codes; \207\ not requiring the disclosure of exploration results; or
minimizing the required use of an independent qualified person.\208\
One commenter also stated that the Commission could reduce the
compliance burden by allowing all Canadian registrants, and not just
those that file under the MJDS, to report under Canada's NI 43-101, and
by considering a similar accommodation for foreign issuers that report
under the other CRIRSCO-based codes.\209\
---------------------------------------------------------------------------

    \205\ See, e.g., letters from AngloGold, Eggleston, and Gold
Resource.
    \206\ See letter from AngloGold.
    \207\ See letters from AngloGold and Midas.
    \208\ See letter from Gold Resource.
    \209\ See letter from Northern Dynasty.
---------------------------------------------------------------------------

    Some commenters opposed a requirement to file a technical report
summary as an exhibit to a Commission filing because they believed it
would be burdensome for registrants that are not subject to similar
requirements in other jurisdictions.\210\ Other commenters opposed the
technical report summary filing requirement because it would compel the
disclosure of information that is proprietary and competitively
sensitive.\211\
---------------------------------------------------------------------------

    \210\ See letters from Alliance, Chamber, Davis Polk, and FCX.
Davis Polk and the Chamber believed that, because only Canada and
Australia impose a similar requirement, the proposed technical
report summary requirement would ``result in an incremental
reporting burden in the United States relative to most other
jurisdictions.''
    \211\ See letters from Alliance and FCX.
---------------------------------------------------------------------------

    Several commenters supported the Commission's proposal to have each
qualified person date and sign the technical report summary prepared by
him or her.\212\ According to the commenters, this requirement would
help establish the document's legitimacy \213\ as well as a reference
date for the report.\214\ One commenter noted that the proposed
requirement to have a qualified person date and sign the technical
report summary is a requirement under all of the CRIRSCO-based
codes.\215\
---------------------------------------------------------------------------

    \212\ See, e.g., letters from AngloGold, CSP\2\, Eggleston,
Golder, and SRK 1.
    \213\ See letter from SRK 1.
    \214\ See letters from Golder and SRK 1. Golder indicated that
the dating requirement would protect the qualified person by
establishing the effective or cutoff dates of data and observations
used and alleviate other timing-related issues.
    \215\ See letter from Rio Tinto.
---------------------------------------------------------------------------

    In addition, many commenters supported the Commission's proposal to
require a registrant to obtain the written consent of each qualified
person who prepared a technical report summary to the use of the
qualified person's name or any quotation from, or summarization of the
technical report summary in the registration statement or report.\216\
One commenter indicated that the written consent requirement ``is very
important to ensure that a QP's descriptions, summaries, results,
conclusions and recommendations are construed accurately and
appropriately by a registrant'' and ``also provides the QP with an
additional opportunity to access the quality control and quality
assurance of a registrant's disclosure as they pertain to the QP.''
\217\
---------------------------------------------------------------------------

    \216\ See letters from AngloGold, Eggleston, Midas, Newmont,
Northern Dynasty, Rio Tinto, SRK 1, Vale, and Willis.
    \217\ Letter from SRK 1.
---------------------------------------------------------------------------

    In connection with the proposed written consent requirement, some
commenters noted that registrants frequently hire multiple qualified
persons for a particular mining project.\218\ Those commenters
recommended that the final rules clarify that multiple qualified
persons may prepare a technical report summary and, in such a
situation, a registrant must have each qualified person identify the
particular parts of the technical report summary for which he or she is
responsible, date and sign each part, and provide his or her written
consent for the use of his or her name and reference to those parts of
the technical report summary prepared by each qualified person.\219\
---------------------------------------------------------------------------

    \218\ See letters from Coeur, Eggleston, Energy Fuels, Golder,
MMSA, SME 1, Ur-Energy, Vale, and Willis; see also letter from
Newmont (recommending the use by the qualified person of a ``sub-
certifications control process accompanied by disclosure of the
areas and personnel relied upon'').
    \219\ See, e.g., letters from Coeur, MMSA, and SME 1.
---------------------------------------------------------------------------

    Some commenters opposed the proposed requirement to have the
qualified person sign the technical report summary on an individual
basis.\220\ These commenters objected on the grounds that liability
concerns are more pronounced in the United States and such a
requirement would place a qualified person in a position similar to an
executive or financial officer of the registrant.
---------------------------------------------------------------------------

    \220\ See letters from Andrews Kurth, Gold Resource, and NMA 1.
---------------------------------------------------------------------------

    Numerous other commenters maintained that the Commission should not
subject qualified persons to expert liability under Section 11 of the
Securities Act.\221\ Those commenters opposed such expert liability on
the grounds that: Ultimate responsibility for a public report
concerning a registrant's exploration results, mineral resources, or
mineral reserves rests with the registrant, acting through its board of
directors; \222\ the proposed requirements for qualified persons, such
as membership in a professional organization that requires compliance
with standards of competence and ethics, and the written consent
provisions, would provide adequate safeguards to ensure the reliability
of supporting documentation by a qualified person; \223\ the Section 11
liability regime is unique and would impose significant costs on
individuals that are not yet subject to it; \224\ imposing Section 11
liability on qualified persons would likely have a chilling effect on
the willingness of individuals to serve in that role and thereby
increase the cost of hiring a qualified person, and could deter
registrants from hiring qualified persons; \225\ and the naming of
individual professionals in Commission filings is not required with
respect to accounting, auditing, and legal matters or in the
determination of oil and gas reserves and, in any event, is not
important to the protection of investors.\226\
---------------------------------------------------------------------------

    \221\ See letters from AusIMM, Chamber, Cleary & Gottlieb, Cloud
Peak, Davis Polk, FCX, JORC, MMSA, NSSGA, SAMCODES 1, Shearman &
Sterling, Sullivan & Cromwell, and Ur-Energy.
    \222\ See, e.g., letters from AusIMM, FCX, JORC, SAMCODES 1, and
Shearman & Sterling.
    \223\ See letters from Davis Polk, Shearman & Sterling, and
Sullivan & Cromwell.
    \224\ See id.; see also letter from Andrews Kurth.
    \225\ See letters from Andrews Kurth, Chamber, Davis Polk, FCX,
MMSA, NSSGA, Shearman & Sterling, and Ur-Energy.
    \226\ See letter from FCX.
---------------------------------------------------------------------------

    Some commenters that expressed concerns about Section 11 liability
requested that the Commission explore alternatives to the individual
signing requirement, such as permitting the firm employing the
qualified person to sign the technical report summary, which would be
consistent with the Commission's treatment of auditors and its
treatment of engineering firms under the Commission's oil and gas
rules.\227\ Those commenters further noted that not requiring an
individual qualified person to sign the technical report summary would
be consistent with the Commission's treatment of audit engagement
partners whereby the naming or signature of the individual audit
engagement partner is not required in Commission filings.\228\
---------------------------------------------------------------------------

    \227\ See letters from Gold Resource and NMA 1. See also letter
from SME 1 (suggesting a sub-certification procedure to deal with
the liability concerns regarding qualified persons).
    \228\ See letters from Gold Resource and NMA 1. An audit
engagement partner is, however, required to be named on PCAOB Form
AP. See Public Company Accounting Oversight Board; Order Granting
Approval of Proposed Rules To Require Disclosure of Certain Audit
Participants on a New PCAOB Form and Related Amendments to Auditing
Standards, Exchange Act Release No. 34-77787 (May 9, 2016) [81 FR
29925].

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

    On a related issue, many commenters recommended that the Commission
adopt the approach under Canada's NI 43-101 or another CRIRSCO-based
code and permit a qualified person to disclaim liability if relying on
a report, opinion or statement of another expert who is not a qualified
person, or on information provided by the issuer, concerning legal,
political, environmental, or tax matters relevant to the technical
report.\229\ According to these commenters, a limited disclaimer is
necessary because the consideration of all applicable modifying factors
in the determination of reserves, or all relevant technical and
economic factors in the determination of resources, is typically beyond
the scope and knowledge of a single individual. Commenters maintained
that without a limited disclaimer provision, and particularly in light
of concerns about Section 11 liability, the Commission would be
imposing liability on qualified persons for opinions and conclusions
outside of their fields of expertise, which would discourage
individuals from acting as qualified persons under the Commission's
rules, and potentially discourage registrants from hiring qualified
persons.\230\
---------------------------------------------------------------------------

    \229\ See letters from AIPG, Amec, BHP, CIM, Cleary Gottlieb,
Cloud Peak, Coeur, CRIRSCO, Davis Polk, Eggleston, Energy Fuels,
FCX, Gold Resource, Graves, Midas, MMSA, Newmont, NMA, Northern
Dynasty, PDAC, Randgold, Rio Tinto, Shearman & Sterling, SME 1, SRK
1, Ur-Energy, Vale, and Willis.
    \230\ See, e.g., letters from CIM, Davis Polk, Eggleston, FCX,
Shearman & Sterling, SME 1, and Ur-Energy.
---------------------------------------------------------------------------

    Other commenters, however, supported the Commission's proposal to
preclude a qualified person from disclaiming responsibility if relying
on a report, opinion, or statement of another expert who is not a
qualified person.\231\ One commenter stated that such a provision ``is
key to obtaining reliable and accurate information'' on a project.\232\
---------------------------------------------------------------------------

    \231\ See letters from Columbia, CSP\2\, and Montana Trout.
    \232\ See letter from CSP\2\.
---------------------------------------------------------------------------

    Many commenters supported the Commission's proposal to require a
registrant to identify the qualified person who prepared the technical
report summary, disclose whether the qualified person is an employee of
the registrant, identify the qualified person's employer if other than
the registrant, and disclose whether the qualified person or the
qualified person's employer is an affiliate of the registrant or
another issuer that has an ownership or similar interest in the subject
mining property.\233\ Commenters stated that such disclosure would be
consistent with the CRIRSCO standards' transparency obligations.\234\
One commenter, however, opposed a requirement to name a qualified
person's employer, as this may have changed since it prepared the
technical report summary.\235\ Instead, that commenter suggested that a
registrant state whether the qualified person is independent of the
registrant and, if not, provide an explanation for the lack of
independence.
---------------------------------------------------------------------------

    \233\ See letters from AngloGold, CBRR, CIM, Coeur, Eggleston,
Gold Resource, Golder, Midas, MMSA, Northern Dynasty, Rio Tinto,
SAMCODES 2, SME 1, SRK 1, Vale, and Willis.
    \234\ See, e.g., letters from Eggleston and Vale. As previously
noted, transparency is one of the three governing principles
underlying the CRIRSCO standards. See supra note 39.
    \235\ See letter from Amec.
---------------------------------------------------------------------------

    In response to whether, as an alternative to the rule proposal, we
should require a registrant to state whether its qualified person is
independent, numerous commenters answered in the affirmative, but also
recommended that, consistent with Canada's NI 43-101, the final rules
require an independent qualified person only under certain
circumstances (e.g., for the first-time disclosure of mineral resources
and mineral reserves and for 100% or greater changes to previously
disclosed resources and reserves) with an exception for producing
issuers.\236\ Those commenters also recommended adopting Canada's NI
43-101's definition of independence and related guidance. Most of those
commenters opposed requiring a registrant to obtain an independent
review of a technical report prepared by a qualified person that is an
employee or affiliate of the registrant.\237\
---------------------------------------------------------------------------

    \236\ See letters from Amec, CIM, Coeur, Eggleston, Gold
Resource, Midas, MMSA, Newmont, Northern Dynasty, SAMCODES 2, SME 1,
SRK 1, Vale, and Willis. Another commenter supported requiring a
registrant to state whether its qualified person is independent, but
did not mention the circumstances under Canada's NI 43-101 that
would limit when an independent qualified person is required. See
letter from Golder.
    \237\ See letters from AngloGold, Eggleston, Gold Resource,
Golder, Midas, Northern Dynasty and SRK 1.
---------------------------------------------------------------------------

