Executive Summary

The Canadian National Instrument NI 43-101 (NI 43-101), established by the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM), holds a crucial role in the global landscape of mineral resource reporting. This standard aligns with the international benchmarks set by the Committee for Mineral Reserves International Reporting Standards (CRIRSCO), which significantly influenced the SEC’s recently adopted Regulation S-K 1300. This regulation aims to modernize and harmonize mining industry reporting standards, largely drawing upon the established principles of NI 43-101. As such, NI 43-101 continues to be a key standard, ensuring transparency and consistency in the reporting of mineral resources and reserves on a global scale.

About the Author

Mr. Radke is a distinguished attorney with extensive experience in federal securities and financial services law. He served as Chief of Staff at the Securities and Exchange Commission under Chairman Harvey Pitt, playing a key role in the development of the Sarbanes-Oxley Act and contributing to the creation of the Public Company Accounting Oversight Board. Throughout his career, Radke has worked with top national and global law firms, specializing in both civil and criminal enforcement. He has represented professionals across the financial sector, including accountants, investment experts, and corporate leaders, in investigations by the SEC, DOJ, FINRA, PCAOB, and state attorneys general.

Radke’s expertise extends to serving as a corporate monitor for organizations like the World Bank Group and acting as an SEC-appointed monitor in major cases, including a significant Ponzi scheme. He has also provided governance counsel to firms like Paine Webber Group and Prudential Securities, advising on corporate misbehavior and governance issues.

In addition to his legal practice, Radke has been an educator, teaching federal securities law enforcement at Georgetown University Law Center since 1999. He holds a B.A. in History from the University of Washington, a J.D. from the University of Baltimore School of Law, and an L.L.M. in Securities Regulation from Georgetown University Law Center.

Introduction

Before the adoption of the new SK-1300 regulations by the SEC on October 31, 2018, the mining industry in the United States was primarily governed under Industry Guide 7. This guide, formally known as the “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations,” was established in 1982 and had been a longstanding framework for the disclosure requirements of mining companies listed in the United States.

However, Industry Guide 7 had several limitations that prompted the SEC to replace it with the new SK-1300 regulations. One of the main issues was its misalignment with international standards, particularly those developed by the CRIRSCO, which had become widely accepted globally. For instance, Guide 7 restricted the disclosure of mineral resources to those that were economically viable, contrasting with CRIRSCO standards that allow the disclosure of mineral resources based on geological evidence, regardless of economic viability.

Additionally, the requirements of Guide 7 were considered outdated, having not been substantially revised since their introduction. This lack of updates resulted in a regulatory framework that did not reflect the advances and current practices in the mining industry, such as modern geological and extraction technologies and evolving market conditions. This discrepancy made it difficult for U.S. companies to compete internationally, where investors might expect more detailed and transparent reporting standards as seen in jurisdictions following the CRIRSCO codes.

The SK-1300 regulations went into effect on January 1, 2021, addressed these issues by introducing more comprehensive disclosure requirements. These include detailed descriptions of mineral resources and reserves, a clear definition and classification of inferred, indicated, and measured resources, and the requirements for a qualified person to oversee such disclosures. These changes aimed to enhance the clarity, consistency, and comparability of mining disclosures, aligning more closely with international standards and helping investors make more informed decisions by providing a fuller picture of a company’s mineral assets.

The transition to SK-1300 represented a significant shift towards more modern and globally comparable mining disclosure standards, promoting transparency and investor trust in the financial reporting of mining companies listed in the United States.

Understanding the Role of CRIRSCO

The Committee for Mineral Reserves International Reporting Standards (CRIRSCO) is a pivotal entity in the mining sector, tasked with standardizing reporting practices across the industry globally. CRIRSCO is a voluntary, collaborative body comprised of representatives from national organizations responsible for developing mineral reporting codes and guidelines. These organizations, known as National Reporting Organizations (NROs), originate from a variety of countries including Australia, Brazil, Canada, Chile, and South Africa, among others.

