Regulatory Over-kill ?With regard to NATIONAL INSTRUMENT 43-101
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS:
Section 2.3 of NI 43-101 states that:
"2.3 Prohibited Disclosure
(1) An issuer must not make any disclosure of the
(a) quantity, grade, or metal or mineral content of a deposit that has not been categorized as an inferred mineral resource, an indicated mineral resource, a measured mineral resource, a probable mineral reserve or a proven mineral reserve; or
(b) results of an economic analysis that includes inferred mineral resources.
(2) Despite paragraph (1)(a), an issuer may disclose in writing the potential quantity and grade, expressed as ranges, of a potential mineral deposit that is to be the target of further exploration if the disclosure
(a) includes a statement that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource; and
(b) states the basis on which the disclosed potential quantity and grade has been determined."
https://www.osc.gov.on.ca/Regulation/Rulemaking/Current/Part4/rule_20051007_43-101_sd-mineral-projects.jsp
(Emphasis added)
The Companion Policy to NI 43-101 "sets out the views of the Canadian Securities Administrators (the "CSA") as to the manner in which the CSA interprets and applies certain provisions of National Instrument 43-101 and Form 43-101F1 (the "Instrument"), and how the securities regulatory authorities or regulators (the "Securities Regulatory Authorities") may exercise their discretion in respect of certain applications for exemption from provisions of the Instrument."
Therein it states that:
"2.3 Prohibited Disclosure
(1) Section 2.3(1) of the Instrument prohibits the disclosure of the quantity, grade, or metal or mineral content of a deposit that has not been categorized as required. It also prohibits the disclosure of the results of an economic analysis, including a preliminary assessment, preliminary feasibility study, and a feasibility study, that includes inferred resources. However, pursuant to section 2.3(2) and (3), respectively, these prohibitions are excepted for quantity and grade of exploration targets expressed as ranges and for preliminary assessments that include inferred mineral resources if the disclosure is accompanied by the cautionary statements required in those sections. Also, this disclosure must be based on information prepared by or under the supervision of a qualified person. For preliminary assessments, the cautionary statement under section 3.4(e) is also required. We expect the issuer to include these cautionary statements in the same paragraph as, or immediately following, the disclosure permitted by these exceptions.
https://www.osc.gov.on.ca/Regulation/Rulemaking/Current/Part4/rule_20051007_43-101_sd-mineral-projects.jsp
(Emphasis added).
Conceptually, this may be the basis for the OTC, although without seeing or hearing any communications of the BCSC, I do not actually know. It certainly would seem reasonably arguable that the published statements of DLKM did not disclose the the quantity, grade, or metal or mineral content "of a deposit ," although it did list and average data from individual separate pit samplings, indicating the presence of metals. However, it did not appear make representations that such data were for the entire deposit or any particular portion thereof. In fact, the gripe on this board was exactly that from the information presented, it was not possible to make any such determination as to the deposit or any delineated portion thereof. As a consequence, it would appear that the very purpose of the NI 43-101 was actually accomplished by the manner in which DLKM made its disclosures.
So, reduced to its essence, the failure, if any, would seem to be in not in describing results in terms of exploration targets as "ranges" or "preliminary assessments" and not including the cautionary statement.
Interestingly, the Company was on the horns of a dilemma, while 43-101 has requirements regarding disclosure of information relating to mineral content, securities law also has requirements that a company disclose information that is "material." This inherent conflict is recognized an remedied in the Companion Policy to 43-101. And the solution is NOT to maintain a continuing CTO, but rather to allow disclosure of pertinent information after it has been reviewed by a Qualified Person.
"2.5 Material Information not yet Confirmed by a Qualified Person - Issuers are reminded that they have an obligation under securities legislation to disclose material facts and to make timely disclosure of material changes. The CSA recognizes that there may be circumstances in which the issuer expects that certain information concerning a mineral project may be material notwithstanding the fact that a qualified person has not prepared or supervised the preparation of the information. In this situation the CSA suggests that issuers file a confidential material change report concerning this information while a qualified person reviews the information. Once a qualified person has confirmed the information, the issuer should issue a news release and the basis of confidentiality will end. Issuers are also reminded that during the period of confidentiality, prohibitions against tipping and trading by persons in a special relationship to the issuer apply until the information is disclosed to the public. Issuers should also refer to National Policy 51-201 Disclosure Standards for further guidance about materiality and timely disclosure obligations."
https://www.osc.gov.on.ca/Regulation/Rulemaking/Current/Part4/rule_20051007_43-101_sd-mineral-projects.jsp
(Emphasis added).
In this case, if there were transgression of disclosure before review, the policy for the 43-101 would seem to be that once review had been conducted by a Qualified Person, which necessarily occurs on preparation of the 43-101 technical report, the CTO should be lifted as "soon as practicable" as required by section 164 of the Securities Act.
"Section 164 of the Securities act has a specific proviso that when required record (presumably a 43-101 report since the CTO was issued under the authority of Sec. 164)) is completed in accordance with with the Act, then "the order is revoked as soon as practicable after the record referred to in the order, completed in accordance with this Act and the regulations, is filed...."
https://www.bclaws.ca/Recon/document/freeside/--%20s%20--/securities%20act%20%20rsbc%201996%20%20c.%20418/00_96418_01.xml#section164
The Commission's statement of mission and values also would seem to require action in an "efficient, timely, and responsive" manner.
Hard for a shareholder not to feel exasperated.
fwiw
jmho
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