    Other commenters opposed any provision that would require a
registrant to hire an independent qualified person or to conduct an
independent review.\238\ One commenter also opposed any provision that
would require the registrant to state whether the qualified person is
independent.\239\ According to that commenter, there is very little
difference between an employee and a consultant who is paid by the
company and both could be unduly influenced. To guard against such
undue influence, this commenter recommended requiring a qualified
person to be a member of a professional organization that can sanction
``those that transgress.'' \240\
---------------------------------------------------------------------------

    \238\ See letters from AngloGold, BHP, CRIRSCO, FCX, JORC, and
Rio Tinto.
    \239\ See letter from AngloGold.
    \240\ Id.
---------------------------------------------------------------------------

    One commenter did not believe that naming a qualified person would
add value to the registrant's Commission filings. This commenter noted
that many outside specialists assist it with various estimations and
evaluations used in its Form 10-K annual report, and ``assistance
regarding reserve estimations is not exceptionally greater than any
other area of consultation or professional guidance.'' \241\ This
commenter did state, however, that if the Commission requires the
naming of a qualified person, it would be appropriate for a registrant
to disclose whether the qualified person is independent using the
definition of independence under Canada's NI 43-101.
---------------------------------------------------------------------------

    \241\ Letter from Alliance.
---------------------------------------------------------------------------

iii. Final Rules
    We are adopting the requirement, as proposed, that a registrant's
disclosure of exploration results, mineral resources, or mineral
reserves in Commission filings must be based on and accurately reflect
information \242\ and supporting documentation prepared by a qualified
person,\243\ as defined in subpart 1300 of Regulation S-K.\244\
Adopting this requirement will more closely align the Commission's
mining property disclosure regime with the CRIRSCO standards.\245\
---------------------------------------------------------------------------

    \242\ As used in subpart 1300 of Regulation S-K, the term
``information'' prepared by a qualified person includes the findings
and conclusions of a qualified person relating to material
exploration results or estimates of mineral resources or mineral
reserves. See 17 CFR 229.1302(a)(1) [Item 1302(a)(1) of Regulation
S-K].
    \243\ id. Like the proposed provision, the final rule refers to
Item 1303, the summary disclosure provision, and Item 1304, the
individual property disclosure provision, to specify the disclosure
to which the qualified person requirement applies.
    \244\ We define ``qualified person'' in Item 1300 of Regulation
S-K. See infra Section II.C.2.
    \245\ This requirement is consistent with the ``competence''
principle underlying the CRIRSCO standards, which requires that each
person who has prepared the technical report summary meets the
definition of qualified person and is, therefore, competent to make
the findings and conclusions contained in the technical report
summary.
---------------------------------------------------------------------------

    The Securities Act and the Exchange Act both provide that the
registration statements and periodic reports required under those
statutes shall contain such information and documents as the Commission
may require, as necessary or appropriate in the public interest and

for the protection of investors.\246\ We believe that the requirement
that a registrant's disclosure of mineral resources, mineral reserves,
and material exploration results in Commission filings be based on and
fairly reflect information and supporting documentation prepared by a
``qualified person'' will further the protection of investors by
helping to make the determination and reporting of estimates of mineral
resources and reserves or exploration results more reliable. This is
particularly important since we are adopting rules that, for the first
time, will allow a registrant with material mining operations to
disclose mineral resources in its Commission filings. As commenters
noted, the qualified person requirement will help to mitigate any risks
associated with the disclosure of mineral resources or exploration
results, which reflect a lower level of certainty about the economic
value of mining properties than is reflected in the disclosure of
mineral reserves.\247\ Requiring that the disclosure of exploration
results, mineral resources, and mineral reserves in Commission filings
be based on the work of a person having the requisite professional
credentials and experience should help to foster proper risk assessment
and disclosure, which is key to an investor's understanding of each
stage of a mining project.\248\ Moreover, by adopting the qualified
person requirement, the Commission will be strengthening its mining
property disclosure requirements in a manner consistent with most
foreign jurisdictions' mining disclosure requirements, thus promoting
uniformity and comparability, which should benefit both registrants and
investors.
---------------------------------------------------------------------------

    \246\ See Securities Act Section 7(a) [15 U.S.C. 77g(a)];
Exchange Act Sections 12(b)(1),)12(g)(1), 13(a) [15 U.S.C.
78l(b)(1), 78l(g)(1), 78m(a)].
    \247\ See supra note 185 and accompanying text.
    \248\ See supra note 186 and accompanying text.
---------------------------------------------------------------------------

    We also are adopting the requirement that the registrant is
responsible for determining that the qualified person meets the
specified qualifications, and that the disclosure in the registrant's
filing accurately reflects information provided by the qualified
person.\249\ Although we acknowledge that the qualified person has a
role to play in establishing that he or she possesses the requisite
credentials and experience,\250\ placing the ultimate responsibility on
the registrant is consistent with the registrant's duty under federal
securities laws to ensure that the information in a Commission filing
is accurate and free of material misstatements or omissions.
---------------------------------------------------------------------------

    \249\ 17 CFR 229.1302(a)(2) [Item 1302(a)(2) of Regulation S-K].
This requirement is consistent with the CRIRSCO standards. See,
e.g., CRIRSCO International Reporting Template, supra note 20, at
cl. 8; JORC Code, supra note 175, at pt. 9.
    \250\ See supra note 191 and accompanying text.
---------------------------------------------------------------------------

    We are adopting the requirement that a registrant must obtain a
dated and signed technical report summary from the qualified person,
which identifies and summarizes the information reviewed and
conclusions reached by the qualified person about the registrant's
mineral resources or mineral reserves determined to be on each material
property.\251\ We also are adopting the requirement that a registrant
must file the technical report summary as an exhibit to the relevant
Commission filing when disclosing mineral reserves or mineral resources
for the first time or when there is a material change in the mineral
reserves or mineral resources from the last technical report summary
filed for the property.\252\
---------------------------------------------------------------------------

    \251\ 17 CFR 229.1302(b)(1) [Item 1302(b)(1) of Regulation S-K].
    \252\ 17 CFR 229.1302(b)(2)(i) [Item 1302(b)(2)(i) of Regulation
S-K].
---------------------------------------------------------------------------

    We believe that the technical report summary filing requirement
will not only help ensure that the registrant's disclosure in the
Commission filing is accurate and reliable, it will also enhance
investor understanding of a registrant's material mining properties.
Specifically, the technical report summary will provide investors with
a summary of the scientific and technical information that is the basis
for the registrant's disclosure of mineral resources, mineral reserves,
and exploration results, which should enable investors to better assess
the value of the registrant's material mining properties. Moreover, to
the extent that the data in the technical report summary constitutes
part of the information used by the board of directors and management
for corporate planning purposes (e.g., deciding which mining projects
to pursue) and, once the mining project is underway, to help assess the
operational performance of the mine, requiring this information to be
filed will enable investors to better understand the corporate
decision-making of the mining registrant.
    As commenters noted, mining companies, including U.S. registrants
that are cross-listed, are already required in jurisdictions with
CRIRSCO-based codes to obtain technical reports either for public
filing or for internal use.\253\ We agree with commenters that stated
that such reports enhance transparency in the industry to the benefit
of investors.\254\ Moreover, as noted by some commenters, the
requirement to have the technical report summary dated and signed will
help to establish the authenticity and relevance of the document.\255\
---------------------------------------------------------------------------

    \253\ See, e.g., letters from Rio Tinto and SRK 1.
    \254\ See, e.g., letter from Eggleston.
    \255\ See, e.g., letters from Golder and SRK 1.
---------------------------------------------------------------------------

    As proposed, the final rules require the registrant to file the
technical report summary as an exhibit, rather than in the body of the
annual report or registration statement, in order to separate the
underlying scientific and technical information in the technical report
summary from the narrative disclosure concerning the registrant's
operations.\256\ We believe this will result in clearer and more
accessible disclosure for investors, enabling them to understand the
disclosure more effectively from both an operational and technical
viewpoint.
---------------------------------------------------------------------------

    \256\ The staff currently has the ability to request a copy of a
technical report as supplemental material, where it is deemed
appropriate, during the course of its review of a registration
statement or report. See 17 CFR 230.418 [Securities Act Rule 418];
17 CFR 240.12b-4 [Exchange Act Rule 12b-4]. Securities Act Rule
418(a)(6) specifically authorizes the staff, ``where reserve
estimates are referred to in a document,'' to request ``a copy of
the full report of the engineer or other expert who estimated the
reserves.'' 17 CFR 230.418(a)(6).
---------------------------------------------------------------------------

    A few commenters objected to the required filing of the technical
report summary based on their belief that, because only Canada and
Australia have a similar technical report filing requirement, the
Commission's filing requirement will be burdensome for mining
registrants that are not listed in those countries.\257\ While we
acknowledge that the final rules will impose a new compliance burden
for some registrants, as explained above, we believe the filing of a
technical report summary will provide important benefits to investors.
In response to commenters' concerns, we are adopting measures that we
believe will limit this compliance burden by requiring technical report
summaries only for material properties, and by requiring the filing of
those documents only when a registrant first discloses mineral
resources or mineral reserves, or when there is a material change in
the mineral reserves or mineral resources from the last technical
report summary filed for the property.
---------------------------------------------------------------------------

    \257\ See letters from Chamber, Davis Polk, and FCX.
---------------------------------------------------------------------------

    In addition, in a change from the proposed rules, as further
discussed below,\258\ while exploration results, if disclosed, must be
based on the findings and conclusions of a qualified person, we are not
mandating that a registrant

obtain a dated and signed technical report summary from a qualified
person to support the disclosure of exploration results. Under the
final rules, a registrant may elect to obtain a technical report
summary in connection with the disclosure of exploration results on a
material property and file it as an exhibit to the relevant Commission
filing, but it is not required to do so.\259\ We believe that this
elective treatment will help to mitigate the concern of some commenters
that opposed the technical report summary filing requirement because it
would compel the disclosure of proprietary and competitively sensitive
information.\260\
---------------------------------------------------------------------------

    \258\ See infra Section II.D.
    \259\ See Item 1302(b)(1) of Regulation S-K.
    \260\ See supra note 211 and accompanying text; see also infra
Section II.D.
---------------------------------------------------------------------------

    Some commenters indicated that the proposed disclosure of certain
specified information in the technical report summary, such as pricing
assumptions or cash flow analysis, could reveal proprietary and
commercially sensitive information.\261\ As discussed below,\262\ the
final rules do not exclude pricing assumptions and cash flow analysis
from the technical report summary because we believe that such
exclusion would omit material information about a registrant's mineral
resource or reserve estimates that is necessary for an investor to
assess the registrant's current and prospective mining operations.
---------------------------------------------------------------------------

    \261\ See, e.g., letters from BHP and SME 1.
    \262\ See infra Sections II.E.4., II.F.1., and II.G.3.
---------------------------------------------------------------------------

    Consistent with the suggestion of some commenters,\263\ the final
rules clarify that a registrant may use multiple qualified persons to
prepare a technical report summary. First, the final rules provide that
if a registrant has relied on more than one qualified person to prepare
the information and documentation supporting its disclosure of
exploration results, mineral resources or mineral reserves, the
registrant's responsibilities as specified in 17 CFR 229.1302 (Item
1302 of Regulation S-K) pertain to each qualified person.\264\ Second,
the final rules state that if more than one qualified person has
prepared the technical report summary, each qualified person must date
and sign the technical report summary, and the technical report summary
must clearly delineate the section or sections of the summary prepared
by each qualified person.\265\
---------------------------------------------------------------------------

    \263\ See, e.g., letters from Coeur, MMSA, and SME 1.
    \264\ 17 CFR 229.1302(a)(3) [Item 1302(a)(3) of Regulation S-K].
    \265\ 17 CFR 229.1302(b)(1)(i) [Item 1302(b)(1)(i) of Regulation
S-K].
---------------------------------------------------------------------------

