Modernization of Property Disclosures for Mining Registrants

1 15 U.S.C. 77a et seq.
2 15 U.S.C. 78a et seq.
3 17 CFR 239.90.
4 17 CFR 249.220f.
5See Modernization of Property Disclosures for Mining Registrants, Securities Act Release No. 33– 10098 (June 16, 2016) [81 FR 41651] (‘‘Proposing Release’’). 6We proposed to modernize our disclosure requirements for mining properties following a request by some industry participants to revise Guide 7. See Petition for Rulemaking from Society for Mining, Metallurgy and Exploration, Inc. to Elizabeth M. Murphy, Secretary, U.S. Securities & Exchange Commission (Oct. 1, 2012), (‘‘SME Petition for Rulemaking’’), http://www.sec.gov/ rules/petitions/2012/petn4-654.pdf. In accordance with 17 CFR 201.192 (Rule 192 of the Commission’s Rules of Practice), the Secretary of the Commission will notify the petitioners of the action taken by the Commission following the publication of this release in the Federal Register. SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 229, 230, 239, and 249 [Release Nos. 33–10570; 34–84509; File No. S7–10–16] RIN 3235–AL81 Modernization of Property Disclosures for Mining Registrants AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: We are adopting amendments to modernize the property disclosure requirements for mining registrants, and related guidance, currently set forth in Item 102 of Regulation S–K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and in Industry Guide 7. The amendments are intended to provide investors with a more comprehensive understanding of a registrant’s mining properties, which should help them make more informed investment decisions. The amendments also will more closely align the Commission’s disclosure requirements and policies for mining properties with current industry and global regulatory practices and standards. In addition, we are rescinding Industry Guide 7 and relocating the Commission’s mining property disclosure requirements to a new subpart of Regulation S–K. DATES: Effective date: The final rule amendments are effective February 25, 2019, except for the amendments to 17 CFR 229.801(g) and 229.802(g), which will be effective on January 1, 2021. Compliance date: Registrants engaged in mining operations must comply with the final rule amendments for the first fiscal year beginning on or after January 1, 2021. Industry Guide 7 will remain effective until all registrants are required to comply with the final rules, at which time Industry Guide 7 will be rescinded. FOR FURTHER INFORMATION CONTACT:
Elliot Staffin, Special Counsel, in the Division of Corporation Finance, at (202) 551–3430, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. SUPPLEMENTARY INFORMATION: We are amending 17 CFR 229.102 (‘‘Item 102 of Regulation S–K’’) under the Securities Act of 1933 (‘‘Securities Act’’) 1 and the Securities Exchange Act of 1934 (‘‘Exchange Act’’),2 adding new exhibit (96) to 17 CFR 229.601(b) (‘‘Item 601 of Regulation S–K’’), adding new 17 CFR
part 229, subpart 229.1300 (‘‘subpart
1300 of Regulation S–K’’), amending 17 CFR 230.436 under the Securities Act, amending Form 1–A,3 amending Form 20–F,4 and rescinding 17 CFR 229.801(g) and 229.802(g) under the Securities Act and Exchange Act.
Table of Contents
I. Introduction
A. Summary of, and Commenters’ Principal Concerns Regarding, the Commission’s Proposed Revisions to the Current Mining Property Disclosure Regime B. Summary of Principal Changes to the Final Rules
II. Final Mining Property Disclosure Rules
A. Consolidation of the Mining Disclosure Requirements

1. Rule Proposal
2. Comments on the Rule Proposal
3. Final Rules
   B. Overview of the Standard for Mining￾Related Disclosure
4. The Threshold Materiality Standard
5. Treatment of Vertically-Integrated
   Companies
6. Treatment of Multiple Property
   Ownership
7. Treatment of Royalty Companies and
   Other Companies Holding Economic Interests in Mining Properties
8. Definitions of Exploration, Development
   and Production Stage
   C. Qualified Person and Responsibility for
   Disclosure
9. The ‘‘Qualified Person’’ Requirement
10. The Definition of ‘‘Qualified Person’’
    D. Treatment of Exploration Results
11. Rule Proposal
12. Comments on the Rule Proposal
13. Final Rules
    E. Treatment of Mineral Resources
14. The Mineral Resource Disclosure
    Requirement
15. Definition of Mineral Resource
16. Classification of Mineral Resources
17. The Initial Assessment Requirement
18. USGS Circular 831 and 891
    F. Treatment of Mineral Reserves
19. The Framework for Determining Mineral
    Reserves
20. The Type of Study Required To Support
    a Reserve Determination
    G. Specific Disclosure Requirements
21. Requirements for Summary Disclosure
22. Requirements for Individual Property
    Disclosure
23. Requirements for Technical Report
    Summaries
24. Requirements for Internal Controls
    Disclosure
    H. Conforming Changes to Certain Forms Not Subject to Regulation S–K
25. Form 20–F
26. Form 1–A
    I. Transition Period and Compliance Date
    III. Other Matters
    IV. Economic Analysis
    A. Baseline
27. Affected Parties
28. Current Regulatory Framework and
    Market Practices
    B. Analysis of Potential Economic Effects
29. Broad Economic Effects of the Final
    Rules and Impact on Efficiency, Competition, and Capital Formation
30. Consolidation of the Mining Disclosure
    Requirements
31. The Standard for Mining-Related
    Disclosure
32. Qualified Person and Responsibility for
    Disclosure
33. Treatment of Exploration Results
34. Treatment of Mineral Resources
35. Treatment of Mineral Reserves
36. Specific Disclosure Requirements
37. Conforming Changes to Certain Forms
    Not Subject to Regulation S–K
    V. Paperwork Reduction Act
    A. Background
    B. Summary of Collection of Information Requirements
    C. Estimate of Potentially Affected
    Registrants
    D. Estimate of Reporting and Cost Burdens
    VI. Final Regulatory Flexibility Act Analysis
    A. Need for, and Objectives of, the Final Rules B. Significant Issues Raised by Public Comments
    C. Small Entities Subject to the Final Rules
    D. Reporting, Recordkeeping, and Other Compliance Requirements E. Duplicative, Overlapping or Conflicting Federal Rules F. Agency Action To Minimize Effect on Small Entities
    VII. Statutory Authority
    I. Introduction
    On June 16, 2016, the Commission proposed revisions to its disclosure requirements and related guidance under the Securities Act and Exchange Act for properties owned or operated by mining companies to provide investors with a more comprehensive understanding of a registrant’s mining properties to help them make more informed investment decisions.5 The Commission also proposed to modernize its disclosure requirements and policies for mining properties by more closely aligning them with current industry and global regulatory practices and standards.6 The Commission’s disclosure requirements are currently

7See U.S. Sec. & Exch. Comm’n. Industry Guide 7: Description of Property By Issuers Engaged or to Be Engaged in Significant Mining Operations (‘‘Guide 7’’). 8See Comments on Proposed Rule:
Modernization of Property Disclosures for Mining Registrants, U.S. Sec. & Exch. Comm’n, https:// www.sec.gov/comments/s7-10-16/s71016.htm. 9See, e.g., letters from Alliance Resource Partners, L.P. (Sept. 23, 2016) (‘‘Alliance’’); AngloGold Ashanti Limited (Aug. 22, 2016) (‘‘AngloGold’’); BHP Billiton (Sept. 23, 2016) (‘‘BHP’’); Cloud Peak Energy Inc. (Sept. 22, 2016) (‘‘Cloud Peak’’); Coeur Mining, Inc. (Aug. 19, 2016) (‘‘Coeur’’); Energy Fuels Inc. (Sept. 29, 2016) (‘‘Energy Fuels’’); Freeport-McMoRan Inc. (Sept. 23,
2016) (‘‘FCX’’); Gold Resource Corporation (Aug.
26, 2016) (‘‘Gold Resource’’); Newmont Mining Corporation (Sept. 26, 2016) (‘‘Newmont’’); Northern Dynasty Minerals Ltd. (Aug. 15, 2016) (‘‘Northern Dynasty’’); Randgold Resources Ltd. (Sept. 26, 2016) (‘‘Randgold’’); Rio Tinto plc (Sept. 26, 2016) (‘‘Rio Tinto’’); Ur-Energy Inc. (Sept. 26,
2016) (‘‘Ur-Energy’’); and Vale S.A. (Aug. 26, 2016)
(‘‘Vale’’).
10See, e.g., letters from Australasian Institute of Mining and Metallurgy (Sept. 26, 2016) (‘‘AusIMM’’); Canadian Institute of Mining, Metallurgy and Petroleum (Aug. 26, 2016) (‘‘CIM’’); Comissao Brasileira de Recursos e Reservas (Sept. 5, 2016) (‘‘CBRR’’); Committee for Mineral Reserves International Reporting Standards (Sept. 23, 2016) (‘‘CRIRSCO’’); Joint Ore Reserves Committee of Australasia (Sept. 26, 2016) (‘‘JORC’’); SAMCODES Standards Committee (Sept. 22, 2016) (‘‘SAMCODES 1’’) and (Sept. 26, 2016) (‘‘SAMCODES 2’’); and Society for Mining, Metallurgy and Exploration, Inc. (Aug. 4, 2016) (‘‘SME 1’’) and Aug. 25, 2016) (‘‘SME 2’’). 11See, e.g., letters from Amec Foster Wheeler (Sept. 26, 2016) (‘‘Amec’’); CPM Group (Aug. 24,
2016) (‘‘CPM’’); Golder Associates, Inc. (Sept. 26,
2016) (‘‘Golder’’); and SRK Consulting (U.S.), Inc.
(Aug. 19, 2016) (‘‘SRK 1’’) and Sept. 26, 2016 (‘‘SRK 2’’). 12See, e.g., letters from American Institute of Professional Geologists (Aug. 22, 2016) (‘‘AIPG’’); Mining and Metallurgical Society of America (Sept. 26, 2016) (‘‘MMSA’’); and National Mining Association (Sept. 23, 2016) (‘‘NMA 1’’) and Sept. 29, 2017 (‘‘NMA 2 and SME 3’’). The latter letter from NMA was co-signed by SME and was submitted at the meeting between representatives of the National Mining Association and Ur-Energy and staff of the Commission’s Division of Corporation Finance on October 10, 2017. That letter is available at: https://www.sec.gov/comments/s7-10-16/s71016- 2633677-161226.pdf. See also letters from National Society of Professional Engineers (Aug. 16, 2016) (‘‘NSPE’’); National Stone, Sand & Gravel Association (Sept. 26, 2016) (‘‘NSSGA 1’’) and (Apr. 28, 2017) (‘‘NSSGA 2’’); Prospectors & Developers Association of Canada (Oct. 12, 2016) (‘‘PDAC’’); and U.S. Chamber of Commerce (Sept. 26, 2016) (‘‘Chamber’’). 13See, e.g., letters from Andrews Kurth Kenyon LLP (Sept. 26, 2016) (‘‘Andrews Kurth’’); Cleary Gottlieb Steen & Hamilton LLP (Sept. 30, 2016) (‘‘Cleary Gottlieb’’); Crowell & Moring LLP (Sept. 16, 2016) (‘‘Crowell and Moring’’); Davis Polk & Wardwell LLP (Sept. 26, 2016) (‘‘Davis Polk’’); Dorsey & Whitney LLP (Sept. 26, 2016) (‘‘Dorsey & Whitney’’); Shearman & Sterling LLP (Sept. 26,
2016) (‘‘Shearman & Sterling’’); Sullivan &
Cromwell LLP (Aug. 15, 2016) (‘‘Sullivan & Cromwell’’); Troutman Sanders LLP (Sept. 26, 2016) (‘‘Troutman Sanders’’); and Vinson & Elkins LLP (Sept. 26, 2016) (‘‘Vinson & Elkins’’). 14See, e.g., letters from Natural Resource Partners L.P. (Sept. 26, 2016) (‘‘NRP’’); and Royal Gold, Inc. (Sept. 26, 2016) (‘‘Royal Gold’’). 15See, e.g., letters from Ted Eggleston, Ph.D. (Aug. 19, 2016) (‘‘Eggleston’’); Douglas H. Graves, P.E. (Sept. 21, 2016) (‘‘Graves’’); Keith Laskowski (Aug. 26, 2016) (‘‘Laskowski’’); Michael Moats (Aug. 31, 2016) (‘‘Moats’’); Dr. Pierre Mousset-Jones (June 20, 2016) (‘‘Mousset-Jones’’); and Dana Willis, P.G. (Aug. 4, 2016) (‘‘Willis’’). 16See, e.g., letters from Carbon Tracker Initiative (Aug. 26, 2016) (‘‘Carbon Tracker’’); Center for Science in Public Participation (Sept. 22, 2016) (‘‘CSP2’’); Columbia Water Center (Sept. 26, 2016) (‘‘Columbia Water’’); Earthworks (and 21 other environmental advocates) (Sept. 26, 2016) (‘‘Earthworks et al.’’); Montana Trout Unlimited (Sept. 25, 2016) (‘‘Montana Trout’’); and Sustainability Accounting Standards Board (Aug. 26, 2016) (‘‘SASB’’). 17See, e.g., letters from Andrews Kurth, AngloGold, AusIMM, CIM, CSP2, Cleary Gottlieb, Coeur, Columbia Water, CBRR, CRIRSCO, Davis Polk, Dorsey & Whitney, Earthworks et al., Golder, Graves, JORC, MMSA, Montana Trout, Newmont, PDAC, Randgold, Rio Tinto, SME 1, Chamber, Ur￾Energy, Vale, and Willis. 18CRIRSCO is an international initiative to standardize definitions for mineral resources, mineral reserves, and related terms for public disclosure. CRIRSCO has representatives from professional societies involved in developing mineral reporting guidelines in Australasia (Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC)), Brazil (Brazilian Commission for Mineral Resources and Reserves (CBRR)), Canada (Canadian Institute of Mining Metallurgy and Petroleum (CIM)), Chile (Minera Comision), Europe (Pan￾European Reserves and Resources Reporting Committee (PERC)), Indonesia (the KCMI Joint Committee (KOMPERS)), Kazakhstan (Kazakhstan Association for Public Reporting on Exploration Results, Mineral Resources and Mineral Reserves (KAZRC)), Mongolia (Mongolian Professional Institute of Geosciences and Mining (MPIGM)), Russia (National Association for Subsoil Examination (NAEN)), South Africa (South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC)), and the USA (Society for Mining, Metallurgy and Exploration, Inc. (SME)). CRIRSCO’s website is located at: http://www.crirsco.com. 19See, e.g., letters from Amec, AIPG, Andrews Kurth, AngloGold, AusIMM, BHP, Chamber , CIM, Cleary & Gottlieb, Coeur, CRIRSCO, Davis Polk, Dorsey & Whitney, Eggleston, Energy Fuels, FCX, Gold Resource, Golder, Graves, JORC, Newmont, NMA 1, NMA 2 and SME 3, Northern Dynasty, NSSGA 1 and 2, PDAC, Randgold, Rio Tinto, SAMCODES 1 and 2, Shearman & Sterling, SME 1, SRK 1, Ur-Energy, Vale, and Willis.
20The CRIRSCO standards are found in its International Reporting Template. See, e.g., Committee for Mineral Reserves International Reporting Standards, CRIRSCO International Reporting Template, cl. 18 (2013), http:// www.crirsco.com/templates/international_ reporting_template_november_2013.pdf. 21See Section 2(b) of the Securities Act [15 U.S.C. 77b(b)] and Section 3(f) of the Exchange Act [15 U.S.C. 78c(f)]. See also infra Section IV. 22See, e.g., infra Section II.E.1.iii (discussing the treatment of mineral resources). found in Item 102 of Regulation S–K, and the related guidance appears in Industry Guide 7.7 We received over 60 comment letters on the proposed revisions 8 primarily from participants in, or representatives of, the mining industry, including mining companies,9 mining standards groups,10 mining consulting groups,11 professional and trade associations,12 law firms,13 mining royalty companies,14 and individual geologists and mining engineers.15 We also received comments from several groups expressing various environmental or sustainability concerns in connection with the mining industry.16 Most commenters supported modernizing the Commission’s property disclosure requirements for mining registrants by more closely aligning them with current industry and global regulatory practices and standards,17 as embodied by the Committee for Reserves International Reporting Standards (‘‘CRIRSCO’’).18 Numerous industry commenters,19 however, expressed concern that the proposed rules deviated, in certain respects, from the CRIRSCO standards 20 or the various international, CRIRSCO-based disclosure codes. As explained below, in a number of instances, we have revised the proposed requirements in line with commenters’ suggestions to be more consistent with the CRIRSCO standards and improve the comparability of mining property disclosures, which should help decrease, relative to the proposed rules, the expected compliance costs and burden of the final rules and enhance investor understanding of registrants’ mining operations. In other instances, we have not changed the proposed requirements because we believe that those requirements are necessary to protect investors. Overall, we believe that the final rules reflect an appropriate consideration of the extent to which the final rules promote efficiency, competition, and capital formation in addition to the protection of investors.21 The final rules will modernize the Commission’s mining property disclosure regime by amending or removing requirements that may have placed U.S. mining registrants at a competitive disadvantage 22 and by adding other requirements that will help investors make more informed investment decisions about those registrants. A. Summary of, and Commenters’ Principal Concerns Regarding, the Commission’s Proposed Revisions to the Current Mining Property Disclosure Regime In light of global developments in the mining industry’s disclosure standards and industry participants’
concerns, we proposed to align the Commission’s disclosure rules for properties owned or operated by mining companies with the CRIRSCO-based codes in several respects. For example, we proposed to require a registrant with material mining operations to disclose, in addition to its mineral reserves, mineral resources that

23However, as proposed, the final rules prohibit a registrant from including mineral reserves when disclosing mineral resource estimates in a prospectus or other Commission filing. have been determined based upon information and supporting documentation by one or more qualified persons. We proposed to use the CRIRSCO standards’ classification scheme regarding mineral resources and reserves, and proposed substantially similar definitions of many of the technical terms used under the CRIRSCO-based codes, such as the definition of the various categories of mineral resources and mineral reserves, qualified person, pre-feasibility study, and feasibility study. We also proposed to permit the qualified person to use the results of either a pre-feasibility study or a final feasibility study to support a determination of reserves in most situations. Further, we proposed to establish a single set of rules for mining property disclosure by rescinding Guide 7, replacing it with a new subpart of Regulation S–K, and amending Item 102 of Regulation S–K to refer to the new subpart. The proposed mining property disclosure rules would require a registrant with material mining operations to provide both summary disclosure concerning its properties in the aggregate as well as more detailed disclosure about individually material properties. While most commenters supported the Commission’s goal of modernizing its mining property disclosure requirements in light of global standards, numerous commenters expressed concern that the proposed rules deviated from the CRIRSCO standards in several respects. Their principal concerns included that:

• Requiring both mineral resource and
  reserve estimates to be based on a price, which may not exceed the average price for the preceding 24 months, except when a contract has defined the price, would diverge from global industry practice, which permits the qualified person to use any reasonable and justifiable price, and which is typically a price based on forward-looking pricing forecasts;
• The proposed summary and individual
  property disclosure requirements are overly prescriptive, burdensome to meet, and do not account for the diversity of operations within the mining industry;
• Prohibiting the use of inferred resources
  in a quantitative assessment of resources would be inconsistent with the CRIRSCO standards, and in particular Canadian mining disclosure requirements, which permit the inclusion of inferred resources to demonstrate the potential economic viability of a deposit;
• Requiring the use of a feasibility study,
  rather than a pre-feasibility study, to support a determination of reserves in high risk situations would run counter to the CRIRSCO-based codes, which leave the decision of what type of technical report is required to support the determination of reserves, including in high risk situations, to the discretion and judgment of the competent or qualified person;
• The proposed prohibition against
  disclaimers would be contrary to the CRIRSCO-based codes, and in particular the Canadian requirements, which permit disclaimers in certain circumstances;
• Prohibiting the use of historical
  estimates would be contrary to the Canadian and Australian approaches, which allow such use, and might preclude the consummation of some mergers, acquisitions or business combinations because there would not be enough time to verify an estimate provided by the target company;
• Requiring all applicable mining property
  disclosure from a royalty, streaming, or other similar company would be burdensome for such companies because they generally have no rights beyond receiving royalties and lack access to the technical data and other information available to the owner or operator, and which is necessary to comply with the mining property disclosure requirements; and
• The proposed rules could compel a
  registrant to disclose its exploration results before they become material to investors, which would run counter to the CRIRSCO￾based codes. Many commenters maintained that, unless the Commission revised the proposed rules, their adoption would result in mining registrants incurring an unnecessarily heavy compliance burden, increase the costs of compliance for mining registrants that also report in CRIRSCO-based jurisdictions, and result in inconsistent disclosure that could cause investor confusion and diminish comparability. Some commenters also maintained that, if adopted, the proposed rules would continue to place U.S. registrants at a significant competitive disadvantage and leave in place significant barriers to entry for foreign mining companies that would otherwise list or raise capital in the United States. We have carefully considered all of the comments received on the proposed rules. As discussed below, the final rules reflect changes from the rule proposal that were made in response to many of these comments. B. Summary of Principal Changes to the Final Rules The final rules include several revisions to more closely align the Commission’s mining property disclosure requirements with the CRIRSCO standards and thereby help decrease, relative to the proposed rules, the compliance burden and costs for the many registrants that are subject to one or more of the CRIRSCO-based codes while still providing important investor protections. For example, the final rules:
• Require a qualified person to use a price
  for each commodity that provides a reasonable basis for establishing the prospects of economic extraction when assessing mineral resources, and that provides a reasonable basis for establishing that the project is economically viable when determining mineral reserves, which may be a historical or forward-looking price, as long as the qualified person discloses and explains, with particularity, his or her reasons for using the selected price, including the material assumptions underlying the selection;
• Eliminate the proposed quantitative
  presumptions regarding when a registrant’s mining operations, and when a change in previously reported estimates of mineral resources or mineral reserves, are deemed to be material;
• Eliminate the proposed summary
  disclosure provision requiring specific items of information in tabular format about a registrant’s top 20 properties and, instead, adopt a more principles-based approach by requiring the registrant to provide investors with an overview of its properties and mining operations;
• Reduce the number of summary and
  individual property disclosure provisions requiring tables from seven, as proposed, to two, and permit other required disclosure to be in either narrative or tabular format;
• Permit, but not require, a registrant to
  file a technical report summary to support its disclosure of exploration results;
• Provide that a qualified person will not
  be subject to expert liability under Section 11 of the Securities Act for findings and conclusions regarding certain aspects of specified modifying factors discussed in the technical report summary or other parts of the registration statement that the qualified person has indicated are based on information provided by the registrant;
• Permit a qualified person to determine
  mineral resources and reserves at any specific point of reference, which must be disclosed in the technical report summary, rather than at three points of reference;
• Exclude geothermal energy from the
  definition of mineral resource;
• Require a qualified person to apply
  relevant technical and economic factors likely to influence the prospect of economic extraction, rather than all modifying factors, when determining mineral resources;
• Permit a qualified person in the
  technical report summary to disclose mineral resources as including mineral reserves as long as he or she also discloses mineral resources as excluding mineral reserves; 23
• Permit a qualified person to include
  inferred resources in an economic analysis that the qualified person opts to include in an initial assessment as long as certain conditions are met;
• Define mineral reserve to include
  diluting materials and allowances for losses that may occur when the material is mined or extracted;

24See Proposing Release, supra note 5, at Section II.A. 25Foreign private issuers use Form 20–F to file their Exchange Act registration statements and annual reports, and also refer to Form 20–F when filing their Securities Act registration statements on Forms F–1 and F–4. See 17 CFR 249.220f. 26Form 1–A is the offering statement used by issuers that are eligible to engage in securities offerings under Regulation A. See 17 CFR 230.251– 230.263. 27See letters from AIPG, Amec, AngloGold, BHP, CBRR, Coeur, Eggleston, Golder, MMSA, Midas Gold Corp. (June 23, 2016) (‘‘Midas’’), Randgold, Rio Tinto, SAMCODES 1 and 2, Ur-Energy, Vale and Willis. 28See letters from Amec, BHP, Crowell & Moring, Eggleston, Golder, Midas, Rio Tinto and SRK 1. 29See letter from NMA 2 and SME 3. 30See, e.g., letters from AIPG and Rio Tinto. 31See, e.g., letters from AIPG, Coeur, Gold Resource, Graves, SME 1, SRK 1, and Willis. 32See, e.g., letters from JORC, Randgold, and SAMCODES 2. 33 17 CFR 229.1300 through 229.1305. Subpart 1300 will apply to registration statements under the Securities Act and the Exchange Act as well as to annual reports under the Exchange Act. 34 Instruction 3 to Item 102 of Regulation S–K [17 CFR 229.102]. We are similarly amending Form 20– F and Form 1–A to provide the same instruction and reference to Regulation S–K subpart 1300. See infra Section II.H. 35Registrants that have material non-mining operations will continue to provide non-mining property disclosures under Item 102 of Regulation S–K. 36See supra note 28. For this reason, we continue to believe that codification of our mining property disclosure requirements is a better approach than revising Guide 7, as suggested by two commenters. See letter from NMA 2 and SME 3. Moreover, we note that the final rules are less prescriptive and conform more closely to CRIRSCO standards than the proposed rules. 37See supra note 27. 38Some commenters noted that, although the proposed rules differed from the CRIRSCO standards in certain respects, they did generally align with the CRIRSCO standards in several other respects. See, e.g., letter from AusIMM (‘‘Most of the CRIRSCO Standard definitions have been Continued

• Permit a qualified person to conduct
  either a pre-feasibility or final feasibility study to support a determination of mineral reserves even in high risk situations;
• Permit the use of historical estimates of
  mineral resources or reserves in Commission filings pertaining to mergers, acquisitions, or business combinations if the registrant is unable to update the estimate prior to the completion of the relevant transaction, provided that the registrant discloses the source and date of the estimate, and does not treat the estimate as a current estimate; and
• Permit a registrant holding a royalty or
  similar interest to omit any information required under the summary and individual property disclosure provisions to which it lacks access and which it cannot obtain without incurring an unreasonable burden or expense. We also are clarifying our position on a few issues raised by commenters that were not fully addressed in the Proposing Release. For example:
• Multiple qualified persons may prepare
  a technical report summary if certain conditions are met;
• If a qualified person is employed by a
  third-party firm, that firm may sign the technical report summary and provide the written consent required for an expert under the Securities Act;
• A registrant’s disclosure of information
  regarding its exploration activity and exploration results is voluntary until such information becomes material to investors; and
• A registrant and its qualified person may
  disclose exploration targets in Commission filings if accompanied by certain specified cautionary and explanatory statements. In addition, we are adopting a two￾year transition period so that a registrant will not have to comply with the new rules until its first fiscal year beginning on or after January 1, 2021, although a registrant may voluntarily comply with the new rules prior to the compliance date, subject to the Commission’s completion of necessary EDGAR reprogramming changes.
  II. Final Mining Property Disclosure
  Rules
  A. Consolidation of the Mining Disclosure Requirements

