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Securities Law

NIN 87/45 - Technical Reports on Mining Properties Accompanying Prospectuses Submitted for Acceptance by the Superintendent of Brokers [NIN - Rescinded]

Published Date: 1987-06-12
Effective Date: 1987-06-11
The following are the current reference materials which have been published to provide guidance on technical reports on mining properties accompanying prospectuses submitted for acceptance by the Superintendent of Brokers:
  1. National Policy #2A.
  2. Form 54 of the B.C. Securities Act.
  3. Local Policy Statement # 3-01.

Engineers and other qualified persons may also obtain from the B.C. and Yukon Chamber of Mines, 840 West Hastings Street, Vancouver, B.C., V6C lC8 (Tel.: 681-5328), for a manual service fee, a copy of a GEOSCIENCE RATING SYSTEM prepared by J.R. Woodcock, P. Eng. This rating system establishes a framework on which to list and value, in a logical and consistent manner, the characteristics of a property that warrant consideration when assessing its merit. It is used in making a recommendation to the Superintendent as to whether a property is sufficiently developed to warrant public funding for further exploration and development, and should accordingly be of assistance to experts in the field.

Notwithstanding the availability of the above reference materials, we continue to encounter deficiencies in reports submitted, and the remedying of such deficiencies contributes significantly to delays encountered in processing and receipting prospectus submissions.

While we hesitate to add to the volume of literature already published on technical reports, we have decided in the interest of expediting the prospectus review process to

(A) Publish the undernoted compilation of deficiencies encountered in reports which contributed to processing delays in 1986;

(B) Publish a checklist for authors of technical reports pertaining to mining properties.

(A) List of Typical Deficiencies in Technical Reports

1. Failure on the part of the Issuer to provide full, true and plain disclosure as required under both National and Local Policy.

2. Too many inconsistencies or a lack of distinction in the technical report between what the writer himself actually observed and what: he is merely reporting as the observance of others who may not be credible. Similarly, a writer may fail to distinguish between data personally accumulated and data supplied by others or obtained from totally anonymous sources. Data from an anonymous source may well rate as hearsay and should not form part of a report unless properly qualified.

3. Not enough attention to the proper documentation and description of the mineralization or of sample assays. This information should be the most important and significant part of a property description, but rather than being presented in a precise fashion it is very frequently handled casually so that it is difficult to know what the assays represent. Sampling information should include: who took the sample, the location of the sample, the type of sample, what type of material was sampled, the portion of the vein or structure sampled, the length or size of sample etc. The writer should either attest to the veracity of the samples or otherwise qualify the authenticity of the sample. The name of the laboratory used and their assay procedures and certificate should be provided.

It is a common failure of report writers to not understand, or to misrepresent the "grab sample". All too often the term"grab sample" is used to describe what is actually a selected sample, or even worse, a carefully selected specimen. A proper grab sample is just what the name implies, i.e. a sample of material grabbed or taken at random that is consequently roughly representative of that portion of the medium sampled. This would be equivalent, say, to filling a sample bag from a rock pile with your eyes closed and without bias. Values obtained from a grab sample should therefore be reasonably reproducible by others taking a similar type of sample of the same material.

4. The source of samples not being clearly reported or depicted on maps as to which of the samples have been collected from within the claim boundaries and which from outside.

5. Samples and assay values often inadequately described and documented. Type of sample (grab, channel, character) and the sample length should be clearly stated.

6. The generally poor quality of many of the maps and sections and the manner in which the data are depicted thereon in technical reports. We encourage the liberal use of properly drafted maps and sections as information can be more clearly shown in this manner than in pages of description.

In many instances, the maps are hastily drawn, they are reduced in size with a copy machine making figures illegible, sometimes resulting in improper scales, they lack the actual geochemical values, or they contain uncontoured geochemical and geophysical values where such contouring is applicable.

7. Tendency to overstate the significance of:

(a) Airborne VLF-EM conductors or ground VLF-EM conductors where there is little or no correlation with other geophysical, geochemical, or geological support.

(b) Geochemical anomalies based on indiscriminate use of means and standard deviations.

(c) Single sample geochemical anomalies.

8. Failure by writers of technical reports often to state clearly and precisely the positive features of a property such as:

(a) favorable host rocks

(b) soil and lithochemical anomalies

(c) geophysical anomalies

(d) alteration zones

(e) mineral occurrences

Furthermore, the relative location of the above features is often unclear. It is important to know whether some of these positive features are coincident as this will enhance the merits of the property.

9. Failure by authors to state the date of revision when a report has been revised.

10. With location ground, often a failure to show clearly the extent, if any, to which mineral-bearing features trend onto the property.

(B) Checklist for Authors of Technical Reports Pertaining to Mining Properties.

The general form of the report is suggested below although sections may be re-arranged, the suggested sections may be further subdivided, and additional sections may be added in order to provide full disclosure of information and convincing reasons to do, the proposed work. The scope of each proposed work program should be reasonable, relative to the available information and the perceived potential of the property.

I Title Page

Goal: sufficient information to identify the report and the proposed work program.

1. Type of report identified (e.g. Geological, Progress, Summary, Valuation).

2. Name of property and general location (e.g. county, mining division, township).

3. Specific location (e.g. latitude and longitude, NTS number, township and range).

4. Disclosure of issuer for which report is filed.

5. Disclosure of author and company with whom the is author associated.

6. Title page should readily distinguish the report from all other reports on the property. (If a report is revised, then the date of revision should be added to the title page and to the signature page. Reports written after completion of a stage of work may be entitled "Progress Report No. 1 dated ____________").

