---------------------------------------------------------------------------

C. Anticipated Impact on Efficiency, Competition, and Capital Formation

    We expect the proposed disclosure requirements to increase the
amount and quality of disclosed information about registrants' mining
operations, and thereby to have a positive effect on efficiency and
capital formation. For example, the proposed rules would require
registrants with material mining operations to disclose determined
mineral reserves, mineral resources and material exploration results.
These proposed requirements would better align the Commission's
disclosure requirements with the current practices used by mining
companies to evaluate their projects, thereby reducing information
asymmetries between registrants and investors about the prospects of
mining operations. In addition, the qualified person requirement,
together with detailed requirements for the supporting technical
studies, should generate higher quality and more consistent
disclosures, which should reduce any uncertainty surrounding the
disclosures. In turn, reduced information asymmetries and reduced
uncertainty about the disclosures would help investors achieve a more
efficient capital allocation, while reducing the cost of capital and
enhancing capital formation for registrants.\484\
---------------------------------------------------------------------------

    \484\ The significant risk and negative impact on capital
formation from uncertainty surrounding mining disclosure is
illustrated by the evidence in William O. Brown, Jr. and Richard
C.K. Burdekin, ``Fraud and Financial Markets: The 1997 Collapse of
the Junior mining Stocks'' (2000), Journal of Economics and
Business, Volume 52, Issue 3, pp. 277-288. The authors utilize event
study methodology to analyze the effect on Canadian mining
companies' stock returns around the revelations in spring 1997 of
fraudulent disclosures of gold resources by the Canadian mining
company Bre-X. The study documents that a portfolio of 59 Canadian
gold mining stocks experienced significantly negative abnormal stock
returns around the Bre-X fraud revelations. Similarly, the Vancouver
Composite Index, which at the time was dominated by natural resource
companies, also experienced significantly negative abnormal returns
for the same event time period. We note that the Bre-X fraud
contributed to the development of the Canadian NI 43-101 mining
disclosure standards.

---------------------------------------------------------------------------

    In particular, we believe that the proposed requirements for
disclosure of material exploration results and mineral resources would
reduce information asymmetries and uncertainty for smaller mining
registrants, as these registrants tend to have mining properties in
earlier stages of development with relatively fewer reported mineral
reserves. As a result, we expect the anticipated positive effects on
efficiency and capital formation to be relatively larger for smaller
registrants. However, these effects would only materialize to the
extent smaller registrants make the required investment in the studies
that are required to support disclosure in the first place. We
anticipate that there likely are some smaller registrants who do not
have access to the liquid funds needed to make that investment.
    Although we expect the overall amount of disclosed information to
increase under the proposed rules, there may be exceptions. As
discussed previously, we expect that the proposed disclosure
requirements would increase the compliance costs for disclosure of
material exploration results and the currently allowed (on a case-by-
case basis) equivalent of mineral resources (i.e., mineralized
material). Therefore, despite the anticipated benefits from the
proposed disclosure requirements, some registrants may find that these
benefits do not outweigh the compliance costs and reduce what they
disclose currently.
    The positive effects we expect on efficiency and capital formation
from the proposed rules would be lower for the registrants that
currently report in foreign jurisdictions with CRIRSCO-based disclosure
codes. These registrants to a large degree already provide the proposed
disclosures. This is particularly the case for Canadian registrants,
who disclose the information pursuant to NI 43-101 standards in their
Forms 20-F under the ``foreign or state law'' exception.
    We expect the proposed rules to have some competitive effects. For
example, there may be reallocation of capital as registrants that
previously could not disclose mineral resources or could not afford the
feasibility studies required for disclosure of mineral reserves (but
could afford pre-feasibility studies) may start to disclose a broader
range of their business prospects, making it easier for these
registrants to raise capital and compete with the mining companies that
already report material mineral resources and reserves. We also
anticipate that by aligning our disclosure requirements with the
CRIRSCO-based codes, the proposed rules would improve the
competitiveness of U.S. securities markets and increase the likelihood
of prospective registrants listing their securities in the United
States, while decreasing the likelihood that current registrants would
exit U.S. markets.\485\ In particular the qualified person requirement
and associated requirements for the supporting technical studies may
improve the global competiveness of U.S. registrants because such
quality assurances have become internationally recognized practice and
may help signal to market participants that U.S. registrants are able
to meet the standards codified by the proposed rules.
---------------------------------------------------------------------------

    \485\ There could be an opposite effect in some cases. Among
foreign private issuers, the registrants not currently reporting in
foreign jurisdictions based on CRIRSCO standards are most likely to
experience an increase in compliance costs. If these compliance
costs become too burdensome, some of these foreign private issuers
may choose to withdraw from U.S. securities markets. The impact of
such a potential outcome is limited, however, as we have only
identified seven (as of December 2015) foreign private issuers that
are not subject to CRIRSCO reporting standards. Moreover, a company
that did not want to comply with these or similar disclosure
standards would only have a limited number of alternative
jurisdictions to list, none of whose markets are as developed or
robust as the U.S. or other financial markets that have such
standards.
---------------------------------------------------------------------------

D. Request for Comment

    We request comment on the costs and benefits described throughout
this release. We seek estimates of these costs and benefits, as well as
any costs and benefits not already identified, that may result from the
adoption of the proposed rules. We also request qualitative feedback on
the nature of the economic effects, including the benefits and costs,
we have identified and any benefits and costs we may have overlooked.
We request comment from the point of view of registrants, investors,
mining professionals such as geologists and engineers, and other market
participants. We further seek information that would help us quantify
or otherwise qualitatively assess the impact of the proposed rules on
efficiency, competition, and capital formation. In addition, we seek
information on how any impact on efficiency, competition, and capital
formation would vary with company size.
    In particular, we request comment on the following:
    124. We seek comment and data on the magnitude of the costs and
benefits identified as well as any other costs and benefits that may
result from the adoption of the proposed rules. In addition, we are
interested in views regarding these costs and benefits for particular
types of covered registrants, such as smaller registrants or
registrants currently reporting according to CRIRSCO-based disclosure
codes.
    125. We seek information that would help us quantify compliance
costs. In particular, we invite comment from registrants or other
mining companies that have had experience reporting under any of the
CRIRSCO-based disclosure codes. For example, what are the costs
associated with the qualified person requirement? If reporting in
Canada or Australia, what are the costs associated with producing and
filing the technical report summaries?
    126. We invite comment on the structure of compliance costs. In
particular, to what extent are the compliance costs fixed versus
variable? Are there scale advantages or disadvantages in the compliance
costs, both in terms of project size or company size?
    127. Are our estimates of the difference in costs of a pre-
feasibility study relative to a feasibility study reasonable? If not,
what would be more reasonable estimates of the difference in costs?
    128. We also seek comment on the alternatives to the proposed rules
discussed in this section, and to the costs and benefits of each
alternative. Are there any other alternatives that we should consider
in lieu of the proposed rules? If so, what are those alternatives and
what are their expected costs and benefits?
    129. We are interested in comments and data related to any
potential competitive effects from the proposed rules. In particular,
we are interested in evidence and views on the current global
competitive situation of U.S. mining registrants as well as the
attractiveness of U.S. securities markets for foreign mining companies.
To what extent does the current mining disclosure regime affect this
competitive situation, if at all? Would the proposed rules improve the
global competitiveness of U.S. mining registrants and securities
markets? If so, how?

V. Paperwork Reduction Act

A. Background

    Certain provisions of the proposed rules contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction

Act of 1995 (``PRA'').\486\ The Commission is submitting the proposed
rules to the Office of Management and Budget (``OMB'') for review in
accordance with the PRA.\487\ The titles for the collections of
information are:
---------------------------------------------------------------------------

    \486\ 44 U.S.C. 3501 et seq.
    \487\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

     ``Regulation S-K'' (OMB Control No. 3235-007); \488\
---------------------------------------------------------------------------

    \488\ The paperwork burden from Regulation S-K is imposed
through the forms that are subject to the requirements in that
regulation and is reflected in the analysis of those forms. To avoid
a Paperwork Reduction Act inventory reflecting duplicative burdens
and for administrative convenience, we assign a one-hour burden to
Regulation S-K.
---------------------------------------------------------------------------

     ``Form S-1'' (OMB Control No. 3235-0065);
     ``Form S-4'' (OMB Control Number 3235-0324);
     ``Form F-1'' (OMB Control Number 3235-0258);
     ``Form F-4'' (OMB Control Number 3235-0325);
     ``Form 10'' (OMB Control No. 3235-0064);
     ``Form 10-K'' (OMB Control No. 3235-0063);
     ``Form 20-F'' (OMB Control No. 3235-0063); and
     Regulation A (Form 1-A) (OMB Control Number 3235-0286).
    We adopted Regulation S-K and these forms pursuant to the
Securities Act or the Exchange Act. Regulation S-K and the forms, other
than Form 1-A, set forth the disclosure requirements for annual reports
and registration statements that are prepared by registrants to provide
investors with the information they need to make informed investment
decisions in registered offerings and in secondary market transactions.
We adopted Regulation A to provide an exemption from registration under
the Securities Act for offerings that satisfy certain conditions, such
as filing an offering statement with the Commission on Form 1-A,
limiting the dollar amount of the offering and, in certain instances,
filing ongoing reports with the Commission.
    The hours and costs associated with preparing and filing the forms
constitute reporting and cost burdens imposed by each collection of
information. An agency may not conduct or sponsor, and a person is not
required to comply with, a collection of information unless it displays
a currently valid control number. Compliance with the proposed rules
would be mandatory. Responses to the information collections would not
be kept confidential, and there would be no mandatory retention period
for the information disclosed.

B. Summary of Collection of Information Requirements

    The proposed rules would require a registrant with material mining
operations to disclose its determined mineral resources, mineral
reserves and material exploration results in Securities Act
registration statements filed on Forms S-1, S-4, F-1 and F-4, in
Exchange Act registration statements on Forms 10 and 20-F, in Exchange
Act annual reports on Forms 10-K and 20-F,\489\ and in Regulation A
offering statements filed on Form 1-A. The proposed rules would further
require that such a registrant base its disclosure regarding mineral
resources, mineral reserves and material exploration results in SEC
filings on information and supporting documentation by a qualified
person. In addition, the proposed rules would require a registrant with
material mining operations to file as an exhibit to its Securities Act
registration statement, Exchange Act registration statement or report,
or its Form 1-A offering statement, a technical report summary prepared
by the qualified person for each material property that summarizes the
information and supporting documentation forming the basis of the
registrant's disclosure in the SEC form. The proposed rules would
require the filing of the technical report summary when the registrant
first reports mineral resources, mineral reserves or material
exploration results or when it reports a material change in a prior
disclosure of resources, reserves or exploration results.
---------------------------------------------------------------------------

    \489\ Form 20-F is the form used by a foreign private issuer to
file either a registration statement or annual report under the
Exchange Act. Because the proposed rule amendments would impose the
same substantive requirements for a registration statement and
annual report filed under Form 20-F, we have not separately
allocated the estimated reporting and cost burdens for a Form 20-F
registration statement and Form 20-F annual report.
---------------------------------------------------------------------------

    The Commission's existing disclosure regime for mining registrants
precludes the disclosure of non-reserves, such as mineral resources,
unless such disclosure is required by foreign or state law.\490\ In
addition, the existing regime permits, but does not require, the
disclosure of material exploration results. The existing regime also
does not currently require a registrant to base its mining disclosure
on information and supporting documentation of a qualified person.
---------------------------------------------------------------------------

