The purpose of an NI 43-101 Technical Report, as stated in the Form 43-101F1 Instructions, is “to provide a summary of material scientific and technical information concerning mineral exploration, development, and production activities on a mineral property that is material to an issuer” and the instructions to authors further states: “The Qualified Person preparing the Technical Report should keep in mind that the intended audience is the investing public and their advisors who, in most cases, will not be mining experts. Therefore, to the extent possible, technical reports should be simplified and understandable to a reasonable investor. However, the technical report should include sufficient context and cautionary language to allow a reasonable investor to understand the nature, importance, and limitations of the data, interpretations, and conclusions summarized in the technical report.”
Unfortunately, there appears to be a trend towards the inclusion in Technical Reports of overwhelming amounts of data and levels of detail that only experts in the field can hope to understand. In this paper, I aim to outline what should, and should not, be included.
An NI 43-101 Technical Report can be any of the following:
- A first time report on a mineral property (exploration or operating).
- A summary of the exploration activities with inherent Quality Control/Quality Assurance (QA/QC) on a project.
- A summary of the mineral resource estimate for a property.
- A report outlining ownership of a non-operating interest in a property (Royalty or otherwise).
- A report containing the results of a Preliminary Economic Assessment.
- A report or summary of the results of a Pre-Feasibility Study, depending on the complexity of the project.
- A summary of the results of a Feasibility Study on a mineral property.
- A summary of work conducted on an operating project possibly containing updated resource and reserve estimates.
- Any variation of the above.
Since the inception of the NI 43-101 reporting format, Micon has seen and examined the gamut of Technical Reports from examples containing barely any useful information on the property to those that run in excess of 500 pages (generally describing pre-feasibility and feasibility studies) that make little attempt to summarize the extensive work conducted on a property.
The Technical Report is not intended as a data dump at the end of an exploration program, nor does it replace the documentation of a complete or preliminary feasibility study on a property with all its subordinate studies, technical designs and engineering drawings. In general, an NI 43-101 Technical Report should be a good summary of the scientific and technical material concerning exploration, development and production on an issuer’s material property (or properties) whether it be an initial report on a property or a summary of the feasibility study. In most cases, the details of that work should be documented in detail for the company’s internal records, but not for public disclosure. It should be noted that «Since a technical report is a summary document the inclusion and filing of comprehensive appendices is not generally necessary to comply with the requirements of the Form.»
The need for separate all-encompassing reports is especially important in the case of pre-feasibility and feasibility studies. In these reports, there are generally secondary investigations dealing with economic trade-off studies, environmental baseline studies, major metallurgical studies, geotechnical and hydrological investigations, equipment supply quotes, detailed mine planning and scheduling, process flowsheets and diagrams, equipment layouts, tailings storage facility designs and cost estimates. In some cases, entire volumes are devoted to these separate, stand-alone studies.
Unfortunately, in the period since the introduction of the NI 43-101 reporting format, the Technical Report has become a catch-all. Ideally, companies would have their Qualified Person/s conduct and document their detailed work and then summarize it into a Technical Report for public disclosure. This can be done by either an in-house or independent QP, depending on the company’s reporting status.
However, it appears some industry executives, promoters and companies have come to believe that the Technical Report, prepared for filing purposes, should attempt to describe in detail all the work done and contain all the data generated in that process.
For many exploration projects, that results in superfluous details cluttering the report, often to the detriment of clarity. Far better that companies should continue to have their staff or consultants write internal reports on their exploration or operating properties which can be then used as the basis for a publicly-filed NI 43-101 report. After all, the investor does not necessarily need to know every nuance of a major exploration program, or have the entire data dump for the project, but a summary of the significant intersections and the key findings of a program or operation based upon information collected in a reliable manner using best practices.
With advanced projects, in an effort to trim costs, corners are getting cut. Some companies try to force major studies into a one volume NI-43-101 report with a multitude of appendices. Too often, the problem then becomes one of inadequate or poorly-organized back-up data being available when the project reaches the stage of seeking construction finance and due diligence is underway.
Micon recommends that its clients undertake properly documented pre-feasibility and feasibility studies. Once the separate components of the study are nearing completion or completed, then the results can be summarized into an NI 43-101 for the purposes of regulatory filing. In this way, if financing is sought for the project, the company has all of the inherent studies and technical information in one place for the purposes of conducting a due diligence review of the information. While review of a Technical Report allows non-technical investors to form an opinion regarding a project’s value, a full review of the underlying data, estimates and assumptions by an Independent Engineer is a necessary step in most project financing situations.
It is time for everyone in the industry to recognize that NI 43-101 reporting was – and is – intended to summarize a company’s exploration work or technical studies related to its mineral properties for the express purposes of relaying this information succinctly to its investors and their advisors. An NI 43-101 report is neither a compendium of every available scrap of information, nor is it a substitute for well-documented pre-feasibility and feasibility studies.