SEC Chair Jay Clayton is focused on improving and streamlining disclosure for companies and their “Main Street” investors. Disclosure for mining companies has not been updated for nearly twenty years, rendering it outdated for both investors and issuers. Internationally, reporting by mining companies has become consistent across regulators, adhering to uniform industry standards. Public mining companies that report in both the US and other countries must meet two different disclosure standards, increasing their costs and burden.
On October 31, 2018, the SEC adopted final rules (release 33-10570) to modernize reporting by mining registrants. The mandate is sweeping. As Chair Clayton stated, “The final rules will modernize the Commission’s mining property disclosure regime by improving the quality and reliability of information provided to investors and by harmonizing disclosures with international standards, including removing the restriction on disclosure of mineral resource estimates that may have placed U.S. registrants and investors at a disadvantage.”
The details of mining properties owned and operated by mining companies can provide important information to investors. The rule will:
- Modernize mining industry reporting.
- Align and harmonize SEC mining disclosure with international regulatory reporting requirements, including CRIRSCO (Committee for Mineral Reserves International Reporting) standards.
- Existing Industry Guide 7 for mining registrants will remain effective until all issuers are required to comply with the final rules. Then the guide will be rescinded and the new reporting requirements will become part of Regulation S-K.
- Issuers will report both summary and specific disclosures for only those mining properties which they determine are “material” to disclose.
- Two new tables will be disclosed in the main document of affected filings (not in an exhibit).
- Table 1-Mineral Resources
- Table 2- Mineral Reserves
- A Technical Report Summary will be compiled by a “Qualified Person” (as determined by the rules) with information and assessments of the company's mining properties. The report will be filed as an exhibit to relevant reports and registration statements.
- The Consent of the Qualified Person is also required to be filed as an exhibit accompanying the Technical Report Summary.
Filers and Form Types Affected:
- Affected issuers include both foreign private and domestic mining companies. Note: Canadian issuers filing on Form 40-F are exempt (under MJDS).
- Form types covered under Regulation S-K
- 1934 Act: Reports on Form 10-K and Form 10 (12B/G)
- 1933 Act: Registration statements on Form S-1, S-3, S-4, F-1, F-3, F-4
- Forms 20-F and 1-A (not covered under Regulation S-K requirements). 40-F (Annual Report) is exempt.
- Form changes to 1-A and 20-F to align with Regulation S-K revisions, including exhibit(s).
- New exhibit 96 for Technical Report Summary (“Item 601(b)(96) of Regulation S-K”).
- Amend 17 CFR 229.102 (“Item 102 of Regulation S-K”) under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) adding new exhibit (96) to 17 CFR 229.601(b) (“Item 601 of Regulation S-K”), adding new subpart 17 CFR 229.1300 (“Subpart 1300 of Regulation S- K”), amending 17 CFR 230.436 under the Securities Act.
- Rescinding 17 CFR 229.801(g) and 229.802(g) under the Securities Act and Exchange Act. Revising Forms 1-A and 20-F directly to include mining issuers because they are not subject Regulation S-K amendments.