    We also are adopting the proposed requirement that a registrant
obtain the written consent of each qualified person who prepared a
technical report summary to the use of the qualified person's name or
any quotation from, or summarization of, the technical report summary
in the relevant registration statement or report, and to the filing of
the technical report summary as an exhibit to the registration
statement or report.\266\ The written consent would only pertain to the
particular section or sections of the technical report summary prepared
by each qualified person.
---------------------------------------------------------------------------

    \266\ 17 CFR 229.1302(b)(4)(i) [Item 1302(b)(4)(i) of Regulation
S-K].
---------------------------------------------------------------------------

    Adoption of the written consent requirement will align the
Commission's mining disclosure rules with the CRIRSCO-based codes,
which impose a similar written consent requirement.\267\ It also will
help ensure that the qualified person's findings and conclusions are
not included in a Commission filing without that person's actual
knowledge.
---------------------------------------------------------------------------

    \267\ See, e.g., Canada's NI 43-101, supra note 123, at pt. 8.3;
JORC Code, supra note 175, at pt. 9; SAMREC Committee, The South
African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves: SAMREC Code, pt. 8 (2016) (``SAMREC
Code''), https://www.samcode.co.za/samcode-ssc/about-samcodes; SME
Guide, supra note 177, at pt. 8.
---------------------------------------------------------------------------

    In addition, requiring the registrant to obtain the qualified
person's written consent is consistent with the Commission's approach
to the use of an expert's report in Securities Act filings.\268\ In
this regard, as proposed, the final rules provide that, for Securities
Act filings, the registrant must file the written consent as an exhibit
to the registration statement.\269\ Because a mining registrant is
currently required to file the written consent of the mining engineer,
geologist, or other expert upon whom it has relied when filing a
Securities Act registration statement, the adopted written consent
requirement should not impose an additional burden.\270\ For Exchange
Act reports, the registrant is not required to file the written consent
obtained from the qualified person, but should retain the written
consent for as long as it is relying on the qualified person's
information and supporting documentation for its current estimates
regarding mineral resources, mineral reserves, or exploration
results.\271\
---------------------------------------------------------------------------

    \268\ See, e.g., Securities Act Rule 436.
    \269\ 17 CFR 229.1302(b)(4)(iv) [Item 1302(b)(4)(iv) of
Regulation S-K].
    \270\ As discussed below, current practice has permitted a
third-party firm employing the individual mining expert to provide
the written consent.
    \271\ See Item 1302(b)(4)(iv). A registrant may be required to
furnish supplementally a written consent obtained in connection with
an Exchange Act report at the request of Commission staff during a
review of the Exchange Act filing. In addition, consistent with
current practice, a registrant must file the qualified person's
written consent as an exhibit to an Exchange Act report that is
being incorporated by reference into a Securities Act registration
statement.
---------------------------------------------------------------------------

    In a clarification of the proposed rules, the final rules provide
that a third-party firm comprising mining experts, such as professional
geologists or mining engineers, may sign the technical report summary
instead of, and without naming, its employee, member, or other
affiliated person who prepared the summary.\272\ If a third-party firm
signs the technical report summary, the final rules further provide
that the third-party firm must provide the written consent.\273\ This
is consistent with current practice, pursuant to which the third-party
firm that employs or controls the expert upon whom the registrant has
relied typically files the written consent instead of the individual
expert. It is also consistent with the treatment of other written
consents provided by auditors and engineering experts, whether in oil,
natural gas, or mining.
---------------------------------------------------------------------------

    \272\ 17 CFR 229.1302(b)(1)(ii) [Item 1302(b)(1)(ii) of
Regulation S-K].
    \273\ 17 CFR 229.1302(b)(4)(iii) [Item 1302(b)(4)(iii) of
Regulation S-K].
---------------------------------------------------------------------------

    We are adopting these third-party firm signature and written
consent provisions to assuage some of the concerns raised by commenters
in connection with the potential Section 11 liability of qualified
persons. Because the third-party firm that signs the technical report
summary and provides the written consent will be treated as the expert
upon whom the registrant has relied when making its mining property
disclosures,\274\ and because the third-party firm is not required to
name the individual employee, member or other affiliated person who
prepared the various sections of the technical report summary, the
third-party firm will incur potential liability under Section 11 rather
than the unnamed individual. Thus, qualified persons who are employed
or otherwise affiliated with third-party firms will not automatically
be exposed to potential Section 11 liability as a result of their
participation in the preparation of supporting

documentation for registrants that are subject to our final rules. The
final rules should therefore mitigate concerns expressed by some
commenters that potential Section 11 liability may reduce the
willingness of some individuals to serve as qualified persons.\275\
---------------------------------------------------------------------------

    \274\ A registrant that receives a technical report summary
signed by a third-party firm is nevertheless subject to its
responsibilities regarding the qualified person under subpart 1300
of Regulation S-K. See Item 1302(a) of Regulation S-K. Therefore, if
a registrant receives a technical report summary signed by a third-
party firm, it should consult with the firm and confirm that each
individual employee, member, or other person affiliated with the
third-party firm who prepared the technical report summary meets the
specified qualifications under the definition of qualified person.
See 17 CFR 229.1300.
    \275\ See supra note 225 and accompanying text.
---------------------------------------------------------------------------

    If the qualified person is an employee of the registrant, however,
he or she must provide the written consent on an individual basis.\276\
This is consistent with current practice concerning other experts who
are employees of the registrant. For example, when a legal opinion is
provided by a registrant's in-house counsel, the individual counsel
typically provides the written consent.
---------------------------------------------------------------------------

    \276\ See Item 1302(b)(4)(iii) of Regulation S-K.
---------------------------------------------------------------------------

    The final rules do not provide a complete exemption for qualified
persons from expert liability under Section 11 of the Securities Act.
While we acknowledge the concerns raised by commenters in this
regard,\277\ not imposing Section 11 liability would be a departure
from the current requirement that imposes such liability on the named
person that prepares the reserve estimates.\278\ It also would be at
odds with the express design of the statute, which specifically posits
engineers or ``any person whose profession gives authority to a
statement made by him'' as potentially subject to Section 11 liability,
and would greatly diminish the protection afforded investors under the
Securities Act.\279\
---------------------------------------------------------------------------

    \277\ See supra note 221.
    \278\ See Guide 7, supra note 7, at ] (b)(5)(ii) (calling for
the name of the person making the estimates and the nature of his
relationship to the registrant).
    \279\ See 15 U.S.C. 77k(a)(4) (referring to ``every accountant,
engineer, or appraiser, or any person whose profession gives
authority to a statement made by him, who has with his consent been
named as having prepared or certified any part of the registration
statement, or as having prepared or certified any report or
valuation which is used in connection with the registration
statement, with respect to the statement in such registration
statement, report, or valuation, which purports to have been
prepared or certified by him'').
---------------------------------------------------------------------------

    However, we recognize that in preparing complex reports of this
nature, the qualified person will, when necessary, rely on information
and input from others, including the registrant. For example, while the
qualified person typically estimates capital and operating costs for
the mining project,\280\ he or she typically relies on the registrant
to provide other economic information regarding macroeconomic trends,
data, and assumptions, and interest rates, all of which are material to
the economic analysis required to support the qualified person's
reserve estimate.\281\
---------------------------------------------------------------------------

    \280\ See 17 CFR 229.601(b)(96)(iii)(B)(18) [Item
601(b)(96)(iii)(B)(18) of Regulation S-K].
    \281\ See 17 CFR 229.601(b)(96)(iii)(B)(19) [Item
601(b)(96)(iii)(B)(19) of Regulation S-K].
---------------------------------------------------------------------------

    There are other required matters in the technical report summary
that may fall outside the expertise of the qualified person, and
regarding which the registrant may provide assistance. For example, the
qualified person may require assistance from the registrant when
considering the following aspects of some of the modifying factors:

     Marketing information and plans within the control of
the registrant; \282\
---------------------------------------------------------------------------

    \282\ See 17 CFR 229.601(b)(96)(iii)(B)(16) [Item
601(b)(96)(iii)(B)(16) of Regulation S-K].
---------------------------------------------------------------------------

     legal matters outside the expertise of the qualified
person, such as statutory and regulatory interpretations affecting
the mine plan; \283\
---------------------------------------------------------------------------

    \283\ See, e.g., 17 CFR 229.601(b)(96)(iii)(B)(3) and (17)
[Items 601(b)(96)(iii)(B)(3) and 601(b)(96)(iii)(B)(17) of
Regulation S-K].
---------------------------------------------------------------------------

     environmental matters outside the expertise of the
qualified person; \284\
---------------------------------------------------------------------------

    \284\ See Item 601(b)(96)(iii)(B)(17) of Regulation S-K.
---------------------------------------------------------------------------

     accommodations the registrant commits or plans to
provide to local individuals or groups in connection with its mine
plans; \285\ and
---------------------------------------------------------------------------

    \285\ See id.
---------------------------------------------------------------------------

     governmental factors outside the expertise of the
qualified person.\286\
---------------------------------------------------------------------------

    \286\ See, e.g., Items 601(b)(96)(iii)(B)(3) and (17) of
Regulation S-K.

Because the qualified person may require assistance from the registrant
on these matters, the final rules provide that the qualified person may
indicate in the technical report summary that the qualified person has
relied on information provided by the registrant in preparing its
findings and conclusions regarding those modifying factors.\287\ The
final rules also provide that, in a separately captioned section of the
technical report entitled ``Reliance on Information Provided by the
Registrant,'' the qualified person must: Identify the categories of
information provided by the registrant; identify the particular
portions of the technical report summary that were prepared in reliance
on information provided by the registrant pursuant to paragraph (f)(1)
of this section, and the extent of that reliance; and disclose why the
qualified person considers it reasonable to rely upon the registrant
for any of the information specified according to this rule.\288\ We
believe that this disclosure will help investors and other interested
persons understand the source and reliability of the information
pertaining to those factors. We also note that this disclosure is
consistent with the disclosure recommended when a qualified or
competent person relies on information provided by the registrant under
the CRIRSCO standards.\289\
---------------------------------------------------------------------------

    \287\ 17 CFR 229.1302(f)(1) [Item 1302(f)(1) of Regulation S-K].
    \288\ 17 CFR 229.1302(f)(2) [Item 1302(f)(2) of Regulation S-K].
    \289\ See, e.g., SME Guide For Reporting Exploration
Information, Mineral Resources, And Mineral Reserves (2017) (2017
SME Guide), Appendix C.
---------------------------------------------------------------------------

    Where the registrant has provided the information relied upon by
the qualified person when addressing these modifying factors, we
believe that it would be appropriate for the registrant, rather than
the qualified person, to be subject to potential Section 11 liability
pertaining to a discussion of these matters in the technical report
summary or other part of the registration statement.\290\ In these
situations, requiring the qualified person to certify this information
may not be necessary for investor protection given that the registrant
remains liable for the contents of the registration statement and
consequently will be incentivized to exercise due care in the
preparation of this information. Accordingly, the final rules provide
that any description in the technical report summary or other part of
the registration statement of the procedures, findings, and conclusions
reached about matters identified by the qualified person as having been
based on information provided by the registrant pursuant to this
section, shall not be considered a part of the registration statement
prepared or certified by the qualified person within the meaning of
Sections 7 and 11 of the Securities Act.\291\ We have limited this
accommodation to the above described aspects of certain modifying
factors because we believe that these aspects are most likely to fall
outside of the qualified person's expertise and for which he or she is
most likely to require assistance from the registrant.
---------------------------------------------------------------------------

    \290\ Some commenters indicated that liability for mining
property disclosure in a Commission filing should fall primarily on
the registrant. See letter from BHP (stating that because a public
report is the responsibility of the company acting through its board
of directors, which should act as an assurance element for
investors, any potential liability imposed on a qualified person
should not be broader than that of the company's principal executive
and financial officers); see also letter from Cloud Peak.
    \291\ 17 CFR 229.1302(f)(3) [Item 1302(f)(3) of Regulation S-K];
see also 17 CFR 230.436(h) [Securities Act Rule 436(h)]. For the
reasons discussed herein, we find that these provisions are
necessary and appropriate in the public interest and consistent with
the protection of investors. See 15 U.S.C. 77z-3.
---------------------------------------------------------------------------

