Qué es una junta directiva ?

En una empresa privada, un consejo directivo es un grupo de individuos elegidos que representan a los accionistas.

En una organización sin fines de lucro, la junta directiva es el órgano rector.

Los miembros de una junta directiva de una organización sin fines de lucro se centran en la estrategia de alto nivel , la supervisión y la rendición de cuentas de la organización.

Recuerde que quienes supervisan las operaciones diarias de una organización son los empleados o gerentes, no la junta.

La función principal del consejo de administración de una empresa pública es velar por los intereses de los accionistas .

Legalmente, los directores deben poner los intereses de los accionistas por delante de los suyos propios.

Los miembros de la junta directiva están allí para supervisar las actividades de la empresa y evaluar su desempeño.

¿Qué hace una junta directiva?

En su mayor parte, el directorio es un asesor de confianza (fiduciario) en nombre de los accionistas.

La contratación y el despido de altos ejecutivos, las políticas de dividendos, las políticas de opciones y la compensación de los ejecutivos son los principales temas bajo la competencia de una junta directiva.

El consejo de administración también se asegura de que la empresa tenga a su disposición recursos suficientes y bien gestionados, a la vez que la ayuda a establecer objetivos amplios y apoya las responsabilidades del equipo ejecutivo.

¿Quién forma parte de un consejo directivo?

Un buen consejo directivo debe representar tanto los intereses de los accionistas como de la gerencia y contar con directores no ejecutivos internos y externos.

Los directores internos tienen en mente los intereses de los accionistas significativos, los gerentes ejecutivos y los empleados, y su experiencia dentro de la organización debería agregar valor.

El director interno promedio no suele recibir compensación por su actividad en el directorio, ya que a menudo ya es un ejecutivo de nivel C, un gran accionista o un representante sindical.

El papel del director no ejecutivo

Los directores externos , o directores no ejecutivos, no participan en ninguna de las operaciones diarias de la empresa.

Los miembros no ejecutivos de la junta directiva reciben un reembolso y a menudo se les paga un extra por asistir a las reuniones del comité.

En circunstancias ideales, un director externo independiente y no ejecutivo aportará una perspectiva nueva al establecimiento de objetivos y la resolución de disputas.

La elección de miembros internos y externos del directorio suele ser vital para el éxito del directorio y de la organización.

¿Qué poderes tiene un consejo directivo?

Generalmente, los estatutos de una organización definen la estructura y los poderes de la junta.

Los estatutos deben especificar cuántos miembros de la junta se eligen y cómo se eligen (por votación de los accionistas en una reunión anual, por ejemplo) y con qué frecuencia se reúne la junta.

Una junta directiva puede tener cualquier número de miembros; sin embargo, la mayoría tiene entre tres y quince. Algunos creen que el tamaño óptimo es de nueve.

La elección y destitución de los miembros de la junta directiva

Mientras los accionistas eligen directores , el comité de nominaciones decide qué candidatos se presentan para su nominación.

Los mandatos de los directores deberían ser escalonados para garantizar que solo se elijan unos pocos cada año. Se considera que nueve años es el tiempo máximo que un director puede ocupar un puesto en una junta directiva.

Destitución de un miembro de la junta directiva

Puede resultar complicado eliminar a un miembro mediante resolución en una asamblea general.

Un director puede ser expulsado por infringir las normas fundamentales. Existen varios tipos de infracciones, entre ellas:

• Utilizar el poder de dirección para fines distintos al bienestar financiero de la corporación

• Cómo sacar provecho de la información confidencial

• Negociar con terceros para influir en una votación de la junta

• Situaciones de conflicto de intereses que implican una recompensa económica

Muchas juntas corporativas también tienen protocolos sobre la idoneidad para ejercer el cargo.

En algunos países, la junta directiva se divide en dos niveles

La estructura del consejo directivo puede variar ligeramente de un país a otro.

Algunos países europeos y asiáticos dividen el gobierno corporativo en dos niveles: consejos ejecutivos y consejos de supervisión.

El consejo ejecutivo está encabezado por el director general o director general, elegido por empleados y accionistas. El consejo ejecutivo es responsable de las operaciones diarias de la empresa.

El consejo de supervisión está presidido por un consejero externo independiente (el presidente) y está compuesto por consejeros no ejecutivos. Estos consejeros no participan en la gestión diaria de la empresa, pero su función es asesorar sobre la estrategia y la dirección general de la organización.

