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.
Well summarized, agree 100%
Your comments are right on the mark, and we at WGM share your views. A NI 43-101 compliant technical report should not be a PhD thesis. That said, it is not always easy for geologists to simplify the terminology, and the reader should be expected to be sufficiently informed to understand the basic technical language. Most important, the report should contain a discussion of each subject area in terms of its relevancy to an investor making an informed assessment of the merits of a project. Flooding the reader with minutiae covering each and every dollar spent is not helpful, yet too often little is said of the economic or other benchmarks that a project needs to clear to be viable, with the inevitable result that projects having no realistic hope for development are billed as ‘the next best thing’. The challenge may be grade or the quality of the mineral resource, or it may be the market itself. Realism should trump ambition, but too often it does not. Yes, there is room for optimism – industry pundits have a less than sterling record in forecasting short-term commodity trends, so we must always be cognizant of the limits of our knowledge if we are dismissing a project. The technical report should be factual, and the writer should not be an advocate for the project owners, yet too often that is precisely what they become. Facts must be checked. We at WGM have a firm belief in check sampling. Had I or others at WGM been involved, Busang, Boka and a slew of other speedbumps that have shaken our industry might have been avoided completely. There is no substitute for check sampling yet for reasons I will never understand, it was never firmly mandated in NI 43-101.
I agree, it needs to be very simple. If you can’t simplify it, then you don’t understand it well enough.
Correct, this is so
Agree completely with Al. The whole issue of QA-QC is the Achilles heel of most exploration programs .
While I agree with virtually all the authors points, I believe that more is always better than less when it comes to disclosure. The reality is that from a company perspective, every release of information is a marketing document, even when the news is bad. Bad news buried in detail where it can be seen clearly if one looks hard enough is better that bad news spun into a summary and stretched into its least negative form.
I need a soft copy of the reporting code.
NI 43-101 was always intended to be a summary. It has since become a growth industry with limited regulatory effectiveness.
At one time the regulators had a Mine Technical and Advisory Committee (MTAMC) to keep the regulators informed of best practices. To say the least it appears ineffective since in the 16 years since it was formed, it has never published a single critique.
Time for a policy re-think.
Agree with the dispersion on content of these reports. For example, of 25 NI 43-101 Technical Reports collected by me from the Web the average size was 10 MB with StDev of 5.9 MB.
It is absolutely to the point.
One may have all the information but should know to which audiance it is being prepared.
The same is the problem with many academicians also ; in presenting their findings, they get carried away and get bogged down with detail and do not flag the importance of the work.
Maybe that is why many decision makers do not read most of the reports.
Well taken, at least as far as deposit characterization information is concerned. Indeed, some of it tends to be overwhelming in trying to prove the existence of a promising resource. On the other hand, part of the problem is, in my opinion at least, the lack of metallurgical data needed to validate the potential of conversion to true reserve, meaning an actually operating asset (Mine+Plant). The metallurgical risk mitigation component of most of the NI 43-1010 TRs is nearly absent. It is also of note the absence of a well-documented, robust design criteria based on hard data, in lieu of eminently popular and promotion-friendly positive assumptions. Not to mention the nearly total lack of variability response data on recoveries and operability, ramp-up implications, anti-cost-escalation provisions, i.e. factual reality. In summary, in my opinion, so far, NI 43-101 appears quite biased towards the drilling / geochem / geology side of the exploration, and in isolation form the processability potential, good or bad, as it may be. This negates to a great degree the intent of the regulator, ultimately leaving the investors by large unprotected.
I partly agree with these issues, but not thoroughly. The report shall include a sufficient level of details so the educated reader can make his own opinion. This means that all material facts must be disclosed. The problem is that most writers do not properly discriminate what is important and what is not, biaised by their personnal experience or interest. As example,how many reports are flooded by geochemical details, while they do not disclose the terms of the option contract! Some details can be extremely material to the investors, and shall not been skipped, since this is where fatal flaws are hiding.
I would argue the material information contained in a NI-43-101 could be synthesized into a series of well designed tables with some supporting text and figures to elaborate on data and process. If a $20 billion company can satisfy investors with a 100 page annual report, why do we need 100’s of pages of text to communicate 1 project. Very inefficient process.
All these points are valid. A compliance document should replace the current standard of valuation/assessment reporting. Critical information should be succinctly paraphrased, all reference data and figures, with additional subreporting should be moved to content regulated appendices to confirm to specific assesment criteria. Or an active industry funded critiquing federal regulatory system should be implemented. Industry funding should also contribute to developing a “big data” classification and valuation standard for mineral deposits.
I will suggest that to stick to important Summary, the document should be limited to certain maximum number of pages apart from appendices that QP cannot go beyond.
I have used the 43-101 to find out the broad geology of a project, that can be completely unknown to me, and in some cases have found them to be fantastic for that detail. When I analyse a company or project and i know there is a chance that it has a 43-101- it’s the first document that I look at.
However, I have found that it can be restricted by the model as analysts use the model for their analysis and ignore what is happening.
When Alacer started in Turkey its Copler mine was achieving ~50% higher grades and ~25% or more higher throughput, but analyst models remained locked in until to the original 43-101 until a new 43-101 report came out following a resource update.