    We also recognize that the qualified person may hire on his or her
own third-party specialists who are not qualified persons. For this
reason, the final rules provide that a qualified person may include in
the technical

report summary information and documentation provided by a third-party
specialist who is not a qualified person, such as an attorney,
appraiser, and economic or environmental consultant, upon which the
qualified person has relied in preparing the technical report
summary.\292\ However, unlike the case with certain information
provided by the registrant, the final rules provide that the qualified
person may not disclaim responsibility for any information and
documentation prepared by a third-party specialist upon which the
qualified person has relied, or any part of the technical report
summary based upon or related to that information and
documentation.\293\ Although many commenters suggested that we permit
such disclaimers,\294\ doing so could undermine the quality of the
technical report summary, as neither the qualified person nor the
third-party specialist would be accountable for material misstatements
or omissions in such information and documentation. This is in contrast
to the situation in which the registrant retains Section 11 liability
for the information that it provides to the qualified person and which
may be disclaimed by the qualified person. We understand the concern of
commenters that, by prohibiting disclaimers of responsibility, a
qualified person could become liable for material misstatements or
omissions of fact in the technical report summary that are attributed
to the third-party specialist upon whom the qualified person has
relied.\295\ However, under the final rules, the qualified person will
be able to determine whether and under what terms it engages the third-
party specialist, which should help the qualified person mitigate any
attendant risks.
---------------------------------------------------------------------------

    \292\ 17 CFR 229.1302(b)(6)(i) [Item 1302(b)(6)(i) of Regulation
S-K].
    \293\ 17 CFR 229.1302(b)(6)(ii)] [Item 1302(b)(6)(ii) of
Regulation S-K].
    \294\ See supra note 229 and accompanying text.
    \295\ See supra note 230 and accompanying text.
---------------------------------------------------------------------------

    Although we are not providing a complete exemption from Section 11
liability for qualified persons or otherwise permitting them to
disclaim information provided by a third-party specialist, there are
limitations on the extent of liability the qualified person will incur,
particularly when other qualified persons are involved in preparation
of the technical report summary, as the final rules now expressly
permit. Under Section 11, a qualified person, as an expert, would have
an affirmative defense against liability for such misstatements or
omissions made on the authority of another expert if the qualified
person ``had no reasonable ground to believe and did not believe, at
the time such part of the registration statement became effective, that
the statements therein were untrue or that there was an omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that such part of the
registration statement did not fairly represent the statement of the
expert or was not a fair copy of or extract from the report or
valuation of the expert.'' \296\ In addition, the written consent
requirement, which requires a qualified person to provide a consent
only regarding the section or sections of the technical report summary
prepared by that person, would further serve to limit the qualified
person's liability under Section 11 for material misstatements or
omissions made by other contributing qualified persons.
---------------------------------------------------------------------------

    \296\ See Section 11(b)(3) of the Securities Act [15 U.S.C.
77k(b)(3)]. One commenter stated that the Commission ``does not
specify how a Qualified Person might establish a due diligence
defense'' under Section 11 of the Securities Act. See letter from
Chamber. We typically do not indicate how persons may establish
defenses under the Securities Act, and we refrain from doing so
here.
---------------------------------------------------------------------------

    The final rules provide that a registrant is not required to file a
written consent of any third-party specialist upon which a qualified
person has relied.\297\ This is consistent with other Commission rules,
which do not require a registrant to provide the written consent of a
secondary specialist upon which a consenting expert has relied.\298\
---------------------------------------------------------------------------

    \297\ 17 CFR 229.1302(b)(6)(iii) [Item 1302(b)(6)(iii) of
Regulation S-K].
    \298\ See 17 CFR 230.436(f) [Securities Act Rule 436(f)]
(``Where the opinion of one counsel relies upon the opinion of
another counsel, the consent of the counsel whose prepared opinion
is relied upon need not be furnished'').
---------------------------------------------------------------------------

    As proposed, the final rules require the registrant to state
whether each qualified person who prepared the technical report summary
is an employee of the registrant.\299\ If the qualified person is not
an employee of the registrant, the final rules require the registrant
to 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.\300\ The terms ``affiliate'' and ``affiliated'' have the
same meaning as in Securities Act Rule 405 or Exchange Act Rule 12b-
2.\301\
---------------------------------------------------------------------------

    \299\ 17 CFR 229.1302(b)(5) [Item 1302(b)(5) of Regulation S-K].
    \300\ See id.
    \301\ See id.
---------------------------------------------------------------------------

    This provision will provide investors with relevant information to
assess the reliability of the disclosure and align the Commission's
mining rules with most of the CRIRSCO-based codes, which impose a
similar identification requirement.\302\ Although several commenters
also recommended that we require a registrant to state whether its
qualified person satisfies the independence requirement of Canada's NI
43-101,\303\ we do not believe an independence requirement is
appropriate for the reasons stated in the Proposing Release.\304\
First, we believe that our approach will help to limit the compliance
burdens on registrants. Second, we believe that other aspects of the
final rules, such as disclosure of the qualified person's credentials
and his or her affiliated status with the registrant or another entity
having an ownership or similar interest in the subject property, along
with the application of potential expert liability in Securities Act
filings, should provide adequate safeguards for investors. Finally, our
approach is consistent with most of the CRIRSCO-based codes, which
permit a qualified person to be an employee or other affiliate of the
registrant as long as the registrant discloses its relationship with
the qualified person.\305\
---------------------------------------------------------------------------

    \302\ See, e.g., JORC Code, supra note 175, at pt. 9; see also
the Pan-European Reserves and Resources Reporting Committee, PERC
Reporting Standard pt. 3.5 (2017) (``PERC Reporting Standard''),
http://www.vmine.net/PERC/documents/PERC%20REPORTING%20STANDARD%202017.pdf. A limited exception to this
is Canada, which requires a registrant to file a technical report
summary prepared by an independent qualified person in certain
circumstances: When becoming a first-time registrant; when
supporting the first time reporting of mineral resources, mineral
reserves, or a preliminary economic assessment of a material
property; or when reporting a 100% or greater change in the total
mineral resources or reserves on a material property, when compared
to the last disclosure. See Canada's NI 43-101, supra note 123, at
pt. 5.3 (Can.).
    \303\ See supra note 236 and accompanying text.
    \304\ See Proposing Release, supra note 5, at Section II.C.1.
For similar reasons, we also do not believe it would be appropriate
to require an independent review of a technical report prepared by a
qualified person that is an employee or affiliate of the registrant.
    \305\ See id.
---------------------------------------------------------------------------

2. The Definition of ``Qualified Person''
i. Rule Proposal
    We proposed to define a ``qualified person'' as a person who is 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. In addition, the proposed
definition requires a qualified person to be an eligible member or
licensee in good standing of a recognized professional organization at
the time the technical report is prepared.\306\
---------------------------------------------------------------------------

    \306\ See Proposing Release, supra note 5, at Section II.C.2.
---------------------------------------------------------------------------

    Under the proposed rules, a ``recognized professional
organization,'' would have to be either recognized within the mining
industry as a reputable professional association,\307\ or be a board
authorized by U.S. federal, state or foreign statute to regulate
professionals in the mining, geoscience, or related field. Furthermore,
the organization must:
---------------------------------------------------------------------------

    \307\ The ``reputable professional association'' standard is
also used in Canada's NI 43-101. See the definition of
``professional association'' in Canada's NI 43-101, supra note 123,
at pt. 1.1.

     Admit eligible members primarily on the basis of their
academic qualifications and experience;
     Establish and require compliance with professional
standards of competence and ethics;
     Require or encourage continuing professional
development;
     Have and apply disciplinary powers, including the power
to suspend or expel a member regardless of where the member
practices or resides; and
     Provide a public list of members in good standing.\308\
---------------------------------------------------------------------------

    \308\ See Proposing Release, supra note 5, at Section II.C.2.

    As we explained in the Proposing Release, this proposed definition
is similar to the definition of competent or qualified person under the
CRIRSCO-based codes.\309\ It differs, however, from those codes in at
least one respect. Although CRIRSCO provides some guidance about what
constitutes a ``recognized professional organization,'' \310\ most of
the CRIRSCO-based codes require that a competent or qualified person be
a member of one or more ``approved'' organizations identified in an
appendix to the code.\311\ This list is updated periodically by the
various code regulators. We did not propose a similar ``approved list''
approach because of our belief that a more principles-based approach
provides flexibility.\312\
---------------------------------------------------------------------------

    \309\ The CRIRSCO standards require that a competent or
qualified person have at least five years of relevant experience
``in the style of mineralization and type of deposit under
consideration and in the activity which that person is undertaking''
and be a member or licensee in good standing of a recognized
professional organization. See CRIRSCO International Reporting
Template, supra note 20, at pt. 11; JORC Code, supra note 175, at
pt. 11; see also SAMREC Code, pt. 10 (2016); PERC Reporting
Standard, supra note 302, at pt. 3.1. The recognized professional
organizations under CRIRSCO standards have and apply disciplinary
powers to members and most require professional development to
maintain such membership.
    \310\ See CRIRSCO International Reporting Template, supra note
20, at cl. 11 (stating that the organization of which a competent
person is a member must have ``enforceable disciplinary processes
including the powers to suspend or expel a member'').
    \311\ See, e.g., JORC Code, supra note 175, at pt. 11; SAMREC
Code, supra note 267, at pt. 9; SME Guide, supra note 177, at pt. 9;
and PERC Reporting Standard, supra note 302, at pt. 3.1.
    \312\ See Proposing Release, supra note 5, at Section II.C.1.
---------------------------------------------------------------------------

    We also proposed detailed instructions to the definition of
``qualified person'' to assist registrants in applying the definition.
The proposed instructions describe the specific types and amount of
experience necessary for various types of mining activities and mineral
deposits.\313\
---------------------------------------------------------------------------

    \313\ See id.
---------------------------------------------------------------------------

ii. Comments on the Rule Proposal
    Numerous commenters supported the Commission's proposal to require
the qualified person to be an individual person.\314\ Commenters noted
that this requirement is consistent with the CRIRSCO standards and
indicated that it helps ensure that the qualified person assumes the
appropriate personal responsibility for his or her findings and
conclusions.\315\ One commenter, however, maintained that professional
associations have no ability to sanction a company and most have no
mechanism for corporate membership.\316\ Another stated that if a firm
can meet all the qualifications required under the qualified person
definition and has quality controls recognized by professional boards
or state regulatory agencies in place, the firm should be allowed to
meet the qualified person definition.\317\
---------------------------------------------------------------------------

    \314\ See letters from Amec, AngloGold, CIM, CSP\2\, Earthworks,
Eggleston, Golder, Midas, MMSA, Rio Tinto, SAMCODES 2, SME 1, SRK 1,
Ur-Energy, and Vale.
    \315\ See, e.g., letters from AngloGold, Golder, Midas, and SME
1.
    \316\ See letter from Rio Tinto.
    \317\ See letter from Alliance.
---------------------------------------------------------------------------

    Many commenters also generally supported the Commission's proposed
definition of ``qualified person'' as an individual person who is 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.\318\ Those commenters noted
that the proposed five year minimum experience requirement is
consistent with the minimum experience requirement under the CRIRSCO-
based codes.\319\ Other commenters recommended that the qualified
person have at least seven years of postgraduate experience in the
mineral industry with at least three years in positions of
responsibility (defined as requiring independent judgment).\320\ Two
commenters, however, stated that the provision requiring at least five
years of relevant experience in the particular type of mineralization
and deposit under consideration is too restrictive.\321\
---------------------------------------------------------------------------