1. Rule Proposal
   The combination of the overlapping structure of the current disclosure regime for mining registrants (in Item 102 of Regulation S–K and Industry Guide 7) and the brevity of Guide 7, which has led to a significant amount of staff interpretive guidance through the comment process, may have created some regulatory uncertainty among mining registrants, particularly new registrants.24 To help address this uncertainty, we proposed to rescind Guide 7 and create new subpart 1300 of Regulation S–K that would govern disclosure for registrants with mining operations. In addition, we proposed to amend Item 102 of Regulation S–K to replace the instruction that directed issuers to the information called for in Guide 7 with a new instruction requiring all mining registrants to refer to and, if required, provide the disclosure under new subpart 1300 of Regulation S–K. We also proposed to provide the same instruction on Form 20–F 25 and Form 1–A.26
2. Comments on the Rule Proposal
   Many commenters stated that they supported the Commission’s proposal to rescind Guide 7 and replace it with a single set of disclosure standards as long as those standards are consistent with the CRIRSCO standards.27 Several commenters also reiterated that the Commission’s current disclosure regime for mining properties has caused uncertainty for mining registrants.28 Two commenters, however, urged the Commission to withdraw its proposal and, instead, make more modest revisions to Guide 7 out of concern that the proposed rules were overly prescriptive and deviated from the CRIRSCO standards in several key respects.29 Regarding the content of the new mining property disclosure rules, some commenters recommended that the Commission specifically incorporate the CRIRSCO template by reference.30 Other commenters requested that the Commission adopt Canada’s legal instrument, NI–43–101, establishing mining property disclosure requirements, or recognize the use of Canada’s Form 43–101F as the basis for a mining registrant’s technical reports.31 A few commenters stated that the Commission’s mining property disclosure rules should follow Australia’s JORC or South Africa’s SAMCODES on the grounds that Canada’s NI 43–101 is too prescriptive.32
3. Final Rules
   We are adopting final rules that will rescind Guide 7, as proposed, and codify the Commission’s mining property disclosure requirements in new subpart 1300 of Regulation S–K.33 We are also amending Item 102 of Regulation S–K, as proposed, to state that registrants engaged in mining operations must refer to and, if required, provide the disclosure under subpart 1300 of Regulation S–K 34 in addition to any non-mining property disclosure required by Item 102.35 Having one source for mining disclosure obligations should facilitate mining registrants’ compliance with their disclosure requirements by reducing the complexity resulting from the existing disclosure structure. Moreover, consolidating the mining property disclosure requirements into Regulation S–K should eliminate the uncertainty noted by several commenters concerning the Commission’s current mining property disclosure regime.36 Many commenters supported our proposal to consolidate the Commission’s mining property disclosure requirements under a single set of rules as long as the final rules align with the CRIRSCO standards.37 As discussed throughout this release, the final rules include revisions that will substantially more closely align the Commission’s mining property disclosure requirements with the CRIRSCO standards as compared to the proposed rules.38 The final rules also

incorporated in the release as they were in the 2014 SME Guide’’). 39See CRIRSCO International Reporting Template, supra note 20, at cl. 3 (‘‘The main principles governing the operation and application of the Template are transparency, materiality and competence. Transparency requires that the reader of a Public Report is provided with sufficient information, the presentation of which is clear and unambiguous, so as to understand the report and not to be misled. Materiality requires that a Public Report contains all the relevant information which investors and their professional advisers would reasonably require, and reasonably expect to find in a Public Report, for the purpose of making a reasoned and balanced judgement regarding the Exploration Results, Mineral Resources or Mineral Reserves being reported. Competence requires that the Public Report be based on work that is the responsibility of suitably qualified and experienced persons who are subject to an enforceable professional code of ethics and rules of conduct’’). 40See, e.g., consideration of the qualified person as an expert under Section 11 of the Securities Act in Section II.C.1. below. 41As proposed, the term ‘‘material’’ would have the same meaning as under 17 CFR 230.405 [Securities Act Rule 405] and 17 CFR 240.12b–2 [Exchange Act Rule 12b–2]. 42See Proposing Release, supra note 5, at Section II.B.1. 43See id. 44See, e.g., letters from AngloGold, CBRR, CIM, Eggleston, Midas, Rio Tinto, SRK 1 and Vale. 45See, e.g., letters from CBRR, Midas, and SRK 1. 46Accounting Standards Code (‘‘ASC’’) 280 requires an enterprise to report separately information concerning an operating segment if any of the following quantitative thresholds are met: (i) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments; (ii) the absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of either the combined reported profit of all operating segments that did not report a loss, or the combined reported loss of all operating segments that did report a loss; or (iii) its assets are 10% or more of the combined assets of all operating segments. Under ASC 280, information about operating segments that do not meet any of the quantitative thresholds may also be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to readers of the financial statements. See ASC 280– 10–50–12. 47See letters from Alliance, SAMCODES 1 and SME 1; see also letter from JORC (stating that materiality should be determined under GAAP without specifying the particular GAAP provision) and letter from SRK 1 (stating that the actual and projected expenditures, revenues and income as well as the amount of capital raised or planned to be raised have a direct impact on materiality, and that if any of those
amounts comprise 10% or more of a registrant’s value, they should be considered material). 48See letters from JORC, SAMCODES 1, and SME 1. 49See letters from CIM, Eggleston, and Vale. 50National Instrument Companion Policy 43– 101CP, pt. General Guidance (4), https:// www.bcsc.bc.ca/Securities_Law/Policies/Policy4/ PDF/43-101CP__CP___February_25__2016/. That document then lists several factors that are likely to support the conclusion that a property is material. See id. at (5). 51See letter from Chamber. 52 426 U.S. 438 (1976). 53 485 U.S. 224 (1988). emphasize transparency, materiality, and competence—the three governing principles of the CRIRSCO standards.39 We therefore believe that the final rules are responsive to commenters’ overarching concern that the Commission’s mining property disclosure requirements be substantially more consistent with current industry standards. We do not believe it would be appropriate, however, to incorporate by reference or otherwise adopt in its entirety on a going forward basis the CRIRSCO international template, Canada’s NI 43–101, or another specific CRIRSCO-based code or guide, as requested by some commenters. Granting such a request would effectively bind the Commission’s rules both to current and future iterations and interpretations of the CRIRSCO standards, codes or guides, over which the Commission would have little to no control or influence. It also would ignore the need to adopt mining property disclosure rules that are consistent with the unique purposes and characteristics of the U.S. federal securities laws.40 B. Overview of the Standard for Mining￾Related Disclosure

1. The Threshold Materiality Standard
   i. Rule Proposal
   Item 102 of Regulation S–K currently requires registrants to disclose information about principal mines, other materially important physical properties, and significant mining operations. Guide 7 only applies to registrants engaged or to be engaged in significant mining operations. However, Guide 7 does not define ‘‘significant’’ mining operations while Item 102 does not specify the particular quantitative factors to be considered in determining the materiality of a mine. For registrants that have one or more principal mines or other materially important properties but lack significant mining operations, Item 102 requires less detailed information. For registrants that have significant mining operations, Guide 7 calls for more extensive disclosures. However, although both Item 102 and Guide 7 refer to ‘‘significant’’ mining operations, the staff historically has advised registrants to apply a materiality standard in determining what disclosures to provide, and has used 10% of a registrant’s total assets as the benchmark for determining the materiality of a registrant’s mining operations. In order to clarify the mining property disclosure standard, we proposed that a registrant would be required to provide the disclosure under new subpart 1300 of Regulation S–K if its mining operations are material to its business or financial condition.41 The Commission also proposed specific steps a registrant would have to take when determining the materiality of its mining operations.42 The Commission further proposed that a registrant’s mining operations are presumed to be material if its mining assets constitute 10% or more of its total assets. The proposed rules also instructed, however, that if a registrant’s mining assets fall below the 10% total assets threshold, it would need to consider if there are other factors, quantitative or qualitative, which would render its mining operations material.43
   ii. Comments on the Rule Proposal
   Many commenters supported the Commission’s proposal to require disclosure if a registrant determines that its mining operations are material to its business or financial condition.44 Some commenters supported the proposed provision that a registrant’s mining operations are presumed to be material if they consist of 10% or more of its total assets, but only if the provision is a presumption and not a bright line test, and not exclusive of other factors.45 Some commenters supported using a quantitative measure for determining the materiality of a registrant’s mining operations for purposes of the proposed rules, but recommended that the Commission adopt the U.S. GAAP thresholds for segment reporting under Accounting Standards Codification (‘‘ASC’’) 280,46 rather than the proposed 10% asset metric.47 Those commenters preferred this particular U.S. GAAP approach because of their concern that large companies may not meet the proposed 10% asset test or because, in their view, the U.S. GAAP approach is more suitable and equitable.48 Other commenters recommended that the Commission avoid a specific materiality test and instead adopt the approach taken in Canada’s Companion Policy 43–101CP.49 That approach requires an issuer to ‘‘determine materiality in the context of the issuer’s overall business and financial condition taking into account qualitative and quantitative factors, assessed in respect of the issuer as a whole.’’ 50 Another commenter 51 opposed ‘‘special materiality tests (such as 10% of total assets)’’ and advocated instead using the standards for materiality established by the U.S. Supreme Court in TSC v. Northway 52 and Basic v. Levinson.53

54See letters from Alliance, Amec, AngloGold, CBRR, Eggleston, Midas, Rio Tinto, and SRK 1. 55See letter from SRK 1; see also letter from CBRR. 56See letters from Alliance and AngloGold. Another commenter stated that no commodity should be excluded, but suggested that only commodities from material properties should be included in technical reports although ‘‘[n]on￾material mines could be aggregated for annual disclosures.’’ Letter from Eggleston. 57See letter from Rio Tinto; see also letter from Amec (opposing the aggregation of assets in different countries, and recommending that the Commission follow the guidance in the Canadian Companion Policy 43–101CP, which states that a property includes multiple claims that are contiguous or in such close proximity that any underlying mineral deposits would likely be developed using common infrastructure). 58See letter from Amec. 59Letter from Midas. 60See, e.g., letters from Amec, CBRR, Earthworks, Eggleston, Midas and SRK. 61Letter from Midas. 62Letter from SRK 1. This commenter recommended that, ‘‘for companies that have significant downstream processing, there should be a requirement to calculate the materiality based on the point in the supply chain where that raw material would be purchased if the company did not own the mining assets.’’ Id. Another commenter stated that exploration through the first point of external sale is appropriate, but noted that not all properties will include all activities. See letter from Eggleston. See also letter from CBRR (stating that ‘‘comprehensive, end-to-end reporting can assist the investors with the relevant information in order to understand mineral projects for exploration and development stage issuers’’ but, for production stage registrants, ‘‘the materiality criteria should be applied and exploration results are not necessarily relevant’’). 63See letter from Earthworks. Two other commenters stressed the importance of considering environmental and sustainability factors in the materiality determination. See letters from CSP2 and Montana Trout. 64 17 CFR 229.1301(b) [Item 1301(b) of Regulation S–K]. 65 Id; see also supra note 41 and accompanying text. Pursuant to Securities Act Rule 405 and Exchange Act Rule 12b–2, a matter is material if there is a substantial likelihood that a reasonable investor would attach importance to it in determining whether to buy or sell the securities registered. This definition is consistent with the U.S. Supreme Court’s holding in TSC Industries v. Northway, Inc., 426 U.S. 438, 449 (1976), that a fact is material if there is a substantial likelihood that the fact would have been viewed by a reasonable investor as having significantly altered the ‘‘total mix’’ of information made available. 66See, e.g., letters from AngloGold, CBRR, SRK 1, and Rio Tinto. 67See CRIRSCO’s International Reporting Template, supra note 20, at cl. 3. 68See supra note 65. 69See letter from Chamber. 70See supra note 44 and accompanying text. 71As
explained in Section II.E.1., below, we are removing geothermal energy from the scope of these rules, and have therefore eliminated geothermal energy from the list of commodities required to be aggregated. 72See 17 CFR 229.1301(c) [Item 1301(c) of Regulation S–K]. Several commenters specifically addressed the Commission’s proposal to require the aggregation of all mining properties, regardless of size or type of commodity produced, when assessing the materiality of a registrant’s mining operations.54 A number of commenters generally supported this proposal, with one noting that aggregation of the mining properties represents the actual composition of the registrant’s value,55 and two others concurring so long as the aggregation correlated to the segment disclosure mandated under the accounting framework.56 Two commenters supported the aggregation of assets based on shared infrastructure and product integration, but only if the assets are in the same geographic region,57 with one also asserting that very different commodities, such as coal and metalliferous metals, should not be aggregated.58 Another commenter, however, opposed the aggregation of assets because ‘‘it does not allow investors to determine the significance of a property, or understand that asset.’’ 59 Several commenters addressed the Commission’s proposal, as part of the materiality determination, to require a registrant to include for each property all related activities from exploration through extraction to the first point of material external sale, including processing, transportation and warehousing.60 One commenter supported this proposal because it is required by Canada’s NI43–101, is the benchmark for mineral project reporting, and provides investors with the information they need to understand the project.61 Another commenter generally supported using the first point of material external sale as the appropriate cut-off because this is generally where a mining company loses control of the product.62 Another commenter, however, did not support the first point of material external sale as the appropriate cut-off because it believed that a registrant’s materiality determination should account for costs associated with mine reclamation on the grounds that reclamation constitutes one of the greatest environmental and social liabilities mining registrants should disclose to investors.63
iii. Final Rules
We are adopting the proposed provision that a registrant must provide the disclosure specified in subpart 1300 of Regulation S–K if its mining operations are material to its business or financial condition.64 We are also adopting the provision, as proposed, that for purposes of subpart 1300, the term material has the same meaning as under Securities Act Rule 405 or Exchange Act Rule 12b–2.65 Commenters generally supported basing the Commission’s mining property disclosure threshold on whether a registrant’s mining operations are material to its business or financial condition.66 Establishing materiality as the threshold for disclosure is consistent with the CRIRSCO standards, which lists materiality as one of the three governing principles underlying those standards.67 Moreover, by providing that materiality is to be determined pursuant to Securities Act Rule 405 and Exchange Act Rule 12b–2, we are clarifying that, although, as described below, a registrant must consider certain factors when determining the materiality of its mining operations, the ultimate governing considerations in this regard are the general principles reflected in those rules.68 In a change from the proposed rules, and as suggested by one commenter,69 we are not including an instruction to the materiality provision stating that a registrant’s mining operations are presumed to be material if they consist of 10% or more of its total assets. Even as a presumption, we are concerned that such an instruction could become a de facto threshold. We also believe that an assessment that takes into consideration all relevant facts and circumstances will lead to better materiality determinations. For similar reasons, we are not adopting a quantitative measure of materiality based on the reportable segment disclosure thresholds in U.S. GAAP. Rather than referring to a specific U.S. GAAP provision, we believe it is appropriate to rely on a more principles-based approach to the materiality provision. Consistent with comments received,70 we are adopting the proposed provision that, when determining whether its mining operations are material, a registrant must:

• Consider both quantitative and
  qualitative factors, assessed in the context of the registrant’s overall business and financial condition;
• Aggregate mining operations on all of its
  mining properties, regardless of the stage of the mining property, and size or type of commodity produced, including coal, metalliferous minerals, industrial materials, and mineral brines; 71 and
• Include, for each property, as applicable,
  all related activities from exploration through extraction to the first point of material external sale, including processing, transportation, and warehousing.72

73See, e.g., letters from Amec and Eggleston. 74See, e.g., letters from CBRR and SRK 1. 75See letter from Eggleston. 76See infra Section II.G.1; see also 17 CFR 229.1301(d) [Item 1301(d) of Regulation S–K]. 77See supra notes 61–62 and accompanying text. 78See, e.g., letter from Midas. 79See 17 CFR 229.601(b)(96)(iii)(B)(17) [Item 601(b)(96)(iii)(B)(17) of Regulation S–K], which requires the qualified person to describe the factors pertaining to environmental compliance, permitting, and local individuals or groups, which are related to the project, including ‘‘[m]ine closure plans, including remediation and reclamation plans, and the associated costs.’’ 17 CFR 229.601(b)(96)(iii)(B)(17)(v). 80 17 CFR 229.1301(a) [Item 1301(a) of Regulation S–K]. 81See infra Section II.B.4. 82See Proposing Release, supra note 5, at Section II.B.1.i. 83A vertically-integrated manufacturer is a company that owns part of its supply chain. In this context, it refers to a registrant that has mining operations to supply raw material to its manufacturing business. 84See Proposing Release, supra note 5, at Section II.B.1.i. 85See letters from Amec, AngloGold, CBRR, Midas, Rio Tinto, and SRK 1. AngloGold stated that ‘‘[i]f the mining component of a vertically￾integrated company is material to its operations, such as a secure source of supply, perceived cost advantage etc., then the same disclosures as mining companies should be required in order to provide a complete set of information to enable an investor to determine an investment decision.’’ 86See letter from Eggleston. 87See supra note 85 and accompanying text. Although some commenters sought to exclude certain commodities or properties in the aggregation process,73 we continue to believe, and agree with those commenters who asserted, that the aggregation of all mining properties, regardless of the mined commodity, is necessary to gauge accurately the materiality of a registrant’s mining operations.74 For example, the exclusion from the aggregation process of properties that a registrant believes are not individually material 75 would overlook and improperly remove from the scope of the mining property disclosure rules a registrant that owns two or more properties, neither of which is individually material, but which, when considered in the aggregate and in the context of the registrant’s overall business, constitute material mining operations. Therefore, the final rules require such a registrant to provide summary disclosure of its overall mining operations,76 although it will not be subject to the more extensive disclosure requirements for individual material properties. Most commenters who addressed the issue supported requiring, as part of the materiality determination, the inclusion for each property of all related activities from exploration through extraction to the first point of material external sale, including processing, transportation, and warehousing.77 Such inclusion is consistent with the ‘‘end-to-end
reporting’’ required under the CRIRSCO￾based codes.78 In this regard, we are not adopting the suggestion of one commenter to specify reclamation of the mine as the end point to be considered in the materiality provision. Mine reclamation and closure plans are important considerations that must be addressed by the qualified person, under the CRIRSCO-based codes. However, those plans are usually prepared as part of the assessment of technical and economic factors relevant to the reasonable prospects of economic extraction when determining mineral resources, or when applying all applicable modifying factors to resources for the purpose of assessing the economic viability of a project when determining mineral reserves. Also, mine reclamation costs are included in capital and operating costs during feasibility studies to estimate mineral reserves. The final rules follow this approach 79 and therefore do not specifically include reclamation as the end point in the materiality determination. However, we believe that mining properties that are at the reclamation stage are still considered mining properties and should be included in evaluations of the materiality of mining operations. Similar to a proposed instruction to the materiality provision, we are adopting a provision stating that the term ‘‘mining operations’’ includes operations on all mining properties that a registrant:

• Owns or in which it has, or it is probable
  that it will have, a direct or indirect economic interest;
• Operates, or it is probable that it will
  operate, under a lease or other legal agreement that grants the registrant ownership or similar rights that authorize it, as principal, to sell or otherwise dispose of the mineral; or
• Has, or it is probable that it will have, an
  associated royalty or similar right.80 Commenters did not object to including within the definition operations on mining properties that a registrant owns or operates pursuant to a lease or other similar agreement. Moreover, although several commenters objected to the scope of the proposed disclosure required of royalty or other similar right holders, only a few commenters recommended their complete exclusion from the proposed rules.81

2. Treatment of Vertically-Integrated
   Companies
   i. Rule Proposal
   As noted in the Proposing Release, some companies have material mining operations that are secondary to or in support of their main non-mining business.82 For example, a metal manufacturer may operate iron ore or coal mines to supply raw material for its primary business. Yet neither Guide 7 nor Item 102 addresses whether or when a vertically-integrated manufacturer 83 is required to provide mining disclosure. In order to clarify the treatment of vertically-integrated manufacturers, the Commission explained that proposed new subpart 1300 of Regulation S–K would apply to all registrants with mining operations, including vertically￾integrated manufacturers. Specifically, a mining operation owned by a registrant to support its primary business could be material and require disclosure. The fact that the registrant’s primary business operation is something other than minerals extraction would not be determinative of whether disclosure would be required under the proposed subpart.84
   ii. Comments on the Rule Proposal
   Most commenters that addressed the issue supported the Commission’s proposal to require vertically-integrated companies, such as manufacturers, to provide the disclosure under proposed subpart 1300 of Regulation S–K.85 One commenter agreed that the proposed rules should apply to a vertically￾integrated company if its mine is material, but disagreed that the mine’s providing a competitive advantage should be a criterion for disclosure.86
   iii. Final Rules
   As proposed, and consistent with comments received,87 new subpart 1300 of Regulation S–K will apply to all registrants with material mining operations, including vertically￾integrated manufacturers. Like a company whose primary business is mining, such a vertically-integrated company will be required to assess relevant quantitative and qualitative factors to determine if its mining operations are material. For example, the bauxite mining operations of an aluminum manufacturer, whose primary business is manufacturing, not mining, could require disclosure if its bauxite mining operations are material, even though they are not the registrant’s primary operations, or the primary source of the registrant’s revenues. Factors to be considered in such a materiality determination could include if the manufacturer derives a

88See Proposing Release, supra note 5, at Section II.B.1.ii. 89See id. at Section II.B.1.i. 90See id. at Section II.B.1.ii. 91See id. at Section II.G.1. 92See id. at Section II.G.2. 93See id. at Section II.B.1.ii. 94See supra notes 56–58 and accompanying text. 95See, e.g., letter from CBRR; see also letter from Vale (stating that because under the CRIRSCO standards, a public report should contain ‘‘all the relevant information which investors and their professional advisers would reasonably require, and reasonably expect to find in a public report . . . it is appropriate to require any registrant with economic interests in multiple mining properties, none of which may be individually material, to provide summary disclosure of its mining operations,’’ but also stating that qualified persons should be allowed ‘‘to use their judgment to determine the best presentation of summary disclosure, including whether to aggregate interrelated mining operations or to group mines and plants by geographic region or commodity’’). 96See, e.g., letters from Alliance and AngloGold (conditioning support of the proposed approach regarding multiple properties as long as that approach aligns with a materiality determination based on financial segment disclosure); see also letter from Rio Tinto (similarly conditioning support as long as aggregation of properties do not cross national or regional boundaries). 97See, e.g., letter from SRK 1; see also letter from Midas (stating that ‘‘[o]nly material properties should require disclosure, and then in a comprehensive technical report as in NI 43–101’’). 98 17 CFR 229.1301(d), which references 17 CFR
229.1303 [Item 1303 of Regulation S–K]. The latter
provision sets forth the specific requirements for summary disclosure. 99 17 CFR 229.1301(d), which references 17 CFR
229.1304 [Item 1304 of Regulation S–K]. The latter
provision provides the specific disclosure requirements for individually material properties. 100 17 CFR 229.1303(a)(2) [Item 1303(a)(2) of Regulation S–K]. 101Commenters did not oppose the proposed treatment of ancillary properties. 102See, e.g., letter from Vale; see also letter from Amec. 103See infra Section II.G.1. 104 17 CFR 229.1303(b)(2) [Item 1303(b)(2) of Regulation S–K]. competitive advantage from, or substantially relies upon, its ability to source that particular mineral from its mining operations. Requiring disclosure of mining operations by vertically-integrated manufacturers is consistent with the disclosure currently provided in Commission filings and should not significantly alter existing disclosure practices. In addition, this treatment of vertically-integrated companies is consistent with the CRIRSCO-based codes, which require disclosure for material mining properties and do not provide exemptions for vertically￾integrated companies.
3. Treatment of Multiple Property
Ownership
i. Rule Proposal
As noted in the Proposing Release, it is common for registrants to own multiple mining properties.88 In some instances, a registrant will have multiple properties that all involve exploration, development, or extraction of the same mineral. In other situations, the registrant’s operations will primarily involve exploration, development, or extraction of one mineral from several properties, but the registrant also will own one or more ancillary properties where it explores, develops, or extracts small amounts (relative to the predominant mineral) of a different mineral. The primary focus of the current rules and guidance is on individually significant or material properties. Neither Item 102 nor Guide 7 provides guidance concerning when or what disclosure is required when a registrant owns multiple or ancillary mining properties. To clarify the disclosure that is required in these circumstances, we proposed that a registrant with multiple properties would be required to consider all of its mining properties in the aggregate, as noted above,89 as well as individually, regardless of size or commodity produced, when assessing whether it must provide the mining disclosure required by new subpart 1300 of Regulation S–K.90 We also proposed that a registrant with multiple properties, none of which is individually material, but which in the aggregate constitute material mining operations, would have to provide summary disclosure concerning its combined mining activities rather than provide disclosure for individual properties.91 We further proposed that, to the extent that an individual property is material to its operations, a registrant would be required to provide detailed disclosure about that property. As proposed, such individual property disclosure would be in addition to the required summary disclosure if the registrant owns two or more individual properties.92 Finally, we explained that, under the proposed rules, a registrant could be required to provide disclosure for a particular property, depending on the facts and circumstances, even if ancillary to the registrant’s predominant commodity.93
ii. Comments on the Rule Proposal
As discussed above, commenters generally supported requiring a registrant to consider all of its mining properties in the aggregate as well as individually, regardless of size or commodity produced, when assessing whether its mining properties are material, although some of the commenters stated that there should be limits on such aggregation.94 Commenters similarly generally supported the proposal to require summary disclosure of their properties in the aggregate,95 although some commenters conditioned their support consistent with their conditional support of the proposed disclosure threshold based on materiality.96 The commenters that opposed the proposed summary disclosure requirements did so largely because they viewed those requirements as being ‘‘out of line with current industry standards.’’ 97
iii. Final Rules
We are adopting the proposed treatment of multiple property ownership.98 In the event that none of a registrant’s mining properties is individually material, it will need to provide only summary disclosure. If the registrant has individually material mining properties, it must provide more detailed disclosure concerning those properties in addition to summary disclosure.99 If a registrant has only one mining property, following a determination that its mining operations are material, the registrant will be required to provide only the individual property disclosure.100 We also are adopting the proposed treatment of ancillary properties, which, depending on the facts and circumstances, could give rise to disclosure obligations. For example, a property on which a registrant explores, develops or extracts a relatively small amount of a particular mineral, compared to its predominant mineral, could be material based upon the amount of actual and projected expenditures on the property as compared to its expenditures on other properties.101 In response to the concern expressed by some commenters that the proposed summary disclosure requirements were too prescriptive,102 and as discussed in greater detail below,103 we have significantly revised the proposed summary disclosure requirements to make them less prescriptive. For example, instead of the proposed requirement to provide specific items of information concerning a registrant’s top 20 properties (by asset value) in tabular format, the final rules take a more principles-based approach and require the registrant to provide an overview of its mining properties and operations in either narrative or tabular format.104 When presenting the overview, the registrant should include the amount and type of disclosure concerning its mining properties that is material to an investor’s understanding

105 17 CFR 1303(b)(2)(iii) [Item 1303(b)(2)(iii) of Regulation S–K]. 106See infra Section II.G.2. 107 17 CFR 229.1304(d)(1) [Item 1304(d)(1) of Regulation S–K], which requires a summary of all mineral resources or reserves as of the end of the most recently completed fiscal year presented in two separate tables (one for resources, the other for reserves). 108See id. 109See the definition of mineral reserve in 17 CFR
229.1300 [Item 1300 of Regulation S–K].
110See Proposing Release, supra note 5, at
Section II.B.1.iii.
111A royalty, in this context, is typically a payment to the royalty right holder from the property owner or operator in return for: (i) Providing upfront capital; (ii) paying part of amount due landowners or mineral right holders; or (iii) converting a participating interest in a joint venture into a royalty right. Such payment is most often based on a percentage of the minerals, revenues, or profits generated from the property. 112Examples include the right to purchase all or a portion of minerals from a mine under a metal purchase agreement (a ‘‘stream’’ agreement) or a working interest in the underlying property. 113See Proposing Release, supra note 5, at
Section II.B.1.iii.
114See id.
115See 17 CFR 230.411, 17 CFR 240.12b–32, which permit any document filed with the Commission under any act administered by the Commission to be incorporated by reference as an exhibit to a statement or report filed with the Commission by the same or any other person, and require that the registrant clearly identify in the reference the document from which the material is taken. 116See Proposing Release, supra note 5, at
Section II.B.1.iii.
117See id. 118See letters from Amec, AngloGold, CBRR, Davis Polk, Dorsey & Whitney, Eggleston, Midas, MMSA, Newmont, Rio Tinto, and SAMCODES 2. 119See letter from AngloGold. 120See id. 121See letter from Davis Polk. of the registrant’s properties and mining operations in the aggregate.105 As discussed in greater detail below,106 we also have made the disclosure requirements for individually material properties less prescriptive and aligned them more closely with the CRIRSCO standards. For example, among several other revisions, we have:

• reduced the number of required tables
  from five to two; 107
• replaced the proposed requirement to
  present mineral resource and reserve disclosure at three separate points of reference with the requirement to present the disclosure at one specific point of reference selected by the qualified person; 108 and
• replaced the requirement to present
  mineral reserve disclosure as net of diluting materials and allowances for losses that may occur when the mineral resource is mined or extracted with the requirement to disclose reserves as including such diluting materials and allowances for losses.109 In light of these revisions, we believe the final rules concerning summary and individual property disclosure will provide clear and consistent standards for registrants to apply in determining the scope of their disclosure obligations without unduly burdening registrants. We also believe that the final rules will help ensure that investors receive all material information about registrants’ mining operations and associated risks.

