1. PDAC2011 Proposed changes to NI 43- 101 MasterMINING, May 3 and 4, 2011 Craig Waldie, P.Geo., Senior Geologist cwaldie@osc.gov.on.ca Jim Whyte, P.Geo., Senior Geologist jwhyte@osc.gov.on.ca

2. Corporate Finance PDAC2011 2  The views expressed in this presentation are our own and do not bind the OSC or other commission staff.  These materials are provided for general information purposes only and do not constitute legal advice.  These are the changes published April 8, 2011, which are still subject to Ministerial approval in Ontario.  Information has been summarized and paraphrased for presentation purposes.

3. Corporate Finance PDAC2011 3 Agenda  National Instrument Professional association and qualified person All disclosure Technical report triggers Certificates and consents  Technical Report Form 2 forms in 1  Companion Policy  Questions and Answers

4. Corporate Finance PDAC2011 4 4 Fundamental Principles of NI 43-101 1.Qualified Person Scientific and technical disclosure must be prepared by a “ Qualified Person ” (QP) 2.Standards and Definitions Adopts CIM categories of resources and reserves as a reporting standard Defines terms like pre-feasibility and feasibility study, exploration information, “ preliminary economic assessment ”

5. Corporate Finance PDAC2011 5 5 Fundamental Principles of NI 43-101 3.Prohibited Disclosure Potentially confusing and undermines the credibility of the market No disclosure of a quantity of mineralized material unless it is certified as a resource or reserve Must disclose both tonnage and grade, and show all classes of resource or reserve Some disclosure of non-compliant information is permitted, but always with clear cautionary language

6. Corporate Finance PDAC2011 6 6 Fundamental Principles of NI 43-101 4.Technical Report Form 43-101F1 – spells out the information the report needs Filed to support scientific and technical disclosure on a project material to the company Certain disclosure events trigger the requirement for a technical report: Financing documents, exchange listing documents Takeover bids and directors’ circulars Annual Information Form Material change to resources or reserves

7. Corporate Finance PDAC2011 7 Purpose of Proposed Changes  Maintain investor protection while making compliance less costly for companies Preserve core principles of NI 43-101 Provide more flexibility for companies and QPs Distribute responsibility fairly between the company and QP Reduce the scope of certain requirements Clarify areas not having the intended effect  Changes reflect 10 years of regulatory experience Changes in industry practices Stakeholder consultations in 2009 Public comments in 2010

8. PDAC2011 National Instrument

9. Corporate Finance PDAC2011 9 Definitions – New and Modified  Acceptable foreign code  Advanced property  Effective date  Historical estimate  Preliminary economic assessment  Professional association  Qualified person  Specified exchange

10. Corporate Finance PDAC2011 10 “Qualified Person”  Education Engineer or geoscientist with a university degree related to mineral exploration or mining  Experience At least five years of experience in mineral exploration, mine development or operation, or mineral project assessment that is relevant to professional degree, and Experience relevant to the subject matter of the mineral project and technical report  Accountability In good standing with a professional association

11. Corporate Finance PDAC2011 11 “Professional Association”  Remove Appendix A from National Instrument  New objective test for foreign associations Generally accepted as a reputable professional association Admits individuals based on education, experience and ethical fitness Requires compliance with professional standards of competence and ethics Requires or encourages continuing professional development Applies disciplinary powers regardless of where the member practises or resides  Companion Policy Includes revised list of foreign associations and required membership designations

12. Corporate Finance PDAC2011 12 Foreign Association – Membership Class 1.Attainment of a position of responsibility; and Exercise of independent judgment 2.A) Favourable confidential peer evaluation; or Individual’s character, professional judgement, experience, and ethical fitness B) Demonstrated prominence or expertise in the field of mineral exploration or mining At least five years of professional experience and a level of responsibility such as: At least three years in a position of responsibility where the person was depended on for significant participation and decision making; Experience of a responsible nature and involving the exercise of independent judgment in at least three of those years; At least five years in a position of major responsibility, or a senior technical position of responsibility.