¿Los directores de la junta directiva reciben una remuneración?

Por lo general, los directores con información privilegiada no reciben remuneración por sus actividades en el directorio, ya que a menudo son ejecutivos de alto nivel o accionistas importantes.

Los directores externos a la empresa (DNE) reciben remuneración. Suelen seleccionarse por su experiencia en áreas relacionadas que beneficiarán la estrategia y el crecimiento de la empresa.

La remuneración varía según el tamaño de la organización. En el Reino Unido, un director no ejecutivo en el consejo de administración de empresas no cotizadas suele ganar entre 15.000 y 20.000 libras esterlinas al año.

La mayoría de los directores no ejecutivos de las PLC que cotizan en bolsa reciben un salario de entre £25.000 y £40.000 por año.

Las posiciones en FTSE 100 NED suelen pagar entre £40.000 y £100.000.

En los consejos de administración irlandeses, la remuneración media de un director no ejecutivo es de 63.000 euros.

También es digno de mención el hecho de que muchos directores no ejecutivos de alto perfil ocupan varios puestos de director además de sus puestos ejecutivos a tiempo completo.

¿Cómo llegar a ser miembro de una junta directiva?

Puedes trabajar para una organización, ascender en la jerarquía y convertirte en un alto ejecutivo elegido para la junta directiva por los accionistas.

Para convertirse en director no ejecutivo, primero hay que saber cómo ser director y obtener una cualificación formal siempre ayuda.

Los títulos y descripciones de funciones de los miembros típicos de la junta directiva

Generalmente, el número de puestos en una junta directiva depende del país, la industria, los accionistas y los estatutos de la empresa.

Los cinco puestos específicos de la junta incluyen lo siguiente:

• Presidente de la junta directiva

En una junta directiva, el rango más alto lo ocupa el presidente. Es responsable de dirigir equipos de personas, por lo que debe poseer sólidas habilidades de liderazgo.

Además de dirigir las reuniones de la junta y nombrar comités, también realizan otras tareas según lo descrito en los estatutos.

Los presidentes también colaboran con los directores ejecutivos y directores generales para dar forma a la cultura de una organización.

• Vicepresidente

Los vicepresidentes actúan como apoyo al presidente, a quien ayudan en el desempeño de sus funciones y responsabilidades.

Debido a que el vicepresidente asume el papel del presidente durante las ausencias, debe tener la capacidad de realizar las funciones del presidente.

Además de supervisar las evaluaciones formales de la junta directiva, trabajan en estrecha colaboración con el director ejecutivo y el presidente para llevar a cabo las políticas de la junta.

Ocasionalmente, se les pide que gestionen conflictos de intereses entre los miembros de la junta.

• Secretario

Además de garantizar el cumplimiento de las regulaciones y leyes, el secretario del consejo será responsable de varias tareas relacionadas con la administración y la comunicación.

La principal función del secretario de la junta directiva es registrar, documentar y distribuir las actas de las reuniones, que son registros de las discusiones y votaciones. Es responsable de mantener estos registros seguros y precisos.

Además, el secretario de la junta intenta garantizar que todas las actividades se lleven a cabo de acuerdo con los estatutos de la organización.

También es su trabajo proporcionar aviso de las reuniones.

• Tesorero

Los tesoreros deben tener sólidas habilidades contables.

Para cada reunión se preparan informes financieros que incluyen información sobre la viabilidad y estabilidad de la empresa.

Estos informes deben ser legibles y concisos para ayudar a informar cualquier decisión que tome la junta.

Su función también es obtener borradores del presupuesto anual de la empresa para su aprobación por el consejo de administración.

• Miembros del consejo de administración y directores no ejecutivos

Los directores que no ocupan uno de los puestos mencionados a menudo se ofrecen como voluntarios para servir como jefes de comités.

Asisten a las reuniones, participan en los debates y votan sobre asuntos de la junta.

Después de su servicio en la junta directiva, pueden ser elegidos para roles más avanzados.

Algunos ejemplos de comités de la junta directiva

Además de la junta directiva, hay varios comités que manejan todo el trabajo asignado por la junta.

En la mayoría de los directorios, existe un comité de gobernanza para reclutar e incorporar nuevos miembros y un comité de finanzas para revisar las políticas contables.