4. Treatment of Royalty Companies and
   Other Companies Holding Economic Interests in Mining Properties
   i. Rule Proposal
   As noted in the Proposing Release,110 some registrants are royalty companies, which are companies that do not own or operate a property, but rather own the right to receive payments, called a royalty right, from the owner or operator of a property.111 In addition, some registrants hold other economic interests, similar to royalty rights, also without owning or operating a property.112 Because neither Item 102 nor Guide 7 addresses whether royalty or similar companies must provide disclosure about the mining operations and properties underlying their economic interest, the staff has provided comments in the filing review process to help guide registrants in determining whether and how such companies should provide mining disclosure. Consistent with prior staff comments, we proposed to require a royalty company or other registrant holding a similar economic interest to provide all applicable mining disclosure if the underlying mining operations that generate the royalty or other payment are material to the royalty or similar company’s operations as a whole. As proposed, and similar to a producing mining company (that owns or operates properties), a royalty or similar company would have to assess both quantitative and qualitative factors to determine whether the underlying mining operations are material.113 Upon an affirmative materiality determination, the proposed rules would require a royalty or similar company to provide disclosure only for those underlying properties, or portions of underlying properties, that generate the registrant’s royalties or similar payments, and only for the reserves and production that generated its payments in the reporting period.114 The proposed rules would require a royalty or similar company to describe the material properties that generate its royalties or similar payments and file a technical report summary for each such property. As proposed, such a registrant would not be required to submit a separate technical report summary about a property covered by a current technical report summary filed by the producing mining registrant. In that situation, the royalty or similar company could incorporate by reference 115 the producing registrant’s previously filed technical report summary.116 We based this approach to royalty and other similar companies on our belief that investors in royalty and other similar companies need information about the material mining properties that generate the payments to the registrant, including mineral reserves and production, to be able to assess the amounts, soundness, and sustainability of future payments. We also recognized, however, that because a royalty or other similar company may not have access to information about portions of the mining property that do not contribute to the registrant’s revenue stream, it should not be required to disclose information concerning the non￾contributing portions.117
   ii. Comments on the Rule Proposal
   Many commenters generally supported the Commission’s proposal to require a royalty company, or a company holding a similar economic interest in another company’s mining operations, to provide all applicable mining disclosure if the underlying mining operations are material to its operations as a whole.118 For example, one commenter stated that, in principle, a royalty company should be required to provide disclosures similar to those provided by the underlying mining company, but noted that such a requirement could give rise to difficulties when the royalty company is a registrant with the Commission but the underlying mining company is not, and when the property that is the subject of the royalty arrangement is not material to the underlying mining company, but the royalty stream is material to the royalty company.119 In those circumstances, the required disclosure may not be readily available to the royalty company.120 Another commenter noted that the Commission’s proposed disclosure for royalty companies is consistent with current guidance as it would only be required with respect to portions of the underlying mining properties that contribute to the royalty company’s revenue stream.121 Like the previous commenter, this commenter stated that the ability of royalty companies to comply with the proposed disclosure obligations, even as circumscribed, may be limited by their inability to access the requisite information and supporting documentation by the underlying mining company’s qualified

122 Id. Two other commenters made a similar recommendation. See letters from Dorsey & Whitney and Newmont. Another commenter urged the Commission to adopt special rules for royalty companies that would recognize their potential inability to provide detailed disclosure regarding the underlying property. This commenter stated that, at a minimum, a royalty company should be able to rely on information provided by the operator while disclaiming liability for that information. See letter from MMSA. 123See letter from Amec. Canada’s NI 43–101 exempts a royalty company from having to file a technical report if: The owner or operator of the underlying mine is a reporting issuer in a Canadian jurisdiction or is a producing issuer whose securities trade on a specified exchange and that discloses mineral resources and reserves under an acceptable foreign code; the owner or operator has disclosed the scientific and technical information that is material to the royalty company; and the royalty company identifies in its disclosure document the source of the scientific and technical information. See Canada’s National Instrument (‘‘NI’’) 43–101 (‘‘Standards of Disclosure for Mineral Projects’’), NI 43–101 (2011) 34 OSCB 7043 pt. 9.2 (Can.), http://web.cim.org/standards/documents/ Block484_Doc111.pdf. Canada’s NI 43–101 also exempts a royalty company from having to file a technical report or from complying with disclosure items requiring data verification, inspection of documents, or personal inspection of the property if the royalty company has requested but has not received access to the necessary data from the owner or operator and is not able to obtain the necessary information from the public domain. See id. at pt. 9.2(2). But see letter from SME 2 (stating that neither the Canadian approach nor the Commission’s incorporation by reference proposal is workable because of ‘‘the U.S securities law liability regime and the litigation environment in the U.S.’’). 124See letters from Eggleston and Rio Tinto. 125See letter from Eggleston. 126See letter from Rio Tinto. 127See letters from AIPG, Alliance, Crowell & Moring, Laskowski, NRP, Royal Gold, SME 2, SRK 2, and Vinson & Elkins. 128See, e.g., letters from Crowell & Moring, NRP, Royal Gold, SME 2, and Vinson & Elkins. 129See letter from SME 2; see also letter from NRP (‘‘along with royalty payments, the company receives only monthly production reports and ‘‘certain other limited economic and mining information that enables NRP to evaluate its royalty business and make periodic reports to its common unitholders’’). 130 17 CFR 229.1301(a)(3) [Item 1301(a)(3) of Regulation S–K]. 131 17 CFR 1301(c)(1) [Item 1301(c)(1) of Regulation S–K]. As we noted in the Proposing Release, because a registrant with royalty or other similar economic interests does not own or operate the producing property, revenues are often a more relevant benchmark than assets for determining materiality. See Proposing Release, supra note 5, at
Section II.B.1.iii.
132 17 CFR 229.1303(a)(1)(iii) [Item 1303(a)(1)(iii) of Regulation S–K]. 133 17 CFR 229.1304(a)(1)(iii) [Item 1304(a)(1)(iii) of Regulation S–K]. person. Moreover, even if the royalty company has access to appropriate supporting documentation, this commenter stated that the operating mining company’s qualified person may be unwilling to consent to its use by the royalty company for liability reasons. Accordingly, this commenter recommended that the Commission clarify that the disclosure obligations of a royalty company are limited to information that is known or reasonably available to it.122 Regarding the proposed provision requiring a royalty company to file a technical report summary if the owner or operator of the underlying mining operations has not done so, one commenter supported applying the proposed rules to royalty companies, but recommended that the Commission provide a limited exemption similar to the exemption under Canada’s NI 43–
101.123 Two other commenters stated
that a royalty company should be required to file summaries of current technical reports by an operating company but only for material properties.124 Those commenters also indicated that a royalty company may not have access to all of the information required to complete a technical report at the level of detail required by the owner of the underlying mine. Therefore, one of the commenters recommended that the Commission allow such a royalty company to prepare an abbreviated report 125 while the other commenter recommended that the royalty company be permitted to reference the operating company’s technical reports.126 Numerous other commenters opposed the Commission’s proposal to require a royalty company to provide all applicable mining disclosure if the underlying mining operations are material to the royalty company.127 Most of these commenters stated that because royalty holders generally have no executive or operational interest or other participation in the mineral properties to which the royalties relate, they typically have no access to the underlying mining operations or to the extensive technical data and other information available to the operator.128 According to one of those commenters, because, typically, the information a royalty holder is entitled to receive is limited to mill production, marketing, and sales data that is used to confirm the calculation of royalty payments, a royalty company generally lacks sufficient information to prepare a current technical report summary.129 That commenter further objected to the proposed provision that would allow a royalty company to incorporate by reference a technical report summary previously filed by the owner or operator of the underlying property because it would impose potential Securities Act or Exchange Act liability on the royalty company for a third party’s technical or other information regarding which the royalty company lacked responsibility or the ability to review or verify. According to the commenter, in order for a royalty company to verify a technical report summary or provide a technical report summary of its own, the royalty company would need to acquire extensive information and access rights from the owner or operator of a mineral property, which the commenter believed the owner or operator would not be willing to provide due to the proprietary nature of much of the information. Moreover, even if the owner or operator were willing to provide the information, the royalty company would be required to re￾negotiate its royalty agreement, which would disadvantage a U.S. royalty company compared to its foreign competitors.
iii. Final Rules
We continue to believe that investors in royalty, streaming, and other registrants holding a similar economic interest in mining operations need information about the material mining properties that generate the payments to the registrant, including mineral reserves and production, to be able to assess the amounts, soundness, and sustainability of future payments. For the royalty or similar company and its investors, the mining property underlying the royalty or similar payments is the primary or only source of revenues and cash flow. As such, we believe that royalty companies and other companies holding similar economic interests should provide similar disclosure as provided by registrants conducting the underlying mining operations. Accordingly, the final rules will require a royalty or other similar company to provide applicable mining disclosure if the mining operations that generate the royalty or other payment are material to the royalty or similar company’s operations as a whole, subject to that information being known or reasonably available to the registrant.130 Thus, a royalty or similar company will have to assess both quantitative and qualitative factors to determine whether the underlying mining operations are material.131 Also as proposed, upon an affirmative materiality determination, the final rules will require a royalty or similar company to provide summary disclosure 132 and the disclosure required for individually material properties,133 but only for those underlying properties, or portions of underlying properties, that generate the registrant’s royalties or similar

134 17 CFR 229.1303(b)(2)(iv) [Item 1303(b)(2)(iv) of Regulation S–K] and 17 CFR 229.1304(d)(3) [Item 1304(d)(3) of Regulation S–K]. 135 17 CFR 229.1302(b)(2) [Item 1302(b)(2) of Regulation S–K]. 136 17 CFR 229.1302(b)(3)(i) [Item 1302(b)(3)(i) of Regulation S–K]. 137 Id. 138See, e.g., letter from SME 2. 139See supra note 128 and accompanying text. 140This is consistent with 17 CFR 230.409 [Securities Act Rule 409] and 17 CFR 240.12b–21 [Exchange Act Rule 12b–21], the general rules governing the situation when required information is unknown or not reasonably available. 141 17 CFR 229.1303(a)(3) [Item 1303(a)(3) of Regulation S–K] and 17 CFR 229.1304(a)(2) [Item 1304(a)(2) of Regulation S–K]. 142 17 CFR 229.1302(b)(3)(ii) [Item 1302(b)(3)(ii) of Regulation S–K] (conditioning omission of the technical report summary on a lack of access because obtaining the information would result in an unreasonable burden or expense; or because the registrant requested the technical report summary from the owner, operator, or other person possessing the technical report summary, who is not affiliated with the registrant, and who denied the request). 143See Proposing Release, supra note 5, at
Section II.B.2.
144As defined by Guide 7, exploration stage ‘‘includes all issuers engaged in the search for mineral deposits (reserves) which are not in either the development or production stage.’’ Guide 7, supra note 7, ¶ (a)(4)(i). 145As defined by Guide 7, development stage ‘‘includes all issuers engaged in the preparation of a determined commercially minable deposit (reserves) for its extraction which are not in the production stage.’’ Guide 7, supra note 7, ¶ (a)(4)(ii). 146As defined by Guide 7, production stage ‘‘includes all registrants engaged in the exploitation of a mineral deposit (reserve).’’ Guide 7, supra note 7, ¶ (a)(4)(iii). 147See Proposing Release, supra note 5, at
Section II.B.2.
148See id. payments, and only for the reserves and production that generated its payments in the reporting period.134 In addition, as proposed, the final rules will also require the royalty or similar company to file a technical report summary for each material underlying property as an exhibit to the Commission filing.135 However, as proposed, the final rules will not require a royalty or similar company to submit a separate technical report summary about a property that is covered by a current technical report summary filed by the producing mining registrant. In that event, the royalty or similar company should refer to the producing registrant’s previously filed technical report summary in its filing with the Commission.136 The purpose of this provision is to inform an investor or other interested party as to where to find detailed information about the underlying property. In a change from the proposed rules, such a reference will not be deemed to incorporate into the royalty company’s or other similar company’s filing the technical report summary previously filed by the mining registrant, absent an express statement that the company intends to incorporate it by reference.137 We agree with commenters that it would not be appropriate to impose potential liability under the Securities Act or Exchange Act on a royalty company through the company’s incorporation by reference of a third party owner’s technical report summary if the royalty company has not been able to review and verify the information contained in the summary because of its lack of access to such information under its existing royalty agreement.138 As mentioned by many commenters,139 we are cognizant that a royalty or similar company may lack, and may have difficulty obtaining, access to the information and supporting documentation required to comply with the Commission’s disclosure requirements concerning the underlying mining properties. We therefore emphasize that what is true generally for our public company disclosure requirements applies to a royalty company’s disclosure obligations regarding the underlying mining properties as well. Specifically, the required information concerning the underlying mining properties need be given only insofar as it is known or reasonably available to the registrant.140 In order to underscore this basic tenet, in a change from the proposed rules, the final rules provide that a registrant that has a royalty, streaming, or other similar right, but which lacks access to any of the information about the underlying properties specified in either the summary disclosure provision (Item 1303 of Regulation S–K) or the individual property provision (Item 1304 of Regulation S–K) may omit such information, provided that the registrant:

• Specifies the information to which it
  lacks access;
• Explains that it does not have access to
  the required information because:
  Æ Obtaining the information would result in an unreasonable effort or expense; or Æ It requested the information from a person possessing knowledge of the information, who is not affiliated with the royalty company or similar registrant, and who denied the request; and
• Provides all required information that it
  does possess or which it can acquire without unreasonable effort or expense.141 The final rules further provide that a royalty company or similar registrant is not required to file a technical report summary for an underlying property if the registrant lacks access to the technical report summary because of substantially similar reasons.142 For example, if the underlying property holder is private, and denies access to relevant information about the property, under the final rules, the royalty company will not be obligated to prepare a technical report summary. Overall, we believe that the adopted treatment of royalty and other similar companies will provide investors with information relevant to assessing investments in those companies without unduly burdening registrants.

5. Definitions of Exploration,
   Development and Production Stage
   i. Rule Proposal
   As noted in the Proposing Release,143 Guide 7 defines the stages used to describe mining operations as ‘‘exploration stage,’’ 144 ‘‘development stage,’’ 145 and ‘‘production stage,’’ 146 but applies these definitions to the registrant as a whole and not on a property-by-property basis. As such, Guide 7 does not provide guidance as to when and how the definitions of exploration, development, and production stage apply to registrants that own properties in different stages. To address this ambiguity and to help ensure that investors receive disclosure that accurately reflects a registrant’s operational status, we proposed to revise the Guide 7 definitions so that they apply to individual properties, as follows:

• An ‘‘exploration stage property’’ is a
  property that has no mineral reserves disclosed;
• A ‘‘development stage property’’ is a
  property that has mineral reserves disclosed, but with no material extraction; and
• A ‘‘production stage property’’ is a
  property with material extraction of mineral reserves.147 We also proposed to revise the Guide 7 definitions as they apply to issuers to recognize that issuers may have properties in differing stages, as follows:
• An ‘‘exploration stage issuer’’ is one that
  has no material property with mineral reserves;
• A ‘‘development stage issuer’’ is one that
  is engaged in the preparation of mineral reserves for extraction on at least one material property; and
• A ‘‘production stage issuer’’ is one that
  is engaged in material extraction of mineral reserves on at least one material property.148 We further proposed to specify that a registrant that does not have reserves on any of its properties, even if it has mineral resources or exploration results, or even if it is engaged in extraction

149As we noted in the Proposing Release, there are registrants that start development or production without first disclosing mineral reserves. Such practices increase the business’ risks due to the absence of the detailed technical and economic analysis required to disclose reserves, thus increasing the degree of uncertainty surrounding the quantities and quality of the mineral to be extracted. See Proposing Release, supra note 5, at 29, n. 65. 150See Proposing Release, supra note 5, at
Section II.B.2.
151See, e.g., letters from Alliance, AngloGold, CBRR, Midas, Rio Tinto, SME 1, and SRK 1. 152See letter from AngloGold (supporting that a registrant lacking mineral reserves on any of its properties, even if it has mineral resources or exploration results, or even if it is engaged in extraction without first disclosing mineral reserves, cannot characterize itself as a development or production stage company). 153See letter from Midas. 154See id. 155Letter from CBRR. 156See id. 157See letter from SME 1. 158 Id. 159See letter from SRK 1 (stating that ‘‘[t]echnical disclosure should be dictated by property stage and materiality’’ and ‘‘[a] company’s production status should not impact disclosure as there are many mining companies with immaterial small scale production or reserves that would classify them as production stage or development stage, but most of their value is in an exploration stage project’’). 160See letters from Amec and Eggleston. 161See letter from Amec. 162See id. 163See letter from Eggleston. 164See letter from Energy Fuels. This commenter did not address the proposed definitions of exploration stage and development stage. The commenter described itself as the second largest uranium producer in the United States, but said that it does not currently own, and never has owned, any mineral reserves as defined by Guide
7. Most of its production at its largest facility has
come from inferred mineral resources. The commenter stated that not being able to refer to itself as a production stage company is potentially misleading to investors. 165 Definitions of specified terms used in subpart 1300 are located in 17 CFR 229.1300. 166 17 CFR 229.1304(c)(1) [Item 1304(c)(1) of Regulation S–K]. 167See letter from Midas. without first disclosing mineral reserves, cannot characterize itself as a development or production stage company.149 Finally, we proposed to require a company to identify an individual property with no mineral reserves as an exploration stage property, even if it has other properties in development or production.150
ii. Comments on the Rule Proposal
Commenters expressed varying degrees of support for the Commission’s proposed definitions of exploration, development and production stage as applied, respectively, to properties and issuers.151 One commenter stated that both sets of definitions would be operable for the company and supported the proposed restriction on the use of the terms ‘‘development and production stage companies.’’ 152 Another commenter supported the proposed definitions of exploration stage and development stage properties, but stated that the definition of production stage property should be revised to include ‘‘current’’ or ‘‘on￾going’’ as opposed to past production.153 This commenter further recommended that the Commission define a development stage issuer as one having at least one development stage property comprising more than 10% of the issuer’s assets, and a production stage issuer as having at least one producing mine comprising more than 10% of the issuer’s assets.154 While a third commenter generally found the two sets of definitions to be adequate, it stated that at least one material property should be enough to justify the production stage if it represents more than 50% of the registrant’s asset value.155 This commenter also believed that if a registrant has disclosed mineral resources, it should be able to characterize itself as a development stage company.156 One commenter supported the proposed definitions of exploration, development, and production stage issuers because they are substantially similar to the Guide 7 definitions.157 The commenter suggested that the proposed definitions as applied to issuers should be used for accounting purposes only (i.e., for the purposes of financial statement characterization), but did not think the proposed definitions would be useful as applied to properties.158 In contrast, a different commenter supported having a set of definitions of exploration, development, and production stage applied to properties, but opposed having a corresponding set of definitions applied to issuers.159 Two other commenters opposed the proposed definitions.160 One believed that both sets of definitions were too prescriptive for the mining industry and stated that because many mining operations have portions that are in the exploration, development, and production stages, it will be extremely difficult to attach a single label to a property.161 In addition, that commenter did not believe it would be useful to define an issuer based on the characteristics of all of its mining properties, and further noted that a registrant is not required to characterize itself as being a particular type of issuer under the Canadian rules.162 The other commenter asserted that the proposed sets of definitions were unnecessary, would add complexity and confusion, and be of limited value to issuers and investors.163 A third commenter strongly opposed the definition of production stage because it depends on whether the company has mineral reserves and not on
whether it is in production.164
iii. Final Rules
We are adopting the definitions of ‘‘exploration stage property,’’ ‘‘development stage property,’’ ‘‘production stage property,’’ ‘‘exploration stage issuer,’’ ‘‘development stage issuer,’’ and ‘‘production stage issuer,’’ as proposed.165 Similar to a proposed instruction, we are also adopting a provision stating that a registrant must identify an individual property with no mineral reserves as an exploration stage property, even if it has other properties in development or production. The provision further states that a registrant that does not have reserves on any of its properties, even if it has mineral resources or exploration results, or even if it is engaged in extraction without first disclosing mineral reserves, cannot characterize itself as a development or production stage company.166 We believe that these adopted definitions and related provision will resolve the ambiguities in the Guide 7 definitions. Under the definitions, a registrant will be able to characterize its properties separately, but will be limited in when and how it can characterize its operational stage. Specifically, a registrant will not be able to characterize itself as a development stage issuer unless it is engaged in the preparation of mineral reserves for extraction on at least one material property. We believe this will benefit investors by providing them with clearer, more accurate and consistent disclosure about the type of company and level of risk involved. In particular, prohibiting a registrant without any mineral reserves from characterizing itself as a production or development stage issuer will help eliminate the possibility that such a registrant, by definition a company in a higher risk operational stage, will incorrectly characterize itself as being in a lower risk stage, thereby potentially misleading or confusing investors. We do not believe it would be appropriate to adopt definitions of development stage issuer and production stage issuer that are based on a specific quantitative measure (i.e., the development stage or production stage property must comprise more than 10% of the issuer’s assets).167 We

168See letter from CBRR.
169See letter from Energy Fuels.
170See letter from CBRR.
171See letter from SRK 1.
172See Proposing Release, supra note 5, at
Section II.C.1. The proposed provision specified
that the qualified person requirement would apply to the disclosure required by the proposed summary disclosure provision (Item 1303) and the proposed individual property disclosure provision (Item 1304). 173See infra Section II.C.2. for a discussion of the proposed definition of qualified person. 174While we referred to the qualified person in the singular throughout the Proposing Release, we noted that it is common for a registrant to have more than one qualified person prepare a technical report for a mining property or project. We also noted that, as proposed, the registrant’s responsibilities regarding the qualified person would apply to each qualified person so engaged. See Proposing Release, supra note 5, at 33, n. 74. 175As used in the CRIRSCO-based codes, ‘‘public report’’ includes all communication by a company to investors on exploration results, mineral resources, and mineral reserves. For example, Australia’s JORC Code defines public s report as:
‘‘. . . reports prepared for the purpose of informing investors or potential investors and their advisers on Exploration Results, Mineral Resources or Ore Reserves. They include, but are not limited to, annual and quarterly company reports, press releases, information memoranda, technical papers, website postings and public presentations.’’ Joint Ore Reserves Committee, the JORC Code, pt. 6 (2012), http://www.jorc.org/docs/JORC_code_ 2012.pdf. 176See, e.g., CRIRSCO International Reporting Template, supra note 20, cl. 8; Canada’s NI 43–101, supra note 123, at pt. 2.1; JORC Code, supra note 175, at pt. 9. 177The competent or qualified person requirement supports the ‘‘competence’’ principle, one of the three governing principles that underlie the CRIRSCO standards. See supra note 39. All of the CRIRSCO-based codes define competence to mean that technical work should be done by a professional with requisite expertise. See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 3; JORC Code, supra note 175, at pt. 9; see also Society for Mining, Metallurgy & Exploration, SME Guide for Reporting Exploration Results, Mineral Resources and Mineral Reserves, pt. 3 (July 2017) (‘‘SME Guide’’), https:// www.smenet.org/SME/media/Publications￾Resources/SMEGuideReporting_082017.pdf.> 178 Guide 7 only calls for disclosure of the name of the person estimating the reserves and the nature of his or her relationship to the registrant. See Guide 7, supra note 7, at ¶ (b)(5)(ii). In addition, if a registrant supplementally provides a copy of a technical report to staff, Guide 7 specifies that the copy include the name of its author and the date of its preparation, if known to the registrant. See Guide 7, supra note 7, at ¶ (c)(2). 179See 17 CFR 230.436 [Securities Act Rule 436]; see also 17 CFR 229.601(b)(23)(i) [Item 601(b)(23)(i) of Regulation S–K]. 180See Proposing Release, supra note 5, at
Section II.C.1.
181See id. A registrant would also have to file the written consent as an exhibit to an Exchange Act believe the less prescriptive approach of the final rules, which bases those definitions on the principle of materiality, is more consistent with the adopted disclosure threshold of materiality, which requires the consideration of both quantitative and qualitative factors, and is therefore preferable to a bright-line test. For the same reasons, we do not believe it would be appropriate to adopt a definition of a production stage issuer specifying that one material property will suffice provided that it represents more than 50% of the registrant´s asset value.168 We also do not believe it would be appropriate to define a production stage issuer as an issuer that is in production even if it has no mineral reserves,169 or to define a development stage issuer as a company that has disclosed mineral resources, but not reserves.170 We are concerned that such an approach would diminish the real difference in risk between a mining project for which only resources have been disclosed, and a more advanced project involving the affirmative determination of reserves, which could lead to investor confusion. Moreover, as a commenter noted, when applied to properties, such an approach would run counter to the definitions of ‘‘development stage’’ and ‘‘production stage’’ that are widely accepted in the industry.171
C. Qualified Person and Responsibility
for Disclosure