13. Corporate Finance PDAC2011 13 Applicable to All Disclosure  All technical information must be Prepared or approved by a QP Addresses instances where information is not prepared by the QP  Restricted/prohibited disclosure No economic analysis on exploration targets or historical estimates No gross metal values or in-situ values No total grades or equivalent grades unless grade of each metal disclosed (total precious metals, total rare earths, “gold-equivalent”)

14. Corporate Finance PDAC2011 14 Historical Estimate  New definition Unverified estimate prepared prior to the company acquiring the property No longer tied to February 1, 2001 date  Combined s. 2.4 and 4.2(2) Source and date etc. Cautionary statements required each time historical estimate is disclosed  Added Include key assumptions, parameters, methods Comment on the work needed to upgrade and verify the historical estimate

15. Corporate Finance PDAC2011 15 Preliminary Economic Assessment  Removed several restrictions “prior to completion of a pre-feasibility study” “results must represent a material change”  Added “describe the impact of the PEA on existing studies” (prefeasibility or feasibility) Are the mineral reserves still valid? Word “economic” reflects industry term (PEA)  Examples of its application: Economic conditions change and nullify an earlier reserve estimate Producing mine with a newly-discovered inferred resource Operating transitions (pit to underground, oxide to fresh)

16. Corporate Finance PDAC2011 16 Written Disclosure  Qualified Person Name and relationship of QP that prepared or approved the technical information  Exploration information Location, azimuth and dip of drill holes Depth of sample intervals  Mineral resources and mineral reserves Drafting changes

17. Corporate Finance PDAC2011 17 Trigger CASE 1 Not a material change in relation to the company CASE 2 Material change in relation to the company But is NOT related to 1 st time or a change to resources, reserves, or a PEA CASE 3 Material change in relation to the company That IS related to 1 st time or a change to resources, reserves, or a PEA  Keep, remove or modify the trigger? Notice included specific questions for public comment Solicited comments from investor advocacy groups  Remove - rely on latest AIF and disclosure record  Modify - new technical report if technical information meets Case 2 or 3 Short Form Prospectus Trigger

18. Corporate Finance PDAC2011 18 Any Written Disclosure Trigger  Modification of the “news release” trigger Back to the 2001 principle News release, fact sheet, presentation – anything permanent  Any first time written disclosure of any of the following that constitutes a material change in relation to the company Mineral resource Mineral reserve PEA Change in mineral resource, mineral reserve or PEA  Must file a news release when the technical report is filed on SEDAR Alerts investors – technical report may be filed up to 45 days after disclosure

19. Corporate Finance PDAC2011 19 Annual Information Form Trigger  Removed “grandfathering” exemption Company’s disclosure should not still be relying on a pre-2001 AIF, prospectus or material change report  May impact some large companies that have never filed a technical report on their material properties New technical report, if triggered, is still required to be filed at the same time as the AIF

20. Corporate Finance PDAC2011 20 Property Acquisition Trigger  Acquisition of a property with a “current” technical report by another company New filing delay – 180 days – under certain conditions 1. Technical report has been previously filed by another company that held the property 2. New company Identifies other company and technical report title and date Names QP who reviewed the technical report on behalf of new company States – to the best of the company’s knowledge, information, and belief, there is no new material scientific or technical information that would make the disclosure of the mineral resources, mineral reserves or results of a preliminary economic assessment, inaccurate or misleading 3. New company files a new technical report supporting its disclosure within 180 days 4. Must file a news release when the technical report is filed on SEDAR

21. Corporate Finance PDAC2011 21 Relying on a “Current” Technical Report  Removed requirement for QP to provide updated QP certificates and consents Company is in the best position to determine if there is no new material technical information Company’s determination is transparent and open to challenge by both investors and regulators QP, especially if an independent contractor, should not be obliged to babysit a project the company is managing  Requires that the company's previous technical report still support disclosure in the trigger document (AIF, circular, offering document, etc.) No new material scientific or technical information The company’s disclosure must still be approved by its internal QP

22. Corporate Finance PDAC2011 22 Independent QP  New exemption for “producing company” listed on a “specified exchange” that wants to become a reporting issuer in Canada Such companies are subject to comparable requirements under rules of the specified (foreign) exchanges ASX, LSE, JSX, NASDAQ, HKEX, Wallstrasseboerse This has been interpreted (wrongly) as an exemption from filing reports on becoming a reporting issuer The foreign issuer must still file technical reports on its material properties, but internal QPs can be the authors

23. Corporate Finance PDAC2011 23 Foreign Codes  “Acceptable foreign code” JORC Code PERC Code SAMREC Code SEC Industry Guide 7 Certification Code Any other code generally accepted in a foreign jurisdiction that is consistent with CIM Definition Standards on Mineral Resources and Mineral Reserves  Reconciliation In response to public comment, we retained the requirement to reconcile foreign codes to CIM definitions, in case any foreign jurisdiction later goes its own way

24. PDAC2011 Technical Report Form

25. Corporate Finance PDAC2011 25 Technical Report - Form 43-101F1 New Form!  Revised with assistance of mining advisory committee (MTAMC) and public comments Single form with better balance between exploration and advanced properties Broadened “Item 25-type” information for properties with a PEA, pre-feasibility of feasibility study Less prescriptive and improved organization Deleted most occurrences of “must” and “details” More guidance on certain items

