Global Mining Update
May 2001
Canada’s new mining
disclosure standards in effect
NATIONAL INSTRUMENT 43-101, Standards of Disclosure for Mineral Projects,
together with Companion Policy 43-101CP and Form 43-101F1, Technical Reports, establishes
standards for all public disclosure that a reporting company makes of scientific and technical
information concerning mineral projects. The rules apply to all disclosure by reporting
companies, including oral public disclosure and written disclosure in news releases,
prospectuses, take-over bid circulars, annual reports, annual information forms and
company Web sites. NI 43-101 replaces National Policy Statement 2-A (Guide for Mining
Engineers, Geologists and Prospectors). The TSE and CDNX each have disclosure standards that
require listed companies to comply with NI 43-101. However, the TSE and CDNX
standards require disclosure beyond what is required under the NI 43-101.
Key Features
NI 43-101 sets out the following requirements for disclosure by a reporting company:

All disclosure concerning mineral exploration, development and mining
operations on a property material to the reporting company must be based on
information prepared by a “qualified person,” defined as an individual who is
an engineer or geoscientist with at least five years of relevant experience in
mineral exploration, mine development or operation, or mineral project
assessment, and who is a member in good standing of a professional
association. All written disclosure, other than news releases, must identify the
qualified person by name and must disclose the qualified person’s relationship
to the reporting company.

NI 43-101 prohibits a company from disclosing an estimate of quantity or
grade of a deposit unless a qualified person has established a mineral resource
or mineral reserve, as those terms are defined by the Canadian Institute of
Mining Metallurgy and Petrolium as the CIM Standards on Mineral Resources and
Reserves Definitions and Guidelines. Technical reports on diamond deposits should
conform to the Guidelines for Reporting of Diamond Exploration Results, Identified
Mineral Resources and Ore Reserves published by the Association of Professional
Engineers, Geologists and Geophysicists of the Northwest Territories.
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
The disclosure requirements of section 3.3 (exploration information) and
section 3.4 (mineral resources and mineral reserves) of NI 43-101 may be
satisfied by referring to previously filed documents that include the required
disclosure.

Technical reports on material properties must be filed upon first becoming a
reporting issuer or in connection with certain written disclosure, including
preliminary prospectuses, offering memoranda, annual reports, take-over bid
circulars and other offering and corporate disclosure documents with
disclosure of significant new or additional mineral resources and mineral
reserves.

Technical reports, when required, must be in the prescribed form (Form 43101F1) and must be prepared and certified by a qualified person.

In certain circumstances, including disclosure of significant new or additional
mineral resources and mineral reserves if the reporting company does not have
a history of production, technical reports must be prepared by qualified
persons who are independent of the reporting company. Limited exemptions
are available where the reporting company’s gross revenues from mining
operations is at least $30 million for its most recently completed financial year
and at least $90 million over its three most recently completed financial years.

NI 43-101 prohibits a company from disclosing an estimate of quantity or
grade of a deposit which has not been categorized as an inferred mineral
resource, an indicated mineral resource, a measured mineral resource, a
probable mineral reserve or a proven mineral reserve. NI 43-101 does
however, provide for exceptions to that prohibition in the case of disclosure of
exploration targets on early stage properties. Companies may disclose the
quantity and grade of exploration targets provided that they are expressed as
ranges and the basis on which the possible quantity and grade has been
determined is described. A statement must be included that the potential
quantity and grade is conceptual in nature, that there has been insufficient
exploration to define a mineral resource on the property and that it is uncertain
if further exploration will result in discovery of a mineral resource on the
property.

NI 43-101 prohibits a company from disclosing the results of an economic
evaluation which uses inferred mineral resources. However, there is now an
exception for preliminary assessments that are based in whole or in part on
inferred mineral resources if the preliminary assessment is a “material fact” or a
“material change” in the affairs of the reporting company. The disclosure
must describe the basis for the preliminary assessment and any qualifications
and assumptions made by the qualified person. The disclosure of the
preliminary assessment must also include a statement that the preliminary
assessment is preliminary in nature, that it includes inferred mineral resources
that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
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mineral reserves and that there is no certainty that the preliminary assessment
will be realized. Additional conditions, including a pre-filing obliation, apply if
the reporting company is a “reporting issuer” in Ontario.