    \318\ See letters from AIPG, AngloGold, AusIMM, BHP, CBRR, CIM,
Coeur, Eggleston, FCX, Golder, JORC, Midas, MMSA, Rio Tinto,
SAMCODES 1, SME 1, SRK 1, Vale, and Willis.
    \319\ See letters from CBRR, Eggleston, Midas, SAMCODES 1, and
SRK 1.
    \320\ See letters from AIPG, Coeur, and SME 1. See also letter
from MMSA (recommending requiring a minimum of 10 years of practical
experience in geosciences including at least five years in positions
of responsibility).
    \321\ See letters from Alliance and Amec. Amec preferred the
definition of qualified person under NI 43-101, which requires a
qualified person to have ``at least five years of experience in
mineral exploration, mine development or operation or mineral
project assessment, or any combination of these, that is relevant to
his or her professional degree or area of practice'' as well as
``experience relevant to the subject matter of the mineral project
and the technical report.''
---------------------------------------------------------------------------

    Several commenters recommended adding an educational requirement to
the definition (e.g., the attainment of a bachelor's or equivalent
degree in an area of geoscience, metallurgy, or mining
engineering).\322\ Two of those commenters stated that, alternatively,
a university degree in civil or chemical engineering would qualify if
the person also had the requisite post-graduate experience in the
minerals industry.\323\ In contrast, three commenters opposed an
educational requirement because the recognized professional
organizations include such a requirement in their membership
criteria.\324\
---------------------------------------------------------------------------

    \322\ See letters from AIPG, Alliance, Amec, CIM, Coeur,
CRIRSCO, Graves, MMSA, Rio Tinto, SME 1, and Willis.
    \323\ See letters from Coeur and Willis. Another commenter
stated that a qualified person should simply hold a university
degree or equivalent accreditation relevant to his or her area of
practice. Such a flexible definition would allow a non-geoscientist,
such as a biochemist or botanist, to be accepted as a qualified
person to undertake the specialized baseline studies supporting
permit applications, particularly environmental permits. See letter
from Amec.
    \324\ See letters from AusIMM, JORC, and SAMCODES 1. Another
commenter, SRK 1, agreed that most professional organizations impose
a minimum education requirement but suggested that the Commission
could also provide for such a requirement in the definition of
qualified person.
---------------------------------------------------------------------------

    A majority of commenters addressing the issue generally supported
the Commission's proposal to require a qualified person to be an
eligible member or licensee in good standing of a recognized
professional organization at the time the technical report is

prepared.\325\ Several commenters generally agreed with the
Commission's proposed criteria defining a ``recognized professional
organization.'' \326\ One commenter suggested adding a requirement that
the organization have ``one or more membership categories requiring
attainment of a position of responsibility that requires the exercise
of independent judgment and a favorable confidential peer evaluation of
the individual's character, professional judgment, experience, and
ethical fitness.'' \327\
---------------------------------------------------------------------------

    \325\ See letters from AIPG, Amec, AngloGold, AusIMM, BHP, CBRR,
CIM, Coeur, CRIRSCO, Eggleston, Golder, JORC, Midas, MMSA, Mousset-
Jones, NSPE, Rio Tinto, SAMCODES 1, SME 1, SRK 1, Vale, and Willis.
    \326\ See, e.g., letters from AIPG, AngloGold, CBRR, CIM, Rio
Tinto, and SRK 1.
    \327\ Letter from SME 1.
---------------------------------------------------------------------------

    Some commenters stated that the Commission should define a
recognized professional organization as encouraging but not requiring
continuing professional development.\328\ According to these
commenters, a strict continuing professional development requirement is
not necessary, particularly if the member is a full-time
practitioner.\329\ Other commenters stressed the importance of
requiring the recognized professional organization to have the
jurisdiction to discipline the qualified person, no matter where the
person resides or practices or where the deposit is located.\330\
---------------------------------------------------------------------------

    \328\ See letters from Amec, CBRR, Midas, Rio Tinto, SRK 1, and
Vale.
    \329\ See, e.g., letters from Midas and SRK 1. MMSA, however,
indicated that continuing professional development should be
compulsory.
    \330\ See letters from Amec, Coeur, MMSA, and Willis.
---------------------------------------------------------------------------

    Most commenters that addressed the ``qualified person'' definition
stated that the Commission should adopt and publish an approved list of
``recognized professional organizations'' similar to the approach under
the CRIRSCO-based codes.\331\ Commenters recommended that the
Commission reference the list of approved organizations set forth in an
Appendix to Canada's NI 43-101 CP (Companion Policy),\332\ the list of
approved organizations maintained by the SME,\333\ or the approved
organization list published by the Australian Securities Exchange
(``ASX'').\334\ According to commenters, referencing such lists would
not only help achieve a level of consistency with the CRIRSCO-based
codes regarding which groups constitute recognized professional
organizations, it also would lessen the Commission's administrative
burden of having to verify and update the list of approved
organizations.\335\
---------------------------------------------------------------------------

    \331\ See letters from AIPG, Amec, AusIMM, BHP, CBRR, CIM,
CRIRSCO, Eggleston, Graves, JORC, Midas, SAMCODES 1, SME 1, SRK 1,
and Vale.
    \332\ See letters from AIPG, CIM, Graves, SME 1, SRK 1, and
Vale.
    \333\ See letters from AusIMM, CBRR, Graves, JORC, and SME 1.
    \334\ See letter from BHP.
    \335\ See, e.g., letters from AIPG, Graves, and SME 1.
---------------------------------------------------------------------------

    Two commenters, however, supported the Commission's proposed
approach requiring an organization to meet specified factors before it
could qualify as a recognized professional organization rather than
using a list of approved organizations,\336\ preferring it as more
flexible \337\ and as ``a better and more practical alternative.''
\338\
---------------------------------------------------------------------------

    \336\ See, e.g., letters from Alliance and Golder.
    \337\ See letter from Alliance.
    \338\ See letter from Golder.
---------------------------------------------------------------------------

iii. Final Rules
    We are adopting the definition of qualified person, as
proposed.\339\ We are also adopting, as proposed, the specific criteria
that qualify an organization to be a recognized professional
organization.\340\
---------------------------------------------------------------------------

    \339\ See 17 CFR 229.1300.
    \340\ See id. For an organization to be a recognized
professional organization, it must: Be either an organization
recognized within the mining industry as a reputable professional
association, or a board authorized by U.S. federal, state or foreign
statute to regulate professionals in the mining, geoscience or
related field; admit eligible members primarily on the basis of
their academic qualifications and experience; establish and require
compliance with professional standards of competence and ethics;
require or encourage continuing professional development; have and
apply disciplinary powers, including the power to suspend or expel a
member regardless of where the member practices or resides; and
provide a public list of members in good standing. With respect to
the first requirement, one commenter opposed allowing a state board
to authorize a recognized professional organization. See letter from
Mousset-Jones. We continue to believe that this criterion is
appropriate because, as one commenter noted, in the United States,
it is typically a board authorized by state statute that regulates
professionals in the mining, geoscience, engineering, geology or
related field. See letter from NSPE.
---------------------------------------------------------------------------

    Adoption of the qualified person definition will align the
Commission's rules with the CRIRSCO standards and, as commenters noted,
help ensure that the qualified person assumes the appropriate personal
responsibility for his or her findings and conclusions.\341\ Although
some commenters recommended adding to the requirement,\342\ adoption of
the ``at least five years of relevant experience'' requirement will
provide further consistency with the CRIRSCO-based codes.\343\
---------------------------------------------------------------------------

    \341\ See supra note 315 and accompanying text.
    \342\ See letters from AIPG, Coeur, MMSA, and SME 1.
    \343\ See, e.g., letters from CBRR, Eggleston, Midas, SAMCODES
1, and SRK 1.
---------------------------------------------------------------------------

    Similar to proposed instructions, we are adopting a definition of
the term ``relevant experience'' for purposes of determining whether a
party is a qualified person. This definition is substantially similar
to guidance provided under the CRIRSCO-based codes. For that reason,
most commenters that addressed the issue found the proposed
instructions to be adequate.\344\ As one commenter explained, the
proposed instructions ``are well aligned to established CRIRSCO
template guidance.'' \345\
---------------------------------------------------------------------------

    \344\ See letters from AngloGold, CBRR, Eggleston, Midas, Rio
Tinto, and SRK 1.
    \345\ Letter from Rio Tinto.
---------------------------------------------------------------------------

    This definition first provides that 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.
For example, 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 technical and economic
factors likely to influence the prospect of economic extraction.
Similarly, 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.\346\
---------------------------------------------------------------------------

    \346\ See the definition of ``relevant experience'' in 17 CFR
229.1300.
---------------------------------------------------------------------------

    This definition next provides that a qualified person must also
have relevant experience in evaluating the specific type of mineral
deposit under consideration (e.g., coal, metal, base metal, industrial
mineral, or mineral brine). What constitutes relevant experience in
this regard 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.\347\
---------------------------------------------------------------------------

    \347\ See paragraph (1) of the definition of ``relevant
experience'' in 17 CFR 229.1300.
---------------------------------------------------------------------------

    This definition also explains that 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.\348\
---------------------------------------------------------------------------

    \348\ See Note 1 to paragraph (1) of the definition of
``relevant experience'' in 17 CFR 229.1300.
---------------------------------------------------------------------------

    This definition further provides that, in addition to experience in
the specific type of mineralization, if the qualified person is engaged
in evaluating exploration results or preparing mineral resource
estimates, the qualified person must have sufficient experience with
the sampling and analytical techniques, as well as extraction and
processing techniques, relevant to the mineral deposit under
consideration. ``Sufficient experience'' in this context 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.\349\
---------------------------------------------------------------------------

    \349\ See paragraph (2) of the definition of ``relevant
experience'' in 17 CFR 229.1300.
---------------------------------------------------------------------------

    Finally, this definition provides that, for a qualified person
applying the modifying factors to convert mineral resources to mineral
reserves, he or she must have both sufficient knowledge and experience
in the application of these factors to the mineral deposit under
consideration, as well as experience with the geology, geostatistics,
mining, extraction, and processing that is applicable to the type of
mineral and mining under consideration.\350\
---------------------------------------------------------------------------

    \350\ See paragraph (3) of the definition of ``relevant
experience'' in 17 CFR 229.1300.
---------------------------------------------------------------------------

    These detailed provisions regarding the meaning of ``relevant
experience'' will help assure that the qualified person has the
appropriate level of experience for both the type of activity and type
of mineral deposit involved to make accurate assessments about the
registrant's exploration results, mineral resources, and mineral
reserves. At the same time, we believe that the adopted definition of
``qualified person,'' taken together with these related provisions,
will provide sufficient flexibility in terms of the required level of
experience and professional standing. Moreover, because the CRIRSCO-
based codes provide similar guidance for the type of experience
required for a competent or qualified person, the adopted definition of
qualified person and related provisions should not significantly alter
existing disclosure practices for registrants subject to those
codes.\351\
---------------------------------------------------------------------------

    \351\ See, e.g., CIM Standing Committee on Reserve Definitions,
CIM Definition Standards--For Mineral Resources and Mineral Reserves
2 (2014) (``CIM Definition Standards''), https://mrmr.cim.org/media/1016/cim_definition_standards_20142.pdf; JORC Code, supra note 175,
at pt. 11; SAMREC Code, supra note 267, at pt. 10; and SME Guide,
supra note 177, at pt. 9.
---------------------------------------------------------------------------

    The final rules do not require a qualified person to have attained
a specific minimum education level because, as several commenters
noted, the recognized professional organizations typically address such
a requirement in their membership criteria.\352\ Although one commenter
suggested adding other criteria to the definition of ``recognized
professional organization,'' \353\ we believe our less prescriptive
approach, which establishes the minimum criteria that an organization
must meet to be considered a recognized professional association, is
the better approach. Consistent with the proposed rules, the final
rules include requiring or encouraging continuing professional
development as one of the defining criteria of a recognized
professional organization. Like most commenters that addressed the
issue,\354\ we agree that it is better to leave the treatment of
continuing professional development to the professional organizations
who are more knowledgeable about whether industry developments require
additional training of their members.\355\
---------------------------------------------------------------------------

