On June 30, 2011, amendments to the current NI 43-101 (the “Old Instrument”), its companion policy and the technical report form will come into effect. The new NI 43-101 (the “New Instrument”) aims to reflect changes that have occurred in the mining industry and make NI 43-101 more effective and cost efficient without compromising investor protection by, among other things, eliminating or reducing the scope of certain requirements and providing more flexibility to mining issuers and qualified persons in certain areas. Key changes in the New Instrument include:

• relaxing the requirement to file a new technical report in connection with a short form prospectus;
• expanding the triggers for when an issuer is required to file a technical report;
• extending the time limit to file a technical report after a triggering event, such as a press release, from 45 days to 180 days in certain circumstances;
• changing how historical estimates are treated, including requiring additional disclosure with respect to historical estimates;
• providing new exemptions for royalty holders; and
• changing requirements related to the qualifications, obligations and consents of qualified persons.

Requirement to File a Technical Report in connection with a Short Form Prospectus

Under the Old Instrument, an issuer was required to file a new technical report if a preliminary short form prospectus contained new material technical or scientific information about a property material to the issuer no later than the time the prospectus was filed. Many issuers found this obligation to be both costly and an impediment to closing an offering in a timely manner. Under the New Instrument, an issuer is only required to file a new technical report to support technical information in a preliminary short form prospectus if the prospectus discloses for the first time, or discloses a material change in: (i) mineral resources or reserves, or (ii) the results of a preliminary economic assessment that constitutes a material change to the issuer, even if the prospectus contains other new information that does constitute a material change to the issuer. As a result, issuers should now be able to complete a short form offering more quickly and efficiently in many cases.

Expanded Written Disclosure Trigger

The New Instrument expands the criteria for when a technical report must be filed to require that a report be filed whenever the issuer discloses in any written disclosure (not just in press releases or directors’ circulars), for the first time, or discloses a material change in: (i) mineral resources or reserves, or (ii) the results of a preliminary economic assessment that constitutes a material change to the issuer.

Timing for Filing a Technical Report

Under the Old Instrument, an issuer had 45 days from the date of the triggering disclosure to file a supporting technical report. Under the New Instrument, an issuer continues to have 45 days from the triggering disclosure to file a supporting technical report unless the mineral resources, reserves or results of the preliminary assessment were prepared by another issuer that holds or held an interest in the same property and disclosed in a technical report by that other issuer, in which case the issuer will have 180 days after the triggering disclosure to file its own technical report. In either case, when such technical report is filed, the issuer must issue a news release at the time of filing the technical report disclosing the filing of the report.

Treatment of Historical Estimates

Like the Old Instrument, the New Instrument provides an exemption from the requirements to file a technical report regarding “historical estimates” in certain circumstances. The New Instrument provides a broader definition of “historical estimates” pursuant to which estimates of the quantity, grade or metal or mineral content of a deposit will be considered historical if an issuer has not verified such estimates as a current mineral resource or mineral reserve, and the estimate was prepared before the issuer acquired or entered into an agreement to acquire an interest in the property. While the Old Instrument limited historical estimates to estimates prepared prior to February 1, 2001, the definition of “historical estimate” in the New Instrument captures certain estimates made after February 1, 2001.

In addition, Section 2.4 of the New Instrument requires that issuers provide additional disclosure in connection with historical estimates, including, to the extent known, key assumptions, parameters and methods used to prepare the historical estimate, and information about what additional work the issuer must do to upgrade or verify the historical estimates as current mineral resources or mineral reserves.

Exemptions for Royalty Holders

Unlike the Old Instrument, the New Instrument exempts issuers that only hold a royalty or similar interest in a property from filing a technical report if the owner or operator of the property: (i) is a reporting issuer in Canada, or (ii) is a producing issuer whose securities trade on a specified exchange and the mineral resources or mineral reserves are disclosed under an “acceptable foreign code” as defined in the New Instrument, and (iii) the owner or operator has disclosed the scientific or technical information that is material to the issuer in a source disclosed by the issuer.

Changes with respect to Qualified Persons and Consents

The New Instrument provides more objective guidelines for what constitutes a “qualified person” and includes a new requirement that the qualified person must have a university degree or equivalent accreditation in an area of geoscience or engineering related to mineral exploration or mining and, if a member of a professional association in a foreign jurisdiction, has a membership designation that meets certain requirements as set out in the definition of qualified person in the New Instrument.

In order to increase the ability of issuers to meet timing deadlines, the New Instrument removes the requirement that issuers file updated consents and certificates in connection with information in a filing that is supported by a previously filed technical report, provided that there is no new material information about the property in the new filing and the technical report continues to meet applicable independence requirements. Further, under consequential amendments to National Instrument 44-101 Short Form Prospectus Offerings, an issuer will not need to obtain the consent of a particular qualified person with respect to information in a short form prospectus that is supported by a previously filed technical report if the information in the previously filed report is still current and the consulting firm which employed the author when the report was written provides consent to use of the report in the short form prospectus and is in the principal business of providing engineering or geoscientific services.