26. Corporate Finance PDAC2011 26 General Instructions  Objective Summary of material technical information that is understandable to a reasonable investor  2 forms in 1 Items 1 - 14 and 23 - 27 for all technical reports Items 15 - 22 for “advanced properties” Mineral resources where potential economic viability is supported by PEA, pre-feasibility or feasibility study; or Mineral reserves  May refer to information from previous report if Information is still current Identify title, date & author of previous technical report Summarize or quote the referenced information QP can’t disclaim responsibility (i.e. due diligence)

27. Corporate Finance PDAC2011 27 Revisions to Technical Report Form Title, ContentsItems 1-2 Summary, Introduction, Reliance Items 3-5 Location, Access, HistoryItems 6-8 Geology, Deposit Types, Mineralization Items 9-11 Work Program, Results, Verification Items 12-18 Resource and Reserve Estimates Item 19 Conclusions, Recommendations Items 20-22 ReferencesItem 23 Date, SignatureItem 24 Development InformationItem 25 IllustrationsItem 26 “General Contents” Title, Date, Signature, Contents, Illustrations Items 1-3 Summary, Introduction, Reliance Items 4-6Location, Access, History Items 7-8 Geology and Mineralization, Deposit Types Items 9-13 Work Program, Results, Verification Item 14 Item 15 Mineral Resources Mineral Reserves Item 16-22 Mining, Recovery, Infrastructure, Markets, Contracts, Environmental, Social Impact, Economic Analysis Items 23-26 Adjacent Properties, Other Data, Conclusions, Recommendations Item 27References Existing Form New Form “Advanced Property”: Items 15 to 22

28. Corporate Finance PDAC2011 28 General Contents  Title Page No change  Date and Signature Page Either at beginning or end of the technical report  Table of Contents Some heading changes  Illustrations Maps and plans – show what is significant to the stage of activity (exploration, advanced, development)

29. Corporate Finance PDAC2011 29 Summary  Added Summarize “important” information about the property Mineral resource and mineral reserve estimates and removed exploration concept Introduction  Terms of reference Objectives and scope the technical report Professionals involved and their responsibilities  Personal inspection Who, when and what

30. Corporate Finance PDAC2011 30  Added Valuations for diamonds/gemstones Commodities where pricing not publicly available  Clarified conditions for use of reliance on experts Reliance on Other Experts Property Description and Location  Added Risks affecting legal access, title, ability to perform work  Deleted How property boundaries are located Location of mineralization, workings, natural features, etc. (duplicates illustration requirements)

31. Corporate Finance PDAC2011 31 Accessibility, Climate, Local Resources, Infrastructure and Physiography  No changes History  New Instruction Distinguish previous work conducted within the current property boundary from previous work outside the property boundary

32. Corporate Finance PDAC2011 32 Geological Setting and Mineralization  Combined related Items Item 9 (Geological Setting) Item 11 (Mineralization) Consolidates associated information Deposit Types  No changes

33. Corporate Finance PDAC2011 33 Exploration  Combined related Items Item 12 (Exploration) Relevant portions of Item 14 (Sampling Method and Approach) Information associated with surface exploration and sampling now under one heading  Deleted Whether work carried our by company or contractor Company is ultimately responsible for its disclosure

34. Corporate Finance PDAC2011 34  Combined related Items Item 13 (Drilling) Relevant portions of Item 14 (Sampling Method and Approach) Information associated with subsurface exploration and sampling now under one heading  Added Drill hole location, azimuth, and dip Properties with mineral resources may meet this requirement by providing a drill plan and representative drill sections through the mineral deposit  New Instruction Clearly distinguish drilling results by previous owner from results by the company Drilling

35. Corporate Finance PDAC2011 35 Sample Preparation, Analysis, Security  Added Relationship of laboratory to the company QA/QC action taken or recommended to provide confidence in data collection and processing  Explicit  Deleted Statement whether sample preparation before dispatch to laboratory was done by an employee of the company

36. Corporate Finance PDAC2011 36 Data Verification  Clarify Steps taken by QP to verify the data in technical report  Removed Requirement to discuss quality control Duplicates pervious Item Statement whether QP has verified the data Replaced with opinion of QP  Added QP’s opinion on the adequacy of the data for the purposes used in the technical report Reasons for limited verification or failure to verify data

37. Corporate Finance PDAC2011 37 Mineral Processing and Metallurgical Testing  Expanded requirements This is the description of metallurgical testing – for advanced projects, plant design has its own section (17) Nature and extent of testing and summary of results Basis for assumptions/predictions of recoveries Representativeness of test samples to types/styles of mineralization and mineral deposit as a whole Any deleterious elements or processing factors potentially affecting economic extraction