    \490\ Because only Canada has adopted its mining code as a
matter of law, the disclosure of non-reserves in SEC filings has
been limited to Canadian registrants.
---------------------------------------------------------------------------

    Accordingly, we expect the proposed rules would cause an increase
in the reporting and cost burdens for each collection of information.
The additional requirements imposed by the proposed rules would,
however, be similar to requirements under foreign (CRIRSCO-based)
mining codes. As such, we expect the increase in reporting and cost
burdens to be less for those registrants that are already subject to
the CRIRSCO standards. Nevertheless, because there are differences
between the proposed rules' requirements and those under the CRIRSCO-
based codes, we expect there would be some increase in reporting and
cost burdens even for those registrants already subject to foreign
mining code requirements.\491\
---------------------------------------------------------------------------

    \491\ For example, unlike the CRIRSCO-based codes, the proposed
rules would require a particular type of technical study, an
``initial assessment,'' to support the disclosure of mineral
resources in SEC filings. See section II.E.3, supra.
---------------------------------------------------------------------------

C. Estimate of Potentially Affected Registrants

    We estimate the number of registrants potentially affected by the
proposed rules to be 345.\492\ Of these registrants, we estimate that
129 are already subject to the disclosure requirements under one or
more CRIRSCO-based codes and, therefore, likely would incur a lesser
increase in reporting and cost burdens to comply with the proposed
rules' requirements.\493\ Accordingly, we estimate that 216 registrants
would bear the full paperwork burden of the proposed rules.
---------------------------------------------------------------------------

    \492\ We have based this estimate on the number of registrants
with mining operations that filed the above described Securities Act
and Exchange Act forms from January 2014 through December 2015.
    \493\ Most of these registrants are subject to the disclosure
requirements in Canada's NI 43-101.
---------------------------------------------------------------------------

    The following table summarizes the number of potentially affected
registrants by the particular form expected to be filed and whether the
registrant is subject to CRIRSCO-based code requirements in addition to
the proposed rules.

                                             PRA Table 1--Estimated Number of Affected Registrants per Form
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Form                             S-1        S-4        F-1        F-4         10        10-K       20-F       1-A     All Forms
--------------------------------------------------------------------------------------------------------------------------------------------------------
# Affected Registrants Subject to CRIRSCO                      7          3          1          1          0         46         70          1        129
 Requirements........................................
# Affected Registrants Not Subject to CRIRSCO                 29          6          0          0          5        169          7          0        216
 Requirements........................................
                                                      --------------------------------------------------------------------------------------------------
    Total # Affected Registrants.....................         36          9          1          1          5        215         77          1        345
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Estimate of Reporting and Cost Burdens

    We have estimated the reporting and cost burdens of the proposed
rules by estimating the average number of hours it would take a
registrant to prepare, review and file the disclosure required by the
proposed rules for each collection of information. In deriving our
estimates, we recognize that the burdens would likely vary among
individual registrants based on a number of factors, including the size
and complexity of their mining operations. The estimates represent the
average burden for all registrants, both large and small.
    We believe that the resulting increase in reporting and cost
burdens would be substantially the same for each collection of
information since the proposed rules would require substantially the
same disclosure for a Securities Act registration statement or
Regulation A offering statement as they would for an Exchange Act
registration statement or report. The sole difference between the
proposed rules' effect on Securities Act registrants and Form 1-A
issuers, on the one hand, and Exchange Act registrants, on the other,
is that a Securities Act registrant and a Regulation A issuer would be
required to obtain and file as an exhibit the written consent of each
qualified person whose information and supporting documentation as an
expert provide the basis for the disclosure required under the
amendments.\494\ To account for this difference, we have allocated one
extra hour to the reporting burdens estimated for the Securities Act
registration statement forms and Regulation A's Form 1-A.
---------------------------------------------------------------------------

    \494\ A Securities Act registrant must file the written consent
of an expert upon which it has relied pursuant to Securities Act
Rule 436 (17 CFR 230.436). A Regulation A issuer's obligation to
file the written consent of an expert is based on Item 17(11)(a) of
Form 1-A.
---------------------------------------------------------------------------

    We estimate that the proposed rules would cause a registrant that
is not already subject to CRIRSCO requirements to incur an increase of
96 hours in the reporting burden for each Securities Act registration
statement (Forms S-1, S-4, F-1, and F-4), and an increase of 95 hours
in the reporting burden for each Exchange Act registration statement or
annual report (Forms 10, 10-K and 20-F.) For a registrant that is
subject to the CRIRSCO requirements, we estimate that the proposed
rules would cause an increase of 41 hours in the reporting burden for
Securities Act registration statements and Form 1-A offering
statements, and an increase of 40 hours in the reporting burden for
Exchange Act registration statements and annual reports.
    We have based our estimated burden hours and costs under the
proposed rules on an assessment by the Commission's staff mining
engineers of the work required to prepare the required information for
disclosure. In particular, our estimates have been based on the staff
engineers' assessment of similar reporting requirements under CRIRSCO
standards (especially Canada's NI 43-101 and Australia's JORC).\495\
The engineers' estimates of time and costs for NI 43-101 and JORC
reporting were adjusted for the differences between the proposed rules
and those standards.
---------------------------------------------------------------------------

    \495\ These estimates include the burden associated with
preparing a technical report summary to support the disclosure of
mineral resources, mineral reserves and material exploration
results. For purposes of this PRA analysis, we estimate that
registrants subject to the CRIRSCO standards would each incur 11
hours, and registrants not subject to those standards would each
incur 50 hours, to prepare the required technical report summary.
---------------------------------------------------------------------------

    The following tables summarize, respectively, the estimated
incremental and total reporting costs and burdens resulting from the
proposed rules. When determining these estimates, for all forms other
than Form 10-K and Form 1-A, we have assumed that 25% of the burden of
preparation is carried by the registrant internally and 75% of the
burden of preparation is carried by outside professionals retained by
the registrant at an average cost of $400 per hour.\496\ For Form 10-K
and Form 1-A, we have assumed that 75% of the burden of preparation is
carried by the registrant internally and 25% of the burden of
preparation is carried by outside professionals at an average cost of
$400 per hour. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the registrant internally is reflected in hours.
---------------------------------------------------------------------------

    \496\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis we estimate that
such costs would be an average of $400 per hour. This is the rate we
typically estimate for outside services used in connection with
public company reporting.
---------------------------------------------------------------------------

    We have determined the estimated total incremental registrant
burden hours for each form under the proposed rules by first
determining the hour burden per registrant response estimated as a
weighted average of the burden hours of registrants subject to and
those not subject to the CRIRSCO requirements.\497\ We then multiplied
this average burden hour per response by the total number of responses
for each form estimated to occur annually. We similarly estimated the
incremental professional costs for each form under the proposed rules
by first estimating the incremental professional costs as a weighted
average of the incremental professional costs estimated to be incurred
by registrants subject and not subject to the CRIRSCO requirements. We
then multiplied the average incremental professional costs by the total
number of annual responses estimated to occur for each form.\498\
---------------------------------------------------------------------------

    \497\ For example, we determined the estimated incremental
burden hours for Form S-1 as follows: 41 hours x 0.25 = 10.25
internal burden hours for CRIRSCO filers; 10.25 hours x 7 = 71.75
total incremental hours for CRIRSCO filers. 96 hours x 0.25 = 24
internal burden hours for non-CRIRSCO filers; 24 hours x 29 = 696
total incremental burden hours for non-CRIRSCO filers. 71.75 hours +
696 hours = 767.75 total internal hours (or 768 hours rounded to the
nearest whole number). 768 hours/36 = 21.33 avg. incremental burden
hours.
    \498\ For example, we determined the estimated incremental
professional costs for Form S-1 as follows: 41 hours x 0.75 = 30.75
outside hours for CRIRSCO filers; 30.75 hours x 7 = 215.25 total
outside hours for CRIRSCO filers. 96 hours x 0.75 = 72 outside hours
for non-CRIRSCO filers; 72 hours x 29 = 2088 total outside hours for
non-CRIRSCO filers. 215.25 hours + 2088 hours = 2303.25 total
outside hours. 2303.25 hours x $400 = $921,300 total incremental
professional costs.
---------------------------------------------------------------------------

    Based on these calculations, as set forth below, we estimate that
the total number of incremental burden hours for all forms resulting
from complying with the proposed rules is 15,400 burden hours. We
further estimate that the

resulting total incremental professional costs for all forms under the
proposed rules is $4,131,200.\499\
---------------------------------------------------------------------------

    \499\ The total incremental burden hours and total incremental
professional costs are rounded to the nearest whole number.

                  PRA Table 2--Estimated Incremental Burden and Costs Under the Proposed Rules
----------------------------------------------------------------------------------------------------------------
                                                                       Total
                                     Number of                      incremental     Incremental        Total
                                      annual        Hour burden     registrant     professional     incremental
                                     responses     per response    burden  hours       costs       professional
                                                                         *                            costs *
                                             (A)             (B)     (C) = (A) x             (D)     (E) = (A) x
                                                                             (B)                             (D)
----------------------------------------------------------------------------------------------------------------
Form S-1........................              36           21.33             768      $25,591.67        $921,300
Form S-4........................               9           19.42             175          23,300         209,700
Form F-1........................               1           10.25              10          12,300          12,300
Form F-4........................               1           10.25              10          12,300          12,300
Form 10.........................               5           23.75             119          28,500         142,500
Form 10-K.......................             215           62.42          13,421        8,323.26       1,789,500
Form 20-F.......................              77           11.25             866          13,500       1,039,500
Regulation A (Form 1-A).........               1           30.75              31           4,100           4,100
                                 -------------------------------------------------------------------------------
    Total.......................             345  ..............          15,400  ..............       4,131,200
----------------------------------------------------------------------------------------------------------------
* Rounded to nearest whole number.

    We have determined the estimated total burden of complying with the
proposed rules for each form by adding the above described estimated
incremental company burden hours to the current burden hours estimated
for each form. We have similarly determined the estimated total
professional costs under the proposed rules for each form by adding the
estimated total incremental professional costs to the current
professional costs estimated for each form. Based on these
calculations, as summarized below, we estimate that, as a result of the
proposed rules, the estimated annual burden for all forms would
increase to 13,753,285 hours, compared to the current annual estimate
of 13,737,885 hours. We further estimate that the proposed rules would
result in estimated annual professional costs for all forms of
$3,329,079,082, compared to the current annual estimate of
$3,324,947,882.

