SEC Adopts Obama-Era Mining Disclosures
On October 31, 2018 the SEC adopted new mining disclosure requirements that were originally proposed under the Obama Administration. (Andrew Ramonas, Bloomberg Law). According to an agency press release, the amendments, which modify both the Securities Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act), will “provide investors with a more comprehensive understanding of a registrant’s mining properties, which should help them make more informed investment decisions.” (SEC, Press Release). The new rules eliminate and update Industry Guide 7, the current set of rules that have been called “woefully out of date.” (Anderson, Brenkert, and Doerksen, Dorsey & Whitney LLP).
One major change in the proposed rules is an update to the required mineral resource disclosures in both the Exchange Act and Securities Act filings. Where the old rules required only the disclosure of a mining operation’s mineral reserves, the new rules also require disclosure of mineral resources and exploration results. (SEC, Press Release). Mineral resources are all those mineable minerals on a company’s property, while mineral reserves are only those mineable minerals that are “economically feasible to produce and sell.” (New Pacific Metals Corp, Blog Post). The SEC hopes these additional disclosures will allow investors to make more informed investment decisions.
The amendments also offer a few quality-of-life changes. These include allowing a registrant to provide investors with an overview of the registrant’s properties and mining operations (instead of listing specific information about its top twenty properties), reducing the number of table disclosures from seven to two, and allowing the disclosures to be either in narrative or tabular format. (SEC, Press Release).
The new rules will not go into effect until January 1, 2021, allowing companies a two-year transition period, though companies may voluntary comply with the new rules ahead of that date.