The SEC is proposing revisions to the property disclosure requirements for mining registrants. These requirements are currently defined in Item 102 of Regulation S-K and Industry Guide 7. These proposed changes are intended to improve investors’ knowledge of a registrant’s mining properties, which should help them make more informed investing decisions.
Item 102 lays out disclosure requirements for a registrant’s principal mines that are “material important”, and these requirements relate to the production, reserve, location, development, and nature of the registrant’s interest. Guide 7 provides disclosure guidance for mineral reserves, but some terms and concepts within the Guide are inadequately defined and becoming increasingly difficult to reconcile as mining becomes a more global enterprise. Several foreign countries have adopted mining disclosure standards based on the Committee for the Mineral Reserves International Reporting Standards (CRIRSCO), and registrants have expressed interest in revising Item 102 and Guide 7 to reflect these requirements. Modernizing Item 102 and Guide 7 would permit US mining companies to compete with global mining companies on a more level playing field.
To that end, the SEC is soliciting comments on all aspects of the proposed rule changes, including:
| 1. | Combining disclosure requirements that currently overlap between Regulation S-K and Guide 7. This would entail the rescinding of Guide 7 and the introduction of a new Regulation S-K subpart 1300, which would reduce confusion and interpretation of regulations. |
| 2. | Better defining the standards for mining-related disclosure. This includes clearer definitions of what constitutes material and significant mining operations. Many of the proposed changes are consistent with current advice on disclosure requirements. The proposed new subpart 1300 would define mining operations as material if a registrant’s mining assets constitute 10% or more of the registrant’s total assets. There will also be better guidelines for registrants who are a vertically-integrated company (such as manufacturers), companies that own multiple mining properties, and royalty companies. |
| 3. | Better defining mining operations. This includes improved definitions of exploration, development, and production to help registrants with multiple mining properties better reflect the current stage of each property to investors. |
| 4. | Establishing a “qualified person” and responsibility for disclosure. The “qualified person” requirement ensures an industry professional with the appropriate expertise is involved in preparing a registrant’s information disclosure. This qualified individual would aid in fulfilling the newly proposed mandate that registrants file a technical report summary for each material mining property. |
| 5. | Enhancing disclosure of exploration results and mineral resources and reserves. Requiring disclosure of exploration results and mineral resources by a qualified person would provide investors with a better picture of mining properties in development. This includes distinctions between indication and measured mineral resources and disclosure of feasibility with supporting documentation. |
| 6. | Requiring additional disclosures, including summary, technical reports, and internal controls. These requirements would improve investor information concerning the registrant’s material mining properties. |
The SEC is interested in public comments on any and all of these topics. Also they are interested in the economic impact of these proposed changes and the burden of disclosure, including compliance costs, on registrants. The complete set of comment solicitations can be read in the full release concerning this Proposed Rule. The public comment period is open through August 26th, 2016. You can submit comments using the form available on the SEC’s website or by e-mailing rule-comments@sec.gov with File Number S7-10-16 in the subject line. You can also use the Federal eRulemaking Portal to submit comments or send your comments by mail to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. Again, be sure to reference File Number S7-10-16.
Comments that have already been submitted can be read here.
Sources:
SEC Release No. 33-10098: Modernization of Property Disclosures for Mining Registrants
SEC Proposes Rules to Modernize Property Disclosures for Mining Registrants