                                         PRA Table 3--Estimated Total Burden and Costs Under the Proposed Rules
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Current    Proposed     Current    Increase    Proposed        Current        Increase in       Proposed
                                            annual      annual      burden     in burden    burden       professional    professional     professional
                                           responses   responses     hours       hours       hours          costs            costs           costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form S-1................................         901         901     219,015         768     219,783       $262,818,096     $921,300        $263,739,396
Form S-4................................         619         619     634,425         175     634,600        761,310,576      209,700         761,520,276
Form F-1................................          63          63      28,462          10      28,472         34,154,568       12,300          34,166,868
Form F-4................................          68          68      24,769          10      24,779         29,722,800       12,300          29,735,100
Form 10.................................         238         238      12,805         119      12,924         15,366,042      142,500          15,508,542
Form 10-K...............................       8,137       8,137  12,198,095      13,421  12,211,515      1,627,400,000    1,789,500       1,629,189,500
Form 20-F...............................         725         725     479,501         866     480,367        575,400,600    1,039,500         576,440,100
Reg. A..................................         250         250     140,813          31     140,844         18,775,200        4,100          18,779,400
(Form 1-A)..............................
                                         ---------------------------------------------------------------------------------------------------------------
Total...................................      11,001      11,001  13,737,885      15,400  13,753,285      3,324,947,882    4,131,200       3,329,079,082
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Request for Comments

    We request comments in order to evaluate: (1) Whether the proposed
collections of information are necessary for the proper performance of
the functions of the agency, including whether the information would
have practical utility; (2) the accuracy of our estimate of the burden
of each proposed collection of information; (3) whether there are ways
to enhance the quality, utility, and clarity of the information to be
collected; (4) whether there are ways to minimize the burden of the
collections of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology; and (5) whether the proposed rules would have
any effects on any other collections of information not previously
identified in this section.\500\
---------------------------------------------------------------------------

    \500\ We request comment pursuant to 44 U.S.C. 3506(c)(2)(B).
---------------------------------------------------------------------------

    Any member of the public may direct to us any comments about the
accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct the comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and should send a copy to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,

Washington, DC 20549-1090, with reference to File No. S7-10-16.
Requests for materials submitted to OMB by the Commission with regard
to these collections of information should be in writing, refer to File
No. S7-10-16, and be submitted to the Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC
20549-2736. OMB is required to make a decision concerning the
collection of information between 30 and 60 days after publication of
this release. Consequently, a comment to OMB is best assured of having
its full effect if OMB receives it within 30 days of publication.

VI. Initial Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (``RFA'') \501\ requires the
Commission, in promulgating rules under Section 553 of the
Administrative Procedures Act,\502\ to consider the impact of those
rules on small entities. Section 603(a) of the RFA \503\ generally
requires the Commission to undertake a regulatory flexibility analysis
of all proposed rules.
---------------------------------------------------------------------------

    \501\ 5 U.S.C. 601 et seq.
    \502\ 5 U.S.C. 553.
    \503\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

A. Reasons For, and Objectives of, the Proposed Action

    The proposed rules are intended to modernize the Commission's
mining disclosure requirements and policies by conforming them to
current industry and global regulatory practices and standards. In so
doing, the proposed rules seek to provide investors with a more
comprehensive understanding of a registrant's mining operations, which
should help them make more informed investment decisions. As noted
above, the proposed rules would:
     provide a clear and consistent standard for when
registrants with mining operations are required to provide the
applicable mining disclosures;
     consolidate current mining disclosure requirements and
standards and related Commission and staff guidance;
     require the disclosure of determined mineral resources and
material exploration results; and
     require that a registrant's disclosure of exploration
results, mineral resources or mineral reserves be based upon and fairly
reflect information and supporting documentation prepared by a mining
industry professional having the requisite level of expertise.

B. Legal Basis

    We are proposing the rule amendments pursuant to sections 3(b), 7,
10, 19(a), and 28 of the Securities Act and sections 3(b), 12, 13,
15(d), 23(a), and 36(a) of the Exchange Act.

C. Small Entities Subject to the Proposed Rule Amendments

    The proposed rules would affect small entities that have, or for
which it is probable that they will have, material mining operations,
and which file registration statements under Section 6 of the
Securities Act or Section 12 of the Exchange Act, and reports under
Section 13(a) or 15(d) of the Exchange Act. For purposes of the RFA,
under our rules, an issuer, other than an investment company, is a
``small business'' or ``small organization'' if it has total assets of
$5 million or less as of the end of its most recent fiscal year and is
engaged or proposing to engage in an offering of securities that does
not exceed $5 million.\504\ From staff review of Securities Act and
Exchange Act filings made by registrants with mining operations from
January 2014 through December 2015, we estimate that there are
approximately 176 issuers that may be considered small entities.
---------------------------------------------------------------------------

    \504\ See Securities Act Rule 157 (17 CFR 230.157); and Exchange
Act Rule 0-10(a) (17 CFR 240.0-10(a)).
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    As described in greater detail above, the proposed rules would add
to the Securities Act and Exchange Act disclosure requirements of
registrants, including small entities, with material mining operations
by requiring:
     The disclosure of determined mineral resources and
material exploration results in addition to mineral reserves;
     the disclosure of exploration results, mineral resources
and mineral reserves in SEC filings to be based on and accurately
reflect information and supporting documentation prepared by a
qualified person; and
     the filing of a technical report summary prepared by a
qualified person for each material property for certain SEC filings.
    The proposed rules would also codify certain existing disclosure
policies for registrants with material mining operations, including
small entities. The same mining disclosure requirements would apply to
both U.S. and foreign registrants.

E. Duplicative, Overlapping or Conflicting Federal Rules

    As noted above, the proposed rules would generally establish new
mining disclosure requirements that we believe would not duplicate or
overlap with other federal rules. The proposed rules would consolidate
all of the Commission's mining disclosure requirements. The proposed
rules would further harmonize certain existing disclosure requirements
and policies, including the disclosure standard for mining disclosure.
We believe that this consolidation would help a mining registrant,
including a small entity, comply with its disclosure obligations under
the Securities Act and Exchange Act, which could mitigate its reporting
burden. We do not believe that the proposed rules would conflict with
other federal rules.

F. Significant Alternatives

    As noted above, we considered a number of alternatives to the
proposed rules. In considering these alternatives, we sought to
accomplish our stated objectives, while minimizing any significant
economic impact on small entities. In connection with the proposed
rules, we considered the following:
     Establishing different compliance or reporting
requirements or timetables that take into account the resources
available to small entities;
     Clarifying, consolidating or simplifying compliance and
reporting requirements under the rules for small entities;
     Use of performance rather than design standards; and
     Exempting small entities from all or part of the proposed
rules.
    Neither the current mining disclosure requirements nor the proposed
rules exempt or treat differently a small entity with material mining
operations. Providing an exemption for, or imposing less extensive
disclosure requirements on, small entities with material mining
operations would likely increase the risk of inaccurate disclosure
concerning those entities' mineral resources, mineral reserves and
material exploration results, to the detriment of investors. Moreover,
as noted above, a primary goal of the proposed rules is generally to
align the Commission's mining disclosure regime with the standards that
have developed under the foreign (CRIRSCO-based) codes so that
investors would have a more complete understanding of a registrant's
mining operations. Those codes do not provide for an exemption for
small entities or otherwise treat such entities

differently. Therefore, we believe it would be inappropriate for our
rules to provide an exemption for, or otherwise treat differently,
small entities with material mining operations. We also note that,
given that the majority of mining registrants are small entities,
exempting them from the proposed rules would effectively disapply the
Commission's mining disclosure regime to most of the companies for
which such disclosure would be potentially beneficial.\505\
---------------------------------------------------------------------------

    \505\ See Section IV.B.3., supra.
---------------------------------------------------------------------------

    As noted above, the proposed rules would consolidate existing
mining disclosure rules and policies and thereby facilitate compliance
for all registrants, including small entities. We have used design
rather than performance standards in connection with the proposed rules
because, based on our past experience, we believe the proposed rules
would be more beneficial to investors if there were specific disclosure
requirements that were uniform for all registrants with material mining
operations. The specific disclosure requirements in the proposed rules
are intended to promote consistent and comparable disclosure among all
such registrants.

G. Request for Comment

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed rule amendments can achieve their
objective while lowering the burden on small entities;
     the number of small entity companies that may be affected
by the proposed amendments;
     the existence or nature of the potential impact of the
proposed amendments on small entity companies discussed in the
analysis; and
     how to quantify the impact of the proposed amendments.
    Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. We will
consider such comments in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will place those comments in the same public file as comments on the
proposed amendments themselves.

VII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996,\506\ a rule is ``major'' if it has resulted, or is likely
to result in:
---------------------------------------------------------------------------

    \506\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the U.S. economy of $100 million or
more;
     a major increase in costs or prices for consumers or
individual industries; or
     significant adverse effects on competition, investment, or
innovation.
    We request comment and empirical data on whether our proposal would
be a ``major rule'' for purposes of the Small Business Regulatory
Enforcement Fairness Act.

VIII. Statutory Authority

    We are proposing the amendments contained in this document pursuant
to Sections 3(b), 7, 10, 19(a), and 28 of the Securities Act and
Sections 3(b), 12, 13, 15(d), 23(a), and 36(a) of the Exchange Act.

List of Subjects

17 CFR Parts 229 and 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 249

    Brokers, Reporting and recordkeeping requirements, Securities.
    In accordance with the foregoing, title 17, chapter II of the Code
of Federal Regulations is proposed to be amended as follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

0
1. The authority citation for part 229 continues to read as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78 mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-
31(c), 80a-37, 80a-38(a), 80a-39, 80b-11 and 7201 et seq.; 18 U.S.C.
1350; Sec. 953(b) Pub. L. 111-203, 124 Stat. 1904; Sec. 102(a)(3)
Pub. L. 112-106, 126 Stat. 309; and Sec. 84001, Pub. L. 114-94, 129
Stat. 1312.

0
2. Amend Sec.  229.102 by:
0
a. Removing ``, mines'' in the introductory text;
0
b. Removing the heading ``Instructions to Item 102:'';
0
c. Redesignating Instructions 1, 2, 3, and 4 to Item 102 as
``Instruction 1 to Item 102:'', ``Instruction 2 to Item 102:'',
``Instruction 3 to Item 102:'', and ``Instruction 4 to Item 102:'',
respectively;
0
d. Revising newly redesignated Instruction 3 to Item 102;
0
e. Removing instructions 5 and 7 to Item 102;
0
f. Redesignating Instruction 6 as ``Instruction 5 to Item 102:'' and
Instructions 8 and 9 as ``Instruction 6 to Item 102:'' and
``Instruction 7 to Item 102:'', respectively.
    The revision reads as follows:

Sec.  229.102  (Item 102) Description of property.

* * * * *
    Instruction 3 to Item 102: Registrants engaged in mining operations
must refer to and, if required, provide the disclosure under subpart
229.1300 of Regulation S-K (Sec. Sec.  229.1301 through 229.1305), in
addition to any disclosure required by this section.
* * * * *
0
3. Amend Sec.  229.601 by:
0
a. Revising the column headings and adding entry (96) to the exhibit
table in paragraph (a);
0
b. Redesignating paragraphs (b)(95)(1) through (3) as paragraphs
(b)(95)(i) through (iii), respectively; and
0
c. Adding paragraph (b)(96).
    The revisions and additions read as follows:

Sec.  229.601  (Item 601) Exhibits.

    (a) * * *

Exhibit Table

* * * * *

                                                                                Exhibit Table
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Exchange act forms
              Securities act forms              ------------------------------------------------------------------------------------------------------------------------------------------------
                                                   S-1      S-3      SF-1     SF-3   S-4 \1\    S-8      S-11     F-1      F-3    F-4 \1\     10    8-K \2\    10-D     10-Q     10-K    ABS-EE
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                                * * * * * * *
(96) Technical report summary \7\..............       X        X   .......  .......       X   .......  .......       X        X        X        X   .......  .......  .......       X   ........

                                                                                * * * * * * *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ An exhibit need not be provided about a company if: (1) With respect to such company an election has been made under Form S-4 or F-4 to provide information about such company at a level
  prescribed by Form S-3 or F-3; and (2) the form, the level of which has been elected under Form S-4 or F-4, would not require such company to provide such exhibit if it were registering a
  primary offering.
\2\ A Form 8-K exhibit is required only if relevant to the subject matter reported on the Form 8-K report. For example, if the Form 8-K pertains to the departure of a director, only the
  exhibit described in paragraph (b)(17) of this section need be filed. A required exhibit may be incorporated by reference from a previous filing.
* * *
\7\ If required pursuant to Item 1302 of Regulation S-K.

