24 LEXPERT
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2014/15
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WWW.LEXPERT.CA
SECURITIES DISCLOSURE
Constructive Constructive
Disclosure Disclosure
Advice
IT'S NOT OFTEN that a regulator, especially a securities regulator,
follows poor marks with gentle encouragement. at's particularly
so in the case of junior mining disclosure. But the Ontario Securities
Commission seems intent on breaking the mould.
In many cases, regulators come down hard on junior miners. e
BC Securities Commission, for example, has been severe with several
companies, including the egregious case of Barkerville Gold Mines
Ltd., which claimed access to as much as 90 million ounces of gold.
e OSC itself minced no words in 2013, when a review of 50 techni-
cal reports led it to fi nd an "unacceptable level of compliance."
If the truth be told, the results were hardly better following the
OSC's review earlier this year of the annual and interim Management's
Discussion & Analysis (MD&A) fi led by 100 Ontario junior miners.
And junior they were: none had a market value of over $100 million,
with the majority under $25 million and only four of the companies
having raised capital by way of prospectus in the preceding fi scal year.
Following the review, a Staff Notice issued in February concluded
that no less than 70 per cent of companies that had no revenue pro-
vided limited disclosure about their plans or progress of their projects,
39 per cent didn't break down their expenses, and 37 per cent didn't
break down their exploration and evaluation assets. Other disclosure
issues included liquidity, capital, related party dealings, risk assess-
ment and the use of proceeds from fi nancing. Miners with a working
capital defi ciency provided just general or no discussion about where
they planned to get more cash and how they proposed to continue
operations. In short, the overall problem was that issuers took a "boil-
erplate" approach to MD&A.
"Dra ing a proper MD&A is not instinctive and it's certainly not
just a matter of fi lling out forms or layering on what was said the pre-
vious quarter — which is how even some experienced management
teams look at it," said Paul Goldman in Goodmans LLP's Vancouver
offi ce. "You have to approach it as a blank sheet of paper every single
A RECENT REVIEW OF
SECURITIES DISCLOSURE
BY THE ONTARIO SECURITIES
COMMISSION TAKES AN
UNUSUALLY SYMPATHETIC
TONE FOR CAPITAL-STARVED
MINING COMPANIES
BY JULIUS MELNITZER
PHOTO:
REUTERS