Otros ejemplos de comités incluyen:

• Comité de auditoría

• Comité de estatutos

• Comunicaciones

• Ciberseguridad

• Comité ESG

• Comité de remuneraciones

Número y tamaño del comité

En general, las juntas directivas más grandes tienen más comités, pero deben evitar formar demasiados. Para que los miembros de la junta directiva sean eficaces, generalmente no deben formar parte de más de dos comités a la vez.

Comités ad hoc

Los comités ad hoc se forman cuando es necesario y se disuelven al finalizar su labor. A continuación se presentan algunos ejemplos de comités ad hoc.

• Presupuesto

• Seguro

• Litigio

Conclusiones clave

• Los directores son elegidos para representar los intereses de los accionistas.

• En la mayoría de las organizaciones, los miembros internos de la junta directiva no reciben remuneración por su trabajo, pero los miembros externos de la junta (directores no ejecutivos o NED) sí la reciben.

• Los miembros de la junta directiva determinan las políticas de la junta, el pago de dividendos, la compensación ejecutiva y el reclutamiento de ejecutivos.

• Es probable que una persona sea eliminada de una junta directiva si viola reglas fundacionales, por ejemplo, si participa en una transacción de conflicto de intereses o llega a un acuerdo con un tercero para influir en las decisiones de la junta.

• Los directores son elegidos por los accionistas pero nominados por el comité de nominaciones.

What is a board of directors?

In a private company, a board of directors is a group of elected individuals representing the shareholders.

In a non-profit organisation, a board of directors is the governing body.

The members of a non-profit board focus on the organisation’s high-level strategy, oversight, and accountability.

Remember, the employees or managers oversee the day-to-day operations of an organisation, not the board.

The primary job of a public company’s board of directors is to look out for the shareholders’ interests.

Legally, directors must put shareholders’ interests ahead of their own.

Board members are there to supervise the company’s activities and evaluate its performance.

What does a board of directors do?

For the most part, the board is a trusted advisor (fiduciary) on behalf of shareholders.

The hiring and firing of senior executives, dividend policies, options policies, and executive compensation are the main issues under a board’s remit.

The board of directors also ensures the company has sufficient, well-managed resources at its disposal while also helping it set broad goals and supporting the executive team’s responsibilities.

Watch David W Duffy in the video below, explain what makes a great board director and how to become one.

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Who sits on a board of directors?

A good board of directors should represent both shareholder and management interests and have internal and external non-executive directors.

Internal directors have the interests of significant shareholders, executive managers, and employees in mind, and their expertise within the organisation should add value.

The average internal director does not typically receive compensation for board activity since they are often already C-level executives, large shareholders, or union representatives.

The role of the non-executive director

Outside directors, or non-executive directors, do not take part in any of the company’s daily operations.

Non-executive board members are reimbursed and are often paid extra for attending committee meetings.

In ideal circumstances, an independent, non-executive, outside director will bring a fresh perspective to goal-setting and dispute resolution.

Choosing both internal and external board members is often vital to the success of a board and the organisation.

What powers does a board of directors have?

Usually, an organisation’s bylaws define the structure and powers of the board.

Bylaws should specify how many board members are elected and how they are elected (by shareholder vote at an annual meeting, for example) and how often the board meets.

A board can have any number of members; however, most have between three and fifteen members. Some believe the optimal size is nine.

The election and removal of board members

While shareholders elect directors, the nominating committee decides which candidates are put forward for nomination.

Directors’ terms should be staggered to ensure only a few are elected each year. Nine years is considered the most time a director should sit on a particular board.

Removing a board member

It can be challenging to remove a member by resolution at a general meeting.

A director can be expelled for breaking foundational rules. There are several types of infractions, including, but not limited to:

• Using directorial power for purposes other than the corporation’s financial well-being

• Profiting from proprietary information

• Negotiating with third parties to influence a board vote

• Conflict of interest situations involving financial reward

Many corporate boards also have protocols regarding fitness to serve.

In some countries, a board of directors is split into two tiers

Board structure can differ slightly from country to country.

Some European and Asian countries divide corporate governance into two tiers – executive boards and supervisory boards.

The executive board is headed by the CEO or managing director, who employees and shareholders elect. The executive board is responsible for the day-to-day operations of the business.

The supervisory board is chaired by an independent outside director (the chair) and consists of non-executive directors. These directors are not involved in the day-to-day running of the business but are there to advise on strategy and the organisation’s overall direction.

Are board directors paid?