* * * * *
    (b) * * *
    (96) Technical report summary. (i) A registrant that, pursuant to
subpart 229.1300 of Regulation S-K (Sec. Sec.  229.1301 through
229.1305), discloses information concerning its mineral resources,
mineral reserves or material exploration results must file a technical
report summary by a qualified person that, for each material property,
identifies and summarizes the scientific and technical information and
conclusions reached concerning mineral exploration results, initial
assessments used to support disclosure of mineral resources, and
preliminary or final feasibility studies used to support disclosure of
mineral reserves. Pursuant to Sec.  229.1302(b), a registrant must file
the technical report summary as an exhibit to its Securities Act
registration statement or Exchange Act registration statement or report
when disclosing for the first time mineral resources, mineral reserves
or material exploration results or when there is a material change in
the mineral resources, mineral reserves or exploration results from the
last technical report summary filed for the property.
    (ii) The qualified person must sign and date the technical report
summary. The qualified person's signature must comply with 17 CFR
230.402(e) or 17 CFR 240.12b-11(d).
    (iii) The technical report summary must not include large amounts
of technical or other project data, either in the report or as
appendices to the report. The qualified person must draft the summary
to conform, to the extent practicable, with the plain English
principles set forth in 17 CFR 230.421 or 17 CFR 240.13a-20.
    (iv)(A) A technical report summary that reports the results of a
preliminary or final feasibility study must provide all of the
information specified in paragraph (b)(96)(iv)(B) of this section. A
technical report summary that reports the results of an initial
assessment must, at a minimum, provide the information specified in
paragraphs (b)(96)(iv)(B)(1) through (13) and (b)(96)(iv)(B)(22)
through (26) of this section, and may also include the information
specified in paragraph (b)(96)(iv)(B)(21) of this section. A technical
report summary that reports material exploration results must, at a
minimum, provide the information specified in paragraphs
(b)(96)(iv)(B)(1) through (11) and (b)(96)(iv)(B)(22) through (26) of
this section.
    (B) A qualified person must include the following information in
the technical report summary, as required by paragraph (b)(96)(iv)(A)
of this section.
    (1) Executive summary. Briefly summarize the most significant
information in the technical report summary, including property
description (including mineral rights) and ownership, geology and
mineralization, the status of exploration, development and operations,
mineral resource and mineral reserve estimates, summary capital and
operating cost estimates, permitting requirements, and the qualified
person's conclusions and recommendations. The executive summary must be
brief and should not contain all of the detailed information in the
technical support summary.
    (2) Introduction. Disclose:
    (i) The registrant for whom the technical report summary was
prepared;
    (ii) The terms of reference and purpose for which the technical
report summary was prepared;
    (iii) The sources of information and data contained in the
technical report summary or used in its preparation, with citations if
applicable; and
    (iv) The details of the personal inspection on the property by each
qualified person or, if applicable, the reason why a personal
inspection has not been completed.
    Instruction to paragraph (b)(96)(iv)(B)(2): The qualified person
must state whether the technical report summary's purpose was to report
mineral resources, mineral reserves or material exploration results.
The qualified person must also state, when applicable, that the
technical report summary updates a previously filed technical report
summary. When filing an update, the qualified person must identify the
previous technical report summary by name and date.
    (3) Property description. Describe:
    (i) The location of the property, accurate to within one mile,
using an easily recognizable coordinate system. The qualified person
must provide appropriate maps, with proper engineering detail (such as
scale, orientation, and titles) to portray the location of the
property. Such maps must be legible on the page when printed;
    (ii) The area of the property;
    (iii) The name or number of each title, claim, mineral right, lease
or option under which the registrant and its subsidiaries have or will
have the right to hold or operate the property. If held by leases or
options, the registrant must provide the expiration dates of such
leases or options and associated payments;
    (iv) The mineral rights, and how such rights have been obtained at
this location, indicating any conditions that the registrant must meet
in order to obtain or retain the property;
    (v) Any significant encumbrances to the property, including current
and future permitting requirements and associated timelines, permit
conditions, and violations and fines; and
    (vi) Any other significant factors and risks that may affect
access, title, or the right or ability to perform work on the property.
    Instruction to paragraph (b)(96)(iv)(B)(3): If the registrant holds
a royalty or similar interest in the property, the information in
paragraph (b)(96)(iv)(B)(3) of this section must be provided for the
property that is owned or operated by a party other than the
registrant. In this event, for example, the report must address the
documents under which the owner or operator holds or operates the
property, the mineral rights held by the owner or operator, conditions
required to be met by the owner or operator, significant encumbrances
and significant factors

and risks relating to the property or work on the property.
    (4) Accessibility, climate, local resources, infrastructure, and
physiography. Describe:
    (i) The topography, elevation, and vegetation;
    (ii) The means of access to the property, including highways,
towns, rivers, railroads, and airports;
    (iii) The climate and the length of the operating season, as
applicable; and
    (iv) The availability of and required infrastructure, including
sources of water, electricity, personnel, and supplies.
    (5) History. Describe:
    (i) Previous operations, including the names of previous operators,
insofar as known; and
    (ii) The type, amount, quantity, and general results of exploration
and development work undertaken by any previous owners or operators.
    (6) Geological setting, mineralization, and deposit. Describe
briefly:
    (i) The regional, local, and property geology;
    (ii) The significant mineralized zones encountered on the property,
including a summary of the surrounding rock types, relevant geological
controls, and the length, width, depth, and continuity of the
mineralization, together with a description of the type, character, and
distribution of the mineralization; and
    (iii) Each mineral deposit type that is the subject of
investigation or exploration together with the geological model or
concepts being applied in the investigation or forming the basis of
exploration program.
    Instruction to paragraph (b)(96)(iv)(B)(6): The qualified person
must include at least one stratigraphic column and one cross-section of
the local geology to meet the requirements of this paragraph.
    (7) Hydrogeology. Describe:
    (i) The nature and quality of the sampling methods used to acquire
data on surface and groundwater parameters;
    (ii) The type and appropriateness of laboratory techniques used to
test for groundwater flow parameters such as permeability. Include
discussions of the quality control and quality assurance procedures;
    (iii) Results of laboratory testing and the qualified person's
interpretation, including any material assumptions. The interpretation
must include descriptions of permeable zones or aquifers, flow rates,
in-situ saturation, recharge rates and water balance; and
    (iv) The groundwater models used to characterize aquifers,
including material assumptions used in the modeling.
    (8) Geotechnical data, testing, and analysis. Describe:
    (i) The nature and quality of the sampling methods used to acquire
geotechnical data;
    (ii) The type and appropriateness of laboratory techniques used to
test for soil and rock strength parameters, including discussions of
the quality control and quality assurance procedures; and
    (iii) Results of laboratory testing and the qualified person's
interpretation, including any material assumptions.
    (9) Exploration. Describe the nature and extent of all relevant
exploration work, conducted by or on behalf of, the registrant.
    (i) For all exploration work other than drilling, describe:
    (A) The procedures and parameters relating to the surveys and
investigations;
    (B) The sampling methods and sample quality, including whether the
samples are representative, and any factors that may have resulted in
sample biases;
    (C) The location, number, type, nature, and spacing or density of
samples collected, and the size of the area covered; and
    (D) The significant results of and the qualified person's
interpretation of the exploration information.
    (ii) For drilling, describe:
    (A) The type and extent of drilling including the procedures
followed;
    (B) Any drilling, sampling, or recovery factors that could
materially impact the accuracy and reliability of the results; and
    (C) The material results and interpretation of the drilling
results.
    Instruction 1 to paragraph (b)(96)(iv)(B)(9): The technical report
summary must comply with all disclosure standards for material
exploration results under Regulation S-K, subpart 229.1300 of this part
(Sec. Sec.  229.1301 through 229.1305).
    Instruction 2 to paragraph (b)(96)(iv)(B)(9): For a technical
report summary to support disclosure of material exploration results,
the qualified person must provide information on all samples or drill
holes to meet the requirements of paragraph (b)(96)(iv)(B)(9)(ii) of
this section. If some information is excluded, the qualified person
must identify the omitted information and explain why that information
is not material.
    Instruction 3 to paragraph(b)(96)(iv)(B)(9): For a technical report
summary to support disclosure of mineral resources or mineral reserves,
the qualified person can meet the requirements of paragraph
(b)(96)(iv)(B)(9)(ii) of this section by providing sampling (including
drilling) plans, representative plans and cross-sections of results.
    Instruction 4 to paragraph(b)(96)(iv)(B)(9): Reports must include a
plan view of the property showing locations of all drill holes and
other samples.
    (10) Sample preparation, analyses, and security. Describe:
    (i) Sample preparation methods and quality control measures
employed prior to sending samples to an analytical or testing
laboratory, sample splitting and reduction methods, and the security
measures taken to ensure the validity and integrity of samples;
    (ii) Sample preparation, assaying and analytical procedures used,
the name and location of the analytical or testing laboratories, the
relationship of the laboratory to the registrant, and whether the
laboratories are certified by any standards association and the
particulars of such certification; and
    (iii) The nature, extent, and results of quality control procedures
and quality assurance actions taken or recommended to provide adequate
confidence in the data collection and estimation process.
    Instruction to paragraph (b)(96)(iv)(B)(10): This item must also
include the author's opinion on the adequacy of sample preparation,
security, and analytical procedures. If the analytical procedures used
in the analysis are not part of conventional industry practice, the
qualified person must state so and provide a justification for why he
or she believes the procedure is appropriate in this instance.
    (11) Data verification. Describe the steps taken by the qualified
person to verify the data being reported on or which is the basis of
this technical report summary, including:
    (i) Data verification procedures applied by the qualified person;
    (ii) Any limitations on or failure to conduct such verification,
and the reasons for any such limitations or failure; and
    (iii) The qualified person's opinion on the adequacy of the data
for the purposes used in the technical report summary.
    (12) Mineral processing and metallurgical testing. Describe:
    (i) The nature and extent of the mineral processing or
metallurgical testing and analytical procedures;
    (ii) The degree to which the test samples are representative of the
various types and styles of mineralization and the mineral deposit as a
whole;
    (iii) The name and location of the analytical or testing
laboratories, the relationship of the laboratory to the