II Table of Contents and Appendices

III Summary

1. Salient points listed, with particular emphasis on the potential for economic success.

2. Other properties cited clearly distinguished from the subject property.

IV Introductio

1. Author's terms of reference.

2. Acknowledgement of outside sources of data.

3. Statement that the reports are based on personal examination of the property or other adequate personal familiarity with the region including the dates of examination and comments on any climatic conditions (e.g. snow) that may have inhibited the examination.

V Property

1. Form of tenure stated.

2. Disclosure of number of claims (or size of the property) and whether the claims are contiguous.

3. Existing claims listed with expiry dates, record number, owner and percentage interest held by the issuer.

4. Disclosure of obvious problems with title known to writer.

5. Placer claims distinguished from the lode claims.

VI Location and Acces

1. Latitude and longitude; NTS.

2. Location relative to land surveys (e.g. township, range and section, county, mining division).

3. Location relative to nearest town or other geographic unit.

4. Means of access to and on the property in the context of exploration phase as well as for future commercial production.

5. Climate, elevation, topography, infrastructure, power sources.

6. Potential impediments to commercial exploration; metallurgy, environment, topography, transportation, water, infrastructure, lack of power, etc.

VII History of Property

1. Sufficiently comprehensive and detailed to enable the reader to understand how present status came about.

2. Disclosure of concepts tested by previous work that are proposed for testing in present work.

3. Explanation of why an exploration concept remains.

VIII Geology

1. Divided into subsections such as "Regional Geology" and "Local Geology".

2. Lithology, alteration, structure, etc.

3. Clear distinction between mineralization on the subject property and mineralization on adjacent properties or on properties in a similar geological or structural setting.

IX Mineralization

1. Sample descriptions should be of sufficient detail to enable a newcomer to the property to visualize length, width, grade, vertical potential, frequency.

2. Rock samples should have description of samples taken, rock type and source (e.g. surface, trench, underground).

3. The type of sample - channel, chip, character, bulk, grab, diamond drill core, diamond drill cuttings, or percussion or rotary cuttings -should be disclosed.

4. Length (width) or diameter of sample along with its orientation relative to the orientation of the body being sampled should be disclosed.

5. Names of persons(s) who took the samples should be available.

6. Where historical values are in currency an estimation of metals price then obtaining should be provided.

7. Results of metallurgical tests should be provided.

X Geophysical & Geochemistry

1. Subdivided into sections on geochemistry, geophysics, results of last exploration program.

2. Where geophysical or geochemical anomalies, or geological characteristics are cited as support of a program, they should be consistent with the characteristics of the anticipated mineralization.

XI Conclusions

1. A concise, clear, logical and convincing series of statements, based on the previously described work, which established a potential for economic mineralization, it should say where the mineralization may be located and how that potential should be tested.

XII Recommendation

1. Should flow logically from the Conclusions and be feasible under the conditions that prevail on the property.

2. Drilling programs for more than 4,000 meters should be divided into success-contingent stages.

3. Where successive stages or work are proposed, each stage should be constructed so that it reaches a decision point.

4. Advancing to a subsequent stage should be contingent on successful results in the previous phase.

5. Where climate, logistics or environmental regulations require advancement to a subsequent stage an appropriate explanation should be given.

6. Where the examination was made more than one year prior to the date of the report, the author should provide assurance that any intervening work will not invalidate his conclusions, recommendations and cost estimate.

XIII Cost Estimate

1. Should be consistent with the Conclusions and Recommendations. Where drilling is recommended, the type of drilling must be stated, and cost per foot/metre provided.

XIV Certificate

The author's certificate (or statement of qualification, etc.) should state:

1. His general qualifications and his professional qualification.

2. Whether the report is based on personal observations, and the date thereof.

3. If the report is not based on personal observations, the source of the information.

4. That he is independent of the applicant and vendor, or if he is not independent, there is an additional certificate (and supporting statement) from an expert who is independent of the applicant and vendor, verifying the Report and its Recommendations.

5. That the author consents to the use of his report and his name by the issuer and of his name in the prospectus (consent may be in a separate letter).

XV Maps

Maps should provide:

1. Location showing an overview of where the property is located.

2. The property boundary, reference information, and if reasonable, the internal claim boundaries.

3. Key map. If any of the survey maps cover less than the full property, then there must be a key map showing the outline of the areas covered by each map (or survey) relative to the property boundaries. The claim map may sometimes be used as a key map by adding the appropriate information.

4. Survey map (such as geochemistry or geophysics) with sufficient detail and data for the reader to check the interpretation.

5. Geology map in a format that can be read, and at an appropriate scale.

6. The locations of rock samples drill holes guidelines.

7. If the value of the property or the justification for the proposed work depends in whole or in part, upon features of an adjacent property such features along with their relationship to the subject property should be shown.

8. Scale (preferably a bar scale), a north arrow, a date, and an acknowledgement of the source of the detail if it is from outside sources.

9. Format that is suitably legible for reproduction in a prospectus.

10. Signature as required for all maps by National Policy No.2-A.

DATED at Vancouver, British Columbia, this 11th day of June, 1987.
Neil de Gelder
Superintendent of Brokers