Typically, insider directors aren’t compensated for their board activity since they are often C-level executives or significant shareholders.

Directors outside the company (NEDs) are paid. NEDs are usually selected based on their expertise in related fields that will benefit the company’s strategy and growth.

Pay varies according to the organisation’s size. In the UK, a non-executive director in the boardrooms of non-quoted firms typically earns between £15,000 and £20,000 a year.

Most non-executive directors of Listed PLCs receive pay of between £25,000 and £40,000 per year.

FTSE 100 NED positions usually pay between £40,000 and £100,000.

On Irish boards, the average non-executive director’s remuneration is €63,000.

Also of note is the fact that many high-profile non-executive directors hold multiple directorships in addition to their full-time executive positions.

How do you become a board director?

You can work for an organisation, rise through the ranks and become a c-suite executive elected to the board by the shareholders.

To become a non-executive director, you must first know how to be a director and gaining a formal qualification always helps.

The titles and job descriptions of typical board members

Usually, the number of positions on a board of directors depends on a company’s country, industry, shareholders and bylaws.

Five specific board positions include the following:

• Chair of the board

On a board, the highest rank is held by the chair. They are responsible for governing teams of people, so they must have strong leadership abilities.

Besides running board meetings and appointing committees, they also perform other tasks as outlined by the bylaws.

Chairs also collaborate with CEOs and executive directors to shape the culture of an organisation.

• Vice-chair

Vice-chairs act as the support to the chair, whom they help with the performance of their duties and responsibilities.

Because the vice-chair assumes the role of the chair during absences, they must have the ability to perform the duties of the chair.

In addition to overseeing formal assessments of the board of directors, they work closely with the CEO and chair to carry out board policies.

Occasionally, they are asked to handle conflicts of interest among board members.

• Secretary

In addition to ensuring compliance with regulations and laws, the board secretary will be responsible for several administrative and communication-related tasks.

A board secretary’s primary duty is to record, document, and distribute meeting minutes, which are records of discussion and votes. They’re responsible for keeping these records safe and accurate.

In addition, the board secretary tries to ensure all activities take place under the organisation’s bylaws.

It is also their job to provide notice of meetings.

• Treasurer

Treasurers should have solid accounting skills.

For each meeting, they prepare financial reports that include information about the viability and stability of the company.

These reports must be legible and concise to help inform any decisions made by the board.

Their role is also to obtain draft versions of the company’s annual budget for approval by the board of directors.

• Board members and non-executive directors

Directors who do not hold one of the mentioned positions often volunteer to serve as heads of committees.

They attend meetings, participate in discussions, and vote on board matters.

Following their service on the board of directors, they may be elected to more advanced roles.

Some examples of board committees

In addition to the board of directors, there are several committees that handle all of the work assigned by the board.

In most boards, there is a governance committee for recruiting and onboarding new members and a finance committee for reviewing accounting policies.

Other examples of committees include:

• Audit committee

• Bylaws committee

• Communications

• Cybersecurity

• ESG committee

• Remuneration committee

Committee number and size

In general, larger boards have more committees, but boards should avoid forming too many committees. For board members to be effective, they should generally serve on no more than two committees at a time.

Ad hoc committees

Ad hoc committees are formed when necessary and dissolved when their work is done. Below are some examples of ad hoc committees.

• Budget

• Insurance

• Litigation

Key takeaways

• Directors are elected to represent shareholders’ interests.

• In most organisations, internal board members are not paid for their work, but outside board members (non-executive directors or NEDs) are.

• Board members determine board policies, dividend payouts, executive compensation and executive recruitment.

• An individual is likely to be removed from a board if they violate foundational rules, for instance, if they engage in a conflict of interest transaction or strike a deal with a third party to influence board decisions.

• Directors are elected by shareholders but nominated by the nominations committee.

National Instrument 43-101: What Issuers Need to Know About the Economic Analysis of a Mineral Project

05/28/2024

 – Alexander Pizale, Gregory Hogan, Sam Chapman

Mining

An economic analysis of a mineral project is a significant milestone for a mining company. The results may indicate the potential feasibility or feasibility of a mineral project, act as a directive on how best to proceed with additional work to determine feasibility, and ultimately decide whether to build and finance a mineral project. An economic analysis is performed with varying degrees of confidence depending on the stage of the mineral project. National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) includes certain rules related to the preparation and disclosure of an economic analysis on a mineral project. This article discusses the various types of economic analyses for mineral projects and the disclosure issues related thereto.