registrant, whether the laboratories are certified by any standards
association and the particulars of such certification; and
    (iv) The relevant results including the basis for any assumptions
or predictions about recovery estimates. Discuss any processing factors
or deleterious elements that could have a significant effect on
potential economic extraction.
    Instruction to paragraph (b)(96)(iv)(B)(12): This item must include
the qualified person's opinion on the adequacy of the data for the
purposes used in the technical report summary. If the analytical
procedures used in the analysis are not part of conventional industry
practice, the qualified person must state so and provide a
justification for why he or she believes the procedure is appropriate,
in this instance.
    (13) Mineral resource estimates. If this item is included, the
technical report summary must:
    (i) Describe the key assumptions, parameters, and methods used to
estimate the mineral resources, in sufficient detail for a reasonably
informed person to understand the basis for and how the qualified
person estimated the mineral resources;
    (ii) Provide estimates of mineral resources for all commodities,
including estimates of quantities, grade or quality, cut-off grades,
and metallurgical or processing recoveries; and
    (iii) Provide the qualified person's opinion on whether all issues
relating to all relevant modifying factors can be resolved with further
work.
    Instruction 1 to paragraph (b)(96)(iv)(B)(13): The technical report
summary must comply with all disclosure standards for mineral resources
under subpart 229.1300 of Regulation S-K (Sec. Sec.  229.1301 through
229.1305).
    Instruction 2 to paragraph (b)(96)(iv)(B)(13): The qualified person
preparing the mineral resource estimates must round off, to appropriate
significant figures chosen to reflect order of accuracy, any estimates
of quantity and grade or quality.
    Instruction 3 to paragraph (b)(96)(iv)(B)(13): The qualified person
must classify mineral resources into inferred, indicated, and measured
mineral resources in accordance with
    Sec. Sec.  229.1303 and 229.1304. The qualified person must state
the uncertainty in the estimates of inferred, indicated, and measured
mineral resources and discuss the sources of uncertainty and how they
were considered in the uncertainty estimates. Uncertainty estimates for
indicated and measured mineral resources must be stated in the form
``x% relative accuracy at y% confidence level over [annual,
quarterly, or monthly] production quantities.'' Uncertainty estimates
for inferred mineral resources must be stated in the form ``the
qualified person expects at least z% of inferred mineral resources to
convert to indicated or measured mineral resources with further
exploration and analysis.''
    Instruction 4 to paragraph (b)(96)(iv)(B)(13): The qualified person
must consider all sources of uncertainty when reporting the uncertainty
associated with each class of mineral resources. Sources of uncertainty
that affect such reporting of uncertainty include sampling or drilling
methods, data processing and handling, geologic modeling and
estimation. The qualified person is not required to use estimates of
confidence limits derived from geostatistics or other numerical methods
to support the disclosure of uncertainty surrounding mineral resource
classification. If the qualified person chooses to use confidence limit
estimates from geostatistics or other numerical methods, he or she
should consider the limitations of these methods and adjust the
estimates appropriately to reflect sources of uncertainty that are not
accounted for by these methods.
    Instruction 5 to paragraph (b)(96)(iv)(B)(13): The qualified person
must support the disclosure of uncertainty associated with each class
of mineral resources with a list of all factors considered and explain
how those factors contributed to the final conclusion about the level
of uncertainty (i.e. confidence limits for indicated and measured
mineral resources and the proportion of inferred resources expected to
be converted to indicated or measured mineral resources with further
exploration) underlying the resource.
    Instruction 6 to paragraph(b)(96)(iv)(B)(13): Sections 229.1303 and
1304 of Regulation S-K (Sec. Sec.  229.1303 and 229.1304)
notwithstanding, in this technical report summary mineral resource
estimates may be inclusive of mineral reserves so long as this is
clearly stated with equal prominence to the rest of the item. If the
qualified person chooses to disclose resources inclusive of mineral
reserves, he or she must also clearly state the mineral resources
exclusive of mineral reserves in the technical report summary.
    Instruction 7 to paragraph (b)(96)(iv)(B)(13): The technical report
summary must include mineral resource estimates of in-situ material,
plant or mill feed, and saleable product.
    Instruction 8 to paragraph (b)(96)(iv)(B)(13): The qualified person
must estimate cut-off grades based on assumed costs for surface or
underground operations and commodity prices that are no higher than 24-
month average prices. The qualified person may use sales prices as
determined by applicable contractual agreements.
    Instruction 9 to paragraph (b)(96)(iv)(B)(13): Unless otherwise
stated, cut-off grades also refer to net smelter returns, pay limits
and other similar terms.
    Instruction 10 to paragraph (b)(96)(iv)(B)(13): When the qualified
person reports the grade or quality for a multiple commodity mineral
resource as metal or mineral equivalent, he or she must also report the
individual grade of each metal or mineral and the commodity prices,
recoveries, and any other relevant conversion factors used to estimate
the metal or mineral equivalent grade.
    (14) Mineral reserve estimates. If this item is included, the
technical report summary must:
    (i) Describe the key assumptions, parameters, and methods used to
estimate the mineral reserves, in sufficient detail for a reasonably
informed person to understand the basis for converting, and how the
qualified person converted, indicated and measured mineral resources
into the mineral reserves;
    (ii) Provide estimates of mineral reserves for all commodities,
including estimates of quantities, grade or quality, cut-off grades,
and metallurgical or processing recoveries;
    (iii) Provide the qualified person's opinion on how the mineral
reserve estimates could be materially affected by risk factors
associated with or changes to any aspect of the modifying factors; and
    (iv) If a pre-feasibility study is used to support mineral reserve
disclosure, the qualified person must provide a justification for using
a pre-feasibility study instead of a feasibility study.
    Instruction 1 to paragraph (b)(96)(iv)(B)(14): The technical report
summary must comply with all disclosure standards for mineral resources
under subpart 229.1300 of Regulation S-K (Sec. Sec.  229.1301 through
229.1305)
    Instruction 2 to paragraph (b)(96)(iv)(B)(14): The qualified person
preparing mineral reserve estimates must round off, to appropriate
significant figures chosen to reflect order of accuracy, any estimates
of quantity and grade or quality.

    Instruction 3 to paragraph (b)(96)(iv)(B)(14): The qualified person
must classify mineral reserves into probable and proven mineral
reserves in accordance with Sec. Sec.  229.1303 and 229.1304.
    Instruction 4 to paragraph (b)(96)(iv)(B)(14): The technical report
summary must include mineral reserve estimates of in-situ material,
plant or mill feed, and saleable product.
    Instruction 5 to paragraph (b)(96)(iv)(B)(14): The qualified person
must estimate cut-off grades based on detailed cut of grade analysis
that includes long term prices that are no higher than the 24-month
historical average prices. The qualified person may use the sales
prices as determined by applicable contractual agreements.
    Instruction 6 to paragraph (b)(96)(iv)(B)(14): When the qualified
person reports the grade or quality for a multiple commodity mineral
reserve as metal or mineral equivalent, he or she must also report the
individual grade of each metal or mineral and the commodity prices,
recoveries, and any other relevant conversion factors used to estimate
the metal or mineral equivalent grade.
    (15) Mining methods. Describe the current or proposed mining
methods and the reasons for selecting these methods as the most
suitable for the mineral reserves under consideration. Include:
    (i) Geotechnical and hydrological models, and other parameters
relevant to mine designs and plans;
    (ii) Production rates, expected mine life, mining unit dimensions,
and mining dilution and recovery factors;
    (iii) Requirements for stripping, underground development, and
backfilling; and
    (iv) Required mining equipment fleet and machinery, and personnel.
    Instruction to paragraph (b)(96)(iv)(B)(15): The qualified person
must include at least one map of the final mine outline.
    (16) Processing and recovery methods. Describe the current or
proposed mineral processing methods and the reasons for selecting these
methods as the most suitable for extracting the valuable products from
the mineralization under consideration. Include:
    (i) A description or flow sheet of any current or proposed process
plant;
    (ii) Plant throughput and design, equipment characteristics and
specifications; and
    (iii) Current or projected requirements for energy, water, process
materials, and personnel.
    Instruction 1 to paragraph (b)(96)(iv)(B)(16): If the processing
method, plant design or other parameters have never been used to
successfully extract the valuable product from such mineralization, the
qualified person must so state and provide a justification for why he
or she believes the approach will be successful in this instance.
    Instruction 2 to paragraph (b)(96)(iv)(B)(16): If the processing
method, plant design or other parameters have never been used to
successfully extract the valuable product from such mineralization and
is still under development, then no mineral resources or reserves can
be disclosed on the basis of that method.
    (17) Infrastructure. Describe the required infrastructure for the
project, including roads, rail, port facilities, dams, dumps and leach
pads, tailings disposal, power, water and pipelines, as applicable.
    Instruction to paragraph (b)(96)(iv)(B)(17): The qualified person
must include at least one map showing the layout of the infrastructure.
    (18) Market studies. Describe the market for the products of the
mine, including justification for demand or sales over the life of the
mine (or length of cash flow projections). Include:
    (i) Information concerning markets for the property's production,
including the nature and material terms of any agency relationships and
the results of any relevant market studies, commodity price
projections, product valuation, market entry strategies, and product
specification requirements; and
    (ii) Descriptions of all material contracts required for the issuer
to develop the property, including mining, concentrating, smelting,
refining, transportation, handling, hedging arrangements, and forward
sales contracts. State which contracts have been executed and which are
still under negotiation. For all contracts with affiliated parties,
discuss whether the registrant obtained terms, rates or charges the
same as could be obtained had the contract been negotiated at arm's
length with an unaffiliated third party.
    (19) Environmental studies, permitting, and social or community
impact. Describe the environmental, permitting, and social or community
factors related to the project. Include:
    (i) The results of environmental studies (e.g. environmental
baseline studies or impact assessments);
    (ii) Requirements and plans for waste and tailings disposal, site
monitoring, and water management during operations and post mine
closure;
    (iii) Project permitting requirements, the status of any permit
applications, and any known requirements to post performance or
reclamation bonds;
    (iv) Requirements and plans for social or community engagement and
the status of any negotiations or agreements with local communities;
    (v) Mine closure plans, including remediation and reclamation
plans, and the associated costs; and
    (vi) The qualified person's opinion on the adequacy of current
plans to address any issues related to environmental, permitting and
social or community factors.
    Instruction to paragraph (b)(96)(iv)(B)(19): The qualified person
must include descriptions of any commitments to ensure local
procurement and hiring.
    (20) Capital and operating costs. Provide estimates of capital and
operating costs, with the major components set out in tabular form.
Explain and justify the basis for the cost estimates including any
contingency budget estimates. State the accuracy level of the capital
and operating cost estimates.
    Instruction to paragraph (b)(96)(iv)(B)(20): To assess the accuracy
of the capital and operating cost estimates, the qualified person must
take into account the risks associated with the specific engineering
estimation methods used to arrive at the estimates. As part of this,
the qualified person must take into consideration the accuracy of the
estimation methods in prior similar environments. The accuracy of
capital and operating cost estimates must comply with Sec.  229.1302.
    (21) Economic analysis. Describe:
    (i) The key assumptions, parameters, and methods used to
demonstrate economic viability;
    (ii) Results of the economic analysis, including annual cash flow
forecasts based on an annual production schedule for the life of
project, and measures of economic viability such as net present value
(NPV), internal rate of return (IRR), and payback period of capital;
and
    (iii) Sensitivity analysis results using variants in commodity
price, grade, capital and operating costs, or other significant input
parameters, as appropriate, and discuss the impact on the results of
the economic analysis.
    Instruction 1 to paragraph (b)(96)(iv)(B)(21): The qualified person
may, but is not required to, include an economic analysis in an initial
assessment. If an initial assessment includes this item, the economic
analysis must be based on only measured and indicated mineral

resources. The qualified person must not include inferred mineral
resources in any economic analysis.
    Instruction 2 to paragraph (b)(96)(iv)(B)(21): If the qualified
person includes an economic analysis in an initial assessment, the
qualified person must also include a statement, of equal prominence to
the rest of this section, that, unlike mineral reserves, mineral
resources do not have demonstrated economic viability.
    Instruction 3 to paragraph (b)(96)(iv)(B)(21): To comply with
paragraph (b)(96)(iv)(B) (21)(i) of this section, the qualified person
must provide all material assumptions including discount rates,
exchange rates, commodity prices, and taxes, royalties, and other
government levies or interests applicable to the mineral project or to
production, and to revenues or income from the mineral project.
    (22) Adjacent properties. Where applicable, a qualified person may
include relevant information concerning an adjacent property if:
    (i) Such information was publicly disclosed by the owner or
operator of the adjacent property;
    (ii) The source of the information is identified;
    (iii) The qualified person states that he or she has been unable to
verify the information and that the information is not necessarily
indicative of the mineralization on the property that is the subject of
the technical report; and
    (iv) The technical report clearly distinguishes between the
information from the adjacent property and the information from the
property that is the subject of the technical report summary.
    (23) Other relevant data and information. Include any additional
information or explanation necessary to provide a complete and balanced
presentation of the value of the property to the registrant.
Information included in this item must comply with subpart 229.1300 of
Regulation S-K (Sec. Sec.  229.1301 through 229.1305).
    (24) Interpretation and conclusions. The qualified person must
summarize the interpretations of and conclusions based on the data and
analysis in the technical report summary. He or she must also discuss
any significant risks and uncertainties that could reasonably be
expected to affect the reliability or confidence in the exploration
results, mineral resource or mineral reserve estimates, or projected
economic outcomes.
    (25) Recommendations. If applicable, the qualified person must
describe the recommendations for additional work with associated costs.
If the additional work program is divided into phases, the costs for
each phase must be provided along with decision points at the end of
each phase.
    (26) References. Include a list of all references cited in the
technical report summary in sufficient detail so that a reader can
locate each reference.