38. Corporate Finance PDAC2011 38 Mineral Resource Estimates  Separate item for mineral resources  Summarize Key assumptions, parameters, and methods for a reasonably informed reader to understand how mineral resources were estimated Comply with disclosure required by s. 2.2, 2.3, and 3.4  New Instruction With multiple cut-off grades, highlight base case cut-off All estimates resulting from each cut-off grade must meet test of “reasonable prospects of economic extraction”

39. Corporate Finance PDAC2011 39 Additional Requirements for “Advanced Properties”  Items 15 to 22 Concept of an “advanced property” Addresses industry concerns about modify existing Form Generally replaces Item 25-type information  Items Mineral Reserve Estimates Mining Methods Recovery Methods Project Infrastructure Market Studies and Contracts Environmental Studies, Permitting and Social or Community Impact Capital and Operating Costs Economic Analysis

40. Corporate Finance PDAC2011 40 Mineral Reserve Estimates  Separate item for mineral reserves  Summarize Key assumptions, parameters, and methods for a reasonably informed reader to understand how mineral reserves were estimated Comply with disclosure required by s. 2.2, 2.3, and 3.4 Discuss extent to which mineral reserves could be materially affected by: Mining Metallurgical Infrastructure Permitting Other relevant factors

41. Corporate Finance PDAC2011 41 Mining Methods  Based on Items 25(a) and (j) of Old Form  Summarize Current/proposed mining method Geotechnical and hydrological aspects of the mine Stripping and underground development issues Mining fleet and machinery requirements Production rates, dilution and mine life

42. Corporate Finance PDAC2011 42 Recovery Methods  Based on Items 25(a) and (b) of Old Form  Summarize Issues specific to plant design and flow sheet Recoverability and amenability of mineralization to the recovery process Requirements for energy, water and process materials

43. Corporate Finance PDAC2011 43 Project Infrastructure  New requirement – not in Item 25 of Old Form  Infrastructure is critical to project costs  Summary of logistics issues such as Roads, rail and port facilities Dams, dumps, stockpiles and leach pads Tailings disposal, pipelines and power

44. Corporate Finance PDAC2011 44 Market Studies and Contracts  Based on Items 25(c) and (d) of Old Form  Market studies Summary of markets for commodities produced Nature of studies completed Marketing and product specification requirements Commodity price projections Confirm QP has reviewed the studies Results support assumptions in technical report  Contracts Identify material contracts in place or under negotiation Indicate if terms are within industry standards  Removed from April 2010 draft Disclosure of contract terms and results of studies

45. Corporate Finance PDAC2011 45 Environmental Studies, Permitting and Social or Community Impact  Based on Item 25(e) of Old Form  Summarize Environmental issues impacting extraction of the mineral deposit Tailings disposal, site monitoring, water management Permit requirements and status of permits Mine closure requirements and costs  Added “Social license” Social or community related plans Status of negotiations or agreements with communities

46. Corporate Finance PDAC2011 46 Capital and Operating Costs  Based on Item 25(g) of Old Form  Summarize Capital and operating costs in tabular form Explain and justify the basis for cost estimates

47. Corporate Finance PDAC2011 47 Economic Analysis  Based on Items 25 (f), (h), (i) and (j) of Old Form  Summarize Clear statement and justification for main assumptions Cash flow forecasts on annual basis NPV, IRR and payback Taxes, royalties and government levies Sensitivity or other analyses and impact of the results  New Instruction Producing issuers may exclude the economic analysis for properties in production, unless a material expansion is planned

48. Corporate Finance PDAC2011 48 Adjacent Properties  Relocated this Item  Drafting change Other Relevant Data and Information  No change

49. Corporate Finance PDAC2011 49 Interpretation and Conclusions  Modified More applicable to various stages of project development Less emphasis on exploration projects  Added Identify significant risks and uncertainties Discuss potential impacts of these risks to the projects potential viability or continued viability  Removed Whether completed work met its original objectives

50. Corporate Finance PDAC2011 50 Recommendations  New Instruction If no work program or budget is proposed – explain why References  No changes

51. PDAC2011 Companion Policy

52. Corporate Finance PDAC2011 52 Companion Policy  Restructured to track sections in NI 43-101 2.4 of NI 43-101  guidance in 2.4 of 43-101CP  Provides more guidance and interpretation Material property Cautionary language Technical report triggers Certificates and consents  Appendix A Revised list of foreign associations and required membership designations  Appendix B Template for QP Consent

53. PDAC2011 Questions?