Types of Economic Analyses

Under NI 43-101, there are three commonly known mining studies that involve an economic analysis of a mineral project. These studies, in order of confidence level from lowest to highest, are: (1) a “preliminary economic assessment” or “PEA”; (2) a “pre-feasibility study” or “PFS”; and (3) a “feasibility study” or “FS”.

1. A PEA is typically the first stage of economic analysis, and the accuracy level is the lowest. NI 43-101 defines a PEA as “a study, other than a pre-feasibility study or feasibility study, which includes an economic analysis of the potential viability of mineral resources”. As a result of this intentionally broad definition, disclosures that indicate economic analysis that are not derived from a PFS or a FS may actually be considered by regulators to be a PEA, with the consequential reporting and disclosure obligations that follow (see below for further details and examples). A PEA is sometimes referred to as a “scoping study”.

2. Following a PEA, a mining issuer will generally produce a more comprehensive and accurate study called a pre-feasibility study. Under NI 43-101, the terms “preliminary feasibility study”, “pre-feasibility study” and “feasibility study” have the meanings ascribed to those terms by the CIM Definition Standards for Mineral Resources & Mineral Reserves adopted by the CIM Council. Mining issuers must not use these terms when referring to an economic analysis unless the applicable economic analysis satisfies the criteria set out in the definition of each term. A PFS is defined as “a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the “modifying factors” (considerations used to convert mineral resources to mineral reserves – these include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors) and the evaluation of any other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be converted to a mineral reserve at the time of reporting”. The completion of a PFS is the minimum prerequisite for the conversion of mineral resources to mineral reserves.

3. Finally, the most comprehensive study is called a feasibility study. A feasibility study is “a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable)”. The results of a feasibility study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of a mineral project.

As a result of the importance of these studies to mining issuers and investors, regulators have an interest in ensuring mining issuers properly disclose such studies to the public and that the studies follow all applicable guidelines.

The PEA

Given a PEA is generally performed at an earlier stage in the development of a mining project, regulators pay particular attention to these types of studies. This is because a PEA is a lower confidence study that typically contains (and is permitted to contain) results of an economic analysis that includes, or is based upon, inferred mineral resources. Where this occurs, mining issuers need to ensure that their disclosure appropriately cautions investors and contains the mandated cautionary language, specifically:

• a statement of “equal prominence” that:

  • the preliminary economic assessment is preliminary in nature, that it includes mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would allow them to be categorized as mineral reserves, and that there is no certainty that the preliminary economic assessment will be realized; and

  • mineral resources that are not mineral reserves do not have demonstrated economic viability;

• a statement regarding the basis for the PEA and any qualifications and assumptions made by the qualified person; and

• a statement that describes the impact of the PEA on the results of any feasibility or pre-feasibility study in respect of the subject property.

The cautionary language needs to be included in each instance the PEA is disclosed. NI 43-101 strictly prohibits mining issuers from disclosing the results of an economic analysis based on exploration targets or based on historical estimates.

The Inadvertent PEA

Under NI 43-101, the filing of a technical report on SEDAR+ will be triggered by the first time written disclosure of the results of a PEA on a material property that constitutes a material change in relation to the mining issuer, or a change in the results of a PEA from the most recently filed technical report if the change constitutes a material change in relation to the mining issuer.

Notwithstanding the above, mining issuers will often make statements about a mineral project that does not have mineral reserves, which suggest that an economic analysis of some nature has been conducted. If the mineral project does not have a mineral reserve estimate and there is disclosure of economics of any sort, regulators generally view this as a PEA and a technical report filing on SEDAR+ may be triggered. These statements may not be captured in formal studies, but rather could include forecasted mine production rates, capital or operating costs, mine life or projected cash flows of a mineral project. These statements are often put into investor presentations or on websites, where internal estimates and forecasts are used without heed of the legal issues that arise.

Examples of disclosure that could be viewed by regulators as being a PEA and therefore trigger the filing of a technical report include:

• “We will likely produce 200,000 oz. silver/month in 2024”

• “Capital costs will be in the range of $50 – $100 million”

• “Mine life will be 10 – 11 years”

• “We expect to generate $20 million in revenue”

• “IRR of approximately 30%”

Therefore, it is important that mining issuers monitor their public disclosure of the economics of their mineral projects in press releases, investor presentations, social media, websites or other continuous disclosure documents so as to not inadvertently trigger a technical report by making such statements if there is no technical report to back them up.