NI 43-101 prohibits reporting companies from using the terms “preliminary
feasibility study”, “pre-feasibility study” or “feasibility study” when referring to
a study unless the study satisfies the criteria set out in NI 43-101. NI 43-101
requires that, for a study to be described as a “feasibility study”, it must be “a
comprehensive study of a deposit in which all geological, engineering,
operating, economic and other relevant factors are considered in sufficient
detail that it could reasonably serve as the basis for a final decision by a
financial institution to finance the development of the deposit for mineral
production”.
TSE Requirements
Appendix B of the TSE Company Manual (Disclosure Standards for Companies Engaged in
Mineral Exploration, Development & Production) imposes requirements on TSE listed companies
above those required under NI 43-101. These include:

All disclosure, including news releases, must identify the qualified person
responsible for the design and conduct of the work performed. The qualified
person must read and approve the disclosure. The reporting company should
identify the source of the information if it was not obtained by the company
itself.

When work has been discontinued on a property, the reporting company must
release any undisclosed results and the reasons for the cessation of work.

If the reporting company has a Web site, the address of the Web site must be
provided on all disclosure materials. All news releases containing information
on a material exploration property must be posted on the Web site
immediately after it has been otherwise published.

Disclosure should describe any recommended programs for further
exploration, including proposed methods, time frame and cost, whether the
company intends to carry out the program and whether it has the funds
available to do so.
CDNX Requirements
CDNX Policy 3.3 (Timely Disclosure) requires CDNX listed companies to comply with
NI 43-101 and with the requirements of CDNX’s Appendix 3F (Mining Standards Guidelines).
Among the CDNX’s additional requirements are the following:

A news release must not disclose mineral reserves without the prior consent of
CDNX’s Market Surveillance Department.
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
If reserve or resource calculations are made by qualified persons who are not at
arm’s length to the reporting company, their calculations and conclusions
should be reviewed and verified by an appropriately qualified independent
individual.
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Fictitious News Release
(numbers refer to the paragraphs on the following pages)
High-Grader Mining Ltd. Announces
Incredible Results at its Gangue Deposit
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(Vancouver) – High-Grader Mining Ltd. today announced that drilling at its Gangue deposit had
produced some incredible results. Kal Goorlie, the President of the Company said “Wow, this is the
best deposit that Grant O’Diorite, our in-house geologist, has seen since graduating from university
two years ago. He thinks that the Gangue deposit has the potential to be as big as Witwatersrand,
Hemlo and Busang combined.”
Highlights from recent drilling include the following intercepts:
Hole
Intercept (metres)
Gold Grade (g/t)
DD 1
1.0
10.0
DD 2
4.5
25.0
DD 5
5.5
30.0
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Analysis by the Company’s geologist indicates that the Gangue deposit holds a combined mineral
reserve and mineral resource of 2.5 million tonnes grading 15.0 g/t Au (including an inferred mineral
resource of 1.5 million tonnes grading 25.0 g/t Au). The Company’s geologist has recommended
that an in-fill drilling program be conducted in the fall using reserve circulation drills. The estimated
cost is $1,000,000. The Company plans to conduct the program and has sufficient working capital to
fund the program.
Kal Goorlie said, “The Gangue deposit will complement the Company’s nearby Wasterock deposit
which holds, according to our geologist, an Ore Reserve of 1.0 million tonnes grading 10.0 g/t gold.”
The Gangue deposit is hosted by a series of faulted volcanic and sedimentary rocks located in
northern Ontario. Visual estimates of mineralization in quartz veins in outcrop run as high as 25 g/t Au.
The Company has drilled a series of diamond and reverse circulation drill holes across the property
and is extremely satisfied with the incredible results that it is getting to-date. Samples from the drill
cores are prepared by on-site employees of the Company. The drill core is sampled in ½ metre
lengths with all core being split longitudinally by diamond saw. One half of the sample is sent to a
laboratory for assaying. The lab uses standard sample preparation procedures and AAS. All samples
assaying over 10 g/t Au are re-assayed using Fire Assay methods.
The Company engaged Dr. Tony Redunzo, P. Geol., the noted geological consultant, to review and
corroborate the data. Dr. Redunzo reviewed the sample preparation procedures and assay
procedures (which include a program of duplicate, check and blank assaying with check assaying
being conducted at a separate laboratory). Dr. Redunzo independently corroborated the data and did
not identify any limitations with respect to the data. Dr. Redunzo has reported that the quality of the
Company’s procedures (including its quality control and quality assurance programs) exceeds
industry standards.
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Things to consider when writing your news release
1. All disclosure of a scientific or technical nature is to be based upon a technical
report or other information prepared by or under the supervision of a qualified person.
Although NI 43-101 does not require news releases to identify the qualified person, the TSE
standards require all disclosure to identify by name the qualified person responsible for the
work and his or her relationship to the company. High-Grader’s geologist, with only two
years of post-graduate experience, does not meet the requirements of a qualified person.
2. Although High-Grader can show highlights from its drilling results, it must
disclose the results from all drill holes. These results could be attached to the news release
as a schedule or annexure. High-Grader should also disclose the location, direction, angle
and total depth of each drill hole along with the “from” and “to” details for each mineralized
intercept, the true widths of individual samples (to the extent known) and any drilling,
sampling or recovery problems. The disclosure should include the identification of any
significantly higher grade intervals within a lower grade intersection.
3. Each category of mineral reserve (eg, “probable mineral reserve” or “proven
mineral reserve”) and mineral resource (eg, “inferred mineral resource”, “indicated mineral
resource” or “measured mineral resource”) must be separately reported rather than
aggregating the mineral reserve and mineral resource. If both mineral resources and mineral
reserves are disclosed, then the disclosure must state the extent, if any, to which the mineral
reserves are included in the total mineral resources. Also, inferred mineral resources are not
to be added to the other categories of mineral resources.
4. NI 43-101 requires written disclosure of mineral resources or mineral reserves to
include, among other information, details of the key assumptions, parameters and methods
used to make the estimate and a general discussion of the extent to which the estimate of
mineral resources and mineral reserves may be materially effected by any known
environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other
relevant issues. A statement must be included that mineral resources which are not mineral
reserves do not have demonstrated economic viability. TSE standards require that all
recommended programs for further exploration be described as well as information on
whether the company intends to carry out the program and has the funds available to do so.
5. This news release does not indicate whether High-Grader has issued any disclosure
on the Wasterock deposit. High-Grader must fully disclose information on the Wasterock
deposit with that information to be disclosed in compliance with the requirements of NI 43101.
6. The use of the category “Ore Reserve” does not comply with the requirement
under NI 43-101 that only the categories defined in NI 43-101 be used. The term “Ore
Reserve” is a category under the Australasian Code for Reporting of Mineral Resources and
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Ore Reserves (JORC Code) and should not be used except in limited circumstances. The
categories of the JORC Code, USGS Circular 831 or the IMM System can be used in
technical reports by reporting companies which are incorporated or organized in foreign
jurisdictions provided that a reconciliation to the NI 43-101 categories is included.
7. The description of the geological setting of the deposit is insufficient. The
disclosure should include a summary of the geological setting of the deposit (including a
description of the regional, local and property geology), a description of the mineral deposit
type and a description of the mineralized zones (including the surrounding rock types, the
relevant geological structures and details of the length, width, depth and continuity of the
mineralization). Also, TSE and CDNX standards prohibit the reporting of visual estimates.
8. The written disclosure should include the location, number, type, nature and
spacing or density of sampling programs. It should also identify any drilling, sampling,
recovery or other factors that could materially impact the accuracy or reliability of the data.
High-Grader’s news release contains a good description of the procedure for sampling the
drill core and the analytical and testing procedures used. However, the news release does
not adequately disclose the name and location of each analytical or testing laboratory used.
The news release must disclose the certification of each laboratory and the relationship, if
any, of the laboratory to High-Grader.
9. The news release meets the requirement of NI 43-101 that written disclosure state
whether a qualified person has corroborated the data and describe the nature of any
limitation on the corroboration of the data. A company must explain any failure to have the
data corroborated. The disclosure must also include a statement as to the quality control
measures applied.