1. The ‘‘Qualified Person’’ Requirement
   i. Rule Proposal
   We proposed that every disclosure of mineral resources, mineral reserves, and material exploration results reported in a registrant’s filed registration statements and reports must be based on, and accurately reflect information and supporting documentation prepared by, a ‘‘qualified person,’’ 172 as defined by the proposed rules.173 We proposed the qualified person 174 requirement to align the Commission’s mining property disclosure rules with the CRIRSCO standards and to remedy a perceived gap in the current reporting regime. All of the CRIRSCO-based codes require any public report 175 about a company’s exploration results, mineral resources, and mineral reserves to be based on and fairly reflect information and supporting documentation prepared by a ‘‘competent’’ or ‘‘qualified person.’’ 176 The purpose of this requirement is to ensure that a registrant’s public declaration of exploration results, mineral resources, and mineral reserves is supported by the findings of a mineral industry professional having the relevant level of expertise.177 In contrast, neither Guide 7 nor Item 102 requires a registrant’s disclosure of mineral reserves to be based on the findings of an appropriately experienced professional.178 While an author of a study or technical report that forms the basis of mineral reserves disclosure in a Securities Act registration statement must consent to the use of its name as an expert,179 there is no requirement to use an expert for reserves disclosure and, if one is used, there are no substantive requirements for that expertise. In connection with the qualified person requirement, we proposed that the registrant must:

• Be responsible for determining that the
  person meets the qualifications specified under the proposed subpart’s definition of ‘‘qualified person’’ and that the disclosure in the filing accurately reflects the information provided by the qualified person;
• Obtain a dated and signed technical
  report summary from the qualified person, which identifies and summarizes for each material property the information reviewed and conclusions reached by the qualified person about the registrant’s exploration results, mineral resources or mineral reserves;
• File the technical report summary with
  respect to every material mining property as an exhibit to the relevant registration statement or other Commission filing when the registrant is disclosing for the first time mineral reserves, mineral resources, or material exploration results or when there is a material change in the mineral reserves, mineral resources, or exploration results from the last technical report filed for the property;
• Prior to filing the technical report
  summary as part of a registration statement or report, obtain the written consent of the qualified person to the use of the qualified person’s name or any quotation from, or summarization of the technical report summary;
• Identify the qualified person who
  prepared the technical report summary in the filed registration statement or report; and
• State whether the qualified person is an
  employee of the registrant, and if the qualified person is not an employee of the registrant:
  Æ Name the qualified person’s employer; Æ 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 Æ If the qualified person or the qualified person’s employer is an affiliate, disclose the nature of the affiliation.180 In the Proposing Release, we explained that if the filing that requires the technical report summary is a Securities Act registration statement, the qualified person would be deemed an ‘‘expert’’ who must provide his or her written consent as an exhibit to the filing pursuant to Securities Act Rule
  436.181 In such situations, the qualified

registration statement or report when the Exchange Act filing is automatically incorporated into a previously filed Securities Act registration statement. 182 15 U.S.C. 77k(a)(4). 183See letters from AIPG, Amec, AngloGold, BHP, CBRR, Columbia Water, Earthworks, Eggleston, FCX, Gold Resource, Golder, Midas, Mousset-Jones, Newmont, NSPE, Northern Dynasty, Rio Tinto, SAMCODES 1, SME 1, SRK 1, Ur-Energy, Vale, and Willis. 184See letter from Rio Tinto. 185See, e.g., letters from AngloGold, BP, and Gold Resource. 186See, e.g., letters from CBRR, Eggleston, Midas, SRK 1, and Willis. 187See, e.g., letters from AIPG and SME 1. 188See letters from AngloGold, CBRR, Eggleston, Gold Resource, Golder, MMSA, Rio Tinto, SME 1, and Vale. 189See letter from AngloGold. 190See letter from Vale. 191See letters from Amec, Eggleston, and Rio Tinto. 192See letter from SRK 1. 193See letters from AngloGold, CBRR, CSP2, Coeur, Eggleston, Gold Resource, Golder, Northern Dynasty, Rio Tinto, SME 1, Vale, and Willis. 194See letters from Rio Tinto and SRK 1. 195See letter from SRK 1. 196See letter from Golder. 197See letter from Eggleston. 198See letters from Coeur, Gold Resource, SME 1, and Willis. 199See, e.g., letters from AngloGold and Rio Tinto. 200See letters from CSP2, Eggleston, Gold Resource, Golder, and SRK 1. On a related point, four commenters stated that the name ‘‘technical report summary’’ was confusing as it suggested that there existed an unabridged technical report. See letters from Coeur, Eggleston, Northern Dynasty, and SME 1. 201See letter from Columbia Water. 202Letter from CSP2. 203See letters from AngloGold, CBRR, CSP2, Eggleston, Golder, Midas, Northern Dynasty, Rio Tinto, SRK 1, and Vale. 204See, e.g., letters from AngloGold, Golder, Midas, and SRK 1. 205See, e.g., letters from AngloGold, Eggleston, and Gold Resource. person would be subject to liability as an expert for any untrue statement or omission of a material fact contained in the technical report summary under
Section 11 of the Securities Act.182
ii. Comments on the Rule Proposal
Numerous commenters supported the Commission’s proposal that every disclosure of mineral resources, mineral reserves and material exploration results reported in a registrant’s filed registration statements and reports must be based on, and accurately reflect information and supporting documentation prepared by, a ‘‘qualified person.’’ 183 One commenter stated that investors would benefit from the qualified person requirement because it would provide the appropriate level of assurance and disclosure about both a registrant’s operations and developing opportunities.184 Other commenters maintained that the qualified person requirement would mitigate the risks associated with including disclosure about a registrant’s mineral resource and exploration results in Commission filings.185 Some commenters explained that the qualified person requirement would result in more accurate and reliable reports, foster proper risk level identification, and ensure that all aspects of industry standards are being assessed and implemented, which would assist investors in understanding each stage of a project.186 Other commenters emphasized that adoption of the qualified person requirement would be a significant step in aligning the Commission’s rules with the CRIRSCO standards and global industry practice.187 Many commenters also supported the Commission’s proposal to make the registrant responsible for determining that the qualified person meets the qualifications specified under the new subpart’s definition of ‘‘qualified person.’’ 188 One commenter stated that the registrant, through its board of directors, is ultimately responsible for the information disclosed by it and attributed to the qualified person.189 A second commenter indicated that, in the case of a qualified person employed by a registrant, the registrant is in the best position to evaluate the qualified person’s credentials and determine if he or she meets the requisite qualifications.190 Other commenters stated that the responsibility for determining who is a qualified person should be a joint decision by the registrant and the named qualified person since the qualified person is responsible for preparing the technical report and knows what type of information he or she is qualified to provide an opinion on.191 One commenter opposed imposing the responsibility for verifying the qualifications of the qualified person on the registrant because such verification would be based on personal information not readily available to the public.192 Many commenters supported the Commission’s proposal to require a registrant to obtain a technical report summary for each material property from the qualified person, which identifies and summarizes the information reviewed and conclusions reached by the qualified person about the registrant’s exploration results, mineral resources, or mineral reserves, before the registrant can disclose those results, resources, or reserves in Commission filings.193 Two commenters
noted that the technical report summary proposal is a requirement under all CRIRSCO codes,194 with one maintaining that the requirement would not be a significant burden for issuers because many mining companies, including U.S. registrants that are cross￾listed, are already required in CRIRSCO￾based jurisdictions to prepare technical reports either for public filing or for internal use.195 Another commenter stated that the technical report summary requirement ensures that facts, forward￾looking statements and cautionary language considered to be material by the qualified persons involved are fully disclosed and in full context.196 A fourth commenter indicated that technical reports have proven to be a useful method of providing transparency to the mining industry and have enhanced the confidence of investors.197 Some commenters recommended that our disclosure framework follow the format of Canada’s NI 43–101F1 so that technical report summaries under the Commission’s rules would be interchangeable with those filed under the Canadian reporting regime.198 For similar reasons, some commenters stated that the technical report summary should follow the CRIRSCO Table 1 format of the registrant’s home listing jurisdiction.199 Several commenters expressly supported the filing of a summarized technical report rather than an unabridged report.200 One commenter, however, recommended requiring the filing of both the summarized technical report and the full technical report 201 while another commenter stated that an unabridged technical report should be required when a project advances to the development stage.202 Many commenters supported the Commission’s proposal to require the filing of a technical report summary for a material property when the registrant first discloses mineral resources, mineral reserves, or material exploration results, or when there is a material change in the previously disclosed resources, reserves and exploration results.203 Commenters stated that a requirement imposing more frequent filing would be unduly burdensome and costly.204 Some commenters stated that the proposed requirement to file a technical report summary for material properties would be a significant burden for smaller companies.205 A few of these commenters suggested that the Commission could alleviate this burden by: Conforming the technical report summary to Table 1 of the CRIRSCO

206See letter from AngloGold.
207See letters from AngloGold and Midas. 208See letter from Gold Resource. 209See letter from Northern Dynasty. 210See 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.’’ 211See letters from Alliance and FCX. 212See, e.g., letters from AngloGold, CSP2, Eggleston, Golder, and SRK 1. 213See letter from SRK 1. 214See 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. 215See letter from Rio Tinto. 216See letters from AngloGold, Eggleston, Midas, Newmont, Northern Dynasty, Rio Tinto, SRK 1, Vale, and Willis. 217Letter from SRK 1. 218See 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’’). 219See, e.g., letters from Coeur, MMSA, and SME 1. 220See letters from Andrews Kurth, Gold Resource, and NMA 1. 221See letters from AusIMM, Chamber, Cleary & Gottlieb, Cloud Peak, Davis Polk, FCX, JORC, MMSA, NSSGA, SAMCODES 1, Shearman & Sterling, Sullivan & Cromwell, and Ur-Energy. 222See, e.g., letters from AusIMM, FCX, JORC, SAMCODES 1, and Shearman & Sterling. 223See letters from Davis Polk, Shearman & Sterling, and Sullivan & Cromwell. 224See id.; see also letter from Andrews Kurth. 225See letters from Andrews Kurth, Chamber, Davis Polk, FCX, MMSA, NSSGA, Shearman & Sterling, and Ur-Energy. 226See letter from FCX. 227See 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). 228See 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]. International Reporting Template; 206 not requiring the filing of the technical report summary more frequently than under the CRIRSCO-based 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 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 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 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 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 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. 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 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

229See 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. 230See, e.g., letters from CIM, Davis Polk, Eggleston, FCX, Shearman & Sterling, SME 1, and Ur-Energy. 231See letters from Columbia, CSP2, and Montana Trout. 232See letter from CSP2. 233See 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. 234See, 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. 235See letter from Amec. 236See 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. 237See letters from AngloGold, Eggleston, Gold Resource, Golder, Midas, Northern Dynasty and SRK 1. 238See letters from AngloGold, BHP, CRIRSCO, FCX, JORC, and Rio Tinto. 239See letter from AngloGold. 240 Id. 241Letter from Alliance. 242As 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. 244We define ‘‘qualified person’’ in Item 1300 of Regulation S–K. See infra Section II.C.2. 245This 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. 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 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 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. 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 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 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.
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 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

246See 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)]. 247See supra note 185 and accompanying text. 248See supra note 186 and accompanying text. 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.
250See supra note 191 and accompanying text. 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]. 253See, e.g., letters from Rio Tinto and SRK 1. 254See, e.g., letter from Eggleston. 255See, e.g., letters from Golder and SRK 1. 256The 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). 257See letters from Chamber, Davis Polk, and FCX. 258See infra Section II.D. 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. 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. 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 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 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. 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. 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

259See Item 1302(b)(1) of Regulation S–K. 260See supra note 211 and accompanying text; see also infra Section II.D. 261See, e.g., letters from BHP and SME 1. 262See infra Sections II.E.4., II.F.1., and II.G.3. 263See, 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]. 266 17 CFR 229.1302(b)(4)(i) [Item 1302(b)(4)(i) of Regulation S–K]. 267See, 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. 268See, e.g., Securities Act Rule 436. 269 17 CFR 229.1302(b)(4)(iv) [Item 1302(b)(4)(iv) of Regulation S–K]. 270As discussed below, current practice has permitted a third-party firm employing the individual mining expert to provide the written consent. 271See 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. 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]. 274A 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. 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 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. 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 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. 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. 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 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. 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

275See supra note 225 and accompanying text. 276See Item 1302(b)(4)(iii) of Regulation S–K. 277See supra note 221. 278See 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). 279See 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’’). 280See 17 CFR 229.601(b)(96)(iii)(B)(18) [Item 601(b)(96)(iii)(B)(18) of Regulation S–K]. 281See 17 CFR 229.601(b)(96)(iii)(B)(19) [Item 601(b)(96)(iii)(B)(19) of Regulation S–K]. 282See 17 CFR 229.601(b)(96)(iii)(B)(16) [Item 601(b)(96)(iii)(B)(16) of Regulation S–K]. 283See, 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]. 284See Item 601(b)(96)(iii)(B)(17) of Regulation S– K. 285See id. 286See, e.g., Items 601(b)(96)(iii)(B)(3) and (17) of Regulation S–K. 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]. 289See, e.g., SME Guide For Reporting Exploration Information, Mineral Resources, And Mineral Reserves (2017) (2017 SME Guide),
Appendix C.
290Some 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. 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 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. 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 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 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
• legal matters outside the expertise of the
  qualified person, such as statutory and regulatory interpretations affecting the mine plan; 283
• environmental matters outside the
  expertise of the qualified person; 284
• accommodations the registrant commits
  or plans to provide to local individuals or groups in connection with its mine plans; 285 and
• governmental factors outside the
  expertise of the qualified person.286 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 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. 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

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]. 294See supra note 229 and accompanying text. 295See supra note 230 and accompanying text. 296See 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. 297 17 CFR 229.1302(b)(6)(iii) [Item 1302(b)(6)(iii) of Regulation S–K]. 298See 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’’). 299 17 CFR 229.1302(b)(5) [Item 1302(b)(5) of Regulation S–K]. 300See id. 301See id. 302See, 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%20 REPORTING%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.). 303See supra note 236 and accompanying text. 304See 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. 305See id. 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. 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. 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 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 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
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

306See Proposing Release, supra note 5, at
Section II.C.2.
307The ‘‘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. 308See Proposing Release, supra note 5, at
Section II.C.2.
309The 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. 310See 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’’). 311See, 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. 312See Proposing Release, supra note 5, at
Section II.C.1.
313See id.
314See letters from Amec, AngloGold, CIM, CSP2, Earthworks, Eggleston, Golder, Midas, MMSA, Rio Tinto, SAMCODES 2, SME 1, SRK 1, Ur-Energy, and Vale. 315See, e.g., letters from AngloGold, Golder, Midas, and SME 1. 316See letter from Rio Tinto. 317See letter from Alliance. 318See 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. 319See letters from CBRR, Eggleston, Midas, SAMCODES 1, and SRK 1. 320See 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). 321See 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.’’ 322See letters from AIPG, Alliance, Amec, CIM, Coeur, CRIRSCO, Graves, MMSA, Rio Tinto, SME 1, and Willis. 323See 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. 324See 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. 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 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:

• 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
  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 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
  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 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 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 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

325See 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. 326See, e.g., letters from AIPG, AngloGold, CBRR, CIM, Rio Tinto, and SRK 1. 327Letter from SME 1. 328See letters from Amec, CBRR, Midas, Rio Tinto, SRK 1, and Vale. 329See, e.g., letters from Midas and SRK 1. MMSA, however, indicated that continuing professional development should be compulsory. 330See letters from Amec, Coeur, MMSA, and Willis. 331See letters from AIPG, Amec, AusIMM, BHP, CBRR, CIM, CRIRSCO, Eggleston, Graves, JORC, Midas, SAMCODES 1, SME 1, SRK 1, and Vale. 332See letters from AIPG, CIM, Graves, SME 1, SRK 1, and Vale. 333See letters from AusIMM, CBRR, Graves, JORC, and SME 1. 334See letter from BHP. 335See, e.g., letters from AIPG, Graves, and SME 1. 336See, e.g., letters from Alliance and Golder. 337See letter from Alliance. 338See letter from Golder. 339See 17 CFR 229.1300. 340See 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. 341See supra note 315 and accompanying text. 342See letters from AIPG, Coeur, MMSA, and SME 1. 343See, e.g., letters from CBRR, Eggleston, Midas, SAMCODES 1, and SRK 1. 344See letters from AngloGold, CBRR, Eggleston, Midas, Rio Tinto, and SRK 1. 345Letter from Rio Tinto. 346See the definition of ‘‘relevant experience’’ in 17 CFR 229.1300. 347See paragraph (1) of the definition of ‘‘relevant experience’’ in 17 CFR 229.1300. 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 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 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 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
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 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 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 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 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 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

348See Note 1 to paragraph (1) of the definition of ‘‘relevant experience’’ in 17 CFR 229.1300. 349See paragraph (2) of the definition of ‘‘relevant experience’’ in 17 CFR 229.1300. 350See paragraph (3) of the definition of ‘‘relevant experience’’ in 17 CFR 229.1300. 351See, 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. 352 See supra note 324 and accompanying text. 353See letter from SME 1. 354See letters from Amec, CBRR, Midas, Rio Tinto, SRK 1, and Vale. 355See, e.g., letter from Rio Tinto. 356See letters from Alliance and Golder. 357We 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. 358Accordingly, 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. 359See, 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. 360See Proposing Release, supra note 5, at
Section II.D.
361See id.
362See id. 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 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 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 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 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 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 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
   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 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

363See id.
364See 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.’’ 365See letters from BHP, Eggleston, Midas, Rio Tinto, and SAMCODES 2. 366See letter from Eggleston. 367Letter from Midas. 368See 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). 369See letter from SAMCODES 2. 370See 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. 371See letters from Alliance, Cleary & Gottlieb, Cloud Peak, CIM, Davis Polk, FCX, Gold Resource, Newmont, NMA 1, Royal Gold, SME 1, and Vale. 372See, e.g., letters from CIM, Cleary & Gottlieb, Gold Resource, SME 1, and Vale. 373See letter from SME 1. 374See id. 375See letters from Alliance, AngloGold, and SRK 1. 376Letter from Alliance. 377See letters from AngloGold, Cleary & Gottlieb, Cloud Peak, CIM, Coeur, Davis Polk, FCX, Gold Resource, Newmont, Royal Gold, SME 1, SRK 1, Vale, and Willis. 378See 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. 379Letter from CIM. See also letters from Amec, AngloGold, BHP, CBRR, Coeur, CRIRSCO, JORC, SAMCODES 1, SME 1, SRK 1, Vale, and Willis. 380Under 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. 382See letter from AngloGold. 383Letter from Midas. 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
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 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 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. 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 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 A third commenter, however, opposed the proposed definition because it does not include all techniques typically employed by exploration geologists and therefore

384Letter from SRK 1.
385See 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. 386See, e.g., letter from SME 1. 387 Id. 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. 390See id. 391See id. 392See supra note 378 and accompanying text. 393See Proposing Release, supra note 5, at
Section II.D.
394See letter from SME 1.
395See Item 1302(b)(1) of Regulation S–K. 396See supra note 375 and accompanying text. 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
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 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 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. 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. 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. 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

397See letters of Alliance and FCX. 398See the definition of ‘‘exploration results’’ in 17 CFR 229.1300. 399See letters from Amec and SRK 1. 400See 17 CFR 229.1300. 401See supra note 385 and accompanying text. 402See letters from Amec and Eggleston. 403See, 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. 404See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 18; and PERC Reporting Standard, supra note 302, at pt. 6. 405See supra note 379 and accompanying text. 406See, e.g., letters from CBRR, CIM, CRIRSCO, and SME 1. 407See, e.g., letter from SME 1. 408See letter from AngloGold. 409See, e.g., letters from CIM, Coeur, SME 1, Vale, and Willis. 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 § 229.1302(c)). 411See 17 CFR 229.1302(c)(1). 412See 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. 413See the definition of ‘‘exploration target’’ in 17 CFR 229.1300. 414 17 CFR 229.1302(c)(2) [Item 1302(c)(2) of Regulation S–K]. 415See, e.g., JORC Code, supra note 175, at pt. 17; and SAMREC Code, supra note 270, at pt. 22. 416See, e.g., letters from CBRR, CIM, and SME 1. 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). 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 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. 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 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 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 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 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 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

417 17 CFR 229.1302(c)(3) [Item 1302(c)(3) of Regulation S–K]. 418See, e.g., JORC Code, supra note 175, at pt. 17; and SAMREC Code, supra note 267, at pt. 22. 419See supra note 416 and accompanying text. 420An 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.
421First, 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. 422See, 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. 423Both 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. 424See SME Petition for Rulemaking, supra note 6, at 1–2. 425See Proposing Release, supra note 5, at
Section II.E.
426See Proposing Release, supra note 5, at Sections II.G.1–2. 427For 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. 428Similarly, 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’’). 429See Proposing Release, supra note 5, at Sections II.E., VIII. 430See letters from Amec, AngloGold, BHP, CBRR, CIM, Eggleston, FCX, Gold Resource, Midas, Newmont, Northern Dynasty, Rio Tinto, SAMCODES 2, SRK 1, and Vale. 431See letter from Midas. target could change as the proposed exploration activities are completed.417 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 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. 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 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 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 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
   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 Another commenter stated that shareholders and potential investors

432See 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’’). 433See letter from Northern Dynasty. 434Letter from Rio Tinto. 435See 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. 436See letter from Midas. 437 Id. 438Letter from Alliance. 439See letter from NSSGA. 440See, e.g., letters from Amec, AngloGold, Eggleston, Gold Resource, Midas, Northern Dynasty, and SRK 1. 441See, e.g., letters from Eggleston, Midas, and SRK 1. 442See letter from Davis Polk. 443See id. 444 17 CFR 229.1303(b)(3) [Item 1303(b)(3) of Regulation S–K] and 229.1304(d)(1) [Item 1304(d)(1) of Regulation S–K]. 445See, e.g., SME Petition for Rulemaking, supra note6; letters from Northern Dynasty and SRK 1; CRIRSCO International Reporting Template, supra note 20, at cl. 21; and JORC Code, supra note 175, at pt. 20. 446See supra note 430. 447Best practice in mining engineering is to first determine the quantity and quality of the material of economic interest (i.e., mineral resource estimation), prior to engineering and economic evaluation, to determine if any or all of that material can be extracted economically (i.e., mineral reserve estimation). See, e.g., Alan C. Noble, Mineral Resource Estimation, in 1 SME Mining Engineering Handbook 203 (P. Darling, ed., 2011), which states ‘‘[t]he ore reserve estimate follows the resource estimate.’’ 448See letters from Alliance and Midas. 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 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 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 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
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 recommendations.445 Requiring the disclosure of mineral resources will also help place U.S. registrants on a level playing field with Canadian mining registrants and non-U.S. mining companies that are subject to one or more of the other CRIRSCO-based mining codes. For these reasons, numerous commenters supported the required disclosure of determined mineral resources in Commission filings.446 Requiring disclosure of mineral resources in Commission filings could increase the reporting costs for those mining companies that do not currently disclose mineral resource information. We believe, however, that any such increase would be modest as most mining companies already assess mineral resources in order to determine reserves.447 As some commenters noted, requiring the disclosure of mineral resources could also increase the possibility that investors may misunderstand the economic value of a mining company, given that mineral resources are less certain than mineral reserves.448 As discussed below, however, we believe that this risk is limited by the definition of the term mineral resource, by requiring disclosure of the particular class of mineral resource, and by requiring an initial assessment for mineral resource disclosure. We also believe that there are important potential benefits to investors from the disclosure of mineral resources, including more comprehensive and potentially more accurate disclosure of mineral reserves. Given that mineral reserve estimates are based on estimates of mineral resources,

