Understanding Form NI 43-101

2008-09-15T02:55:00.000-07:00

by glr_ky 23-Aug-08 01:18 am

Part 1:

Home of the NI 43-101, The Canadian Institute of Mining, Metallurgy and Petroleum:
http://www.cim.org/mainEn.cfm

Then, go to http://www.cim.org/committees/guidelinesStandards_main.cfm

Scroll down 'til you see this area and click on the PDF links for your very own copy of the NI 43-101 Standard:
* NI 43-101 - Standards of Disclosure for Mineral Projects - (December 30, 2005)
* Form FI - Technical Report (December 30, 2005)
* Companion Policy (December 30, 2005)

Note for any oil bugs here: you may be interested in reviewing the NI 53-101 available on the CIM page above, as that instrument is the standard for reporting petrolium resources in Canada, the USA and many other nations.

To see a typical real NI 43-101, go here: http://www.usgold.com/resources/
Click download PDF (Adobe will automatically give you free reader software if you click yes.)
www.bancrofturanium.com/projects/monmouth/43-101report.asp

http://www.bancrofturanium.com/projects/monmouth/43-101Report/BU%2043-101%20Monmouth%20Vol1%20July%2008.swf

Scroll to bottom of page and open PDF file titled: "Tonkin Resource Estimate NI 43-101". These things typically run 150 to 200 pages in length.

Part 2:

To see another from Formation Capital (cobalt miner):
http://www.sedar.com/search/search_form_pc_en.htm

1. Type in Formation Capital under "company name".
2. Change date range to be between June 2008 to current date.
3. Set document search to "all" and click on "search".
4. In the search results, scroll down to "Amended & restated technical report (NI 43-101) - English" dated July 15 and download the PDF.

Good definitive site:
http://www.georeferenceonline.com/NI%2043-101.htm

Good fun site to explore mining and exploration, check out the Mineral Exploration Primer (under "Resources" tab) at the Association for Mineral Exploration British Columbia (AME BC) site:
http://www.amebc.ca/default.htm

International mining standards body, the Committee for Mineral Reserves International Reporting Standards:
http://www.crirsco.com/welcome.asp

Overview of Goldspring Exploration in the Nevada Comstock - Feature Video

Part 3:

This typical statement from US Gold's site briefly explains the relationship between use of the 43-101, and miners in the USA under the SEC:

1. All mineral resources have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in National Instrument 43-101, commonly referred to as NI 43-101.

2. US Gold Corporation is a publicly traded company in the United States and subject to regulation by the United States Securities and Exchange Commission (SEC). U.S. reporting requirements for disclosure of mineral properties are governed by SEC Industry Guide 7. Canadian and Guide 7 standards are substantially different. The SEC permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this website such as "resources," "geologic resources," "measured," "indicated," and "inferred," that the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. Investors should be aware that US Gold has no "reserves" as defined by Guide 7 and are cautioned not to assume that any part or all of mineral resources will ever be confirmed or converted into Guide 7 compliant "reserves." Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute Guide 7 compliant "reserves" by SEC standards as in-place tonnage and grade without reference to unit measures.

Part 4:

Link to the Society for Mining, Metallurgy, and Exploration, Inc. (Littleton, CO), one of the most prestigeous professional mining societies in the world:

http://www.smenet.org/

Click on "Publications", then "Online Books", then "Recommendations Concerning Estimation and Reporting of Mineral Resources and Mineral Reserves" Great reading!!

Quote from Chapter 7.2 :
Because of the international nature of the mining industry, a need for international standardization has long been recognized. A group of professional societies formed a committee in 1993, whose mission specifically includes the development of internationally acceptable guidelines for the definition, estimation and public reporting of Mineral Reserves. This committee, known as CRIRSCO (Combined Reserves International Reporting Standards Committee), includes representatives of the U.S., Canada, Australia, South Africa, the U.K., Ireland, and Chile. Each of the member countries has developed national guidelines which follow essentially the same template. These guidelines are similar to those in the 1999 SME Guide and accept reasonable and supportable price forecasts as the basis for reserve estimation.
Reporting codes and guidelines developed by national professional societies have been incorporated by reference in the reporting rules applicable in Canada (NI 43-101 and the CIM guidelines), Australia (the JORC code), South Africa (the SAMREC code), and Chile. Similar guidelines have been developed in the United Kingdom and Ireland which are accepted but have not yet been formally recognized by reference in the listings rules of the corresponding regulatory agencies. While these codes and guidelines do not specify which commodity price assumptions should be made when estimating reserves, the accepted practice is to use management’s best estimate of future prices. This approach is generally consistent with that used by management for planning purposes. It is also generally consistent with assumptions made for financial reporting. On the negative side, the lack of guidelines gives considerable latitude to the subjective assessment of future prices, including opportunities for abuses.

Management Practices
Mines are planned and operated by companies, using long-term estimates of commodity prices. Although current prices often affect near-term production decisions (which may result in changes to production schedules and operating cutoff grade, and in extreme cases in temporary shut down), investment decisions, including opening new mines or permanent closure of existing mines, are made on the basis of long-term expectations. Using different commodity prices for planning and for reserve reporting implies that the corresponding mine plans and production schedules also differ.

Part 5: Most important part!

With regard to resource reporting, this is the meat of what really applies to Goldspring especially as to how it's resources relate to large investors and funds, long-term, IMHO:

Go to http://www.sec.gov/search/search.htm

1. Change "Search by Section" to "Forms".
2. Type 3235-0069 in the search terms window, then click on "Search".

Click on "Industry Guides", download (or open) the PDF and go to page 34, see Guide 7, "Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations". This guideline would be used for the final chapter in reporting assets to the SEC.

Summary (my conclusions, no legal basis):
1. Canadian National Instrument 43-101 is a mineral resource reporting guideline required to be used by law in Canada and a few other countries, but not in the USA.
2. NI 43-101 is the de facto professional guideline used for creating mineral resource reports in the USA. However, the engineers may in addition use other methods, guides and standards such as those from the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME) or Society for Mining, Metallurgy, and Exploration (SME).
3. The resource numbers created via the 43-101 are universally accepted by the US mining and financial communities as sufficiently accurate for evaluating a mining company's mineral resource assets, an important component of it's total value.
4. The results of 43-101 reports are also used to create other valuable reports such as Bankable Resource numbers and Mine Feasibility Studies.

The information I've posted here is the result of amateur research effort on my part solely for my DD. Do your own DD prior to purchasing any stock. I would be delighted to have professional mining expert feedback on my findings and conclusions.

- glr_ky at Yahoo Financial Message Board http://finance.yahoo.com/q?s=GSPG.OB

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Understanding a NI 43-101 Filing

Understanding Form NI 43-101