Sec.  229.801  [Amended]

0
4. Amend Sec.  229.801 by removing paragraph (g).

Sec.  229.802  [Amended]

0
5. Amend Sec.  229.802 by removing paragraph (g).
0
6. Add subpart 229.1300 to read as follows:

Subpart 229.1300--Disclosure by Registrants Engaged in Mining
Operations

Sec.
229.1301 (Item 1301) General instructions and definitions.
229.1302 (Item 1302) Qualified person, technical report summary, and
technical studies.
229.1303 (Item 1303) Summary disclosure.
229.1304 (Item 1304) Individual property disclosure.
229.1305 (Item 1305) Internal controls disclosure.

Subpart 229.1300--Disclosure by Registrants Engaged in Mining
Operations

Sec.  229.1301  (Item 1301) General instructions and definitions.

    (a) A registrant must provide the disclosure specified in subpart
229.1300 of this part if its mining operations are material to its
business or financial condition. For purposes of this subpart, the term
material has the same meaning as under Sec.  230.405 or Sec.  240.12b-2
of this chapter.
    (b) When determining whether its mining operations are material, a
registrant must:
    (1) Consider both quantitative and qualitative factors, assessed in
the context of the registrant's overall business and financial
condition;
    (2) Aggregate mining operations on all of its mining properties,
regardless of the stage of the mining property, and size or type of
commodity produced, including coal, metalliferous minerals, industrial
materials, geothermal energy, and mineral brines; and
    (3) Include, for each property, as applicable, all related
activities from exploration through extraction to the first point of
material external sale, including processing, transportation, and
warehousing.
    Instruction 1 to paragraph (b): As used in this section, the term
mining operations includes operations on all mining properties that a
registrant:
    i. Owns or in which it has, or it is probable that it will have, a
direct or indirect economic interest;
    ii. Operates, or it is probable that it will operate, under a lease
or other legal agreement that grants the registrant ownership or
similar rights that authorize it, as principal, to sell or otherwise
dispose of the mineral; or
    iii. Has, or it is probable that it will have, an associated
royalty or similar right.
    Instruction 2 to paragraph (b): A registrant's mining operations
are presumed to be material if they consist of 10% or more of its total
assets.
    Instruction 3 to paragraph (b): A registrant's mining operations
may be material even if they comprise less than 10% of its total assets
if, when considered with other quantitative or qualitative factors, the
required disclosure concerning the mining operations would
significantly alter the total mix of information available.
    (c) Upon a determination that its mining operations are material, a
registrant must provide summary disclosure concerning all of its mining
activities, as specified in Sec.  229.1303, as well as individual
property disclosure concerning each of its mining properties that is
material to its business or financial condition, as specified in Sec.
229.1304. When providing either summary or individual property
disclosure, the registrant:
    (1) Should provide an appropriate glossary if the disclosure
requires the use of technical terms relating to geology, mining or
related matters, which cannot readily be found in conventional
dictionaries;
    (2) Should not include detailed illustrations and technical
reports, full feasibility studies or other highly technical data. The
registrant shall, however, furnish such reports and other material
supplementally to the staff upon request; and
    (3) Should use plain English principles, to the extent practicable,
such as those provided in 17 CFR 230.421 and 17 CFR 240.13a-20, to
enhance the readability of the disclosure for investors.
    (d) Definitions. As used in this subpart, these terms have the
following meanings:
    (1) Cut-off grade is the grade (i.e., the concentration of metal or
mineral in rock) which determines the destination of the material
during mining. For purposes of establishing ``prospects of economic
extraction,'' the cut-off grade is the grade which distinguishes
material that is deemed to have no

economic value (it will not be mined in underground mining or if mined
in surface mining, its destination will be the waste dump) from
material that is deemed to have economic value (its ultimate
destination during mining will be a processing facility). Other terms
used in similar fashion as cut-off grades include net smelter returns,
pay limits, and break-even stripping ratio.
    (2) A development stage issuer is one that is engaged in the
preparation of mineral reserves for extraction on at least one material
property.
    (3) A development stage property is one that has mineral reserves
disclosed, pursuant to this subpart, but no material extraction.
    (4) Exploration results are data and information generated by
mineral exploration programs (i.e., programs consisting of sampling,
drilling, trenching, analytical testing, assaying, and other similar
activities undertaken to locate, investigate, define or delineate a
mineral prospect or mineral deposit) that are not part of a disclosure
of mineral resources or reserves. A registrant must not use exploration
results alone to derive estimates of tonnage, grade, and production
rates, or in an assessment of economic viability.
    (5) An exploration stage issuer is one that has no material
property with mineral reserves disclosed.
    (6) An exploration stage property is one that has no mineral
reserves disclosed.
    (7) A feasibility study:
    (i) Is a comprehensive technical and economic study of the selected
development option for a mineral project, which includes detailed
assessments of all applicable modifying factors, as defined by this
section, together with any other relevant operational factors, and
detailed financial analysis that are necessary to demonstrate, at the
time of reporting, that extraction is economically viable. The results
of the study may serve as the basis for a final decision by a proponent
or financial institution to proceed with, or finance, the development
of the project.
    (ii) A feasibility study is more comprehensive, and with a higher
degree of accuracy, than a pre-feasibility study. It must contain
mining, infrastructure, and process designs completed with sufficient
rigor to serve as the basis for an investment decision or to support
project financing.
    Note to paragraph (d)(7): The confidence level in the results of a
feasibility study is higher than that with a pre-feasibility study.
Terms such as full, final, comprehensive, bankable, or definitive
feasibility study are equivalent to a feasibility study.
    (8) A final market study is a comprehensive study to determine and
support the existence of a readily accessible market for the mineral.
It must, at a minimum, include product specifications based on final
geologic and metallurgical testing, supply and demand forecasts,
historical prices for the preceding five or more years, estimated long
term prices, evaluation of competitors (including products and
estimates of production volumes, sales, and prices), customer
evaluation of product specifications, and market entry strategies or
sales contracts. The study must provide justification for all
assumptions, which must include all material contracts required to
develop and sell the mineral reserves.
    (9)(i) An indicated mineral resource is that part of a mineral
resource for which quantity and grade or quality are estimated on the
basis of adequate geological evidence and sampling.
    (ii) As used in this subpart, the term adequate geological evidence
means evidence that is sufficient to establish geological and grade or
quality continuity with reasonable certainty. The level of geological
certainty associated with an indicated mineral resource is sufficient
to allow a qualified person to apply modifying factors, as defined in
this section, in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit.
    Note to paragraph (d)(9): An indicated mineral resource has a lower
level of confidence than that applying to a measured mineral resource
and may only be converted to a probable mineral reserve.
    (10)(i) An inferred mineral resource is that part of a mineral
resource for which quantity and grade or quality are estimated on the
basis of limited geological evidence and sampling.
    (ii) As used in this subpart, the term limited geological evidence
means evidence that is only sufficient to establish that geological and
grade or quality continuity is more likely than not. The level of
geological uncertainty associated with an inferred mineral resource is
too high to apply modifying factors, as defined in this section, in a
manner useful for evaluation of economic viability.
    (iii) A qualified person: (A) Must have a reasonable expectation
that the majority of inferred mineral resources could be upgraded to
indicated or measured mineral resources with continued exploration; and
    (B) Should be able to defend the basis of this expectation before
his or her peers.
    Note to paragraph (d)(10): An inferred mineral resource has the
lowest level of geological confidence of all mineral resources, which
prevents the application of the modifying factors in a manner useful
for evaluation of economic viability. As such, inferred mineral
resource may not be considered when assessing the economic viability of
a mining project and may not be converted to a mineral reserve.
    (11)(i) An initial assessment is a preliminary technical and
economic study of the economic potential of all or parts of
mineralization to support the disclosure of mineral resources. The
initial assessment must be prepared by a qualified person and must
include appropriate assessments of reasonably assumed modifying
factors, as defined by this section, together with any other relevant
operational factors that are necessary to demonstrate, at the time of
reporting, that there are reasonable prospects for economic extraction.
    (ii) An initial assessment is required for disclosure of mineral
resources but cannot be used as the basis for disclosure of mineral
reserves.
    (12)(i) A measured mineral resource is that part of a mineral
resource for which quantity and grade or quality are estimated on the
basis of conclusive geological evidence and sampling.
    (ii) As used in this subpart, the term conclusive geological
evidence means evidence that is sufficient to test and confirm
geological and grade or quality continuity. The level of geological
certainty associated with a measured mineral resource is sufficient to
allow a qualified person to apply modifying factors, as defined in this
section, in sufficient detail to support detailed mine planning and
final evaluation of the economic viability of the deposit.
    Note to paragraph (d)(12): A measured mineral resource has a higher
level of confidence than that applying to either an indicated mineral
resource or an inferred mineral resource. It may be converted to a
proven mineral reserve or to a probable mineral reserve.
    (13)(i) A mineral reserve is an estimate of tonnage and grade or
quality of indicated and measured mineral resources that, in the
opinion of the qualified person, can be the basis of an economically
viable project. More specifically, it is the economically mineable part
of a measured or indicated mineral resource, net of allowances for
diluting materials and for losses that may occur when the material is
mined or extracted.

