Mining E-Review: September 2012 - Introduction

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Introduction

This edition of the Osler Mining Review contains the following articles: (i) a discussion of a recent Canadian Securities Administrators’ notice concerning the use of preliminary economic assessments; (ii) a review of a recent cease trade order issued by the British Columbia Securities Commission due to an allegedly non-compliant technical report; (iii) an examination of proposed tax changes that may negatively affect foreign investments in Canadian mining companies; (iv) an assessment of the new U.S. rules concerning disclosure about conflict minerals; and (v) an analysis of new rules in the United States concerning disclosure of payments to governments by resource extraction issuers.

Preliminary Economic Assessments for Mining Projects – New Guidance from the Canadian Securities Administrators

The Canadian Securities Administrators (CSA) recently published a staff notice clarifying the CSA’s position on several issues regarding the use and disclosure of preliminary economic assessments (PEAs) by Canadian reporting issuers in the mining sector.  The Notice comes in the wake of a number of recent high-profile situations involving mining issuers which had run into difficulty with their technical disclosure, particularly as it related to PEAs.

British Columbia Securities Commission Issues Cease Trade Order Following Review of Barkerville Gold Mines Technical Report

In an environment of increasing scrutiny by securities regulators of technical disclosure, the British Columbia Securities Commission recently issued a full cease trade order in respect of the securities of Barkerville Gold Mines, a TSX-V listed issuer, on the basis of an allegedly non-compliant technical report.  While the facts underlying the cease trade order may be somewhat unusual, it is further evidence of the recent willingness of Canadian securities regulators to impose strict remedies and penalties in the face of what they view to be flawed or inadequate technical disclosure regarding mining projects.  

Proposed Tax Changes Negatively Affect Foreign Investments in Canadian Mining Companies

Canadian tax amendments proposed on August 14, 2012 could adversely affect structures, commonly used in the mining sector, involving Canadian companies with foreign subsidiaries.

SEC Adopts Final Rule Governing Conflict Minerals

On August 22, 2012 the SEC adopted its final rule regarding reporting obligations for the use of conflict minerals originating in the Democratic Republic of Congo and adjoining countries.  Reporting issuers that manufacture or contract to manufacture mobile telephones and other telecommunications devices, computers, industrial manufacturing tools, food packaging, light bulbs, jewellery or other products utilizing conflict minerals will likely experience repercussions across the breadth of their operations.

SEC Adopts Final Rules Governing Payments to Governments by Resource Extraction Issuers

On August 22, 2012 the SEC adopted a new rule imposing annual reporting obligations on resource extraction issuers for payments to the U.S. federal government or any non-U.S. government (including Canadian federal, provincial or local governments or any company that is at least majority-owned by a non-U.S. government) relating to the commercial development of oil, natural gas or minerals.

Our Reputation & Recent Representative Work

Osler was once again honoured as one of the best firms in Canada for corporate matters in the 2012 Canadian Legal Lexpert Directory. Osler received the highest possible ranking of “Most Frequently Recommended” in the Corporate/Commercial, Corporate Finance & Securities and Mergers & Acquisitions categories. We are proud to have received the top ranking in each of these categories every year since the directory’s inception in 1998.