    \352\  See supra note 324 and accompanying text.
    \353\ See letter from SME 1.
    \354\ See letters from Amec, CBRR, Midas, Rio Tinto, SRK 1, and
Vale.
    \355\ See, e.g., letter from Rio Tinto.
---------------------------------------------------------------------------

    We are not publishing an approved list of ``recognized professional
organizations.'' We continue to believe that our principles-based
approach, which some commenters preferred because of its
flexibility,\356\ provides assurance that the qualified person has the
appropriate level of professional expertise to support the disclosure
of exploration results, mineral resources, or mineral reserves without
unduly restricting the pool of eligible qualified persons. Although we
acknowledge that the ``approved organization'' approach may be
initially easier to apply, it could also become outdated as
circumstances change, which could adversely affect the quality of
disclosure.\357\
---------------------------------------------------------------------------

    \356\ See letters from Alliance and Golder.
    \357\ We also do not believe it would be appropriate to
reference a specific approved list of recognized professional
organizations adopted under one of the CRIRSCO-based codes, as
suggested by some commenters. See supra notes 332-334. This would
effectively bind the Commission's rules to a current and future
standard adopted by a third-party entity over which the Commission
would have little to no control or influence.
---------------------------------------------------------------------------

D. Treatment of Exploration Results

1. Rule Proposal
    Neither Guide 7 nor Item 102 addresses the disclosure of
exploration results in Commission filings.\358\ In contrast, the
CRIRSCO-based codes permit the disclosure of exploration results, which
are defined as data and information generated by mineral exploration
programs that might be of use to investors but which do not form part
of a disclosure of mineral resources or mineral reserves.\359\
---------------------------------------------------------------------------

    \358\ Accordingly, the staff does not currently request
disclosure of exploration results. If a registrant voluntarily
provides exploration results, the staff will review, and if
appropriate, issue comments on, such disclosure.
    \359\ See, e.g., JORC Code, supra note 175, at pts. 18-19;
SAMREC Code, supra note 267, at pt. 20; PERC Reporting Standard,
supra note 302, at pt. 6; and SME Guide, supra note 177, at pts. 33-
34.
---------------------------------------------------------------------------

    We proposed to require that a registrant disclose its exploration
activity and its material exploration results for each of its material
properties for its most recently completed fiscal year.\360\ Similar to
the CRIRSCO-based codes, we proposed to define exploration results as
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. We
further proposed an instruction explaining that when determining
whether exploration results are material, a registrant should consider
their importance in assessing the value of a material property or in
deciding whether to develop the property.\361\
---------------------------------------------------------------------------

    \360\ See Proposing Release, supra note 5, at Section II.D.
    \361\ See id.
---------------------------------------------------------------------------

    In addition, we proposed to prohibit the use of exploration
results, by themselves, to derive estimates of tonnage, grade, and
production rates, or in an assessment of economic viability because of
the level of risk associated with exploration results.\362\ As we
explained, exploration results, by themselves, are inherently
speculative in that they do not include an assessment of geologic and
grade or quality continuity and overall geologic uncertainty.
Therefore, we indicated that exploration results are insufficient to
support disclosure of estimates of tonnage, grade, or other
quantitative

estimates.\363\ As proposed, tonnage and grade estimates would only be
part of mineral resource and reserve estimates, which must include an
assessment of geologic and grade or quality continuity and overall
geologic uncertainty.\364\
---------------------------------------------------------------------------

    \362\ See id.
    \363\ See id.
    \364\ See id. Similar restrictions on the use of exploration
results exist under the CRIRSCO standards. See, e.g., CRIRSCO
International Reporting Template, supra note 20, at cl. 18, which
states that ``[i]t should be made clear in public reports that
contain Mineral Exploration Results that it is inappropriate to use
such information to derive estimates of tonnage and grade.''
---------------------------------------------------------------------------

2. Comments on the Rule Proposal
    Several commenters generally supported requiring the disclosure of
material exploration results on material properties.\365\ One commenter
stated that exploration results on material properties are the basis
for valuing the property and, hence, should be disclosed in a technical
report specific to the property in question.\366\ Another commenter
stated that exploration results are ``important information for
investors, particularly in respect of exploration or development
companies, where exploration results might be all or a significant
portion of the information on the company's properties.'' \367\ A third
commenter stated that disclosure of material exploration results for
material properties should be required for exploration stage
registrants, but not for large production stage registrants, because
the same level of exploration results might not be deemed
material.\368\ A fourth commenter supported the required disclosure of
material exploration results for material properties as long as the
exploration information required to be disclosed is consistent with the
CRIRSCO definitions.\369\
---------------------------------------------------------------------------

    \365\ See letters from BHP, Eggleston, Midas, Rio Tinto, and
SAMCODES 2.
    \366\ See letter from Eggleston.
    \367\ Letter from Midas.
    \368\ See letter from Rio Tinto; see also letter from BHP
(agreeing with the proposed material exploration results disclosure
requirement because it is a common practice promoted in other
jurisdictions for small to medium-sized listed companies to disclose
material exploration results).
    \369\ See letter from SAMCODES 2.
---------------------------------------------------------------------------

    Many other commenters opposed requiring the disclosure of material
exploration results on a registrant's material properties.\370\ Most of
those commenters expressed concern that requiring the disclosure of
material exploration results could compel the disclosure of
commercially sensitive information and the potential violation of
confidentiality agreements with joint venture partners and other mining
operators (e.g., on adjacent properties).\371\ Several of those
commenters asserted that compulsory disclosure of exploration results
would be inconsistent with the CRIRSCO-based codes, which permit or
encourage but do not require such disclosure.\372\ One of the
commenters stated that, under the CRIRSCO standards, disclosure of
exploration results is voluntary until such information becomes
material to investors.\373\ Because the rule proposal would require the
disclosure of material exploration results on a material property on a
yearly basis, this commenter expressed concern that a registrant might
be compelled to disclose its exploration results in most instances even
before those exploration results would be considered material to
investors.\374\ Other commenters expressed concern that investors would
misconstrue the significance of exploration results.\375\ For example,
one commenter stated that the disclosure of material exploration
results ``is very likely to mislead investors into thinking that a
property is more economically viable than it may actually be given the
low level of certainty of exploration results.'' \376\
---------------------------------------------------------------------------

    \370\ See letters from Alliance, AngloGold, Cloud Peak, CIM,
Cleary & Gottlieb, Coeur, Davis Polk, FCX, Gold Resource, Newmont,
NMA 1, Royal Gold, SME 1, SRK 1, Vale, and Willis.
    \371\ See letters from Alliance, Cleary & Gottlieb, Cloud Peak,
CIM, Davis Polk, FCX, Gold Resource, Newmont, NMA 1, Royal Gold, SME
1, and Vale.
    \372\ See, e.g., letters from CIM, Cleary & Gottlieb, Gold
Resource, SME 1, and Vale.
    \373\ See letter from SME 1.
    \374\ See id.
    \375\ See letters from Alliance, AngloGold, and SRK 1.
    \376\ Letter from Alliance.
---------------------------------------------------------------------------

    Because of the above concerns, most of the commenters that
addressed the issue recommended that the Commission permit, but not
require, the disclosure of material exploration results on material
properties.\377\ In this regard, some commenters distinguished between
exploration or development stage issuers, on the one hand, and
production stage issuers, on the other.\378\ These commenters stated
that because exploration results may be the only available information
for certain exploration or development stage issuers, the disclosure of
exploration results would be material for investors in these types of
issuers. For production stage issuers, however, the disclosure of
exploration results would generally result in immaterial information
that would be costly and burdensome to prepare.
---------------------------------------------------------------------------

    \377\ See letters from AngloGold, Cleary & Gottlieb, Cloud Peak,
CIM, Coeur, Davis Polk, FCX, Gold Resource, Newmont, Royal Gold, SME
1, SRK 1, Vale, and Willis.
    \378\ See letters from Amec, Cleary & Gottlieb, and Vale.
Another commenter agreed that exploration results ``may be all or a
significant portion of the available information regarding the
properties of an exploration or development-stage mining company,''
but nevertheless recommended the voluntary disclosure of exploration
activity and exploration results, including by exploration or
development stage companies. Letter from FCX.
---------------------------------------------------------------------------

    A number of commenters also opposed the Commission's proposed
prohibition of the use of exploration results to derive estimates of
tonnage and grade because, under the CRIRSCO standards, qualified
persons and registrants are allowed to disclose exploration targets,
which are quantitative estimates of the ranges of tonnage and grade of
a mineral deposit, which is the target of exploration.\379\ These
commenters recommended that the Commission permit the disclosure of
exploration targets, as defined under the CRIRSCO standards,\380\ which
would allow a registrant to provide a range of estimates of tonnage and
grade, while also requiring the registrant to provide ``cautionary
language of equal prominence that the potential quantity and grade is
conceptual in nature, that there has been insufficient exploration to
define the mineralization as a mineral resource and that it is
uncertain if further exploration will result in the target delineated
as a mineral resource.'' \381\
---------------------------------------------------------------------------

    \379\ Letter from CIM. See also letters from Amec, AngloGold,
BHP, CBRR, Coeur, CRIRSCO, JORC, SAMCODES 1, SME 1, SRK 1, Vale, and
Willis.
    \380\ Under the CRIRSCO standards, an exploration target is a
statement or estimate of the exploration potential of a mineral
deposit in a defined geological setting where the statement or
estimate, quoted as a range of tons and a range of grade or quality,
relates to mineralization for which there has been insufficient
exploration to estimate mineral resources. CRIRSCO International
Reporting Template, supra note 20, at cl. 17.
    \381\ Id.; see also letter from CIM.
---------------------------------------------------------------------------

    Commenters that addressed the proposed definition of exploration
results had varied opinions. One commenter supported without
elaboration the Commission's proposed definition of exploration
results.\382\ Another commenter generally agreed with the proposed
definition of exploration results, indicating that they ``are correctly
defined as not forming part of a mineral resource or mineral reserve,''
but suggested adding to the definition information generated by
``geophysical and geochemical surveys, remote sensing information, bulk
sampling, test mining (not for commercial purposes).'' \383\
---------------------------------------------------------------------------

    \382\ See letter from AngloGold.
    \383\ Letter from Midas.
---------------------------------------------------------------------------

    A third commenter, however, opposed the proposed definition because
it does not include all techniques typically employed by exploration
geologists and therefore

recommended adding to the definition ``[a]ll industry standard
activities of geologic exploration.'' \384\ A fourth commenter objected
to the part of the proposed definition that excludes exploration
results from forming part of a declaration of mineral resources or
mineral reserves because exploration results are the basis of the
mineral resource and mineral reserve estimates.\385\
---------------------------------------------------------------------------

    \384\ Letter from SRK 1.
    \385\ See letter from Amec. Because ``exploration results do not
become something other than exploration results once a [m]ineral
[r]esource or [m]ineral [r]eserve is declared,'' the commenter
preferred the definition of ``exploration information'' under
Canada's NI 43-101. That definition provides that exploration
information ``means geological, geophysical, geochemical, sampling,
drilling, trenching, analytical testing, assaying, mineralogical,
metallurgical, and other similar information concerning a particular
property that is derived from activities undertaken to locate,
investigate, define, or delineate a mineral prospect or mineral
deposit.'' Canada's NI 43-101, supra note 123, at pt. 1.1.
---------------------------------------------------------------------------