449See, e.g., letter from Northern Dynasty (stating that because mineral resources, if rigorously estimated, can materially change the valuation of a company, shareholders and potential investors should be made aware of those assets). 450See supra notes 438–439 and accompanying text. 451See supra Section II.E.1.i. 452See, e.g., letter from Northern Dynasty. 453See letter from Davis Polk. 454See supra note 428 and accompanying text. 455See Proposing Release, supra note 5, at
Section II.E.1.
456The term ‘‘dumps’’ refers to stockpiles of mined material. The term ‘‘tailings’’ refers to a mixture of fine mineral matter and process effluents generated by mineral processing plants. 457See 17 CFR 210.4–10(a)(16)(i) [Rule 4– 10(a)(16)(i) of Regulation S–X]. 458See Proposing Release, supra note 5, at
Section II.E.1.
459See id.
460See id.
461The term ‘‘inventory of mineralization’’ means an estimate of the total quantity of mineralization based on the available evidence. 462See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 21; JORC Code, supra note 175, at pt. 20; and SAMREC Code, supra note 267, at pt. 24. 463The term cut-off grade refers to the grade (the concentration of metal or mineral in rock) at which the destination of the material changes during mining. For establishing prospects of economic extraction, it is the grade that distinguishes between the material that is uneconomic and the material that is economic and therefore going to be mined and processed. Terms with similar meanings include net smelter return, pay limit and break-even stripping ratio. See the definition of cut-off grade in 17 CFR 229.1300. 464See Proposing Release, supra note 5, at
Section II.E.1.
465See, e.g., letters from AngloGold, Eggleston, Midas, Northern Dynasty, and Rio Tinto. 466See letters from AngloGold, CBRR, and Rio Tinto. 467See letter from Midas. 468See letter from SRK 1. 469See letters from Amec, AngloGold, BHP, Eggleston, Energy Fuels, Rio Tinto, and Vale. 470Letter from Eggleston; see also letter from Energy Fuels; letter from Vale (explaining that we believe that the required rigor surrounding the disclosure of mineral resources as well as the attendant scrutiny from the qualified person, particularly regarding mineral resource classification, is likely to lead to more reliable mineral reserves disclosure.449 We recognize that some industry participants, such as those in the industrial minerals and aggregates business, view mineral resources as less important to their business than other mining registrants and therefore have opposed a requirement to disclose mineral resources.450 As previously explained, however, like the proposed rules, the final rules do not impose an affirmative obligation to determine mineral resources.451 If an aggregates or other mining company does not want to incur the expense of hiring a qualified person to determine the existence of mineral resources, it need not do so. In that case, however, the company would not be able to declare that it has mineral resources in a Commission filing. Once a registrant with material mining operations does determine that it has mineral resources, based on information and supporting documentation of a qualified person, then, because of their importance to the potential valuation of the company and to investors,452 we do not believe that the registrant should have the option, as one commenter suggested,453 of not disclosing the mineral resources in a Commission filing, or of otherwise being excepted from disclosing them. In this regard we note that the approach we are taking is consistent with the regulatory frameworks of the CRIRSCO-based codes, which, without exception, require disclosure of mineral resources (and mineral reserves) once the registrant has made the determination that it has them and they are material.454
2. Definition of Mineral Resource
i. Rule Proposal
We proposed to define ‘‘mineral resource’’ as a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for its economic extraction.455 We further proposed to define the term ‘‘material of economic interest,’’ as used in the definition of mineral resource, to include mineralization, including dumps and tailings,456 geothermal fields, mineral brines, and other resources extracted on or within the earth’s crust. As proposed, the term ‘‘material of economic interest’’ would not include oil and gas resources resulting from oil and gas producing activities, as defined in Regulation S– X,457 gases (e.g., helium and carbon dioxide), or water.458 The proposed rules further specified that, when determining the existence of a mineral resource, a qualified person must be able to estimate or interpret the location, quantity, grade or quality continuity, and other geological characteristics of the mineral resource from specific geological evidence and knowledge, including sampling.459 In addition, when determining the existence of a mineral resource, as proposed, the qualified person must conclude that there are reasonable prospects for economic extraction of the mineral resource based on an initial assessment that he or she conducts by qualitatively applying the modifying factors likely to influence the prospect of economic extraction.460 Similar to the CRIRSCO-based codes, we proposed to state in connection with the definition of mineral resource that it is not to be merely an inventory of all mineralization 461 drilled or sampled.462 A mineral resource is instead a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade,463 likely mining dimensions, location or continuity, which, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable.464 We further proposed to include within the definition of mineral resource non-solid matter, such as geothermal fields and mineral brines, in addition to mineralization, even though the CRIRSCO-based codes restrict mineral resources to solid matter.
ii. Comments on the Rule Proposal
Several commenters generally supported the Commission’s proposal to define ‘‘mineral resource’’ as a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for its economic extraction.465 Some commenters supported the proposed definition because it is aligned or consistent with the CRIRSCO standards.466 Another commenter indicated the proposed definition was reasonable because it included the requirement that there are ‘‘reasonable prospects for economic extraction’’ as under the CRIRSCO jurisdictions.467 In contrast, although agreeing that mineral resources must have reasonable prospects for their economic extraction, one commenter opposed the proposed definition on the grounds that a qualified person will not be able to assure that all modifying factors can be accommodated for eventual economic extraction.468 Several commenters recommended that the Commission revise the definition of mineral resource by requiring that there be reasonable prospects for eventual economic extraction, as under the CRIRSCO standards.469 As one commenter explained, under the proposed definition, ‘‘there is an implication that a mineral resource has reasonable prospects for economic extraction today’’ whereas ‘‘[i]n many cases, mineral resources are identified that may not have reasonable prospects today, but with improved prices, technology, may be economic tomorrow.’’ 470 Some commenters

‘‘[t]he word ‘‘eventual’’ indicates timing for economic extraction, and timing may vary depending on the commodity or mineral’’). 471See letters from SME 1 and Vale. 472See letters from Amec, AngloGold, Eggleston, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 473See letter from Eggleston. 474Letter from Amec. 475See letters from Eggleston, Northern Dynasty, and Rio Tinto. 476See letters from Eggleston and Rio Tinto. 477See letters from Eggleston and Northern Dynasty. 478See letter from Eggleston. 479See letters from Amec, CBRR, CRIRSCO, Davis Polk, SAMCODES 2, SME 1, and SRK 1. 480See letter from SME 1; see also letter from Amec (stating that the definition of mineral resource should exclude mineral brines because ‘‘[m]ineral brine reservoirs are dynamic systems, and the methodology for estimation of brine resources and brine reserves is significantly different to that used in Mineral Resource and Mineral Reserve estimates, since brine resource and brine reserve estimates also require temporal measurements of fluid flow and brine chemistry’’). 481See letter from SME 1. 482See, e.g., letters from Rio Tinto and SRK 1; see also letter from SAMCODES 2 (stating that disclosure of both mineral brines and geothermal energy should be regulated under oil and natural gas rules). 483See letters from Amec and SRK 1; see also letter from MMSA (recommending the adoption of separate rules for both geothermal energy and mineral brines because ‘‘these commodities do not closely correspond with solid minerals’’). 484See letters from Amec, AngloGold, CBRR, Eggleston, Rio Tinto, and SRK 1. 485See letter from SRK 1. 486See letters from Amec, AngloGold, Eggleston, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 487See letters from AngloGold, Eggleston, and Rio Tinto. 488See letter from SRK 1. 489See letter from CBRR. 490See the definition of ‘‘mineral resource’’ in 17 CFR 229.1300. 491See, e.g., letters from CBRR and Midas. See infra note 493 and accompanying text for why we are not adopting the modifier ‘‘eventual’’ as used in the CRIRSCO definition of mineral resource. 492As discussed below, in a change from the proposed rules, the final rules require a qualified person to consider relevant technical and economic factors likely to influence the prospect of economic extraction, rather than applicable modifying factors, at the resource determination stage in order to more closely align the final rules with the CRIRSCO standards. See infra Section II.E.4. 493See, e.g., letters from Eggleston and Vail. further recommended that the Commission provide interpretive guidance on the meaning of the term ‘‘eventual.’’ 471 Several commenters supported the proposed definition’s inclusion of dumps and tailings.472 One commenter explained that mine dumps and tailings are a significant source of metals and, in some cases, are the only identified mineral resource on a property.473 Another commenter stated that, in addition to dumps and tailings, the definition of mineral resource
should specifically include ‘‘slag heaps (dumps), stockpiles, heap or dump leach pads, and backfill materials.’’ 474 Some commenters generally supported the proposed definition’s inclusion of mineral brines.475 Two of those commenters conditioned their support on the Commission’s adoption of significant additional guidance regarding mineral brines.476 Two commenters also supported the proposed inclusion of geothermal energy.477 One of the commenters conditioned support on the Commission’s adoption of separate rules for geothermal energy with additional guidance.478 In contrast, several commenters expressly opposed the inclusion of mineral brines and geothermal energy in the definition of mineral resource.479 One commenter explained that extraction of mineral brines and geothermal energy ‘‘requires the pumping of fluids rather than digging of solid materials’’ and, like water and gases, which the proposed definition would exclude, involves scientific and engineering principles that are substantially different from those used to estimate solid mineral resources.480 Regarding geothermal energy, this commenter stated that there is no internationally accepted standard protocol to estimate and report the potential for geothermal energy.481 Some commenters believed that disclosure of mineral brines should be regulated under the oil and natural gas rules.482 A few commenters recommended regulating disclosure of geothermal energy under its own set of rules.483 Several commenters supported the proposed exclusion of oil and gas resources resulting from oil and gas producing activities, as defined in Regulation S–X, gases (e.g., helium and carbon dioxide), and water from the definition of mineral resource.484 As one commenter explained, the above substances are not traditional or industry standard commodities considered as ‘‘mining operations.’’ 485 Many commenters supported requiring in the definition of mineral resource that a qualified person estimate or interpret the location, quantity, grade or quality continuity, and other geological characteristics of the mineral resource from specific geological evidence and knowledge, including sampling.486 Commenters noted that the proposed requirement is in alignment with CRIRSCO standards 487 and is the current industry standard.488 One commenter stated that a qualified person should also consider non￾geologic factors, such as processing, mining method costs, and economic evaluation, when determining the reasonable prospects for a mineral resource’s economic extraction.489
iii. Final Rules
We are adopting the definition of mineral resource, as proposed, to mean a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction.490 As commenters noted, this definition is consistent with the requirement under the CRIRSCO-based codes that, in order for a deposit, in whole or part, to be determined to be a mineral resource, there must be reasonable prospects for its economic extraction.491 In order to classify a deposit as a resource, a qualified person must establish that there are reasonable prospects of economic extraction by estimating or interpreting key geological characteristics from specific geological evidence. We believe that requiring an analysis based on specific geological evidence to establish prospects of economic extraction provides an appropriate standard, and importantly, one that is more exacting than what we are requiring for the disclosure of exploration results. A qualified person should have a higher level of confidence to determine that a deposit is properly classified as a mineral resource (which is an estimate of tonnage and grade that has reasonable prospects of economic extraction) than to report exploration results (which may not indicate the existence of any tonnage with reasonable prospects of economic extraction) because of the relatively greater weight that investors are likely to place on estimates of mineral resources. This in turn should help mitigate the uncertainty inherent in the determination of mineral resources. Moreover, because the CRIRSCO-based codes impose a substantially similar requirement, we do not believe this aspect of the definition of mineral resources would significantly alter existing disclosure practices of registrants subject to these codes.492 We are not modifying the proposed definition of mineral resource to mean that there must be reasonable prospects for its eventual economic extraction.493 Because a qualified person must consider relevant technical and economic factors likely to influence the prospect of economic extraction, including pricing for the resource that could be based on forward-looking price

494See infra Section II.E.4.
495See, e.g., JORC Code, supra note 175, at pt. 20; and SME Guide, supra note177, at pt. 35. 496See infra Section II.E.4. 497See the definition of ‘‘material of economic interest’’ in 17 CFR 229.1300. 498See supra note 472. 499See, e.g., JORC Code, supra note 175, at pt. 20; SAMREC Code, supra note 267, at pt. 24; PERC Reporting Standard, supra note 302, at pt. 7.4; and SME Guide, supra note 177, at pt. 35. 500See supra note 479 and accompanying text. 501Mining can be defined as the ‘‘[p]rocess of obtaining useful minerals from the earth’s crust.’’ Lewis & Clark, Elements of Mining 20 (1964). 502See Ontario Securities Commission (OSC), Mineral Brine Projects and National Instrument 43– 101 Standards of Disclosure for Mineral Projects, Notice 43–704 (July 22, 2011) (‘‘In our view mineral brine projects are mineral projects as defined in NI 43–101’’). 503See, e.g., OSC Notice 43–704 (‘‘We also think that it is in the public interest for mineral brine projects to be subject to the requirements of NI 43–
101. NI 43–101 provides a proper and rigorous
disclosure framework for mineral projects hosted in a brine’’). 504See the definition of ‘‘material of economic interest’’ referenced in the definition of mineral resource in 17 CFR 229.1300. 505See, e.g., letter from SME 1. For example, the Australian Geothermal Energy Association’s Geothermal Code Committee concluded that JORC was a better model for the Australian Geothermal Reporting Code than the Society of Petroleum Engineers’ Resources Management System, which is favored by some U.S. industry groups. See, e.g., J.V. Lawless, M. Ward and G. Beardsmore, The Australian Code for Geothermal Reserves and Resources Reporting: Practical Experience, Proceedings of the World Geothermal Congress (2010). 506 17 CFR 210.4–10(a)(16)(i). 507See the definition of ‘‘material of economic interest’’ referenced in the definition of mineral resource in 17 CFR 229.1300. 508See supra note 484. 509See the definition of ‘‘mineral resource’’ in 17 CFR 229.1300; see also 17 CFR 229.1302(d)(1)(i)(A) [Item 1302(d)(1)(i)(A) of Regulation S–K]. 510See letters from Amec, AngloGold, Eggleston, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 511See letters from AngloGold, Eggleston, and Rio Tinto. 512See letter from SRK 1. 513See, e.g., letter from Amec. 514See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 21; JORC Code, forecasts,494 when determining whether mineral resources exist on a property, we believe it is clear from the definition of mineral resource that the reasonable prospects for economic extraction will occur over a timeline. To be clear, by requiring that there be reasonable prospects for a mineral resource’s economic extraction, we do not mean that the extraction must occur immediately. Rather, we expect that it will occur over a temporal period, which will vary depending on the mineral or commodity being mined. As noted by the CRISCRO-based codes, for coal, iron ore, bauxite or other bulk minerals and commodities, it may be reasonable to consider economic extraction as occurring over a time period of 50 or more years when determining whether the deposit is a mineral resource. However, for smaller mineral deposits, it would likely be reasonable to consider economic extraction as occurring over a much shorter time period, for example, no more than 10–15 years.495 Under the final rules, the qualified person will choose the appropriate temporal period when determining whether mineral resources exist and, if the property is material, must explain its choice in the technical report summary.496 The final rules provide that the term ‘‘material of economic interest,’’ when used in the context of mineral resource determination, includes mineralization, including dumps and tailings, mineral brines, and other resources extracted on or within the earth’s crust.497 Most commenters 498 that addressed the issue supported including dumps and tailings within the definition because it reflects industry practice and is consistent with the CRIRSCO-based
codes.499 The inclusion of dumps and tailings in the definition of mineral resource reflects the fact that, under certain circumstances, these byproducts from older mining operations possess value. The final rules do not exclude mineral brines from the definition of mineral resource 500 because we continue to believe that, by definition, extracting minerals, such as lithium, from mineral brines constitutes mining.501 While such extraction may involve the consideration and application of additional factors, the scientific and engineering principles used to characterize mineral brine and resources and reserves are substantially similar to those used to characterize solid mineral resources and reserves. We also note that, although the CRIRSCO-based codes define a mineral resource as ‘‘solid material,’’ at least one CRIRSCO-based jurisdiction has determined that disclosure regarding the mining of mineral brines should be regulated under the same set of rules governing mineral resources.502 Moreover, including minerals extracted from mineral brines within the definition will provide registrants with a workable, reasonable, and consistent framework for disclosure related to these activities while providing investors with useful and reliable information about the properties containing the mineral brines.503 In a change from the proposed rules, the adopted definition of mineral resource does not include geothermal energy.504 We have been persuaded to exclude geothermal energy from the definition of mineral resource due to the lack of consensus regarding how to regulate the disclosure of geothermal energy resources.505 The adopted definition of mineral resource also excludes oil and gas resources resulting from oil and gas producing activities, as defined in Rule 4–10(a)(16)(i) of Regulation S–X,506 gases (e.g., helium and carbon dioxide), and water.507 Most commenters that addressed the issue supported the exclusion of oil and gas resources because their exclusion is consistent with industry practice.508 Also consistent with industry practice, we are excluding gases (such as helium and carbon dioxide) and water because the scientific and engineering principles used to estimate these resources are substantially different from those used to estimate mineral resources. As proposed, the final rules provide that a mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.509 Several commenters supported requiring in the definition of mineral resource that a qualified person estimate or interpret the location, quantity, grade or quality continuity, and other geological characteristics of the mineral resource from specific geological evidence
and knowledge, including sampling.510 As commenters noted, this requirement is in alignment with CRIRSCO standards 511 and is the current industry standard.512 Accordingly, its adoption should help promote uniformity in the disclosure of mineral resources. Although some commenters suggested that we expand the definition to include other specific factors to consider at the resource determination stage,513 we believe that such expansion would increase the prescriptive nature of subpart 1300 and could thereby increase the compliance burden of the final rules without providing significant additional benefits for investors.
3. Classification of Mineral Resources
i. Rule Proposal
We proposed to adopt the CRIRSCO￾based classification of mineral resources 514 by requiring a registrant

supra note 175, at pt. 20; SAMREC Code, supra note 267, at pt. 24; and PERC Reporting Standard, supra note 302, at pt. 7.2. 515See Proposing Release, supra note 5, at
Section II.E.2.
516See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 22; JORC Code, supra note 175, at pt. 21; SAMREC Code, supra note 267, at pt. 25; and PERC Reporting Standard, supra note 302, at pt. 7.5. 517See Proposing Release, supra note 5, at
Section II.E.2.
518See id.
519See id.
520See id.
521See id.
522See id.
523See id.
524See id.
525See id.
526See id.
527We proposed to require this quantification of uncertainty in the ‘‘initial assessment’’ prepared by the qualified person. We proposed to define ‘‘initial assessment’’ as a preliminary technical and economic study of the economic potential of all or parts of mineralization to support the disclosure of mineral resources. See Proposing Release, supra note 5, at Section II.E.2. An initial assessment is different from a pre-feasibility study in that a pre￾feasibility study is used to determine whether all or part of a mineral resource can be converted into a mineral reserve. We discuss the initial assessment requirement in detail in Section II.E.4 below. 528See Proposing Release, supra note 5, at
Section II.E.2.
529The term ‘‘confidence limits of relative accuracy’’ refers to the values on both sides of zero (the average relative accuracy for unbiased mineral resource estimates) that show, for a specified probability (the confidence level), the range in which the relative accuracy lies. For example, if a report says the confidence limits of relative accuracy for a mineral resource is ±10% at 90% confidence for annual production quantities, it means there is a nine out of ten chance that the actual annual production quantities will be between 90% and 110% of the planned quantities. 530Using this approach, the geologic uncertainty associated with indicated and measured mineral resources is stated by keeping any two of the three relevant variables (confidence limits of relative accuracy, confidence level, and production periods) constant while varying the third. For example, the risk could be stated as ±15% at 90% confidence for monthly, quarterly, or annual production estimates, or ±10% or ±15% at 90% confidence for annual production estimates. 531The mining engineering literature makes clear that specifying the confidence limits of relative accuracy, at a specific confidence level, of production quantities per period is the best way to quantify uncertainty associated with resources. See, e.g., E.H. Isaaks, and R.M. Srivastava, An Introduction to Applied Geostatistics 489–513 (1990); and M.E. Rossi, and C.V. Deutsch, Mineral Resource Estimation 209–222 (2014). See generally P.R. Stephenson, Mineral Resource Classification. How the Viability of Your Project May Hang On a Qualified Person’s Judgment (2011); and P. Stoker and C. Moorhead, Confidence in Resource Estimates—Beyond Classification (2009). with material mining operations to classify its mineral resources into inferred, indicated, and measured mineral resources, in order of increasing confidence based on the level of underlying geological evidence.515 We further proposed to define each of those subcategories of mineral resources. a. Inferred Mineral Resources Similar to the CRIRSCO-based codes,516 we proposed to define ‘‘inferred mineral resource’’ as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.517 As the proposed rules explained, ‘‘limited geological evidence’’ means evidence that is only sufficient to establish that geological and grade or quality continuity is more likely than not. The proposed rules further provided that the level of geological uncertainty associated with an inferred mineral resource is too high to apply modifying factors in a manner useful for evaluation of economic viability.518 Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, under the proposed rules it may not be considered when assessing the economic viability of a mining project and may not be converted to a mineral reserve.519 We further proposed to establish the
level of certainty that a qualified person must strive to achieve when determining the existence of an inferred mineral resource. As proposed, the qualified person must have a reasonable expectation that the majority of inferred mineral resources could be upgraded to indicated or measured mineral resources with continued exploration. In addition, the qualified person should be able to defend the basis of this expectation before his or her peers.520 b. Indicated and Measured Mineral Resources We proposed to define ‘‘indicated mineral resource’’ as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling.521 As the proposed rules explained, ‘‘adequate geological evidence’’ means evidence that is sufficient to establish geological and grade or quality continuity with reasonable certainty. This means that the level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.522 We also proposed to explain that an indicated mineral resource has a lower level of confidence than that applicable to a measured mineral resource and may only be converted to a probable mineral reserve.523 We proposed to define ‘‘measured mineral resource’’ as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling.524 As the proposed rules explained, ‘‘conclusive geological evidence’’ means evidence that is sufficient to test and confirm geological and grade or quality continuity. This means that the level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit.525 We also proposed to provide that, because a measured mineral resource has a higher level of confidence than that applying to either an indicated mineral resource or an inferred mineral resource, it may be converted to a proven mineral reserve or to a probable mineral reserve.526
c. Considerations of Geologic
Uncertainty
We proposed to require that the qualified person quantify the uncertainty associated with each class of mineral resources by disclosing the uncertainty associated with the production estimates derived from each class of mineral resources.527 While a qualified person would be permitted to develop mineral resource estimates using any generally accepted method, including geostatistics, simulation, or inverse distance, under the proposed rules, he or she would also be required to estimate the uncertainty associated with each class of mineral resource, expressed in a prescribed format that depended upon the specific classification of the resource. As we explained in the Proposing Release,528 for indicated and measured mineral resources, the qualified person would be required to provide the confidence limits of relative accuracy,529 at a specific confidence level, of the preliminarily estimated production quantities per period from the resource.530 This approach for reporting the level of uncertainty is consistent with what many have suggested in the mining engineering literature to be best practice.531 When proposing this approach, we did not impose any restrictions on the acceptable confidence limits of relative accuracy or confidence level required to disclose indicated or measured mineral resources. In that regard, we recognized that the natural variability of geologic characteristics is different for different deposits.

532We proposed to require uncertainty estimates for inferred mineral resources to be stated in the form ‘‘the qualified person expects at least z% of inferred mineral resources to convert to indicated or measured mineral resources with further exploration and analysis.’’ See Proposing Release, supra note 5, at note 180 and accompanying text. 533Possible sources of uncertainty that affect the reporting of inferred resources may include sampling or drilling methods, data processing and handling, geologic modeling and estimation. 534See letters from Amec, AngloGold, BHP, CBRR, Eggleston, FCX, Midas, Rio Tinto, SAMCODES 2, SRK 1, and Vale. 535See, e.g., letters from Amec, CIM, Coeur, Northern Dynasty, and SAMCODES 2. 536Letter from Alliance. 537See, e.g., letters from AngloGold, Midas, and Rio Tinto. 538See letter from SRK 1. 539See letters from CBRR, Eggleston, and Gold Resource. 540See letter from Gold Resource. 541See, e.g., letters from AngloGold, Eggleston, Gold Resource, and Rio Tinto. 542See supra note 535. 543Letter from CIM. 544See letter from Gold Resource. 545See id. 546See letters from Amec, AngloGold, BHP, CBRR, Coeur, CRIRSCO, Eggleston, Energy Fuels, JORC, Midas, MMSA, NMA, Northern Dynasty, Randgold, SAMCODES 2, SME 1, SRK 1, Ur-Energy, Vale, and Willis. 547See letters from Amec, Coeur, CRIRSCO, Eggleston, Energy Fuels, JORC, Midas, MMSA, NMA, Northern Dynasty, SME 1, SRK 1, Ur-Energy, Vale and Willis. 548See letters from Coeur, NMA, Northern Dynasty, SME 1, Ur-Energy, and Vale. 549See letters from Amec, AngloGold, CBRR, Eggleston, Gold Resource, Rio Tinto, SAMCODES 1, SRK 1, and Vale. 550See, e.g., letters from CBRR, Coeur, Northern Dynasty, SRK 1, and Vale. We further proposed that, when estimating the geologic uncertainty associated with indicated and measured mineral resources, the qualified person would be required to consider the limitations of the data, assumptions, and models used to determine the resource estimates. This is because the numerical estimates of uncertainty from geostatistics or simulation do not account for risk factors associated with the input such as, but not limited to, drilling or sampling methods, laboratory assaying methods, outlier treatment, assumptions made during modeling of domains and geologic controls, compositing (averaging grades over similar sampling volumes or lengths), and establishing upper limits of grades. Consequently, such numerical estimates may underestimate the uncertainty associated with the mineral resources. Regarding inferred mineral resources, we proposed to require qualified persons to state the minimum percentage of inferred mineral resources they believe will be converted to indicated and measured mineral resources with further exploration.532 As we explained, because inferred resources have such a low level of confidence, it would be inappropriate for a qualified person to use them in production estimates for a period equal to or shorter than a year. Differences between actual
and estimated production for such periods would have such high standard deviations that they would not provide an appropriate basis for investment decisions.533
ii. Comments on the Rule Proposal
Many commenters supported the Commission’s proposal to require a registrant to classify its mineral resources into inferred, indicated, and measured mineral resources because such a requirement would be consistent with the CRIRSCO standards.534 Other commenters supported the classification requirement as long as the definitions of inferred, indicated and measured mineral resources are identical to those under the CRIRSCO-based codes.535 One commenter saw little value in the classification of mineral resources. According to that commenter, ‘‘[b]ecause resources are considered economically marginal and of lower certainty to begin with, dividing resources into low, middle, and high level of certainty offers little value’’ and ‘‘tends to give additional credibility to the resources as a whole that may not be warranted.’’ 536 a. Inferred Mineral Resources Some commenters supported requiring a registrant with material mining operations to disclose inferred resources, despite limited geologic evidence underlying those resources, on the grounds that such a requirement is consistent with CRIRSCO 537 or industry standards.538 Other commenters, however, recommended permitting rather than requiring the disclosure of inferred resources.539 According to one of those commenters, an optional approach is warranted because of the high level of geologic uncertainty associated with that class of mineral resource.540 Several commenters supported defining ‘‘inferred mineral resource’’ as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.541 Other commenters, however, objected to the proposed definition of inferred resource because it is not identical to the CRIRSCO definition.542 For example, one commenter objected to the proposed definition of ‘‘limited geological evidence’’ as evidence that is only sufficient to establish that geological and grade or quality continuity is more likely than not. Instead, that commenter recommended substituting the CRIRSCO definition of inferred mineral resource, which includes the requirement that ‘‘[g]eologic evidence is sufficient to imply but not verify geological and grade or quality continuity.’’ According to that commenter, by using the CRIRSCO definition, ‘‘the assumptions underlying the estimates of inferred mineral resources are more clearly defined.’’ 543 One commenter supported the Commission’s proposed prohibition regarding the use of inferred resources in economic assessments of mining properties.544 This commenter indicated that using inferred resources in this way could mislead registrants and investors on the economic potential of the property.545 Many other commenters opposed the Commission’s proposal to prohibit the use of inferred resources to make a determination about the potential economic viability of extraction.546 Commenters stated that this prohibition would be inconsistent with the CRIRSCO-based codes, which permit
the inclusion of inferred resources in a scoping study or a preliminary economic assessment (as permitted under Canada’s NI 43–101) as long as cautionary disclaimers regarding the geologically speculative nature of inferred resources and the corresponding high level of risk associated with them are provided.547 According to several of these commenters, adoption of this prohibition would place U.S. registrants at a significant disadvantage and deprive investors of information they have found relevant to their investment decisions.548 Commenters generally agreed with the Commission’s proposal to preclude the conversion of inferred resources into a mineral reserve because of the high level of geologic uncertainty associated with inferred resources.549 In response to our request for comment about whether we should require a registrant to use a legend or cautionary language when disclosing inferred resources, while commenters supported such use in a preliminary economic assessment or scoping study to warn of a high level of geologic uncertainty,550 a few commenters opposed the use of cautionary language in the reporting of inferred resources because such language is already captured in the