As for Busang, scissor holes may have made the difference – standard practice in Australia – I did make the comment to Bre-X at a presentation in the US – but they said it’s obvious what the geology is doing. In hindsight, it would have been difficult to salt the scissor to the grade and downhole intersection. And Busang allowed a drillhole to influence an area 100m either side of it at that time and that’s how they once had a 13moz resource upgrade from 14 drillholes or that kind of effect, at one stage.
JORC 2012 has recently been coming under comment for the reams that accompany the intersections – but actually the detail is useful if you want to know what has been applied – ie the methodology.
So it comes down to what audience is reading it and what it wants from it. A flaw can occur when the geo hand-on-heart says that he believes in the methodology he has applied to determine the resources and reserves – as we have often seen in Australia.
So what do you replace NI 43-101 with ?
Replace the 43-101 with truth and common sense. We often seem to ignore the prudent person concept, which, to paraphrase asks the simple question “Based on the information presented, would a prudent person spend their own funds on this project?” The 43 101 often seems to me to be a bad attempt to legislate common sense by creating a fact list along with opinions that we are asked to believe absolutely.
After 55 years in this business I have yet to meet a “prudent person” when it comes to investment in mineral exploration. As a Scottish friend (with a wicked sense of humour) used to say: “If I want to make money, I go to the race track. If I want to lose money I buy mining stocks!”
Your assessment is right the mark and we support it at H2T Mine Engineering Services.
One of the reasons companies use them as the catchall may well be due to onset of our hyper-legal aware society, where anything not fully vetted and couched in exacting language may well lead to a lawsuit, sponsored by environmental groups, the govt, or just about anyone with a laws degree and an ax to grind.
Its a good article. I think even countries such as India and SEBI must include something equivalent to NI 43-101 for all the publicly listed companies so that fraudulent claims on mineral resources and subsequent money investment for such fraudulent resources by investors in Indian companies for even overseas properties must NOT happen.
This article is timely and needed. We often lose track of the purpose of a 43-101 and that is to convey credible information to the shareholder to allow them to make informed decisions and not succumb to a scam like BreX back when CIM recognized the need for such consumer protection – a QP visiting the site.
However I not supportive of company QPs preparing such documents as no matter how ethical the author, the spin is always going to be there and positive to either attract investors or to appease the financiers or potential buyers of a company or property.
I doing such, we are losing the credibility of the reports and it’s back to a buyer beware scenario.
Data rooms while a good venue to purchasers perhaps should be there for informed investors during the operation of the venture or other aspects of the property evaluation. In this manner the 43-101, can be written in a clear and concise, credible manner with retrievable back-up should the investor or financier require such.
In 2001, industry was quite insistent, for cost reasons, that company QP’s should be permitted to prepare reports.
Nothing has changed in 16 years even if many 43-101 report are suffused with optimism bias. For instance company accountants do not prepare financial audits – why 43-101 non-independence?
As Mark Twain once “I didn’t have time to write a short letter, so I wrote a long one instead.”. Writing a succinct report is often more work than compiling the detailed reports from the various sources that are required for an NI-43-101. Really if an investor is looking for a summary of a project than Item 1 (Summary) of Form 43-101F1 is all they should need to read. If looking for a bit more perhaps Items 25 and 26. For those that would like a bit of data to confirm these sections – they can plough through the rest. and look for the features or symptoms of risk as they so wish. I really don’t see the problem in this digital age of having more rather than less information to make an informed decision. I’ve heard several opinions that the JORC Code Table 1 summary is perhaps a too thin veneer of information for making and informed analysis.
I think NI 43-101 is good document in mining industry.
I totally agree with this presentation. It needs to be very simple and precise enough to be understood by investors and their advisors. Some of these Technical Reports contain a quantity of information and number of pages closer to a pre-feasibility level or a PhD. thesis!!!!.
My opinion: NI-43-101 Technical Report = Basic Public/Inverstor information written with simplicity, cautionary language and terminology, understandable, syntehsized and summarized form. I would prefer to see Technical Reports made only by a COMMITEE of QPs.
Thanks for the clarity, it has become a trend of late wherein the NI 43-101 Technical report seems to be a data dump. However, with efforts like the one above of sharing and discussing the true nature of these reports we are now better informed and in state of producing relevant information to various stakeholders especially those with non-technical backgrounds.
Very good article, but I think the QPs who write these reports mean to include as much detail as they can for the purpose of promoting their work, knowing that investors advisers are the target. They’re writing the reports for the stocks [issuers] but it’s direct talk to the investors.
As some respondents stated, it is better to have more than less and it is up to the reader to decide which parts he is interested with. It all started with Bre-X issue and even now after the introduction of NI 43-101 we find cases of unethical reporting of mineral resources and reserves by Qualified Person and such. Persons are suitably punished.
I too feel that the NI 43-101 disclosures should be reviewed from time to time to incoporate the learnings for making it more effective and also it serves the intended purpose.
There are countries like India where the regulators like Securities Exchange Board of India (SEBI) is yet to implement the requirement of mineral resource reporting standards as part of disclosures for listing in its stock exchanges like. NSE, BSE etc.