3. Final Rules
    We continue to believe that the disclosure of exploration results,
to the extent that they are material, will provide investors with a
more comprehensive picture of a registrant's mining operations and help
them make more informed investment decisions. However, we also
recognize the concern of commenters that, because we proposed to
require annual disclosure of material exploration results on a material
property, a registrant might misinterpret the requirement as compelling
it to disclose its exploration results in most instances, even before
those exploration results would be considered material to
investors.\386\ Such a result would conflict with the approach under
the CRIRSCO standards, pursuant to which ``the release of exploration
results [is] optional, and an issuer is only required to provide full
disclosure of exploration results when considered appropriate and
material to the investor.'' \387\
---------------------------------------------------------------------------

    \386\ See, e.g., letter from SME 1.
    \387\ Id.
---------------------------------------------------------------------------

    The approach we are adopting regarding the disclosure of
exploration results is substantially similar to the CRIRSCO approach.
To make this clear, the final rules provide that if the registrant is
disclosing exploration activity or exploration results for its most
recently completed fiscal year, it must then provide the specified
disclosure, as discussed below.\388\ This approach recognizes that the
disclosure of exploration activity and exploration results is voluntary
and largely within the discretion of the registrant until such activity
and the concomitant results become material for investors. Once the
exploration activity and related results become material, under the
final rules they must be disclosed.\389\ When determining whether
exploration results and related exploration activity are material, the
registrant should consider all relevant facts and circumstances, such
as the importance of the exploration results in assessing the value of
a material property or in deciding whether to develop the property, and
the particular stage of the property.\390\
---------------------------------------------------------------------------

    \388\ 17 CFR 229.1304(g)(1) and (2) [Item 1304(g)(1) and (2) of
Regulation S-K].
    \389\ 17 CFR 229.1304(g)(4) [Item 1304(g)(4) of Regulation S-K],
which states that a registrant must disclose exploration results and
related exploration activity for a material property under this
section if they are material to investors.
    \390\ See id.
---------------------------------------------------------------------------

    A company engaged in mining activities frequently uses exploration
results, prior to a determination of mineral resources, to assess the
economic potential of its property as part of its decision to develop a
property. In addition, a company uses exploration results to determine
whether mineral resources exist and to estimate the mineral resources.
To the extent that mineral resources (and mineral reserves estimated
from them) on a particular property are material, depending on the
facts and circumstances, the exploration results that led to the
estimation of those mineral resources could also be material.
    The registrant will be required to make a good faith determination
regarding the materiality of its exploration activity and exploration
results at the end of each completed fiscal year. In this regard, we
are providing some guidance for a registrant's materiality
determination regarding exploration results and related exploration
activity.\391\ Because materiality is a facts-and-circumstances
determination, what is material for one registrant may not be material
for another. For example, as commenters have noted,\392\ investors may
be more likely to find material the exploration activity and
exploration results of an exploration-stage issuer since such
information may comprise most, if not all, of the information regarding
mining assets available for that registrant. In contrast, investors may
be less likely to find material the exploration activity and
exploration results of a production-stage issuer where the primary
activity and investor interest are regarding the reserves being
extracted and their economic value.
---------------------------------------------------------------------------

    \391\ See id.
    \392\ See supra note 378 and accompanying text.
---------------------------------------------------------------------------

    As previously noted, one factor to be considered when determining
the materiality of a registrant's exploration activity and concomitant
exploration results is the importance of that information in assessing
the value of a material property or in deciding whether to develop the
property.\393\ For example, exploration results that have significantly
affected the registrant's analysis or estimates of the life of a
material mining project would likely be considered material, thus
triggering a disclosure obligation. In contrast, exploration results in
the early stages of exploration activity may not rise to the level of
material information if they do not affect the registrant's decision to
develop the property. Similarly, an exploration result may not be
material if the registrant has determined that other features of the
property make the development of the property unlikely.
---------------------------------------------------------------------------

    \393\ See Proposing Release, supra note 5, at Section II.D.
---------------------------------------------------------------------------

    Requiring the disclosure of exploration results only when they have
become material to investors will more closely align our disclosure
rules with the CRIRSCO standards,\394\ which should help limit the
final rules' compliance costs. Furthermore, although some commenters
expressed concern that investors would misconstrue the significance of
exploration results, we believe this risk will be mitigated by
precluding the use of exploration results alone, without due
consideration of geologic uncertainty and economic prospects, to serve
as a basis for disclosure of tonnage, grade, and production rates, or
in an assessment of economic viability.
---------------------------------------------------------------------------

    \394\ See letter from SME 1.
---------------------------------------------------------------------------

    In a change from the proposed rules, if a registrant discloses
exploration results, the final rules do not require the registrant to
file a technical report summary to support such disclosure, even though
the disclosure itself must still be based on information and supporting
documentation by a qualified person.\395\ This elective treatment of
technical report summaries for exploration results should also help
limit compliance costs for the registrant and could reduce the
potential for investor confusion regarding the significance of the
disclosed results, about which some commenters expressed concern.\396\
Furthermore, making the technical report summary optional for
exploration results should also mitigate the concern of some

commenters \397\ who believed that requiring the disclosure of
exploration results would result in the disclosure of proprietary and
commercially sensitive information. This is because such information is
more likely to be found in the technical report summary's detailed
disclosure requirements for exploration activity and exploration
results (compared to the disclosure required in the narrative part of
the Commission filing).
---------------------------------------------------------------------------

    \395\ See Item 1302(b)(1) of Regulation S-K.
    \396\ See supra note 375 and accompanying text.
    \397\ See letters of Alliance and FCX.
---------------------------------------------------------------------------

    We are adopting the definition of exploration results, as
proposed.\398\ Although some commenters objected to the definition
because it does not include all activities related to exploration
programs,\399\ the specific activities mentioned are intended to be
illustrative of exploration activities and are not meant to exclude
other activities. In this regard, we note that the definition includes
``other similar activities undertaken to locate, investigate, define or
delineate a mineral prospect or mineral deposit.'' \400\ Moreover, the
specific activities mentioned in the definition are substantially
similar to the activities mentioned in the definition of ``exploration
information'' under Canada's NI 43-101.\401\
---------------------------------------------------------------------------

    \398\ See the definition of ``exploration results'' in 17 CFR
229.1300.
    \399\ See letters from Amec and SRK 1.
    \400\ See 17 CFR 229.1300.
    \401\ See supra note 385 and accompanying text.
---------------------------------------------------------------------------

    While some commenters objected to the definition of exploration
results as referencing data and information ``that are not part of a
disclosure of mineral resources or reserves,'' \402\ this part of the
definition is consistent with the definition of exploration results
under the CRIRSCO-based codes.\403\ This language is not meant to deny
the connection between, and continuum of, exploration results, mineral
resources and mineral reserves, which a successful mining project will
reveal. Rather, it is meant to underscore the geologic and economic
uncertainties underlying exploration results, compared to the levels of
certainty required to arrive at estimates of mineral resources and
reserves, which only additional work by the qualified person can
resolve.
---------------------------------------------------------------------------

    \402\ See letters from Amec and Eggleston.
    \403\ See, e.g., JORC Code, supra note 175, at pt. 18; SAMREC
Code, supra note 267, at pt. 20; PERC Reporting Standard, supra note
302, at pt. 6; and SME Guide, supra note 177, at pt. 33.
---------------------------------------------------------------------------

    Because of the low level of certainty underlying exploration
results, we are adopting the proposed restriction that a registrant
must not use exploration results alone to derive estimates of tonnage,
grade, and production rates, or in an assessment of economic viability.
This restriction is generally consistent with the CRIRSCO standards
\404\ although, as some commenters stated,\405\ those standards permit
the disclosure of exploration targets, which are expressed as a range
of tonnages and grades. Noting that the Proposing Release did not
discuss exploration targets, these commenters requested that we
specifically include exploration targets as a permitted item of
disclosure under the Commission's rules.\406\
---------------------------------------------------------------------------

    \404\ See, e.g., CRIRSCO International Reporting Template, supra
note 20, at cl. 18; and PERC Reporting Standard, supra note 302, at
pt. 6.
    \405\ See supra note 379 and accompanying text.
    \406\ See, e.g., letters from CBRR, CIM, CRIRSCO, and SME 1.
---------------------------------------------------------------------------

    We recognize that, as commenters indicated, it is common practice
for mining companies to discuss their exploration activities in terms
of an exploration target.\407\ As one commenter noted, placing
exploration results within the context of an exploration target helps
determine the materiality of those results.\408\ Moreover, as several
commenters indicated, exploration targets are typically discussed in a
technical report summary, particularly where the targets are in
proximity to mineral resources and reserves and, thus, may be material
to investors.\409\
---------------------------------------------------------------------------

    \407\ See, e.g., letter from SME 1.
    \408\ See letter from AngloGold.
    \409\ See, e.g., letters from CIM, Coeur, SME 1, Vale, and
Willis.
---------------------------------------------------------------------------

    Therefore, in response to commenters, the final rules provide that
a registrant may disclose an exploration target for one or more of its
properties that is based upon and accurately reflects information and
supporting documentation of a qualified person.\410\ This change will
also more closely align our rules with industry practice and global
standards. The final rules also provide that a qualified person may
include a discussion of an exploration target in a technical report
summary.\411\ Further, similar to the definition under the CRIRSCO
standards,\412\ the final rules define an exploration target to mean a
statement or estimate of the exploration potential of a mineral deposit
in a defined geological setting where the statement or estimate, quoted
as a range of tonnage and a range of grade (or quality), relates to
mineralization for which there has been insufficient exploration to
estimate a mineral resource.\413\
---------------------------------------------------------------------------

    \410\ 17 CFR 229.1302(c)(1) [Item 1302(c)(1) of Regulation S-K].
See also 17 CFR 229.1304(g)(5) [Item 1304(g)(5) of Regulation S-K]
(providing that a registrant may disclose an exploration target when
discussing exploration results or exploration activity related to a
material property as long as the disclosure is in compliance with
the requirements of Sec.  229.1302(c)).
    \411\ See 17 CFR 229.1302(c)(1).
    \412\ See CRIRSCO International Reporting Template, supra note
20, at cl. 17; see also JORC Code, supra note 175, at pt. 17; and
SAMREC Code, supra note 270, at pt. 21.
    \413\ See the definition of ``exploration target'' in 17 CFR
229.1300.
---------------------------------------------------------------------------

    However, we also recognize that the disclosure of exploration
targets poses the potential for investor confusion in that an investor
might misconstrue an exploration target as an estimate of a mineral
resource or mineral reserve. Therefore, the final rules provide that
any substantive disclosure of an exploration target must be provided in
a separate section of the Commission filing or technical report summary
that is clearly captioned as a discussion of an exploration target.
That section must include a clear and prominent statement that:

     The ranges of potential tonnage and grade (or quality)
of the exploration target are conceptual in nature;
     There has been insufficient exploration of the relevant
property or properties to estimate a mineral resource;
     It is uncertain if further exploration will result in
the estimation of a mineral resource; and
     The exploration target therefore does not represent,
and should not be construed to be, an estimate of a mineral resource
or mineral reserve.\414\
---------------------------------------------------------------------------

    \414\ 17 CFR 229.1302(c)(2) [Item 1302(c)(2) of Regulation S-K].

    This requirement is similar to the cautionary language required for
the disclosure of an exploration target under the CRIRSCO-based
codes.\415\ Several commenters recommended that we require such
disclosure of cautionary statements in conjunction with the disclosure
of exploration targets.\416\
---------------------------------------------------------------------------

    \415\ See, e.g., JORC Code, supra note 175, at pt. 17; and
SAMREC Code, supra note 270, at pt. 22.
    \416\ See, e.g., letters from CBRR, CIM, and SME 1.
---------------------------------------------------------------------------

    The final rules further require that any such disclosure of an
exploration target must also include:

     A detailed explanation of the basis for the exploration
target, such as the conceptual geological model used to develop the
target;
     An explanation of the process used to determine the
ranges of tonnage and grade, which must be expressed as
approximations;
     A statement clarifying whether the exploration target
is based on actual exploration results or on one or more proposed
exploration programs, which should include a description of the
level of exploration activity already completed, the proposed
exploration activities designed to test the validity of the
exploration target, and the timeframe in which those activities are
expected to be completed; and
     A statement that the ranges of tonnage and grade (or
quality) of the exploration

target could change as the proposed exploration activities are
completed.\417\
---------------------------------------------------------------------------

    \417\ 17 CFR 229.1302(c)(3) [Item 1302(c)(3) of Regulation S-K].

