources. Use of qualified persons NI 43-101 requires that technical information in respect of a mineral project be prepared, supervised or approved by a qualified person. A qualified person is an engineer, geologist or other rec-

hGZ / ISTOCKPhOTO.COM

Smile — you’re under arrest
A Florida man was charged with leaving the scene of an accident, dangerous driving and not wearing a seat belt. The charges were laid after a woman in a neighbouring car recorded his road rage episode that ended with his pickup truck veering into oncoming traffic and slamming into a light pole. Jeffrey White, 33, was charged in Tampa following the incident that began with him allegedly tailgating her, then swerving out into traffic to pass her car and then match her speed so that he could flip her a middle finger — all of it caught on video by the woman. Florida Highway Patrol police viewed her iPhone footage (and his license plate) on the spot and were able to track the man down and arrest him. “Maybe this is his opportunity for growth. Maybe he can use this as a learning tool and not go off the rails next time,” the woman told WTSP-TV. Her name was not released, but the video, published on YouTube and dubbed “Instant Karma,” was viewed 1.3 million times in 24 hours, WTSP reported. — STAFF