551See letters from AngloGold and Rio Tinto. Another commenter opposed the use of cautionary statements regarding inferred resources because ‘‘[r]equiring prescriptive statements is not beneficial to the industry.’’ Letter from Amec. 552See letter from Eggleston. 553See letters from AngloGold, CBRR, Midas, Northern Dynasty, and Rio Tinto. 554See, e.g., letters from CBRR, Midas, and Rio Tinto. 555See letters from AngloGold and Northern Dynasty. 556See letters from Amec, CIM, Coeur, SRK 1, and Willis. 557See letter from Willis. 558See letters from SRK 1 and Willis. 559See letter from SRK 1. 560See letters from AngloGold and CBRR. 561See id. 562See id. 563See letters from Amec, Coeur, Northern Dynasty, Rio Tinto, and SRK 1. 564See letters from Coeur and SRK 1. 565See letters from Amec, Midas, Rio Tinto, and SRK 1. 566See id. 567See letter from SRK 1. 568See letters from AIPG, Amec, AngloGold, BHP, CBRR, Cloud Peak, Eggleston, FCX, Gold Resource, JORC, Midas, MMSA, Northern Dynasty, NSSGA, Rio Tinto, SAMCODES 1 and 2, SRK 1, Ur-Energy, and Vale. 569See letter from SAMCODES 1. 570See id. 571See letter from AIPG. Several other commenters recommended that the Commission permit a qualified person to provide a qualitative discussion of the uncertainties involved in resource determination in lieu of a quantitative assessment based on the confidence limits of relative accuracy. See letters from Cloud Peak, Gold Resource, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 572See letter from Vale; see also letters from Eggleston and MMSA. 573See letters from Amec, CBRR, Eggleston, Gold Resource, JORC, Midas, MMSA, Northern Dynasty, Rio Tinto, Royal Gold, SRK 1, Ur-Energy, and Vale. 574See, e.g., letters from Amec, Eggleston, Gold Resource, Northern Dynasty, SRK 1, and Vale. 575See letter from MMSA. definition.551 Another commenter supported providing an appropriate cautionary statement to accompany the reporting of inferred resources, but asserted that a cautionary statement should be required for all mineral resource and mineral reserve statements because they are estimates based on various assumptions that may or may not be met at a particular time.552 b. Indicated and Measured Mineral Resources Several commenters supported the Commission’s proposal to define ‘‘indicated mineral resource’’ as that
part of a mineral resource for which
quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling.553 Those commenters stated that the proposed definition aligned with the CRIRSCO definition of indicated mineral resource.554 The commenters also supported the proposed definition of ‘‘adequate geological evidence’’ as evidence that is sufficient to establish geological and grade or quality continuity with reasonable certainty. Two of those commenters further agreed that the definition of ‘‘adequate geologic evidence’’ should be based on a qualified person’s ability to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.555 Other commenters urged the Commission to adopt verbatim the CRIRSCO definition of indicated mineral resource, which includes the provision that ‘‘[g]eologic evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.’’ 556 Commenters stated that the CRIRSCO definition ‘‘is more specific’’ 557 than the Commission’s proposed definition and is the industry standard.558 In opposing the proposed definition of indicated mineral resource, one of those commenters further explained that a qualified person will not be able to assure that all modifying factors can be accommodated for eventual economic extractions.559 Some commenters supported the Commission’s proposal to define ‘‘measured mineral resource’’ as that
part of a mineral resource for which
quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling.560 Those commenters further supported the proposed definition of ‘‘conclusive geological evidence’’ as evidence that is sufficient to test and confirm geological and grade or quality continuity, which means that the level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit.561 Those commenters stated that the proposed definition of measured mineral resource is consistent with the CRIRSCO standards.562 Other commenters recommended that the Commission adopt the CRIRSCO definition of measured mineral resource instead of the proposed definition.563 Commenters stated that the CRIRSCO definition is the industry standard,564 did not favor use of the term ‘‘conclusive geological evidence’’ because, in their view, it sets an unrealistic standard,565 and maintained that a qualified person would not be able to assure that all modifying factors could be accommodated for eventual economic extraction.566 One of the commenters recommended replacing the term ‘‘conclusive’’ with ‘‘a high level of confidence.’’ 567
c. Considerations of Geologic
Uncertainty
Many commenters opposed the Commission’s proposal to quantify the level of risk associated with indicated and measured mineral resources based on the confidence limits of relative accuracy at a particular confidence level for production estimates for periods of one year or less.568 While acknowledging that the use of confidence limits of relative accuracy is considered best practice in the industry, one commenter opposed mandating such a requirement because, depending on the deposit, a quantitative assessment of risk may not be necessary and, in any event, may not be available to the company.569 Instead, this commenter recommended relying on the application of the CRIRSCO definitions of inferred, indicated, and measured mineral resource, each of which requires a certain level of geological evidence, and requiring the qualified person to disclose the basis for the classification.570 A second commenter stated that qualitative risk assessments (e.g., low, medium, high) are more likely to provide investors with a sense of the risks inherent in mineral resource and reserve estimates than numerical risk assessments that inherently fail to account for the underlying geological uncertainties, estimates and interpretations.571 A third commenter stated that quantitative estimation of uncertainties is burdensome and, in most cases, the costs outweigh the benefits. That commenter recommended that the Commission follow CRIRSCO’s approach, which encourages but does not require the quantitative estimation of uncertainties.572 Many commenters opposed the Commission’s proposal to require a qualified person to describe the level of risk associated with an inferred mineral resource based on the minimum percentage that he or she estimates would convert to indicated or measured mineral resources with further exploration.573 Commenters stated that there is no realistic way to quantify such an estimate with any degree of accuracy,574 such a requirement would be impractical and burdensome for small mining companies,575 and such a

576See letter from Vale.
577See letters from Amec, Eggleston, Northern Dynasty, Rio Tinto, and Ur-Energy. 578See, e.g., 17 CFR 229.1302(d)(1)(iii)(A) [Item 1302(d)(1)(iii)(A) of Regulation S–K]; 17 CFR 229.1303(b)(3); and 17 CFR 229.1304(d)(1). 579 Depending on the particular classes of resources that are determined (e.g., if most or all of the determined resources are inferred resources), a registrant should consider whether appropriate risk factor disclosure is needed to explain to investors the limitations and risks of the resource determination. 580See letters from AngloGold, BHP, Eggleston, Midas, Rio Tinto, and SAMCODES 2. 581See also Section II.E.4.c. below for our discussion concerning the inclusion of inferred mineral resources in a quantitative assessment of the potential economic viability of a deposit. 582See the definition of ‘‘inferred mineral resource’’ in 17 CFR 229.1300 to mean that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. 583See id. As proposed, the final rules also explain that, because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve. See id. 584See supra note 541 and accompanying text. 585See, e.g., the CRIRSCO International Reporting Template, supra note 20, at cl. 22; JORC Code, supra note 175, at pt. 21; and SAMREC Code, supra note 267, at pt. 25. 586When used in the context of mineral resource determination, ‘‘limited geological evidence’’ means evidence that is only sufficient to establish that geological and grade or quality continuity is more likely than not. See the definition of ‘‘limited geological evidence’’ in 17 CFR 229.1300. Under CRIRSCO’s definition of inferred mineral resource, the requisite evidence is defined to mean geologic evidence that is sufficient to imply but not verify geological and grade or quality continuity. See CRIRSCO International Reporting Template, supra note 20, at cl. 22. We believe our articulation of the requisite evidence is more appropriate because it provides a clearer description of the low level of evidence that may support a determination of inferred mineral resources. 587See supra note 537 and accompanying text. 588See, e.g., letter from Gold Resource. 589See 17 CFR 229.1300, which defines an indicated mineral resource as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. When used in the context requirement is not imposed by other jurisdictions.576 Some commenters noted that, consistent with the CRIRSCO-based codes, the proposed definition of inferred mineral resource included the requirement that
the qualified person have a reasonable expectation that the majority of inferred mineral resources could be upgraded to indicated or measured mineral resources with continued exploration. Those commenters suggested that this proposed requirement would act as a substitute for the proposed quantification in that, if the qualified person cannot meet this expectation with regard to part of a deposit, that part could not be classified as inferred resources.577
iii. Final Rules
We are adopting the proposed requirement that a registrant with material mining operations classify its mineral resources into inferred, indicated, and measured mineral resources, in order of increasing confidence based on the level of underlying geological evidence.578 We believe this classification requirement will improve the accuracy of a registrant’s mining disclosure in Commission filings, and thereby benefit investors, because it is based upon an assessment of ‘‘geologic uncertainty,’’ which is the risk related to the quality, quantity and location of the mineral in the ground. Geologic uncertainty directly affects two very significant estimates, production quantities per period and related cash flows, which are crucial to a registrant’s determination, and an investor’s understanding, of mineral resource disclosure. We, therefore, believe that the final rules should require, and not merely allow, the classification of mineral resources.579 As several commenters noted, requiring the classification of mineral resources into inferred, indicated, and measured mineral resources is consistent with the CRIRSCO standards and prevailing industry practice.580 Thus, adoption of this classification requirement will more closely align the Commission’s mining property disclosure rules with global industry practice and promote uniformity in mining property disclosure. a. Inferred Mineral Resources 581 We are adopting the definition of ‘‘inferred mineral resource,’’ largely as proposed.582 In a slight change from the proposed rules, the adopted definition of inferred mineral resource provides that the level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence prospects of economic extraction in a manner useful for evaluation of economic viability.583 In response to commenters, the final rules use the term ‘‘relevant technical and economic factors’’ instead of ‘‘modifying factors,’’ as proposed, in order to more closely align the definition of inferred resources with that under the CRIRSCO￾based codes. As some commenters noted, the adopted definition of inferred mineral resource is generally consistent with the definition under the CRIRSCO-based codes.584 The central tenet under both definitions is that inferred mineral resources are estimates of quantity and grade or quality based on limited geological evidence and sampling.585 Although our definition of ‘‘limited geological evidence’’ differs slightly from the definition of geologic evidence in the CRIRSCO definition of inferred mineral resource,586 its meaning is substantially similar to the CRIRSCO definition. As commenters noted, it is consistent with the CRIRSCO standards to require the disclosure of inferred resources, which have been determined by a qualified person, in the Commission filings of a registrant with material mining operations.587 Although some commenters recommended that we permit rather
than require the disclosure of inferred resources in Commission filings because they have the lowest level of geologic confidence,588 we believe that inferred mineral resources are nonetheless important to an investor’s understanding of a registrant’s mining operations because they may be converted into indicated or measured mineral resources with further exploration. Additionally, the definition of inferred mineral resource will reduce any potential investor misunderstanding of the nature of a registrant’s mining operations by providing appropriate context for and limitations on the disclosure of inferred resources. First, the definition clearly highlights for investors that inferred mineral resources have the highest degree of uncertainty, allowing investors to take this factor into account when assessing a registrant’s disclosure. Second, the definition prohibits a registrant from using inferred mineral resources as a basis to determine mineral reserves. Rather, inferred resources will first have to meet the definitional requirements of, and be converted into, measured or indicated mineral resources, before they will be eligible to be considered as potential mineral reserves under the final rules. This will help limit the incentive for a registrant to be aggressive in disclosing inferred mineral resources because such disclosure would not increase the likelihood that such resources would ultimately be deemed to be mineral reserves. b. Indicated and Measured Mineral Resources We are adopting the proposed definition of indicated mineral resource.589 This definition provides

of mineral resource determination, the term ‘‘adequate geological evidence’’ means evidence that is sufficient to establish geological and grade or quality continuity with reasonable certainty. See id. 590See id. 591See id. 592See supra note 553 and accompanying text. 593See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 23; JORC Code, supra note 175, at pt. 22; and SAMREC Code, supra note 267, at pt. 27. 594See 17 CFR 229.1300, which defines a measured mineral resource to mean that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. When used in the context of mineral resource determination, the term ‘‘conclusive geological evidence’’ means evidence that is sufficient to test and confirm geological and grade or quality continuity. See the definition of ‘‘conclusive geological evidence’’ in 17 CFR 229.1300. 595See the definition of ‘‘measured mineral resource’’ in 17 CFR 229.1300. 596See id. 597See supra note 565 and accompanying text. 598See supra note 560 and accompanying text. 599See, e.g., JORC Code, supra note 175, at pt. 23 (stating that ‘‘[m]ineralisation may be classified as a Measured Mineral Resource when the nature, quality, amount and distribution of data are such as to leave no reasonable doubt, in the opinion of the Competent Person determining the Mineral Resource, that the tonnage and grade of the mineralisation can be estimated to within close limits, and that any variation from the estimate would be unlikely to significantly affect potential economic viability’’). 600As previously explained, the best practice in mining engineering is to determine mineral resources, prior to engineering and economic evaluation, to determine if any or all of those resources can be classified as mineral reserves. See supra note 447 and accompanying text. The predominant approach in the mining engineering literature is that mineral resource classification should be based on the estimator’s judgment of the uncertainty in estimates due to the geologic uncertainty. See, e.g., JORC Code, supra note 175, at pt. 24; and SAMREC Code, supra note 267, at pt.
29. This is consistent with the adopted definitions
of mineral resource classifications. 601See 17 CFR 229.601(b)(96)(iii)(B)(11)(v) [Item 601(b)(96)(iii)(B)(11)(v) of Regulation S–K]. 602See supra note 531 and accompanying text. 603See, e.g., letters from CBRR, MMSA, Rio Tinto, and Vale. 604 17 CFR 229.601(b)(96)(iii)(B)(11)(iv) [Item 601(b)(96)(iii)(B)(11)(iv) of Regulation S–K]. 605See Item 601(b)(96)(iii)(B)(11)(v) of Regulation S–K. 606See supra notes 570–572 and accompanying text. that the level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.590 The definition further explains that an indicated mineral resource has a lower level of confidence than that applying to a measured mineral resource and may only be converted to a probable mineral reserve.591 As those commenters that supported the proposed definition noted,592 this definition of indicated mineral resource is consistent with the comparable definition and guidance under the CRIRSCO-based codes.593 We are also adopting the proposed definition of measured mineral resource.594 This definition provides that the level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit.595 The adopted definition also explains that a measured mineral resource has a higher level of confidence than that applying to either an indicated mineral resource or an inferred mineral resource, and may be converted to a proven mineral reserve or to a probable mineral reserve.596 Although some commenters opposed the use of the term ‘‘conclusive evidence’’ because they believed that it set an unrealistic standard,597 we believe the term is appropriate because, as other commenters noted,598 it is consistent with the CRIRSCO standards and conveys that the level of evidence is sufficiently high enough to enable a qualified person to conclude that he or she may proceed with detailed mine planning and final evaluation of the economic viability of the deposit using measured mineral resources. The term is not meant to convey that there is no uncertainty in the estimate. But rather, as is the case with the CRIRSCO-based codes, the term means there is no reasonable doubt, in the opinion of the qualified person estimating mineral resources, that the tonnage and grade of the deposit can be estimated to such accuracy that any variation from the estimate would have an insignificant effect on the potential economic viability.599 Because the definitions of ‘‘indicated mineral resource’’ and ‘‘measured mineral resource’’ are substantially similar to the corresponding CRIRSCO￾based definitions, their adoption will more closely align the Commission’s mining property disclosure requirements with the
foreign mining code provisions, which would benefit both registrants and investors by promoting uniformity in mining disclosure standards. For those mining registrants that are dual-listed and already subject to the CRIRSCO-based requirements, such alignment should help to limit any potential additional costs imposed by the new requirement under the final rules to disclose indicated and measured mineral resources. In addition, some registrants, even if not currently subject to the CRIRSCO-based requirements, nonetheless apply substantially similar definitions of indicated and measured mineral resources as part of the process of determining mineral reserves,600 and should therefore benefit from their familiarity with the adopted definitions.
c. Considerations of Geologic
Uncertainty
In a change from the proposed rules, the final rules do not require that the qualified person quantify and disclose the uncertainty associated with indicated and measured mineral resources in terms of the uncertainty associated with the production estimates derived from them by providing the confidence limits of relative accuracy, at a specific confidence level, of the preliminarily estimated production quantities per period from the resource.601 Although this approach for reporting the level of uncertainty is consistent with best practice in the industry,602 we acknowledge that, for the reasons several commenters stated, requiring this approach in all instances could be impractical or inappropriate, unduly burdensome, and costly for many registrants.603 In lieu of a provision mandating a quantitative assessment of risk regarding indicated and measured mineral resources, we are requiring the qualified person to disclose the criteria used to classify a resource as indicated or measured and to justify the classification.604 This disclosure must include a discussion of the uncertainty in the indicated or measured mineral resource estimates, the sources of the uncertainty, and how those sources were considered in the estimates.605 This approach is consistent with commenters’ suggestion that we permit a qualitative discussion of the uncertainties involved in resource determinations in lieu of a quantitative assessment.606 While the final rules do not require a qualified person to use estimates of confidence limits derived from geostatistics or other numerical methods to support the disclosure of uncertainty surrounding mineral resource classification, if the qualified person chooses to use such confidence limit estimates, the final rules instruct that he or she should consider the limitations of these methods and adjust the estimates appropriately to reflect

607See Item 601(b)(96)(iii)(B)(11)(v) of Regulation S–K. For example, if a qualified person uses geostatistics or simulation to estimate the uncertainty associated with a particular mineral resource as ‘‘±15% relative accuracy at 90% confidence level for annual production quantities,’’ then he or she, after determining that the risks associated with external risk factors are negligible, may report the numerically derived estimate without adjusting for any external risks. On the other hand, if the qualified person first determines that the risk factors external to the calculation are not negligible, then he or she should adjust the confidence limits to be wider than ±15% or use a confidence level less than 90% to account for the risk factors external to the calculation. In such case, the specific confidence limits (e.g., ±25%) or confidence level (e.g. 80%) that would be appropriate will depend on the nature and significance of the risk factors external to the calculation of confidence limits obtained using numerical methods (e.g., kriging or conditional simulation). 608See, e.g., JORC Code, supra note 175, at pt. 25 (‘‘Competent Persons are encouraged, where appropriate, to discuss the relative accuracy and confidence level of the Mineral Resource estimates with consideration of at least sampling, analytical and estimation errors. The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnage. Where a statement of the relative accuracy and confidence level is not possible, a qualitative discussion of the uncertainties should be provided in its place’’). 609See supra note 573 and accompanying text. 610 17 CFR 229.1302(d)(1)(iii)(B)(1) [Item 1302(d)(1)(iii)(B)(1) of Regulation S–K]. 611See supra note 577 and accompanying text. 612See Item 1302(d)(1)(iii)(B)(2) of Regulation S– K [Item 1302(d)(1)(iii)(B)(2) of Regulation S–K]. 613See Item 601(b)(96)(iii)(B)(11)(iv) of Regulation S–K. 614See Item 601(b)(96)(iii)(B)(11)(v) of Regulation S–K. In deciding between inferred and indicated mineral resources, the qualified person should note that our definitions provide that the level of geological uncertainty associated with inferred mineral resources is too high to apply relevant technical and economic factors likely to influence the prospect of economic extraction in a manner useful for evaluation of economic viability whereas the level of geological uncertainty associated with indicated mineral resources is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Similarly, in deciding between indicated and measured mineral resources, the qualified person should note that our definitions provide that the level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine
planning whereas the level of geological uncertainty associated with measured mineral resources allows it to be used for ‘‘detailed’’ mine planning. This guidance is consistent with the CRIRSCO standards. See CRIRSCO International Reporting Template, supra note 20, at cl. 25. 615See Proposing Release, supra note 5, at
Section II.E.3.
616As used in this context, the term ‘‘preliminary’’ refers to a less rigorous study than what is required for feasibility studies, as defined and discussed in Section II.G.2., below. 617See Proposing Release, supra note 5, at
Section II.E.3.
618See id.
619A scoping study is ‘‘an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to sources of uncertainty that are not accounted for by these methods.607 The adopted approach is similar to the approach under the CRIRSCO-based codes, which encourages but does not require a quantitative assessment of risk regarding indicated or measured mineral resource estimates, and leaves the decision whether to use estimates of confidence limits to the discretion of the qualified person.608 The qualified person may use estimates of confidence limits when assessing the level of uncertainty regarding his or her mineral resource estimates if he or she believes that such use would be practical and helpful. If, however, the qualified person determines that the use of estimates of confidence limits would be inappropriate or impractical, he or she may refrain from undertaking such a quantitative assessment of risk regarding his or her indicated or measured mineral resource estimates. For similar reasons, the final rules do not require a qualified person to state the minimum percentage of inferred mineral resources he or she believes will be converted to indicated and measured mineral resources with further exploration. Many commenters objected to the proposed requirement because they believed that it would be impractical and burdensome.609 We have been persuaded that such a requirement may not be necessary because the final rules require the qualified person to have a reasonable expectation that the majority of inferred mineral resources could be upgraded to indicated or measured mineral resources with continued exploration.610 As some commenters suggested, this required expectation will act as a substitute for the proposed quantification in that, if the qualified person cannot meet this expectation with regard to part of a deposit, that part cannot be classified as inferred resources.611 Further, the provision requiring the qualified person to be able to defend the basis for his or her reasonable expectation before his or her peers 612 will also help to dissuade the determination and disclosure of unreasonable inferred mineral resource estimates. Similar to the approach adopted regarding indicated and measured resources, in lieu of a provision requiring a quantitative assessment of risk regarding inferred resources, we are requiring the qualified person to disclose the criteria used to classify a resource as inferred and to justify the classification.613 This disclosure must include a discussion of the uncertainty in the inferred resource estimates, the sources of the uncertainty, and how those sources were considered in the estimates. This approach is again consistent with commenters’ suggestion that we permit a qualitative discussion of the uncertainties involved in
resource determination. We believe that such a required qualitative discussion of the criteria used to classify and justify a deposit, in whole or part, as inferred resources would serve to inform investors about the reliability of the disclosure without unduly burdening registrants. Regardless of whether the qualified person provides a qualitative or quantitative assessment of risk, under the final rules the qualified person must adequately explain his or her reasons for classifying a mineral resource as inferred, indicated, or measured and that his or her classification is consistent with the definitions of inferred, indicated, and measured mineral resources. In this regard, the final rules require the qualified person to list all of the factors considered regarding the level of uncertainty and explain how those factors contributed to the final conclusion about the level of uncertainty underlying the resource estimates.614
4. The Initial Assessment Requirement
i. Rule Proposal
We proposed that a registrant’s disclosure of mineral resources must be based upon a qualified person’s ‘‘initial assessment’’ supporting the determination of mineral resources.615 We proposed to define an ‘‘initial assessment’’ as a preliminary 616 technical and economic study of the economic potential of all or parts of mineralization to support the disclosure of mineral resources. As proposed, the initial assessment must be prepared by a qualified person and must include appropriate assessments of reasonably assumed modifying factors together with any other relevant operational factors that are necessary to demonstrate, at the time of reporting, that there are reasonable prospects for economic extraction.617 Also as proposed, an initial assessment is required for disclosure of mineral resources but cannot be used as the basis for disclosure of mineral reserves.618 As we explained in the Proposing Release, an initial assessment is not a scoping 619 or conceptual study as

demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified.’’ JORC Code, supra note 175, at pt. 38 and SME Guide, supra, note 177, at pt. 50. 620See, e.g., JORC Code, supra note 175, at pt. 38 and SME Guide, supra note 177, Table 2, at 68–69 (providing requirements for scoping, pre-feasibility, and feasibility studies). 621See Canada’s NI 43–101 supra note 123, at pt.
1.1 (defining a preliminary economic assessment to
mean ‘‘a study, other than a pre-feasibility or feasibility study, that includes an economic analysis of the potential viability of mineral resources’’). 622See Proposing Release, supra note 5, at
Section II.E.3.
623See id.
624 If the qualified person decides to include economic analysis in the initial assessment, then the proposed rules would require the inclusion of detailed cost estimates. See Proposing Release, supra note 5, at note 190 and accompanying text. 625See Proposing Release, supra note 5, at
Section II.E.3.
626See id.
627See id.
628See id.
629 ‘‘Long term’’ in this context refers to the life of the mine. See, e.g., David Humphreys, Pricing and Trading in Metals and Minerals, 1 SME Mining Engineering Handbook, at 49 (stating that the assumed commodity price should be ‘‘the expected annual average price to be achieved for the mined product during each year of the project’s life’’). 630For example, the JORC Code and Canada’s NI 43–101 and CIM Standards call for the qualified person to report the assumptions underlying price estimates and do not prescribe a specific price model. See, e.g., JORC Code, supra note 175, Table 1, at 32 (requiring the qualified person to report ‘‘[t]he derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products’’ under revenue factors). See also ASX Listing Rules-Guidance Note 31 pt.
2.4 (‘‘ASX also notes that to the extent that an
estimate of mineral resources or ore reserves involves a representation about future matters, it must be based on reasonable grounds—meaning that the price, capital expenditure and operational expenditure assumptions used to calculate the estimates must also be objectively reasonable . . .’’). Canada’s NI 43–101 requires that a registrant disclosing mineral resources or reserves must disclose ‘‘the key assumptions, parameters, and methods used to estimate the mineral resources and mineral reserves.’’ Canada’s NI 43–101, supra note 123, at pt. 3.4(c). The CIM Best Practice Guidelines lists [commodity] prices as one such key assumption but provides no guidance on how prices should be determined except that ‘‘if commodity prices used differ from current prices . . ., an explanation should be given, including the effect on the economics of the project if current prices were used.’’ CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines 30 (2003). 631See Proposing Release, supra note 5, at
Section II.E.3 (discussing Table 1).
632The modifying factors and requirements in proposed Table 1 were modeled on accepted industry practice and supported by the relevant mining engineering literature. See, e.g., Richard L. Bullock, Mineral Property Feasibility Studies, 1 SME Mining Engineering Handbook, at 227–261. defined in some of the CRIRSCO-based codes 620 or a preliminary economic assessment as defined in Canada’s NI 43–101.621 The purpose of an initial assessment is narrower than those studies as it would be done solely to support disclosure of mineral resources and not to determine whether to proceed with further work leading to preparing a pre-feasibility study for reserve determination. As proposed, at a minimum, the qualified person’s initial assessment must include a qualitative evaluation of modifying factors to establish the economic potential of the mining property or project (i.e., that there are reasonable prospects for economic extraction of the mineral resource.) As we explained in the Proposing Release, requiring a well-defined and specific technical study to support disclosure of mineral resources would provide greater assurance to investors that mineral resource disclosure is reliable.622 a. Cut-Off Grade and Price Estimation We proposed instructions to the initial assessment requirement designed to elicit material information concerning the basis for the qualified person’s conclusion that there are reasonable prospects for economic extraction. The first proposed instruction was that an initial assessment must include cut-off grade estimation, based on assumed unit costs for surface or underground operations and estimated mineral prices.623 As we explained, cut-off grade refers to the grade at which the destination of the material changes during mining. For purposes of the initial assessment, cut-off grade distinguishes between material that is going to the waste dump and material that is going to the processing plant (in surface mining) or between material that is not mined and material mined to be processed (in underground mining). As part of the proposed initial assessment, the qualified person would need to assume the cost to mine a typical unit of the specific material involved. We did not propose to require the qualified person to estimate all specific operating and capital costs in detail in order to estimate unit cost as
part of the initial assessment.624 Rather,
for the initial assessment, the proposed rule requires the qualified person to make assumptions about the two key determinants of cut-off grade estimation––operating costs and commodity prices. As we explained, any cut-off grade estimation that is not based upon, or does not disclose, these two assumptions may not fully meet the standard required to demonstrate reasonable prospects of economic extraction.625 As proposed, a qualified person must base the unit cost estimate used in cut￾off grade estimation in an initial assessment on assumed unit costs derived, for example, from historic data or factoring, for either underground or surface mining. In addition, the qualified person must make and disclose an assumption about whether the deposit will be mined with underground or surface mining methods.626 When estimating mineral prices for the cut-off grade estimation, we proposed to require the qualified person to use a commodity price that is no higher than the average spot price during the 24-month period prior to the end of the last fiscal year, determined as an unweighted arithmetic average of the daily closing price for each trading day within such period, unless prices are defined by contractual arrangements.627 For purposes of consistency, we proposed that qualified persons use this same ceiling for all other commodity price estimates in the proposed mining disclosure for both mineral resources and reserves.628 When explaining our reasons for proposing the 24-month trailing average price requirement, we stated our belief that the qualified person must use commodity price estimates that are reasonable and justifiable and represent long term 629 market trends in mineral resource and reserve estimation. However, we also noted that most foreign jurisdictions allow the qualified person to use any reasonable and justifiable price, which is based on the qualified person’s or management’s view of long term market trends.630 b. Qualitative Assessment of Factors and Permitted Assumptions A second proposed instruction requires the qualified person to provide a qualitative assessment of all other relevant modifying factors to establish economic potential and justify why he or she believes that all issues can be resolved with further exploration and analysis.631 We proposed to provide the minimum requirements for various factors that the qualified person must evaluate when preparing an initial assessment, pre-feasibility study, or feasibility study in a single table to facilitate a comparison of the modifying factors evaluation requirement across the three key technical studies proposed to be used for mineral resource and reserve disclosure. According to the proposed presentation, the modifying factors evaluative process becomes more exacting as mining property assessment progresses from mineral resource estimation to mineral reserve estimation.632 As proposed, at the initial assessment stage, a qualified person would be