    (ii) The determination that part of a measured or indicated mineral
resource is economically mineable must be based on a preliminary
feasibility (pre-feasibility) or feasibility study, as defined by this
section, conducted by a qualified person applying the modifying factors
to indicated or measured mineral resources. Such study must demonstrate
that, at the time of reporting, extraction of the mineral reserve is
economically viable under reasonable investment and market assumptions.
The study must establish a life of mine plan that is technically
achievable and economically viable, which will be the basis of
determining the mineral reserve.
    (iii) As used in this subpart, the term economically viable means
that the qualified person has determined, using a discounted cash flow
analysis, or has otherwise analytically determined, that extraction of
the mineral reserve is economically viable under reasonable investment
and market assumptions.
    (iv) As used in this subpart, the term investment and market
assumptions includes all assumptions made about the prices, exchange
rates, sales volumes and costs that are necessary and are used to
determine the economic viability of the reserves. The price shall be no
higher than the average spot price during the 24-month period prior to
the end of the fiscal year covered by the report, determined as an
unweighted arithmetic average of the daily closing price for each
trading day within such period, except in cases where sales prices are
determined by contractual agreements. In such a case, the qualified
person may use the price set by the contractual arrangement, provided
that such price is reasonable, and the qualified person discloses that
he or she is using a contractual price and discloses the contractual
price used.
    Note to paragraph (d)(13): A qualified person must subdivide
mineral reserves, in order of increasing confidence in the results
obtained from the application of the modifying factors to the indicated
and measured mineral resources, into probable mineral reserves and
proven mineral reserves, as defined in this section.
    (14)(i) A mineral resource is a concentration or occurrence of
material of economic interest in or on the Earth's crust in such form,
grade or quality, and quantity that there are reasonable prospects for
economic extraction.
    Note to paragraph (d)(14)(i): A mineral resource is a reasonable
estimate of mineralization, taking into account relevant factors such
as cut-off grade, likely mining dimensions, location or continuity,
that, with the assumed and justifiable technical and economic
conditions, is likely to, in whole or in part, become economically
extractable. It is not merely an inventory of all mineralization
drilled or sampled. (ii) As used in this subpart, the term material of
economic interest includes mineralization, including dumps and
tailings, geothermal fields, mineral brines, and other resources
extracted on or within the earth's crust. It does not include oil and
gas resources as defined in Regulation S-X Sec.  210.4-10(a)(16)(D) of
this chapter, gases (e.g., helium and carbon dioxide), and water.
    Note to paragraph (d)(14)(ii): A qualified person must subdivide
mineral resources, in order of increasing geological confidence, into
inferred, indicated and measured mineral resources.
    (iii) When determining the existence of a mineral resource, a
qualified person, as defined by this section, must:
    (A) Be able to estimate or interpret the location, quantity, grade
or quality continuity, and other geological characteristics of the
mineral resource from specific geological evidence and knowledge,
including sampling; and
    (B) Conclude that there are reasonable prospects for economic
extraction of the mineral resource based on an initial assessment, as
defined in this section, that he or she conducts by qualitatively
applying the modifying factors, as defined by this section, likely to
influence the prospect of economic extraction.
    (15) Modifying factors are the factors that a qualified person must
apply to mineralization or geothermal energy and then evaluate in order
to establish the economic prospects of mineral resources, or the
economic viability of mineral reserves. A qualified person must apply
and evaluate modifying factors to convert measured and indicated
mineral resources to proven and probable mineral reserves. These
factors include, but are not restricted to, mining, energy recovery and
conversion, processing, metallurgical, economic, marketing, legal,
environmental, infrastructure, social and governmental factors. The
number, type and specific characteristics of the modifying factors
applied will necessarily be a function of and depend upon the mineral,
mine, property, or project.
    (16)(i) A preliminary feasibility study (pre-feasibility study) is
a comprehensive study of a range of options for the technical and
economic viability of a mineral project that has advanced to a stage
where a qualified person has determined (in the case of underground
mining) a preferred mining method, or (in the case of surface mining) a
pit configuration, and in all cases has determined an effective method
of mineral processing and an effective plan to sell the product.
    (ii) A pre-feasibility study includes a financial analysis based on
reasonable assumptions, based on appropriate testing, about the
modifying factors and the evaluation of any other relevant factors that
are sufficient for a qualified person to determine if all or part of
the indicated and measured mineral resources may be converted to
mineral reserves at the time of reporting. The financial analysis must
have the level of detail necessary to demonstrate, at the time of
reporting, that extraction is economically viable.
    Note to paragraph (d)(16): A pre-feasibility study is less
comprehensive and results in a lower confidence level than a
feasibility study. A pre-feasibility study is more comprehensive and
results in a higher confidence level than an initial assessment.
    (17) A preliminary market study is a study that is sufficiently
rigorous and comprehensive to determine and support the existence of a
readily accessible market for the mineral. It must, at a minimum,
include product specifications based on preliminary geologic and
metallurgical testing, supply and demand forecasts, historical prices
for the preceding five or more years, estimated long term prices,
evaluation of competitors (including products and estimates of
production volumes, sales, and prices), customer evaluation of product
specifications, and market entry strategies. The study must provide
justification for all assumptions. It can, however, be less rigorous
and comprehensive than a final market study, which is required for a
full feasibility study.
    (18)(i) A probable mineral reserve is the economically mineable
part of an indicated and, in some cases, a measured mineral resource.
    (ii) For a probable mineral reserve, the qualified person's
confidence in the results obtained from the application of the
modifying factors and in the estimates of tonnage and grade or quality
is lower than what is sufficient for a classification as a proven
mineral reserve, but is still sufficient to demonstrate that, at the
time of reporting, extraction of the mineral reserve is economically
viable under reasonable investment and market assumptions. The lower
level of confidence is due to higher geologic uncertainty when the
qualified person converts an indicated mineral resource to a probable
reserve or higher risk in the results of the application of

modifying factors at the time when the qualified person converts a
measured mineral resource to a probable mineral reserve.
    (iii) A qualified person must classify a measured mineral resource
as a probable mineral reserve when his or her confidence in the results
obtained from the application of the modifying factors to the measured
mineral resource is lower than what is sufficient for a proven mineral
reserve.
    (19) A production stage issuer is one that is engaged in material
extraction of mineral reserves on at least one material property.
    (20) A production stage property is one with material extraction of
mineral reserves.
    (21)(i) A proven mineral reserve is the economically mineable part
of a measured mineral resource.
    (ii) For a proven mineral reserve, the qualified person has a high
degree of confidence in the results obtained from the application of
the modifying factors and in the estimates of tonnage and grade or
quality.
    (iii) A proven mineral reserve can only result from conversion of a
measured mineral resource.
    (22) A qualified person is:
    (i) A mineral industry professional with at least five years of
relevant experience in the type of mineralization and type of deposit
under consideration and in the specific type of activity that person is
undertaking on behalf of the registrant; and
    (ii) An eligible member or licensee in good standing of a
recognized professional organization at the time the technical report
is prepared. For an organization to be a recognized professional
organization, it must:
    (A) Be either:
    (1) An organization recognized within the mining industry as a
reputable professional association, or
    (2) A board authorized by U.S. federal, state or foreign statute to
regulate professionals in the mining, geoscience or related field;
    (B) Admit eligible members primarily on the basis of their academic
qualifications and experience;
    (C) Establish and require compliance with professional standards of
competence and ethics;
    (D) Require or encourage continuing professional development;
    (E) Have and apply disciplinary powers, including the power to
suspend or expel a member regardless of where the member practices or
resides; and (F) Provide a public list of members in good standing.
    Instruction 1 to paragraph (d)(22): The term relevant experience
means, for purposes of determining whether a party is a qualified
person, that the party has experience in the specific type of activity
that the person is undertaking on behalf of the registrant. If the
qualified person is preparing or supervising the preparation of a
technical report concerning exploration results, the relevant
experience must be in exploration. If the qualified person is
estimating, or supervising the estimation of mineral resources, the
relevant experience must be in the estimation, assessment and
evaluation of mineral resources and associated modifying factors, as
defined in this section. If the qualified person is estimating, or
supervising the estimation of mineral reserves, the relevant experience
must be in engineering and other disciplines required for the
estimation, assessment, evaluation and economic extraction of mineral
reserves.
    Instruction 2 to paragraph (d)(22): The term relevant experience
also means, for purposes of determining whether a party is a qualified
person, that the party has experience evaluating the specific type of
mineral deposit under consideration, e.g., coal, metal, base metal,
industrial mineral, mineral brine, or geothermal fields. The type of
experience necessary to qualify as relevant is a facts and
circumstances determination. For example, experience in a high-nugget,
vein-type mineralization such as tin or tungsten would likely be
relevant experience for estimating mineral resources for vein-gold
mineralization whereas experience in a low grade disseminated gold
deposit likely would not be relevant.
    Instruction 3 to paragraph (d)(22): It is not always necessary for
a person to have five years' experience in each and every type of
deposit in order to be an eligible qualified person if that person has
relevant experience in similar deposit types. For example, a person
with 20 years' experience in estimating mineral resources for a variety
of metalliferous hard-rock deposit types may not require as much as
five years of specific experience in porphyry-copper deposits to act as
a qualified person. Relevant experience in the other deposit types
could count towards the experience in relation to porphyry-copper
deposits.
    Instruction 4 to paragraph (d)(22): For a qualified person
providing a technical report for exploration results or mineral
resource estimates, relevant experience also requires, in addition to
experience in the type of mineralization, sufficient experience with
the sampling and analytical techniques, as well as extraction and
processing techniques, relevant to the mineral deposit under
consideration. Sufficient experience means that level of experience
necessary to be able to identify, with substantial confidence, problems
that could affect the reliability of data and issues associated with
processing.
    Instruction 5 to paragraph (d)(22): For a qualified person applying
the modifying factors, as defined by this section, to convert mineral
resources to mineral reserves, relevant experience also requires:
    i. Sufficient knowledge and experience in the application of these
factors to the mineral deposit under consideration; and
    ii. Experience with the geology, geostatistics, mining, extraction
and processing that is applicable to the type of mineral and mining
under consideration.

Sec.  229.1302  (Item 1302) Qualified person, technical report summary,
and technical studies.

    (a) A registrant's disclosure of exploration results, mineral
resources or mineral reserves, as required by Sec.  229.1303 and Sec.
229.1304, must be based on and accurately reflect information and
supporting documentation prepared by a qualified person, as defined in
Sec.  229.1301(d). The registrant is responsible for determining that
the person meets the qualifications specified under the definition of
qualified person in Sec.  229.1301(d), and that the disclosure in the
registrant's filing accurately reflects the information provided by the
qualified person.
    (b)(1) The registrant must obtain a dated and signed technical
report summary from the qualified person, which, pursuant to Sec.
229.601(b)(96), identifies and summarizes the information reviewed and
conclusions reached by the qualified person about the registrant's
mineral resources, mineral reserves or material exploration results
determined to be on each material property.
    (2) The registrant must file the technical report summary, pursuant
to Sec.  229.601(b)(96), as an exhibit to the relevant registration
statement or other Commission filing when disclosing for the first time
mineral reserves, mineral resources or material exploration results or
when there is a material change in the mineral reserves, mineral
resources or exploration results from the last technical report summary
filed for the property.
    Instruction to paragraph (b)(2): A royalty company does not have to
submit a separate technical report summary for a property that is
covered by a current technical report summary

