After over 30 years the Securities and Exchanges Commission (SEC) in the United States is replacing Guide 7, which has been used by companies with material mining assets reporting to SEC, with S-K 1300. S-K 1300 will come into effect on January 1st, 2021, however, registrants are encouraged to adopt S-K 1300 earlier. Registrants will be required to file annual reports aligned to S-K 1300, so it is important that registrants have a clear comprehension of S-K 1300 and its supporting guides that amount to several hundred pages of technical regulation.
Mining Plus has been working with early adopters of S-K 1300 and is well placed to guide registrants through their transition from Guide 7. We have summarised S-K 1300 here and provided some comparison with Guide 7 and NI 43-101:
Unlike Guide 7, S-K 1300 is aligned to CRIRSCO definitions and shares similarities with (but is not equal to) other reporting codes applicable to the mining industry such as NI 43-101. Perhaps the biggest divergence from NI 43-101 is that S-K 1300 does not require Qualified Persons (QPs) to be independent of the registrant and that S-K 1300 permits third party firms (i.e. Mining Plus) to “single sign-off”, and assume liability for a, Technical Report Summary (TRS) i.e. QPs do not provide individual certificates and consents.
TRS is the SEC´s equivalent of an NI43-101 Technical Report has a prescribed format and content with many similarities to NI 43-101:
The SEC has stated that it will not publish or maintain a list of Recognised Professional Organisations (RPO´s). However, a QP must be attached to an RPO that publishes a list of its membership, in addition, a QP must have five years’ relevant experience in the type of mineralisation, deposit type, and activity (e.g. exploration, resource estimation or mineral processing). The 5-year guide is flexible, if a QP can demonstrate significant relevant experience in similar deposit types. S-K 1300 allows for QPs to divide responsibility for different sections of a TRS. Under S-K 1300, the definition of a QP is more stringent than other codes, however, under S-K 1300 a QP does not necessarily require a university degree.
Exploration Results
Registrants can elect to report non-material exploration results as long as they are reported as following; The SEC requires registrants to disclose exploration results and corresponding activities when they are material to investors. However, disclosure of exploration results is not necessarily by way of a TRS. Exploration Results can be disclosed on websites, in Company Presentations and in Press Releases and do not require QP sign-off. Such disclosures are not subject to S-K 1300, but, should include the standard “forward-looking information” cautionary statements and safe-harbor rule, and must include the following cautionary statement:
There has been insufficient exploration of the relevant property or properties to allow for an estimate of a mineral resource.
It is uncertain if further exploration will result in the estimation of a mineral resource.
The exploration target therefore does not represent, and should not be construed to be, an estimate of a mineral resource or mineral reserve.
Exploration Targets
Reporting of Exploration Targetsvia websites, Company Presentations and Press Releases does not require QP sign-off, however, disclosures must be based upon, and accurately reflect, information and supporting documentation produced by a QP. When statements of potential tonnage and grade ranges (or quality) are disclosed, they must be presented with the following statements:
A detailed explanation of the basis for the exploration target, such as the conceptual geological model used to develop the target.
An explanation of the process used to determine the ranges of tonnage and grade, which must be expressed as approximations.
A statement that the ranges of tonnage and grade (or quality) of the exploration target could change as the proposed exploration activities are completed.
A statement clarifying whether the exploration target is based on actual exploration results or on one or more proposed exploration programs, which should include a description of the level of exploration activity already completed, the proposed exploration activities designed to test the validity of the exploration target, and the time frame in which those activities are expected to be completed.
If exploration targets are disclosed in a TRS, they must be included in a separate section that must clearly indicate, by caption, that the disclosure involves a discussion of an exploration target. The section disclosing an exploration target must include a clear and prominent statement that:
Ranges of potential tonnage and grade or quality of the exploration target are conceptual in nature;
There has been insufficient exploration of the relevant property or properties to estimate a mineral resource;
It is uncertain whether further exploration will result in the estimation of a mineral resource; and
The exploration target therefore does not represent, and should not be construed to be, an estimate of a mineral resource or mineral reserve.
Mineral Resources
Mineral resources and reserves must be disclosed in a TRS aligned to S-K 1300.
A TRS used to declare mineral resources (MI+I) is known as an “Initial Assessment”. SEC define the Initial assessment as a technical and economic study of the economic potential of all parts of mineralisation disclosed in the mineral resource. An initial assessment is the equivalent of NI 43-101´s PEA. S-K 1300´ requirements for an economic assessment when declaring mineral resources is an important distinction from other codes.
Mineral Reserves
Guide 7 requires that Mineral Reserves are disclosed in a “Bankable” Feasibility Study. S-K 1300 allows the disclosure of Mineral Reserves in a PFS or FS level TRS.
This has bought the requirements for mineral reserves more in line with NI 43-101 and other codes aligned to CRIRSCO´s definitions.
If you would like to find out more, get in touch with the Mining Plus team here.