    These disclosure requirements will help investors understand the
conceptual basis and limitations of an exploration target, which should
help mitigate the potential for investor confusion about the target.
These disclosure requirements are also similar to the requirements for
exploration target disclosure under the CRIRSCO-based codes.\418\
Several commenters recommended that we require similar disclosure of
explanatory statements in conjunction with the disclosure of
exploration targets.\419\
---------------------------------------------------------------------------

    \418\ See, e.g., JORC Code, supra note 175, at pt. 17; and
SAMREC Code, supra note 267, at pt. 22.
    \419\ See supra note 416 and accompanying text.
---------------------------------------------------------------------------

    We did not propose, and we are not requiring, the disclosure of
exploration results by a registrant that has material mining operations
in the aggregate but no individual properties that are material.\420\
If a company has determined that it lacks material mining properties,
we believe it is unlikely that such a company would have exploration
results that are material. While a company with no material properties
could voluntarily elect to disclose exploration results for its
properties, we do not believe investors would benefit from a
requirement to disclose exploration results under those circumstances.
---------------------------------------------------------------------------

    \420\ An example of such a registrant would be an industrial
minerals company that has more than 50 properties none of which is
individually material. Under the final rules, such a company would
be required to provide summary disclosure concerning its mineral
resources and mineral reserves. See infra Section II.G.1 and 17 CFR
229.1303.
---------------------------------------------------------------------------

E. Treatment of Mineral Resources

1. The Mineral Resource Disclosure Requirement
i. Rule Proposal
    The determination of mineral resources is the second step, after
mineral exploration, that geoscientists and engineers use to assess the
value of a mining property.\421\ Most foreign mining codes require the
disclosure of material mineral resources.\422\ In contrast, Item 102
and Guide 7 preclude the disclosure of mineral resources in Commission
filings except in certain instances.\423\ According to industry
representatives, this restriction has limited the completeness and
relevance of the disclosures in SEC filings, and has caused confusion
among mining companies and their investors.\424\
---------------------------------------------------------------------------

    \421\ First, mining professionals use exploration results to
determine if a mineral deposit is present. Next, they estimate
mineral resources, which are the portions of the mineral deposit
that have prospects of economic extraction. The last step is the
determination of mineral reserves, which are the economically
mineable portions of the mineral resources.
    \422\ See, e.g., JORC Code, supra note 175, at pts. 14 and 20;
SAMREC Code, supra note 267, at pts. 3 and 24; SME Guide, supra note
177, at pts. 17 and 35; and PERC Reporting Standard, supra note 302,
at pts. 2.8 and 7.
    \423\ Both Guide 7 and Item 102 permit the disclosure of non-
reserve deposits, such as mineral resources, if such information is
required to be disclosed by foreign or state law or if such
estimates previously have been provided to a person (or any of its
affiliates) that is offering to acquire, merge, or consolidate with
the registrant, or otherwise to acquire the registrant's securities.
See Instruction 3 to paragraph (b)(5) of Guide 7 and Instruction 5
to Item 102 of Regulation S-K. Only Canada has adopted a mining
disclosure code as a matter of law. Other foreign mining codes have
been adopted as listing standards for foreign securities exchanges
or as guidelines by foreign securities commissions. See Proposing
Release, supra note 5, Section 5, note 14 and accompanying text.
    \424\ See SME Petition for Rulemaking, supra note 6, at 1-2.
---------------------------------------------------------------------------

    We proposed to require a registrant with material mining operations
to disclose specified information in its Securities Act and Exchange
Act filings concerning any mineral resources, as defined in the
proposed rules, that have been determined based on information and
supporting documentation from a qualified person.\425\ As proposed, a
registrant with material mining operations that has multiple properties
would have to provide both summary disclosure about its mineral
resources for all properties and more detailed disclosure concerning
its mineral resources for each material property.\426\
---------------------------------------------------------------------------

    \425\ See Proposing Release, supra note 5, at Section II.E.
    \426\ See Proposing Release, supra note 5, at Sections II.G.1-2.
---------------------------------------------------------------------------

    Under the proposed rules, while a registrant could not disclose
that it has determined that a mineral deposit constitutes a mineral
resource or mineral reserve unless that determination is based upon
information and supporting documentation \427\ prepared by a qualified
person, there would be no requirement that a registrant make such an
affirmative determination. For example, a registrant could choose not
to engage a qualified person to conduct the analyses and prepare the
documentation necessary to support a determination that a mineral
deposit is a mineral resource or reserve. In that case, under the
proposed rules, in the absence of such information and supporting
documentation, the registrant would be deemed not to have any mineral
resources, and as such, would not be required to disclose mineral
resources in a filing. If, however, the registrant did make the
determination that it had mineral resources based upon information and
supporting documentation prepared by a qualified person (e.g., as part
of its efforts to attract investors or secure project financing), then
under the proposed rules the registrant would be required to disclose
such mineral resources. This approach is consistent with the CRIRSCO-
based codes.\428\
---------------------------------------------------------------------------

    \427\ For both the proposing and final rules, ``information and
supporting documentation'' means an initial assessment for mineral
resource determination and a preliminary or final feasibility study
for mineral reserve determination, each as prepared by a qualified
person or persons. See Proposing Release, supra note 5 and infra at
Sections II.E.3. II.E.4., and II.F.2.
    \428\ Similarly, other significant mining jurisdictions do not
require a registrant to make the determination that it has mineral
resources or reserves, as defined by those codes. The regulatory
frameworks do, however, require disclosure of mineral resources and
mineral reserves once the registrant has made the determination that
it has them and they are material. See, e.g., Australian Security
Exchange Listing Rules (July 2014), r 5.7, 5.8, 5.9 (``ASX Listing
Rules''), https://www.asx.com.au/documents/rules/Chapter05.pdf
(providing guidance for disclosure of exploration results, mineral
resources and mineral reserves for ``material mining projects'').
---------------------------------------------------------------------------

    As previously noted, Item 102 and Guide 7 preclude the disclosure
of estimates other than reserves in SEC filings unless such information
is required to be disclosed by foreign or state law or if obtained and
reported in the context of an acquisition, merger, or business
combination. Since we proposed to require the disclosure of estimates
for mineral resources in addition to mineral reserves by a registrant
with material mining operations, the foreign or state law or business
transaction exception would no longer be necessary. Therefore, we also
proposed to eliminate this exception.\429\
---------------------------------------------------------------------------

    \429\ See Proposing Release, supra note 5, at Sections II.E.,
VIII.
---------------------------------------------------------------------------

ii. Comments on the Rule Proposal
    Numerous commenters supported the Commission's proposal to require
a registrant with material mining operations to disclose determined
mineral resources in addition to mineral reserves.\430\ For example,
one commenter stated that the requirement would align the Commission's
disclosure rules with the CRIRSCO standards, provide a level playing
field for U.S. mining registrants, and provide investors with important
information about the mining registrant and its assets.\431\
---------------------------------------------------------------------------

    \430\ See letters from Amec, AngloGold, BHP, CBRR, CIM,
Eggleston, FCX, Gold Resource, Midas, Newmont, Northern Dynasty, Rio
Tinto, SAMCODES 2, SRK 1, and Vale.
    \431\ See letter from Midas.
---------------------------------------------------------------------------

    Another commenter stated that shareholders and potential investors

should be made aware of a company's mineral resources because such
resources are recognized internationally as assets of a mineral
property and can materially change the valuation of the company.\432\
This commenter also stated that U.S. companies have been put at a
disadvantage by not being able to disclose the potential value of their
properties through the disclosure of mineral resources.\433\ A third
commenter indicated that the ``resource component is useful to
investors in understanding the potential asset life and forward
development options still under development.'' \434\ Because of the
widespread disclosure of mineral resources under the CRIRSCO-based
codes, several commenters saw little to no risk to investors from the
Commission's proposal to require a registrant with material mining
operations to disclose mineral resources.\435\
---------------------------------------------------------------------------

    \432\ See letter from Northern Dynasty; see also letter from SRK
1 (stating that disclosed mineral resources ``are an industry
standard evaluation of a potential or actual mining property'' that
``are commonly used by registrants and investors alike to evaluate
and compare specific properties as to their potential economic
value'').
    \433\ See letter from Northern Dynasty.
    \434\ Letter from Rio Tinto.
    \435\ See letters from AngloGold, Eggleston, Rio Tinto, and SRK
1. Another commenter stated that it did not anticipate any risks
from the required disclosure of mineral resources as long as the
Commission adopted the CRIRSCO template and accompanying
definitions. See letter from CBRR.
---------------------------------------------------------------------------

    One commenter acknowledged that there is a minor risk that
investors could interpret mineral resources as mineral reserves (i.e.,
that they imply economic viability).\436\ This commenter, however,
further stated that because of the widespread reporting of resources in
CRIRSCO jurisdictions, most investors understand the difference between
resources and reserves. Moreover, this commenter believed that the
Commission could mitigate any risk from resource disclosure by
requiring disclaimers as under Canada's NI 43-101, such as ``mineral
resources are not mineral reserves and do not have demonstrated
economic viability.'' \437\
---------------------------------------------------------------------------

    \436\ See letter from Midas.
    \437\ Id.
---------------------------------------------------------------------------

    A number of commenters in the industrial minerals or aggregates
industry were critical of the proposed mineral resource disclosure
requirement. One such commenter opposed a requirement to disclose
mineral resource information on the grounds that because resources are
marginally economic and of lower certainty, reporting resources ``could
mislead investors with limited knowledge of the mining industry into
believing that a mining operation has a larger number of future
saleable tons than would likely be the case.'' \438\ Another commenter
disagreed with the Commission's statement that mining companies and
their investors consider mineral resource estimates to be material and
fundamental information about a company and its projects. That
commenter described the statement as an overgeneralization that does
not apply to the aggregates business.\439\
---------------------------------------------------------------------------

    \438\ Letter from Alliance.
    \439\ See letter from NSSGA.
---------------------------------------------------------------------------

    Several commenters expressly supported the Commission's proposal to
require any disclosure of mineral resources in Commission filings to be
based on information and supporting documentation of a qualified
person.\440\ Some of these commenters stated that they did not know of
any circumstance that would justify the public disclosure of mineral
resources without the determination and approval of a qualified
person.\441\ One commenter, however, opposed the required disclosure of
mineral resources even if supported by a qualified person's information
and documentation.\442\ According to this commenter, the costs of
preparing such disclosure may be significant whereas the benefits of
such disclosure may be limited because of the inherent uncertainties in
resource estimation. For this reason, this commenter recommended that
the Commission make the disclosure of mineral resources optional even
if supported by a qualified person.\443\
---------------------------------------------------------------------------

    \440\ See, e.g., letters from Amec, AngloGold, Eggleston, Gold
Resource, Midas, Northern Dynasty, and SRK 1.
    \441\ See, e.g., letters from Eggleston, Midas, and SRK 1.
    \442\ See letter from Davis Polk.
    \443\ See id.
---------------------------------------------------------------------------

iii. Final Rules
    As proposed, the final rules provide that a registrant with
material mining operations must disclose specified information in its
Securities Act and Exchange Act filings concerning mineral resources
that have been determined to exist based on information and supporting
documentation from a qualified person.\444\ We continue to believe that
requiring a mining registrant with material mining operations to
disclose mineral resources in addition to mineral reserves will provide
investors with important information concerning the registrant's
operations and prospects. The importance of this information is
demonstrated by the fact that most foreign mining codes require the
disclosure of mineral resources; mining companies, including U.S.
registrants, routinely disclose mineral resource information on their
websites; and many mining company analysts consider mineral resource
information as an important factor in their valuations and