633See Proposing Release, supra note 5, at
Section II.E.3 (discussing Table 1).
634See Proposing Release, supra note 5, at
Section II.E.3.
635The phrase ‘‘accuracy level of at least approximately ±50%’’ means that the qualified person must have a reasonable basis to believe that assumptions underlying the estimate will result in actual costs with a substantial likelihood of being within 50% and 150% of the estimate. 636The term ‘‘contingency’’ is used to address the level of confidence in the cost estimates. It generally means the amount ‘‘set aside for any additional, unforeseen costs associated with unanticipated geologic circumstances or engineering conditions.’’ Scott A. Stebbins, Cost Estimating for Underground Mines,1 SME Mining Engineering Handbook, at 270. Thus, a contingency level of ≤25% means the contingency cannot be more than 25% of the direct cost estimate. 637See Proposing Release, supra note 5, at
Section II.E.3.
638See id.
639See letters from CBRR (recommending that the initial assessment include material risk analysis, but that more comprehensive risk analysis should not be required because the more detailed analysis would be expected in a separate report); Columbia, CSP2, Gold Resource (recommending that the initial assessment include a discussion of the material risks associated with the mineral resource determination); and Montana Trout. 640See, e.g., letters from AngloGold, BHP, JORC, and Rio Tinto. 641See letter from AngloGold. 642See letter from BHP. In contrast, five other commenters indicated that proposed Table 1 would be useful. See letters from AngloGold, Midas, MMSA, NSSGA, and Northern Dynasty. 643See letters from BHP, JORC, and Rio Tinto. Such a report requires an estimate of mineral resources to be supported by a discussion of factors enumerated in that table, and if certain factors have been omitted, there must be a reasonable explanation of why they have been excluded. As one commenter explained, such a report would entail a qualitative assessment of modifying factors as well as a discussion of the assumptions underlying cut-off estimates. See letter from Rio Tinto. 644See letter from Eggleston. required to evaluate, at a minimum, the following factors:

• Site infrastructure (e.g., whether access
  to power and site is possible);
• Mine design and planning (e.g., what is
  the broadly defined mining method);
• Processing plant (e.g., whether all
  products used in the preliminary economic assessment can be processed with methods consistent with each other);
• Environmental compliance and
  permitting (e.g., what are the required permits and corresponding agencies and whether significant obstacles exist to obtaining those permits); and
• Any other reasonably assumed
  modifying factors, including socio-economic factors, necessary to demonstrate reasonable prospects for economic extraction. Another proposed instruction to the initial assessment requirement refers the qualified person to proposed Table 1 for the assumptions permitted to be made when preparing the initial assessment. These include assumptions concerning infrastructure location and the required plant area, type of power supply, site access roads and camp or town site, production rates, processing method and plant throughput, post-mining land uses, and plans for tailings disposal, reclamation, and mitigation.633
  c. Optional Economic (Cash Flow)
  Analysis
  We explained in the Proposing Release that an initial assessment, the singular goal of which is to demonstrate reasonable prospects of economic extraction, not economic viability, need not contain the quantitative analysis required to demonstrate the economic feasibility of mining projects. To demonstrate such economic feasibility, estimates of future cash flows are necessary because capital expenditures, operating costs, and revenues vary over the life of a mine due to variations in mining conditions. We stated, however, that if the qualified person chose to demonstrate the economic potential of the mining property beyond the minimum requirements of an initial assessment by including a cash flow analysis, we believed such analysis could benefit investors, subject to appropriate restrictions. One proposed instruction to the initial assessment requirement addresses the option of providing cash flow analysis as part of the initial assessment. This instruction states that, while a qualified person may include cash flow analysis in an initial assessment to demonstrate economic potential, the qualified person may not use inferred mineral resources in such cash flow analysis.634 Moreover, if the qualified person includes cash flow analysis in the initial assessment, then operating and capital cost estimates must have an accuracy level of at least approximately ±50%635 and a contingency level of no greater than 25% of the direct estimate.636 The proposed instruction also provided that the qualified person must state the accuracy and contingency levels in the initial assessment.637 We also proposed, to the extent a qualified person wants to include an economic analysis in an initial assessment, he or she would only be permitted to use a cash flow analysis. All other quantitative analyses would be prohibited. We based this prohibition on our belief that other quantitative measures of economic potential that omit cash flows could be potentially misleading.638
  ii. Comments on the Rule Proposal
  Several commenters supported the Commission’s proposal to require that a registrant’s disclosure of mineral resources be based upon a qualified person’s initial assessment, which supports the determination of mineral resources, including that the qualified person consider applicable modifying factors and relevant operational factors at the resource evaluation stage.639 Many other commenters either offered only conditional support for or opposed the Commission’s proposed initial assessment requirement because they believed it went beyond what is required under the CRIRSCO standards at the resource determination stage. For example, some commenters stated that, while there should be some form of documentation required by a qualified person to support the disclosure of mineral resources in Commission filings, it should be consistent with what is allowed under the CRIRSCO￾based codes, and should not be termed ‘‘an initial assessment’’ in order to avoid investor confusion.640 One commenter recommended that the required initial assessment take the form of a ‘‘conceptual study,’’ as defined under the CRIRSCO standards, which would include the consideration of applicable modifying factors.641 Another commenter stated that the assessment of modifying factors as set forth in proposed Table 1 was overly prescriptive, but also agreed that the qualified person should ‘‘apply the CRIRSCO principles for the qualitative assessment of modifying factors’’ when determining mineral resources.642 In lieu of the proposed initial assessment requirement, that commenter, as well as others, recommended allowing a report that conforms to JORC Table 1 on an ‘‘if not why not basis.’’ 643 In explaining its opposition to the proposed initial assessment requirement, one commenter maintained that, under CRIRSCO, at the resource determination stage, all that is required is that the qualified person demonstrate that there are reasonable prospects for eventual economic extraction. That commenter stated that it is best left to the discretion of the qualified person to determine the most appropriate methodology for identifying, estimating, and disclosing mineral resources.644 a. Cut-Off Grade and Price Estimation Most commenters that addressed the issue supported the proposed requirement that a qualified person’s documentation in support of resource determination and disclosure include cut-off grade estimation based on assumed unit costs for surface or

645See letters from AngloGold, CBRR, Eggleston, Golder, Midas, Northern Dynasty, and SRK 1. One commenter, however, opposed requiring an initial assessment using assumed unit costs for operations that would include pricing and other cash flow information on the grounds that this information is proprietary, commercially sensitive, and confidential. See letter from Alliance. 646See letter from SRK 1. 647See letter from Amec. The commenter also stated that a qualified person should be allowed to make the determination of assumed unit costs based on benchmarking to similar deposit types and types of operations in the particular jurisdiction. 648See letters from AIPG, Alliance, Amec, AngloGold, BHP, CBRR, Chamber, CIM, Cleary & Gottlieb, Cloud Peak, Coeur, CRIRSCO, Davis Polk, Dorsey & Whitney, Eggleston, Energy Fuels, FCX, Golder, Graves, JORC, MMSA, Newmont, NMA 1, Northern Dynasty, PDAC, Randgold, Rio Tinto, Royal Gold, SAMCODES 1 and 2, Shearman & Sterling, SME 1, Ur-Energy, Vale, and Willis. 649Letter from CIM. 650See id; see also letter from SME 1. 651See letter from BHP. 652Letter from FCX. 653See letter from Alliance. 654See, e.g., letters from AIPG, Amec, CBRR, Chamber , Cleary & Gottlieb, Cloud Peak, Davis Polk, Eggleston, Energy Fuels, FCX, JORC, Newmont, SAMCODES 1, Shearman & Sterling, SME 1, and Vale. 655See letter from AIPG (‘‘U.S. GAAP requires that estimated future cash flows from mineral properties be used in determining the value of mining assets in a purchase price allocation and in testing mining assets for impairment. The estimated future cash flows are based on management’s projections using projected sales prices reflecting the current and future forecasted prices. The forecasted prices should be consistent with the length of the mine life’’). See also FCX, Newmont, SME 1, and Vale. 656See letter from Gold Resource. 657See letter from Eggleston. 658See letter from Andrews & Kurth. 659See letters from Amec, AngloGold, BHP, CBRR, CIM, Coeur, Eggleston, Energy Fuels, FCX, Golder, JORC, Midas, MMSA, Newmont, NMA 1, Northern Dynasty, Randgold, Rio Tinto, Royal Gold, SAMCODES 1, SME 1, SRK 1, Vale, and Willis. 660See, e.g., letter from Vale; see also letter from SME 1. underground operations.645 One commenter recommended requiring that, consistent with current industry practice, the determination of the cut-off grade include estimates of processing costs, metallurgical recovery, and general and administrative costs.646 Another commenter recommended using the term ‘‘cut-off’’ instead of ‘‘cut￾off grade’’ because the criteria used may be grade, but could also be net smelter return or include quality or metallurgical characteristics.647 Many commenters opposed the proposed requirement that, when estimating mineral prices for the purpose of cut-off grade estimation or cash flow analysis for both mineral resource and reserve determination, the qualified person must use a commodity price that is no higher than the average spot price during
the 24-month period prior to the end of the last fiscal year, determined as an unweighted arithmetic average of the daily closing price for each trading day within such period, unless prices are defined by contractual arrangements. While commenters generally agreed that cut-off estimation should be based on estimated prices, most commenters that addressed the issue opposed the proposed 24-month trailing average pricing model on the grounds that it is unrealistic and inconsistent with pricing requirements, guidance, and practice under the CRIRSCO-based codes, which permit prices to be based on forward-looking pricing forecasts. Consequently, according to those commenters, compliance with the historical-based pricing requirement would be costly and unduly burdensome for companies dual-listed in the United States and one or more of the CRIRSCO jurisdictions.648 According to those commenters, the prevailing industry practice in the CRIRSCO-based jurisdictions is to use forward-looking pricing forecasts when estimating mineral resources and reserves. The forecasted prices ‘‘are typically based on consensus projections that are derived from an average of the short-term and an average of the long-term prices provided by numerous financial institutions that are independent of the companies that report mineral resources and reserves.’’ 649 Because most mining companies base their mineral resource and reserve estimates on these consensus prices, investors can then compare similar mineral projects in different parts of the world. The proposed required use of a two-year trailing average price would not allow for this comparability. The commenters claimed this would force unrealistically optimistic price assumptions in a declining market and unrealistically pessimistic prices in a rising market.650 One commenter estimated that the proposed 24-month pricing model, if adopted, would result in a 40 percent reduction in mineral resources reported to the Commission compared to other jurisdictions.651 Another commenter stated that the proposed historical pricing model would create timing concerns because registrants would not be able to conduct a rigorous reserve analysis between the end of the fiscal year and the filing deadline for Form 10–K annual reports. Accordingly, ‘‘registrants would be forced, as a practical matter, months before the end of the reporting period, to make a very conservative estimate of what the actual mandated ceiling price will be, which may lead to overly conservative reserve and resource estimates.’’ 652 One other commenter stated that the 24-month period is too short because pricing for coal can vary and fluctuate widely in a relatively short period of time and over multiple markets.653 Many commenters recommended that, in lieu of the 24-month trailing average price requirement, and consistent with the CRIRSCO-based codes, the Commission require that, when estimating prices for the purpose of both mineral resource and reserve
disclosure, the qualified person use any reasonable and justifiable price, which is typically based on the qualified person’s or management’s view of long-term market trends, as long as the qualified person provides justification for, and discloses all material assumptions concerning the price used.654 Some commenters further noted that such a requirement would be consistent with certain financial reporting requirements for the mining industry under U.S. GAAP.655 In contrast, one commenter recommended using a 36-month average because the commenter believed it is less volatile and, therefore more appropriate than the proposed 24-month period.656 Another commenter also preferred the use of a 36-month period but only as a ‘‘fallback position’’ in the event that an issuer is not permitted to engage in forward-looking analysis of the price.657 One commenter recommended that the Commission adopt a 12-month trailing average price model for mineral resource and reserve determination and disclosure because it would reflect mineral resource and reserve estimates based on current market conditions.658 Most of the commenters that addressed the pricing issue opposed the Commission’s proposal to require the use of the same pricing standard for both mineral resource and mineral reserve determination.659 Those commenters maintained that commodity prices used to estimate mineral resources are typically higher than the prices used to estimate mineral reserves because of the longer period it takes to effect commodity production from resources compared to reserves. According to commenters, using the same price standard for resources and reserves would result in an underestimation of a registrant’s resources, which would put a U.S. registrant at a significant disadvantage relative to registrants not subject to the proposed rules.660 A few commenters recommended using a price estimate for resources determination that is a set

661See, e.g., letters from SRK 1, Eggleston and Newmont. 662See letter from BHP. 663See id. 664See letter from Vale; see also letter from MMSA (requesting generally that the Commission allow for exemptions from the required disclosure ‘‘to protect trade secrets, confidential information, product pricing, and marketing information that is vital for a company to maintain its competitive advantage or that could represent violations in anti￾trust or other legislation in the country of operation’’). 665See letter from Vale. 666See letter from Amec. 667See id. 668See letter from Eggleston; see also letter from Energy Fuels (opposing the proposed initial assessment requirement because it attempts to treat a mineral resource as a ‘‘mineral reserve currently in the making,’’ which would send the wrong message to investors); and SAMCODES 2 (stating that ‘‘[i]t is good practice to undertake a high-level ‘‘initial assessment’’ to support the claim of reasonable prospects for economic extraction, but it is not necessary to have to disclose the process and modifying/operational factors that were applied.). 669See letters from Columbia, CSP2, and Montana Trout. 670See letters from CSP2 and Montana Trout. 671See letter from Columbia. 672See, e.g., letters from Coeur, Midas, SME 1, and Willis. 673See letters from Coeur, SME 1, and Willis. 674See, e.g., letters from Coeur and SME 1. 675 17 CFR 229.1302(d)(1) [Item 1302(d)(1) of Regulation S–K]. 676See the definition of ‘‘initial assessment’’ in 17 CFR 229.1300. 677See, e.g., letter from Amec. 678See 17 CFR 229.1302(d)(1)(i)(B) [Item 1302(d)(1)(i)(B) of Regulation S–K]. percentage (ranging from 5% to 20%) higher than the price used for reserve estimation.661 An additional commenter believed that the research it conducts to estimate future commodity prices is sensitive intellectual property that is not required to be disclosed under the CRIRSCO template or JORC.662 This commenter suggested that the Commission permit a registrant to discuss the methodology used to estimate its pricing model without requiring disclosure of the price itself. Alternatively, this commenter requested that a registrant be allowed to compare its forward-looking pricing to that produced by an industry recognized expert and comment on whether there is a material difference between the forward-looking pricing models.663 One commenter requested that the Commission allow a registrant to keep its future price assumptions confidential when reporting resources and reserves if those assumptions are commercially sensitive.664 As conditions to keeping its price assumptions confidential, a registrant would have to disclose the methodology for estimating mineral resources and reserves, and state whether those resources and reserves would be extractable if commodity prices were not greater than a certain historical price. This commenter suggested using a 36-month average trailing price for this purpose rather than a 24-month average trailing price
because it is less volatile.665 b. Qualitative Assessment of Factors and Permitted Assumptions One commenter opposed requiring the determination of mineral resources to include appropriate assessments of reasonably assumed modifying factors because it believed that the term ‘‘modifying factors’’ should be used exclusively when converting mineral resources to mineral reserves.666 That commenter recommended substituting the phrase ‘‘technical and economic factors’’ for ‘‘modifying factors’’ in order to be consistent with the CRIRSCO standards. That commenter also believed that the proposed initial assessment requirement may create an expectation of a much more detailed and formal evaluation of the technical and economic factors than what is currently industry-accepted practice.667 A second commenter similarly indicated that because consideration of all applicable modifying factors is only appropriate at the reserve determination stage, requiring an assessment of the modifying factors at the resource evaluation stage could confuse investors into mistakenly believing that resources are reserves.668 Some commenters stressed the importance of considering environmental factors at the initial assessment stage.669 According to two of those commenters, such consideration should include whether the company’s operations will generate acid-mine drainage, which often requires post￾project collection and treatment of pollution in perpetuity and results in considerable environmental and financial liability.670 Another commenter recommended that the initial assessment discuss a mining project’s water requirements and address how water availability for the region is predicted to change in the future, whether from increased incidents of drought, competing demands from nearby agricultural users, or groundwater drawdowns.671
c. Optional Economic (Cash Flow)
Analysis
Some commenters maintained that the Commission should align itself with Canada’s NI 43–101 and permit the disclosure of an economic assessment of resources, with cash flow analysis, including permitting the use of inferred resources as long as appropriate disclaimers are given, in addition to requiring disclosure of material assumptions and qualitative assessment of relevant technical and economic factors likely to affect prospects of economic extraction, if a registrant discloses mineral resource estimates.672 Those commenters recommended that the Commission not use the term ‘‘initial assessment’’ and instead name the documentation to support a mineral resource estimate a ‘‘resource study’’ and name the report describing economic potential of mineral resources either a scoping study or preliminary economic assessment.673 Commenters stated that, because inferred mineral resources are permitted to be included in economic analyses in preliminary economic assessments under Canada’s NI 43–101 and in scoping studies under other CRIRSCO-based codes, U.S. registrants would be placed at a competitive disadvantage were the Commission to adopt the proposed prohibition of inferred mineral resources in economic assessments.674
iii. Final Rules
We are adopting the proposed requirement that a registrant’s disclosure of mineral resources be based upon a qualified person’s ‘‘initial assessment’’ supporting the determination of mineral resources.675 The final rules define an initial assessment, as proposed, to mean a preliminary technical and economic study of the economic potential of all or parts of mineralization to support the disclosure of mineral resources.676 However, in a change from the proposed rules, as a result of comments received, the final rules do not require the qualified person’s initial assessment to include a qualitative evaluation of the modifying factors to establish the economic potential of the mining property or project. Rather, consistent with the suggestion of some commenters,677 the final rules provide that, at a minimum, the initial assessment must include the qualified person’s qualitative evaluation of relevant technical and economic factors likely to influence the prospect of economic extraction to establish the economic potential of the mining property or project.678 To reflect this change, we have revised the proposed definition of initial assessment to provide that the initial assessment must include appropriate assessments of reasonably assumed technical and economic factors, together with any other relevant operational factors, that are necessary to demonstrate at the time

679See 17 CFR 229.1300.
680See, e.g., letters from Amec, Eggleston, and Northern Dynasty. 681See, e.g., letter from Amec; see also CRIRSCO International Reporting Template, supra note 175, at cl. 21 (‘‘The term ‘reasonable prospects for eventual economic extraction’ implies a judgement (albeit preliminary) by the Competent Person in respect of the technical and economic factors likely to influence the prospect of economic extraction, including the approximate mining parameters.’’). 682See the definition of ‘‘initial assessment’’ in 17 CFR 229.1300. 683See letters from BHP, JORC, and Rio Tinto. 684See infra Section II.G.3. for a detailed discussion of the disclosure requirements for the technical report summary regarding mineral resources (in addition to those regarding mineral reserves and exploration results). 685The final rules define cut-off grade, as proposed, to mean the grade (i.e., the concentration of metal or mineral in rock) which determines the destination of the material during mining. For purposes of establishing ‘‘prospects of economic extraction,’’ the cut-off grade is the grade that distinguishes material deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). Other terms used in similar fashion as cut-off grade include net smelter return, pay limit, and break-even stripping ratio. 17 CFR 229.1300. 686See 17 CFR 229.1302(d)(2) [Item 1302(d)(2) of Regulation S–K]. 687See, e.g., CIM Definition Standards at 4 (‘‘A Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions might become economically extractable.’’). See also JORC Code, supra note 175, at pt. 20 (‘‘Portions of a deposit that do not have reasonable prospects for eventual economic extraction must not be included in a Mineral Resource’’); and SME Guide, supra note 177, at pt. 35 (‘‘. . .a Mineral Resource is not an inventory of all mineralization drilled or sampled, regardless of cut-off grade, likely mining dimensions, location, or continuity; rather it is a realistic estimate of mineralization which, under assumed and justifiable technical and economic conditions, might become economically extractable.’’). 688See Item 1302(d)(2) of Regulation S–K. 689See id. 690See id. 691See id. 692See id. 693We are also adopting this estimated pricing standard for the determination and disclosure of mineral reserves. See infra Section II.F.2. 694See, e.g., letter from CIM. of reporting that there are reasonable prospects for economic extraction.679 This change is intended to address the concern of some commenters 680 that the proposed initial assessment requirement would exceed what is required under the CRIRSCO standards because full consideration of the modifying factors is only required at the mineral reserve determination
stage. The adopted initial assessment requirement will more closely align the Commission’s mining property disclosure requirements with the CRIRSCO standards.681 At the same time, the adopted requirement will underscore that, at the resource determination stage, the qualified person must assess both the geologic characteristics of the deposit as well as the relevant technical and economic factors likely to influence the prospect of economic extraction in order to conclude that the parts of the mineral deposit he or she is determining to be mineral resources have reasonable prospects of economic extraction. While the relevant technical and economic factors to be considered at the resource determination stage are likely to be similar to the modifying factors applied at the reserve determination stage, because the final rules only require a qualitative assessment of the technical and economic factors at the resource determination stage, that assessment will be less thorough and less certain than the assessment of modifying factors required at the reserve determination stage. Accordingly, the final rules provide, as proposed, that an initial assessment cannot be used as the basis for disclosure of mineral reserves.682 Although a commenter recommended that the format of the initial assessment conform to JORC Table 1’s Checklist of Assessment and Reporting Criteria on an ‘‘if not why not basis,’’ 683 we are adopting, substantially as proposed, a format for the initial assessment that more closely resembles the technical report format of Canada’s NI 43–101F1. While there is substantial overlap in the items required to be considered and discussed under JORC Table 1 and Canada’s NI 43–101F1, we believe that the presentation of disclosure requirements in the Canadian technical report format is clearer and more comprehensive and, as such, will help elicit better disclosure.684 a. Cut-Off Grade and Price Estimation Similar to the proposed rules, the final rules require that a qualified person include in the initial assessment a cut-off grade 685 estimation based on assumed unit costs for surface or underground operations and estimated mineral prices.686 We continue to believe that a discussion of cut-off grade is an appropriate requirement for a technical study that supports mineral resource estimation because, by definition, a mineral resource estimate is not just an inventory of all mineralization. It is an estimate of that
part of the deposit that has reasonable
prospects of economic extraction.687 We believe the cut-off grade is the best indicator, at this stage, of such prospects because it requires the qualified person to estimate and exclude that portion of the deposit that has no reasonable prospects of economic extraction at the time of the analysis. In connection with the cut-off grade estimation requirement, the qualified person must make and disclose an assumption about whether the deposit will be mined with underground or surface mining methods.688 Given the wide disparity between surface and underground mining costs, we are concerned that any unit costs estimate that is not specific to one of these two broad categories of mining methods may not adequately establish the reasonable prospects of economic extraction. In a change from the proposed rules, in response to comments received, we are not requiring that the qualified person use a commodity price that is no higher than the average spot price during the 24-month period prior to the end of the last fiscal year, unless prices are defined by contractual arrangements. Consistent with the suggestion of numerous commenters, the final rules instead provide that, when estimating mineral prices, the qualified person must use a price for each commodity that provides a reasonable basis for establishing the prospects of economic extraction for mineral resources.689 In addition, the qualified person must disclose the price used and explain, with particularity, his or her reasons for using the selected price, including the material assumptions underlying the selection. This explanation must include disclosure of the time frame used to estimate the commodity price and unit costs for cut-off grade estimation and the reasons justifying the selection of that time frame.690 The selected price and all material assumptions underlying it must be current as of the end of the registrant’s most recently completed fiscal year.691 Similar to the proposed rule, the qualified person may use a price set by contractual arrangement, provided that such price is reasonable, and the qualified person discloses that he or she is using a contractual price when disclosing the price used.692 We believe that the adopted estimated pricing requirement will more closely align the Commission’s disclosure rules to the ‘‘any reasonable and justifiable price’’ standard under the CRIRSCO￾based codes and thereby address several concerns raised by commenters.693 First, under the final rules, a qualified person is able to use a price that is either a historical price or one based on forward￾looking pricing forecasts. Because, according to commenters, most mining companies currently rely on consensus prices based on forward-looking pricing forecasts,694 the adopted estimated