CRIRSCO Is Not a Reporting Standard Itself

It is crucial to understand that CRIRSCO is not a reporting standard unto itself and does not replace national reporting standards such as NI 43-101, JORC, or SAMREC. Instead, CRIRSCO provides a template that harmonizes these various national and regional reporting standards into a globally accepted framework. This template, known as the International Reporting Template (IRT), seeks to ensure consistency and comparability across different jurisdictions while respecting the local nuances of each member’s reporting standards.

CRIRSCO’s role is fundamentally about promoting high standards of reporting for mineral deposit estimates, mineral resources, and mineral reserves. This includes ensuring transparency and consistency in the public reporting of exploration results, which is crucial for maintaining trust among stakeholders and supporting effective market regulation. The group’s efforts aim to facilitate the international exchange and comparison of mineral property estimates by aligning the definitions and standards used across different reporting codes.

By doing so, CRIRSCO helps create a level playing field in the mining industry, ensuring that stakeholders, including investors, regulators, and the public, can have confidence in the reported information regardless of the geographical origin of the data. This global approach helps mitigate the risk of misinterpretation and misinformation, fostering a more informed and efficient global mining market.

CRIRSCO’s Functions and Global Impact

CRIRSCO’s primary mission is to promote high standards of reporting for mineral deposit estimates, mineral resources, and mineral reserves. This includes ensuring transparency and consistency in the public reporting of exploration results, which is essential for maintaining trust among stakeholders and supporting effective market regulation. CRIRSCO’s efforts are centered around the International Reporting Template (IRT), which aims to harmonize various national and regional reporting standards—such as JORC in Australasia and NI 43-101 in Canada—into a globally accepted guideline.

This framework facilitates a unified approach to reporting mineral resources and reserves, enhancing comparability and reliability across international boundaries. By promoting these high standards, CRIRSCO plays a crucial role in shaping global mining practices and helping to establish a more transparent and accountable industry.

Collaboration and Recognition

CRIRSCO also collaborates extensively with international organizations like the International Council on Mining and Metals (ICMM) and receives recognition from the United Nations Economic Commission for Europe (UNECE). These partnerships underscore the significant role CRIRSCO plays in the global mining landscape, influencing policies and practices that extend far beyond national borders.

The Primacy of NI 43-101

The NI 43-101 has played a significant role in shaping international reporting standards for mineral projects, especially through its influence in the development of CRIRSCO’s International Reporting Template (IRT). Developed by the Canadian Securities Administrators, NI 43-101 sets a high bar for the public disclosure of scientific and technical information related to mineral projects on Canadian stock exchanges. This standard is notable for its stringent requirements, particularly regarding the qualifications and responsibilities of “Qualified Persons” who prepare the reports.

NI 43-101 has had a considerable influence on international mineral reporting standards by serving as a model for the development of similar codes in other countries. Its comprehensive approach to defining mineral resources and reserves, along with its emphasis on transparency and accountability, has contributed to its adoption and adaptation in various jurisdictions around the world. CRIRSCO has integrated many aspects of NI 43-101 into its own standards, aiming to ensure consistency and reliability in the reporting practices across the global mining industry.

In essence, while CRIRSCO’s international standards do not replace NI 43-101, they are harmonized to ensure that reporting standards across different countries reflect a common set of principles. This alignment facilitates the comparison and evaluation of mining projects internationally, enhancing investor confidence and promoting fair practices in the mining sector. NI 43-101’s role is thus foundational and influential in the context of global mining reporting standards​.

NI 43-101 Is Standard Compliant with S-K 1300

While NI 43-101 is widely recognized and specifically aligned with the requirements of S-K 1300, other standards like JORC (Australasia) and SAMREC (South Africa) are indeed based on CRIRSCO templates, which are broadly compatible with S-K 1300. However, each of these standards has slight variations in how mineral resources and reserves are defined and reported.

Key Considerations: Compliance with S-K 1300: While JORC and SAMREC are aligned with CRIRSCO principles, which share common core definitions and standards with S-K 1300, they might not automatically comply with all specific requirements of S-K 1300. This is primarily because each standard has nuanced differences in terms of disclosure requirements, terminologies, and the level of detail required in reporting.

