Disclosure Standards for Companies Engaged in Mineral Exploration, Development & Production

7 Valuations Reporting of a valuation of a property must include the valuation method and all key assumptions. The purpose and scope of the valuation must also be disclosed. The author(s) of the valuation, their professional qualifications and their relationship with the company, if any, must be disclosed. Tenure and Permitting Upon acquisition of a material property, companies must disclose the basic tenets of the regulatory system of granting the rights for exploration and exploitation of minerals in the jurisdiction where the property is located. This would include a brief description of the permitting process, including required environmental assessments and what progress has been made during the course of an exploration or development program. Companies must also disclose their proportionate ownership at successive stages of property development and any significant constraints or obligations. This should encompass cash or share payments, work commitments and production royalties. Any adverse claims or disputes as to title or rights to the property must be described including what steps the company must take to resolve the dispute and how long it may take to reach a resolution. Properties located in foreign jurisdictions will require more complete disclosure of tenure and permitting issues. Disclosure must address any constraints on access to the property including whether or not the company owns the surface rights to the property and what impact this may have on the company’s ability to explore and mine on the property. Production Companies which publish their cost or anticipated cost of production, on a cost per unit basis, must clearly set out what costs are and are not included in the calculation. This provides investors with the ability to compare results of different companies which use different calculations. The Gold Institute has published a reporting standard for gold mines which is recommended for use by listed companies. Production figures, including costs, that are disclosed on the basis of equivalents of a particular mineral (e.g., ounces of silver converted to equivalent ounces of gold) must include the amount of production of the secondary mineral and the value used for the conversion. Such conversions should be restricted to similar commodities, such as platinum group metals, and not used to convert base metals to precious metals, for example. A similar breakdown of by-product production should be provided when it is treated as a cost reduction rather than as additional revenue. Companies which do not have a 100% interest in the production from operating mines must avoid disclosure which provides gross production figures without also providing net figures or plain disclosure of the company’s proportional interest in the operation.