PEA vs PFS

A PEA is not a PFS. Consequently, if mineral reserves have been delineated in the study, then a report that a mining issuer wishes to call a PEA may be more properly called a PFS. This is because the completion of a PFS is the minimum prerequisite for the conversion of mineral resources to mineral reserves. This also means that the economic analysis in the PFS cannot include inferred mineral resources. Regulators in the past have noted that mining issuers have “blurred the lines” between a PEA and a PFS by stating that some or all of the components of the PEA are done at a PFS-level. The result is that a mining issuer has effectively produced a PFS, but one that includes inferred mineral resources, which is not permitted. A PEA should be a “conceptual study of the potential viability of mineral resources”, so any disclosure that implies that a PEA has demonstrated economic or technical viability would be contrary to NI 43-101 and the definition of a PEA.

Regulators require that mining issuers do not:

• describe a study as a PEA unless it clearly falls within the definition of a PEA; or

• compare their PEA or any components of it to the standards of a PFS if the study includes inferred mineral resources.

Regulators have noted that they may take the position that a mining issuer is treating a PEA as a PFS if the mining issuer:

• does not include the above noted cautionary statements with equal prominence each time it discloses the economic analysis of the mineral resources;

• uses the PEA as a basis to justify going directly to a feasibility study or a production decision;

• discloses mining or mineable mineral resources or uses the term “ore”, which is essentially treating mineral resources as mineral reserves; or

• otherwise states or implies that economic viability of the mineral resources has been demonstrated.

Mining issuers should ensure that their disclosure of the results of a PEA is not misleading by providing appropriate context, cautionary statements and discussion of risks sufficient for the public to understand the importance and limitations of the results of the PEA.

However, mining issuers also need to be able to take a step back and re-scope advanced stage projects based on new information or alternative production scenarios. Therefore, a study that includes an economic analysis of the potential viability of mineral resources that is done concurrently with or as part of a PFS or FS is not, in the view of regulators, a PEA if it:

• has the net effect of incorporating inferred mineral resources into the PFS or FS, even as a sensitivity analysis;

• updates, adds to or modifies a PFS or FS to include more optimistic assumptions and parameters not supported by the original study; or

• is completed at the level of a PFS or FS.

Insufficient Disclosure of the Economic Analysis

Regulators have also previously expressed concerns that mining issuers with advanced properties do not sufficiently disclose the economic analysis for their mineral projects in their technical reports. NI 43-101 provides that the economic analysis must include a clear statement of, and justification for, the principal assumptions and cash flow forecasts on an annual basis using mineral reserves or mineral resources and an annual production schedule for the life of the mineral project. Technical reports must also include a discussion of net present value, internal rate of return and payback period of capital with imputed or actual interest. Technical reports on advanced properties must provide cash flows on an annual basis and provide an appropriate sensitivity analysis with related impacts on the economic analysis. In addition, technical reports that contain an economic analysis must address the issue of taxes applicable to the mineral project. The impact of taxes and adequate sensitivities, both positive and negative, are required to be outlined with the economic analysis.

Regulators have noted instances of overly optimistic or highly aggressive assumptions in PEAs, as well as the use of methodologies that diverge significantly from industry best practice and guidelines. Mining issuers are reminded that forward-looking disclosures should not be made unless the mining issuer has a reasonable basis for the forward-looking information. Similarly, qualified persons are reminded that professional standards typically require the use of procedures and methods that are consistent with industry best practice and guidelines, and that if significant divergence is necessary, the nature and basis for the divergence should be disclosed. Divergences that are not justified could result in a requirement to revise and re-file a technical report.

Conclusion

It is important that mining issuers take the above considerations into account prior to the public release of an economic analysis to ensure that they do not contravene any of the rules or inadvertently trigger the filing of a technical report on SEDAR+. Compliance is simply a matter of recognizing that an economic analysis is being disclosed and complying with the above-noted requirements.

For more on NI 43-101, find our previous articles in this series here.

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Cassels has distinguished itself in the vanguard of the mining industry, offering the largest and most experienced dedicated mining group of any major Canadian law firm. Led by Jen Hansen and Jennifer Traub, we are proud to be consistently ranked as Tier 1 for mining law by Chambers Canada.