Reconciliation Requirement: For a JORC or SAMREC report to be used in compliance with S-K 1300 for filing purposes on U.S. exchanges, it generally needs to include a reconciliation to S-K 1300. This reconciliation must clearly outline any differences in resource and reserve definitions and ensure that all reporting meets the stringent transparency and materiality standards required by the SEC.

Case-by-Case Basis: Whether a JORC or SAMREC report can be used directly without extensive modification depends on how closely the reporting standards used in the report align with S-K 1300. In many cases, additional supplementary information may be required to fully comply with S-K 1300 requirements.

Complying with Regulation S-K 1300 

The review process to ensure that mineral resource and reserve reports align with the SEC’s S-K 1300 requirements involves several layers of oversight and accountability, primarily centered on the roles of “Qualified Persons” and the company’s internal governance. Here’s how this process typically unfolds:

Qualified Persons (QPs)

Role of Qualified Persons: Under S-K 1300, a “Qualified Person” must review and approve the disclosures related to mineral resources and reserves. This Qualified Person must be a licensed professional with suitable qualifications, experience, and a favorable professional reputation. The role of the Qualified Person is crucial, as they ensure the technical information complies with S-K 1300 standards.

Expertise and Responsibility: The Qualified Person is responsible for validating all the technical and scientific information presented in the reports, including any international reports that are used. They must have expertise relevant to the particular type of mineralization and deposit under consideration.

Certification and Independence: To maintain independence and objectivity, the Qualified Person must not have any undisclosed personal interest in the company or the properties they are reviewing. They are required to provide a signed consent, certifying that the information is fair and impartial.

Company Oversight

Internal Controls: The company using the report for SEC filings is responsible for ensuring that its disclosures are accurate and compliant with S-K 1300. This includes implementing internal controls over data collection, mineral resource estimation, and financial disclosures.

Audit and Compliance Committees: Many companies establish specialized committees, such as audit committees or compliance committees, that oversee the integrity of the financial and technical reporting, including compliance with S-K 1300.

Regulatory Oversight

SEC Review and Enforcement: The SEC periodically reviews filings and disclosures by publicly traded companies, including those related to mineral resources and reserves. If discrepancies or non-compliance with S-K 1300 are found, the SEC can require corrective disclosures or take enforcement actions.

Transparency and Public Scrutiny: Because these reports are public documents filed with the SEC, they are subject to scrutiny by investors, analysts, and the general public, providing an additional layer of oversight.

Safeguards

Reconciliation Requirement: For reports prepared under international standards, a detailed reconciliation to S-K 1300 must be provided if there are significant differences in the resource or reserve definitions or reporting criteria.

Continuous Education and Professional Development: Qualified Persons are often required to engage in continuous professional development to stay updated with industry practices and regulatory requirements, ensuring their assessments and reports remain relevant and compliant.

These layers of oversight, combined with the professional and ethical responsibilities of Qualified Persons and the regulatory authority of the SEC, form a comprehensive system designed to ensure that the mineral resource and reserve reports align with S-K 1300 and uphold the standards required for accurate and reliable public disclosure.

Conclusion

While SEC Regulation S-K 1300 permits the use of various reporting standards, such as JORC and SAMREC, these standards are not necessarily compatible and may require specific adjustments to meet the regulation’s criteria, unlike the Canadian NI 43-101 standard. NI 43-101 is inherently compliant due to its rigorous and industry-leading financial reporting standards, which form the foundation of the CRIRSCO templates and are universally recognized.

Due to its comprehensive compliance, NI 43-101 reports, which are globally accepted on all major stock exchanges, not just inherently compliant with US and Canadian regulations, are exclusively accepted in the NatGold™ tokenization model. This may appear conservative, but it is deemed a prudent approach given the current regulatory landscape. While each mining title still requires specific due diligence—as is customary with all standards—the compatibility of NI 43-101 with S-K 1300 is unequivocal.

Moving forward, while we currently endorse NI 43-101 as the standard for converting gold resources or reserves into NatGold tokens, we remain open to incorporating other national standards in the future, should they align with our stringent criteria for transparency and reliability. This adaptive stance ensures that the NatGold model will continue to evolve alongside global advancements in mineral resource reporting.