filed by the producing mining registrant. In that situation, the
royalty company must incorporate by reference the producing
registrant's previously filed technical report summary in the royalty
company's filing with the Commission.
    (3)(i) The registrant must obtain the written consent of the
qualified person to the use of the qualified person's name and any
quotation or other use of the technical report summary in the
registration statement or report prior to filing the technical report
summary with the Commission.
    (ii) For Securities Act filings, the registrant must file the
written consent as an exhibit to the registration statement pursuant to
Sec. Sec.  230.436 and 230.601(b)(23) of this chapter.
    (4) The registrant must identify the qualified person who prepared
the technical report summary in the filed registration statement or
report and state whether the qualified person is an employee of the
registrant. If the qualified person is not an employee of the
registrant, the registrant must name the qualified person's employer,
disclose whether the qualified person or the qualified person's
employer is an affiliate of the registrant or another entity that has
an ownership, royalty or other interest in the property that is the
subject of the technical report summary, and if an affiliate, describe
the nature of the affiliation.
    Instruction to paragraph (b)(4): As used in this section, affiliate
has the same meaning as in Sec.  230.405 or Sec.  240.12b-2 of this
chapter.
    (c) A registrant's disclosure of mineral resources under subpart
229.1300 of this part must be based upon a qualified person's initial
assessment, as defined in Sec.  229.1301(d), which supports the
determination of mineral resources. At a minimum, the initial
assessment must include the qualified person's qualitative evaluation
of applicable modifying factors to establish the economic potential of
the mining property or project. The technical report summary submitted
by the qualified person to support a determination of mineral resources
must describe the procedures, findings and conclusions reached for the
initial assessment, as required by Sec.  229.601(b)(96).
    Instruction 1 to paragraph (c): A qualified person must include
cut-off grade estimation, based on assumed unit costs for surface or
underground operations and estimated mineral prices, in the initial
assessment. To estimate mineral prices, the qualified person must use a
commodity price that is no higher than the average spot price during
the 24-month period prior to the end of the last fiscal year,
determined as an unweighted arithmetic average of the daily closing
price for each trading day within such period, unless prices are
defined by contractual arrangements. In such a case, the qualified
person may use the price set by the contractual arrangement, provided
that such price is reasonable, and the qualified person discloses that
he or she is using a contractual price and discloses the contractual
price used.
    Instruction 2 to paragraph (c): The qualified person must provide
qualitative assessment of all relevant modifying factors, as defined in
Sec.  229.1301(d), to establish economic potential and justify why he
or she believes that all issues can be resolved with further
exploration and analysis. As provided by Table 1 of this subpart, those
factors include, but are not limited to:
    i. Site infrastructure (e.g. whether access to power and site is
possible);
    ii. Mine design and planning (e.g. what is the broadly defined
mining method);
    iii. Processing plant (e.g. whether all products used in assessing
prospects of economic extraction can be processed with methods
consistent with each other);
    iv. Environmental compliance and permitting (e.g. what are the
required permits and corresponding agencies and whether significant
obstacles exist to obtaining those permits); and
    v. Any other reasonably assumed modifying factors, including socio-
economic factors, necessary to demonstrate reasonable prospects for
economic extraction.
    Instruction 3 to paragraph (c): Additionally, a qualified person
may include cash flow analysis in an initial assessment to demonstrate
economic potential. The qualified person may not, however, use inferred
mineral resources in such cash flow analysis. If the qualified person
includes cash flow analysis in the initial assessment, then operating
and capital cost estimates must have an accuracy level of at least
approximately 50% and a contingency level of no greater
than 25%, as provided by Table 1 of this subpart. The qualified person
must state the accuracy and contingency levels in the initial
assessment.
    Instruction 4 to paragraph (c): The qualified person should refer
to Table 1 of this subpart for the assumptions permitted to be made
when preparing the initial assessment.

      Table 1 to Subpart 229.1300--Summary Description of Modifying Factors Evaluated in Technical Studies
----------------------------------------------------------------------------------------------------------------
                                                                Preliminary feasibility
               Factors                    Initial assessment             study              Feasibility study
----------------------------------------------------------------------------------------------------------------
Site infrastructure..................  Establish whether or     Required access roads,   Required access roads,
                                        not access to power      infrastructure           infrastructure
                                        and site is possible.    location and plant       location and plant
                                        Assume infrastructure    area defined. Source     area finalized. Source
                                        location, plant area     of all utilities         of all required
                                        required, type of        (power, water, etc.)     utilities (power,
                                        power supply, site       required for             water, etc.) for
                                        access roads and camp/   development and          development and
                                        town site, if required.  production defined       production finalized.
                                                                 with initial designs     Camp/Town site
                                                                 suitable for cost        finalized
                                                                 estimates. Camp/Town
                                                                 site finalized.
Mine design & planning...............  Mining method defined    Preferred underground    Mining method
                                        broadly as surface or    mining method or the     finalized. Detailed
                                        underground.             pit configuration for    mine layouts finalized
                                        Production rates         surface mine defined.    for preferred
                                        assumed.                 Detailed mine layouts    alternative.
                                                                 drawn for each           Development and
                                                                 alternative.             production plan
                                                                 Development and          finalized for
                                                                 production plan          preferred alternative
                                                                 defined for each         with required
                                                                 alternative with         equipment fleet
                                                                 required equipment       specified
                                                                 fleet specified.

Processing plant.....................  Establish that all       Detailed bench lab       Detailed bench lab
                                        products used in         tests conducted.         tests conducted. Pilot
                                        assessing prospects of   Detailed process flow    plant test completed,
                                        economic extraction      sheet, equipment         if required, based on
                                        can be processed with    sizes, and general       risk. Process flow
                                        methods consistent       arrangement completed.   sheet, equipment
                                        with each other.         Detailed plant           sizes, and general
                                        Processing method and    throughput specified.    arrangement finalized.
                                        plant throughput                                  Final plant throughput
                                        assumed.                                          specified
Environmental compliance & permitting  List of required         Identification and       Identification and
                                        permits & agencies       detailed analysis of     detailed analysis of
                                        drawn. Determine if      requirements or          requirements or
                                        significant obstacles    interests of agencies,   interests of agencies,
                                        exist to obtaining       NGOs, communities and    NGOs, communities and
                                        permits. Identify pre-   other stakeholders.      other stakeholders
                                        mining land uses.        Detailed baseline        finalized. Completed
                                        Assess requirements      studies with             baseline studies with
                                        for baseline studies.    preliminary impact       final impact
                                        Assume post-mining       assessment (internal).   assessment (internal).
                                        land uses. Assume        Detailed tailings        Tailings disposal,
                                        tailings disposal,       disposal, reclamation    reclamation and
                                        reclamation, and         and mitigation plans.    mitigation plans
                                        mitigation plans.                                 finalized
Other modifying factors \1\..........  Appropriate assessments  Reasonable assumptions,  Detailed assessments of
                                        of other reasonably      based on appropriate     modifying factors
                                        assumed modifying        testing, on the          necessary to
                                        factors necessary to     modifying factors        demonstrate that
                                        demonstrate reasonable   sufficient to            extraction is
                                        prospects for economic   demonstrate that         economically viable
                                        extraction.              extraction is
                                                                 economically viable.
Capital costs........................  Optional.\2\ If          Accuracy: 25%.               minus>15%.
                                        50%.        Contingency: <=15%.....  Contingency: <=10%.
                                       Contingency: <=25%.....
Operating costs......................  Optional.\2\ If          Accuracy: 25%.               minus>15%.
                                        50%.        Contingency: <=15%.....  Contingency: <=10%.
                                       Contingency: <=25%.....
Economic analysis \3\................  Optional. If included:   Taxes described in       Taxes described in
                                        Taxes and revenues are   detail; revenues are     detail; revenues are
                                        assumed. Discounted      estimated based on at    estimated based on at
                                        cash flow analysis       least a preliminary      least a final market
                                        based on assumed         market study; economic   study or possible
                                        production rates and     viability assessed by    letters of intent to
                                        revenues from            detailed discounted      purchase; economic
                                        available measured and   cash flow analysis.      viability assessed by
                                        indicated mineral                                 detailed discounted
                                        resources.                                        cash flow analysis
----------------------------------------------------------------------------------------------------------------
\1\ The modifying factors, as defined in this section, include, but are not limited to, the factors listed in
  this table. The number, type and specific characteristics of the modifying factors applied will be a function
  of and depend upon the mineral, mine, property, or project.
\2\ Initial Assessment, as defined in this section, does not require cash flow analyses or operating and capital
  cost estimates. The qualified person may include such cash flow analyses at his or her discretion.
\3\ Initial assessment does not require capital and operating cost estimates or economic analysis, although it
  requires unit cost assumptions based on an assumption that the resource will be exploited with surface or
  underground mining methods. Economic analyses, if included, must only be based on measured and indicated
  mineral resources.

    (d) A registrant's disclosure of mineral reserves under subpart
229.1300 of this part must be based upon a qualified person's pre-
feasibility study or feasibility study, each as defined in Sec.
229.1301(d), which supports a determination of mineral reserves. The
pre-feasibility or feasibility study must include the qualified
person's detailed evaluation of all applicable modifying factors to
demonstrate the economic viability of the mining property or project.
The technical report summary submitted by the qualified person to
support a determination of mineral reserves must describe the
procedures, findings and conclusions reached for the pre-feasibility or
feasibility study, as required by Sec.  229.601(b)(96). All reserve
disclosures based on a pre-feasibility study must include the qualified
person's justification for using a pre-feasibility study instead of a
final feasibility study.
    Instruction 1 to paragraph (d): The term mineral reserves does not
necessarily require that extraction facilities are in place or
operational, that the company has obtained all necessary permits or
that the company has entered into sales contracts for the sale of mined
products. It does require, however, that the qualified person has,
after reasonable investigation, not identified any obstacles to
obtaining permits and entering into the necessary sales contracts, and
reasonably believes that the chances of obtaining such approvals and
contracts in a timely manner are highly likely. In addition, in certain
circumstances, it may require the completion of at least a preliminary
market study, as defined in Sec.  229.1301(d), in the context of a pre-
feasibility study, or a final market study, as defined in Sec.
229.1301(d), in the context of a feasibility study, to support the
qualified person's conclusions about the chances of obtaining revenues
from sales. For example, a preliminary or final market study would be
required where the mine's product cannot be traded on an exchange,
there is no other established market for the product, and no sales
contract exists. When assessing mineral reserves, the qualified person
must take into account the potential adverse impacts, if any, from any
unresolved material matter on which extraction is contingent and which
is dependent on a third party.
    Instruction 2 to paragraph (d): The qualified person must exclude
inferred mineral resources from the pre-feasibility study's
demonstration of economic viability in support of a disclosure of a
mineral reserve.
    Instruction 3 to paragraph (d): Factors to be considered in a pre-
feasibility study are typically the same as those required for an
initial assessment, but considered at a greater level of detail or at a
later stage of development. For

example, as provided in Table 1 of this subpart, a pre-feasibility
study must define, analyze or otherwise address in detail:
    i. The required access roads, infrastructure location and plant
area, and the source of all utilities (e.g., power and water) required
for development and production;
    ii. The preferred underground mining method or surface mine pit
configuration, with detailed mine layouts drawn for each alternative;
    iii. The bench lab tests that have been conducted, the process flow
sheet, equipment sizes, and general arrangement that have been
completed, and the plant throughput;
    iv. The environmental compliance and permitting requirements or
interests of agencies, non-governmental organizations, communities and
other stakeholders, the baseline studies, and the plans for tailings
disposal, reclamation and mitigation, together with an analysis
establishing that permitting is possible; and
    v. And any other reasonable assumptions, based on appropriate
testing, on the modifying factors sufficient to demonstrate that
extraction is economically viable.
    Instruction 4 to paragraph (d): A pre-feasibility study must
include an economic analysis that supports the property's economic
viability as assessed by a detailed discounted cash flow analysis or
other similar financial analysis. The economic analysis must describe
in detail applicable taxes and provide an estimate of revenues. As
discussed in Instruction 1 to paragraph (d) of this section, in certain
situations, estimates of revenues must be based on at least a
preliminary market study.
    Instruction 5 to paragraph (d): The pre-feasibility study must also
identify sources of uncertainty that require further refinement in a
final feasibility study.
    Instruction 6 to paragraph (d): Operating and capital cost
estimates in a pre-feasibility study must, at a minimum, have an
accuracy level of approximately 25% and a contingency range
not exceeding 15%, as provided in Table 1 of this subpart. The
qualified person must state the accuracy level and contingency range in
the pre-feasibility study.
    Instruction 7 to paragraph (d): In some instances, the risk factors
associated with a project may indicate that more than a pre-feasibility
study is required to disclose mineral reserves, e.g., in situations
where the project is the first in a particular mining district with
substantially different conditions than existing company projects, such
as environmental and permitting restrictions, labor availability and
skills, remoteness, and unique mineralization and recovery methods. In
such cases, the qualified person must use a feasibility study in order
to achieve the level of confidence necessary for disclosing mineral
reserves.