695See supra note 659 and accompanying text. 696See, e.g., letter from CIM. 697See supra notes 662–664 and accompanying text. 698See 17 CFR 229.1302(d)(3) [Item 1302(d)(3) of Regulation S–K]. These factors include: site infrastructure; mine design and planning; processing plant; environmental compliance and permitting; and any other reasonably assumed technical and economic factors, including factors related to local individuals and groups, which are necessary to demonstrate reasonable prospects for economic extraction. See also Table 1 to paragraph (d) of Item 1302 of Regulation S–K. 699See 17 CFR 229.1302(d)(1)(iv) [Item 1302(d)(1)(iv) of Regulation S–K]. 700See, e.g., SME Guide, supra note177, Table 1, at 44–67. 701See supra notes 669–671 and accompanying text. 702See infra Section II.G.3. 703 17 CFR 229.1302(d)(4)(i) [Item 1302(d)(4)(i) of Regulation S–K], which requires operating and capital cost estimates to have an accuracy level of at least approximately ±50 percent and a contingency level of no greater than 25 percent. 704We have included both accuracy and contingency requirements for operating and capital cost estimates in Table 1 to paragraph (d) of Item 1302 of Regulation S–K. 705See, e.g., SME Guide, supra note177, Table 2, at 68–69 (providing accuracy and contingency ranges for capital and operating cost estimates in scoping, pre-feasibility, and feasibility studies). pricing requirement will allow registrants to use the same prices for disclosing mineral resources in Commission filings as they do for their own internal management purposes and when reporting in CRIRSCO-based jurisdictions. This should help limit the compliance costs of the final rules. Second, the revised estimated pricing requirement permits a registrant to use a different price for mineral resource determination than it uses for reserve determination, and to vary the estimated price for different commodities, as long as those prices are reasonable and justifiable. Consequently, the determination and disclosure of a registrant’s mineral resources should more accurately reflect the information guiding a registrant’s business decisions because the qualified person has more flexibility in selecting the different prices for mineral resource and reserve estimation (as opposed to being limited to prices less than the 24-month trailing average).695 Third, because the adopted estimated pricing requirement conforms to the CRIRSCO standards and global industry practice, it will help to promote uniformity and comparability regarding the disclosure of mineral resource and reserve estimates among mining registrants, which should benefit investors by enhancing their analysis and understanding of registrants’ mining operations.696 We are not adopting a provision, as suggested by a few commenters,697 that would exempt the disclosure of the price, and related material assumptions, underlying mineral resource (or mineral reserve) estimates. Because of the important role that pricing
considerations play in determining estimates of mineral resources (and mineral reserves), we believe that such an exemption could lead to the omission of information that is material to an investor’s understanding of those estimates. b. Qualitative Assessment of Factors and Permitted Assumptions We are adopting a provision that specifies the relevant technical and economic factors likely to influence the reasonable prospect of economic extraction that, at a minimum, the qualified person must qualitatively assess.698 While the factors are identical to those in the proposed instruction, we have conformed that instruction to reflect the change in the definition of, and required disclosure concerning, the initial assessment. We believe a qualitative evaluation of these listed factors, at a minimum, is necessary to determine the economic potential of a mining property. An assessment of the geological characteristics of the mined material would not be complete if it did not include an evaluation and discussion of infrastructure, mine design, processing, and environmental issues that could pose obstacles to the material’s extraction. We are adopting another provision that refers the qualified person to Table 1 to paragraph (d) of Item 1302 for the assumptions permitted to be made when preparing the initial assessment as well as other technical studies.699 This table sets forth the minimum requirements for various factors that the qualified person must evaluate when preparing an initial assessment, pre-feasibility study, or feasibility study. It is substantially similar to the proposed Table 1 but has been conformed to reflect the change in the definition of, and required disclosure concerning, the initial assessment. We are presenting the minimum factors to be considered for each study in one table to facilitate a comparison of the evaluative factor requirement across the three key technical studies proposed to be used for mineral resource and reserve disclosure. As this presentation demonstrates, the evaluative process becomes more exacting as mining property assessment progresses from mineral resource estimation to mineral reserve estimation. The assumptions permitted to be made in the initial assessment include those pertaining to infrastructure location and the required plant area, type of power supply, site access roads and camp or town site, production rates, processing method and plant throughput, post-mining land uses, and plans for tailings disposal, reclamation, and mitigation. Allowing assumptions for a variety of factors at the resource determination stage is generally consistent with guidelines under the CRIRSCO-based codes.700 Moreover, the assumption phase is temporary as the qualified person must substitute most assumptions with empirical evidence and facts as part of the pre-feasibility or feasibility study that is required for determining mineral reserves. We are not expanding the disclosure of environmental factors in connection with
the initial assessment, as suggested by some commenters.701 As explained in greater detail below, we believe that the specified environmental factors required to be included in the technical report summary will likely cover the concerns raised by those commenters to the extent that they are material to investors.702
c. Optional Economic (Cash Flow)
Analysis
Similar to a proposed instruction, we are adopting a provision stating that a qualified person may include cash flow analysis in an initial assessment to demonstrate economic potential. If the qualified person includes cash flow analysis in the initial assessment, then the adopted provision imposes the same accuracy and contingency levels required for operating and capital cost estimates as under the proposed instruction.703 The qualified person must state the accuracy and contingency levels in the initial assessment. We believe that these accuracy and contingency requirements 704 for operating and capital costs are appropriate because they are generally consistent with those accepted for scoping studies.705 In a change from the proposed rules, the final rules will permit a qualified person to include inferred mineral resources in a cash flow analysis prepared as part of the initial assessment as long as the qualified person:

• States with equal prominence to the
  disclosure of mineral resource estimates that the assessment is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have modifying factors applied to them that would enable them to be categorized as mineral reserves, and there is no certainty

706 17 CFR 229.1302(d)(4)(ii) [Item 1302(d)(4)(ii) of Regulation S–K]. 707See supra note 674 and accompanying text. 708See supra notes 619–621 and accompanying text. 709See Proposing Release, supra note 5, at
Section II.E.3.
710See Proposing Release, supra note 5, at
Section II.E.4, which refers to USGS Circular 891
(stating that ‘‘[i]n 1980, the [USGS and Bureau of Mines] published Circular 831, ‘Principles of the Mineral Resource Classification System of the U.S. Bureau of Mines and U.S. Geological Survey’ (U.S. Geological Survey, 1980). The circular, which outlines a classification system for all mineral commodities, filled the classification needs of the Bureau of Mines, which was no longer responsible for coal resource classification, and was the basis for this revision of the coal resource classification system by the Geological Survey. The revision, embodied in this report, has two main objectives:
(1) to provide detailed information lacking in Bulletin 1450–B; and (2) to provide standard definitions, criteria, guidelines, and methods required for uniform application of the principles outlined in Circular 831’’). Gordon H. Wood, Jr et al., U.S. Geological Survey, U.S. Dep’t of the Interior, Coal Resource Reclassification System of the U.S. Geological Survey, USGS Circular 891 (1983), http://pubs.usgs.gov/circ/1983/0891/ report.pdf. 711See Proposing Release, Section II.E.4, which refers to USGS Circular 831 (stating that ‘‘[t]he system can be used to report the status of mineral and energy-fuel resources for the Nation or for specific areas’’). U.S. Geological Survey & U.S. Bureau of Mines, U.S. Dep’t of the Interior, Principles of a Resource/Reserve Classification for Minerals: A Revision of the Classification System Published as USGS Survey Bulletin 1450–A, USGS Circular 831 (1980), http://pubs.usgs.gov/circ/1980/ 0831/report.pdf. 712See id. 713 Guide 7 prohibits mineral resource disclosure and as such does not provide any guidance, or place any restrictions, on how to classify mineral resources. 714See supra Section II.E.3. 715See supra Sections II.E.2 and II.E.4. 716The Circulars prescribe strict guidelines to classify mineral resources based on the distance from a drill hole (‘‘drill hole spacing’’) that do not vary depending on the complexity and specific facts of the deposit. For example, these Circulars define measured (0- to 1⁄4-mile), indicated (1⁄4 to 3⁄4-mile) and inferred (3⁄4- to 3-miles) mineral resources based on drill hole (or outcrop) radii. 717See, e.g., Ricardo A. Olea and James A. Luppens, Modeling Uncertainty in Coal Resource Assessments, With an Application to a Central Area of the Gillette Coal Field, USGS Scientific Investigations Report 2014–5196 1 (2014) (concluding that an approach that involved establishing confidence limits ‘‘should be considered realistic improvement[ ] over distance methods used for quantitative classification of uncertainty in coal resource, such as U.S. Geological Survey Circular 891’’). 718See Proposing Release, supra note 5, at
Section II.E.4.
that this economic assessment will be realized;

• Discloses the percentage of the mineral
  resources used in the cash flow analysis that are classified as inferred resources; and
• Discloses, with equal prominence, the
  results of the economic analysis excluding inferred resources in addition to the results that include inferred resources.706 These conditions are generally in line with the approach of Canada’s NI 43– 101, which permits the use of inferred resources in a preliminary economic assessment as long as cautionary language about such use is provided. We are adopting this change to address commenters’ concern that, because inferred resources may be included in economic analyses in preliminary economic assessments under Canada’s NI 43–101 and in scoping studies under other CRIRSCO-based codes, U.S. registrants would be at a competitive disadvantage were we to adopt subpart 1300, as proposed.707 We believe that the above conditions will appropriately caution investors concerning the level of risk underlying such mineral resource estimates and provide them with additional information to help evaluate whether to invest on the basis of estimates that include inferred resources. As previously noted, an initial assessment is not required to have an economic analysis, and when it does not include such an analysis, its scope is narrower than that of a preliminary economic assessment under Canada’s NI 43–101 or a scoping study under other CRIRSCO-based codes.708 But if a qualified person opts to provide an economic analysis, which includes inferred resources, in an initial assessment under the final rules, a U.S. registrant may use such an initial assessment for substantially similar purposes as a Canadian registrant uses a preliminary economic assessment or another non-U.S. registrant uses a scoping study in Australia, South Africa, or other foreign jurisdiction that has adopted a CRIRSCO-based code. As previously discussed, we do not believe that other quantitative measures of economic potential that omit cash flows are appropriate, and we are concerned that they potentially could be misleading.709 Capital expenditures, operating costs, and revenues vary over the life of a mine due to variations in mining conditions. Hence, economic analyses that do not account for these variations may not tell a complete story. For example, a gross profit evaluation that does not account for the timing of capital outlays and revenues could indicate that a project is viable, yet in actuality timely loan repayments may not be possible. Consequently, to the extent a qualified person wants to include an economic analysis in an initial assessment, he or she must use a cash flow analysis.

5. USGS Circular 831 and 891
   i. Proposed Interpretation
   In the Proposing Release, we explained why we do not believe that it would be appropriate to permit the continued classification of mineral resources based on United States Geological Survey (‘‘USGS’’) Circulars 831 and 891 following adoption of subpart 1300 of Regulation S–K.710 Consistent with the mission of the USGS, these circulars were mostly suitable for national and regional level reporting of mineral resources and reserves for government planning purposes,711 and were not intended to be the basis for public company disclosure to investors. While Circular 831 initially established a classification system for all mineral commodities, its classification scheme has been largely phased out for metal mining. It is still used in coal and some industrial minerals mining, while Circular 891 was specifically designed, and is still used, for resource or reserve classification of coal.712 In the past, the staff has not objected to mineral reserve disclosure that used these circulars to classify mineral resources as inferred, indicated, or measured resources.713 However, we indicated in the Proposing Release that we do not believe the use of USGS Circulars 831 and 891 for resource classification in Commission filings would be consistent with the proposed rules. As we explained, the primary criterion for the required mineral resource classification under the CRIRSCO standards, upon which the Commission’s proposed rules are based, is the geologic confidence in the estimates based on the geologic evidence (limited, adequate, or conclusive).714 In addition, under the CRIRSCO standards and the Commission’s proposed rules, all disclosed mineral resources must have reasonable prospects of economic extraction, which requires the qualified person to consider a variety of technical and economic factors, in addition to geologic evidence, when evaluating the economic potential of a deposit.715 In contrast, the primary criterion in the Circulars’ classification system is the extent to which tonnages fall within particular distances from a drill hole or outcrop.716 Although drill hole spacing may be a factor that informs the qualified person’s assessment of geologic confidence, for the purposes of public company disclosure to investors, we indicated that we do not believe it should be the sole factor.717 We therefore solicited comment on the appropriateness of using Circulars 831 and 891 to classify mineral resources.718

719See, e.g., letters from AIPG, Amec, AngloGold, BHP, CBRR, Eggleston, Gold Resource, Midas, Northern Dynasty, Rio Tinto, SME 1, and SRK 1. 720See, e.g., letters from AIPG and SME 1. 721See, e.g. letters from AIPG, Eggleston, and SME 1. 722See letters from AIPG and SME 1. 723See letter from BHP. 724Letter from SRK 1. 725See letter from Rio Tinto. 726See letters from Alliance, Cloud Peak, and NMA 1. 727See letter from Alliance. 728See Proposing Release, supra note 5, at
Section II.E.4. 729See supra Sections II.E.2 through II.E.4. 730See, e.g., letters from AIPG and SME 1. 731See, e.g., letters from BHP and SRK 1. 732Paragraph (a)(1) of Guide 7.
733See, e.g., CIM Definition Standards, supra note 351, at 5–6; JORC Code, supra note 175, at pt. 29; SME Guide, supra note 177, at pt. 41; SAMREC Code, supra note 267, at pt. 35; and PERC Reporting Standard, supra note 302, at pt. 8.1. 734See Proposing Release, supra note 5, at
Section II.F.1.
735See id.
736See id.
737See id.
ii. Comments on the Proposed
Interpretation
Numerous parties supported the Commission’s position that use of USGS Circulars 831 and 891 to classify mineral resources would not be appropriate under the proposed rules.719 Some commenters stated that the Circulars are inconsistent with the CRIRSCO standards and were designed for a different purpose (i.e., government identification of mineral occurrences that may be of economic interest 25–50 years in the future.) 720 For that reason, according to those commenters, allowing continued use of the Circulars to classify resources would lead to investor confusion and should never be permitted,721 even for coal.722 One commenter opposed the use of Circulars 831 and 891 to classify mineral resources because they are not based on modern geostatistical methods that are now routinely applied and, thus, are outdated.723 Another commenter agreed that Circulars 831 and 891 are ‘‘completely out of date and do not address many modern aspects of exploration, sampling, chain of custody, quality assessment/quality controls (‘QA/QC’), resource estimation methods, validation and reconciliation.’’ 724 One other commenter stated that the use of Circulars 831 and 891 to classify mineral resources would not be appropriate because of the poor alignment with CRIRSCO, the lack of economic criteria, and the potential to cause inconsistent disclosure.725 In contrast, a few commenters stated that the Commission should allow the use of the Circulars for coal deposits because they are still a valid tool in classifying coal deposits.726 As one of those commenters explained, because coal is a tabular deposit that is often relatively consistent over large areas, it lends itself to the type of evaluation provided by the Circulars.727
iii. Final Interpretation
Having considered the comments received, we are affirming our position that the use of USGS Circulars 831 and 891 for resource classification in Commission filings should not be permitted under the final rules. As we explained in the Proposing Release, those Circulars provide a method of classification that primarily relies on a single criterion—the extent to which tonnages fall within particular distances from a drill hole or outcrop.728 In contrast, the final rules, which provide a mineral resource classification scheme that is substantially similar to the CRIRSCO classification system, require a qualified person to assess the geologic confidence in the resource estimates based on the geologic evidence and, in addition, to consider a variety of relevant technical and economic factors likely to influence the prospect of economic extraction.729 Consequently, we agree with commenters that the method used to classify mineral resources in Circulars 831 and 891 is inconsistent with the CRIRSCO standards and should not be permitted under new subpart 1300, even when classifying coal resources.730 Because, as commenters indicated, the USGS Circulars do not address many modern aspects of exploration, sampling, resource estimation methods, validation, and reconciliation,731 which are included under the CRIRSCO standards, we do not believe that the Circulars are the most appropriate method for purposes of public company disclosure to investors. Rather, we believe that the continued reliance on those Circulars to classify mineral resources would lead to inconsistencies with mineral resource estimates determined under the CRIRSCO standards and investor confusion. Accordingly, neither a registrant nor its qualified person may use Circulars 831 and 891 to classify mineral resources when providing the disclosure required under subpart 1300. F. Treatment of Mineral Reserves

1. The Framework for Determining
   Mineral Reserves
   i. Rule Proposal
   Guide 7 defines a mineral reserve as ‘‘that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.’’ 732 Guide 7 does not, however, delineate the factors that must be considered when making a reserve determination. In contrast, other jurisdictions have adopted the CRIRSCO framework whereby the determination of mineral reserves occurs by applying and evaluating specifically defined ‘‘modifying factors’’ to indicated and measured mineral resources.733 We proposed to revise the definition of mineral reserves to align it generally with the definition under the CRIRSCO￾based codes by adopting the framework of applying modifying factors to indicated or measured mineral resources in order to convert them to mineral reserves.734 As part of this framework, we proposed definitions of ‘‘mineral reserves,’’ ‘‘probable mineral reserves,’’ ‘‘proven mineral reserves,’’ and ‘‘modifying factors.’’ We proposed to define ‘‘mineral reserve’’ as an estimate of tonnage and grade or quality of indicated or measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, as proposed, a mineral reserve is the economically mineable part of a measured or indicated mineral resource, net of allowances for diluting materials and for losses that may occur when the material is mined or extracted.735 Under the proposed rules, the determination that part of a measured or indicated mineral resource is economically mineable would have to be based on a preliminary feasibility (pre-feasibility) or feasibility study conducted by a qualified person applying the modifying factors to indicated or measured mineral resources. Such study would have to demonstrate that, at the time of reporting, extraction of the mineral reserve is economically viable under reasonable investment and market assumptions. Moreover, the study would have to establish a life of mine plan that is technically achievable and economically viable, which would be the basis of determining the mineral reserve.736 As used in the proposed definition of mineral reserve, ‘‘economically viable’’ means that the qualified person has determined, using a discounted cash flow analysis, or has otherwise analytically determined, that extraction of the mineral reserve is economically viable under reasonable investment and market assumptions.737 As used in this proposed definition, ‘‘investment and market assumptions’’ includes all

738See id.
739See id.
740See id.
741See, e.g., JORC Code, supra note 175, at pt. 30; CIM Definition Standards, supra note 351, at 6; SAMREC Code, supra note 267, at pt. 36; and PERC Reporting Standard, supra note 302, at pt. 8.11. 742See Proposing Release, supra note 5, at
Section II.F.1.
743See id.
744See id.
745See, e.g., JORC Code, supra note 175, at pt. 31; CIM Definition Standards, supra note 351, at 6; SAMREC Code, supra note 267, at pt. 37; and PERC Reporting Standard, supra note 302, at pt. 8.13. 746See Proposing Release, Section II.F.1. 747See id. 748See id. 749See id. 750See, e.g., JORC Code, supra note 175, at pt. 12; CRIRSCO International Reporting Template, supra note 20, at cl. 12; SAMREC Code, supra note 267, at pt. 12; and PERC Reporting Standard, supra note 302, at pt. 4.3. 751See Proposing Release, supra note 5, at
Section II.F.1.
752See, e.g., JORC Code, supra note 175, at pt. 32; CRIRSCO International Reporting Template, supra note 20, at cl. 33; SAMREC Code, supra note 267, at pt. 38, and PERC Reporting Standard, supra note 302, at pt. 8.15. 753See Proposing Release, supra note 5, at
Section II.F.1.
754See id.
755See id.
756See, e.g., JORC Code, supra note 175, at pt. 32; CRIRSCO International Reporting Template, supra note 20, at cl. 33; SAMREC Code, supra note 267, at pt. 38; and PERC Reporting Standard, supra note 302, at pt. 8.15. 757 In this regard, we stated our belief that, because excluding diluting materials is a minor computational step in reserve estimation, the proposed net estimate for reserves measure would not impose a significant additional compliance burden for registrants. See Proposing Release, supra note 5, at Sections II.F.1. 758 In-situ means ‘‘in its original place.’’ It is used in this context to refer to mineral reserves estimated as in-place tons. 759See Proposing Release, supra note 5, at Sections II.F.1–2. assumptions made about the prices, exchange rates, sales volumes and costs that are necessary and are used to determine the economic viability of the reserves.738 As proposed, the price used to determine the economic viability of the mineral reserves could not be higher than the average spot price during the 24-month period prior to the end of the fiscal year covered by the study, determined as an unweighted arithmetic average of the daily closing price for each trading day within such period, except in cases where sales prices are determined by contractual agreements. In such a case, the qualified person would be able to use the price set by the contractual arrangement, provided that such price is reasonable and the qualified person discloses that he or she is using a contractual price and discloses the contractual price used.739 The proposed rules used the CRIRSCO classification scheme and framework for mineral reserve determination, which subdivides mineral reserves, in order of increasing confidence in the results obtained from the application of the modifying factors to the indicated and measured mineral resources, into probable mineral reserves and proven mineral reserves.740 Similar to the CRIRSCO classification scheme,741 we proposed to define ‘‘probable mineral reserves’’ as the economically mineable part of an indicated and, in some cases, a measured mineral resource.742 As we explained in the Proposing Release, for a probable mineral reserve, the qualified person’s confidence in the results obtained from the application of the modifying factors and in the estimates of tonnage and grade or quality is lower than what is sufficient for a classification as a proven mineral reserve, but is still sufficient to demonstrate that, at the time of reporting, extraction of the mineral reserve is economically viable under reasonable investment and market assumptions.743 This lower level of confidence can be due either to higher geologic uncertainty when the qualified person converts an indicated mineral resource to a probable mineral reserve or higher risk in the results of the application of modifying factors at the time when the qualified person converts a measured mineral resource to a probable mineral reserve. As further required
by the proposed rules, a qualified person must classify a measured mineral resource as a probable mineral reserve when his or her confidence in the results obtained from the application of the modifying factors to the measured mineral resource is lower than what is sufficient for a proven mineral reserve.744 Similar to the CRIRSCO classification scheme,745 we proposed to define ‘‘proven mineral reserves’’ as the economically mineable part of a measured mineral resource.746 As the proposed rules explained, for a proven mineral reserve, the qualified person must have a high degree of confidence in the results obtained from the application of the modifying factors and in the estimates of tonnage and grade or quality.747 In addition, as proposed, a proven mineral reserve can only result from conversion of a measured mineral resource.748 We proposed to define ‘‘modifying factors’’ as the factors that a qualified person must apply to mineralization or geothermal energy and then evaluate in order to establish the economic prospects of mineral resources, or the economic viability of mineral reserves.749 Similar to the CRIRSCO framework, a qualified person would have to apply and evaluate modifying factors to convert measured and indicated mineral resources to proven and probable mineral reserves.750 As proposed, these factors included, but were not restricted to, mining, energy recovery and conversion, processing, metallurgical, economic, marketing, legal, environmental, infrastructure, social, and governmental factors. We also proposed that the number, type, and specific characteristics of the applied modifying factors are a function of and depend upon the mineral, mine, property, or project.751 We proposed several instructions about the conversion of mineral resources into mineral reserves. For example, one instruction explained that, similar to the CRIRSCO framework,752 if the uncertainties in the results obtained from the application of the modifying factors, which prevented a measured mineral resource from being converted to a proven mineral reserve, no longer exist, then the qualified person may convert the measured mineral resource to a proven mineral reserve.753 Another instruction stated that a qualified person cannot convert an indicated mineral resource to a proven mineral reserve unless there is new evidence that justifies conversion of the indicated mineral resource to a measured mineral resource.754 A third instruction explained that a qualified person cannot convert an inferred mineral resource to a mineral reserve without first obtaining new evidence that justifies converting it to an indicated or measured mineral resource.755 These proposed instructions are consistent with the CRIRSCO framework for conversion of mineral resources into mineral reserves.756 We proposed a definition of mineral reserve as an estimate of tonnage and grade or quality that is net of allowances for diluting materials and mining losses. This is in contrast to the
definition of mineral reserve under the CRIRSCO standards, which includes diluting materials in reserve estimates.757 We proposed a net estimate for reserves because the proposed rules would require disclosure of mineral reserves at three points of reference: In-situ,758 plant or mill feed, and saleable product.759 As we explained, estimates that are exclusive of diluting materials and mining losses would provide a

760The efficiency of the processing method demonstrates how well the registrant converts the resource into saleable product. See Proposing Release, supra note 5, at Section II.F.1. 761See id. 762See, e.g., letters from AngloGold, BHP, CBRR, Eggleston, Gold Resource, JORC, Midas, Northern Dynasty, Rio Tinto, SAMCODES 1 and 2, and Vale. 763See letter from Midas. 764See letter from Eggleston. 765See letter from Energy Fuels. 766See letters from Amec, AngloGold, BHP, CBRR, Coeur, FCX, Gold Resource, Golder, MMSA, NMA 1, Northern Dynasty, Randgold, Rio Tinto, Royal Gold, SAMCODES 1, SME 1, SRK 1, Vale, and Willis. 767See, e.g., letters from BHP, FCX, Golder, and MMSA. 768See, e.g., letters from BHP, CBRR, Randgold, and Rio Tinto. 769Some of the commenters made similar arguments when objecting to the proposed requirement to disclose mineral reserves as in-situ in addition to plant/mill feed and saleable product. See, e.g., letters from Amec, Rio Tinto, SME 1, and Vale. See infra Section II.G. for further discussion. 770See letters from AngloGold, CBRR, Eggleston, Midas, Northern Dynasty, and SRK 1. 771See, e.g., letters from AngloGold, CBRR, Golder, Midas, and SRK 1. 772See letter from CBRR. 773See letters from SRK 1 and Golder. As previously discussed, some commenters objected to the application of the modifying factors at the mineral resource determination stage. See, e.g., letters from Amec and Eggleston. Those commenters requested that we remove from the definition of modifying factors their use to establish the economic prospects of mineral resources. 774See letters from Amec, CBRR, Eggleston, Gold Resource, Golder, Midas, Northern Dynasty, Rio Tinto, SAMCODES 2, and SRK 1. 775See letter from Eggleston. 776See letter from CBRR. 777See letter from BHP. 778See letter from Alliance. 779See id. 780See, e.g., letters from Amec, AngloGold, Eggleston, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 781See letter from Midas; see also letter from Eggleston. 782See letter from SRK 1. 783Letter from BHP. 784Letter from SME 1. clearer picture of the efficiency of the processing method.760 Under the proposal, when discussing the analysis in the technical report summary, the qualified person would be required to disclose the assumptions made about prices, exchange rates, discount rate, sales volumes and costs necessary to determine the economic viability of the reserves.761
ii. Comments on the Rule Proposal
Many commenters generally supported the Commission’s proposal to adopt the CRIRSCO framework of applying modifying factors to indicated or measured mineral resources in order to convert them to mineral reserves.762 One commenter supported the Commission’s proposed definition of ‘‘mineral reserve’’ as the economically mineable part of a measured or indicated mineral resource, net of allowances for diluting materials and for losses that may occur when the material is mined or extracted.763 Another commenter stated that the proposed definition of mineral reserve was acceptable, but the definition in the CIM Definition Standards, which does not use a net reserve concept, is substantially better and consistent with international usage.764 One other commenter preferred the CRIRSCO definition of mineral reserve, which includes dilution and allowances for losses, but stated that, alternatively, the Commission should permit a registrant to disclose its reserves both as inclusive of dilution and losses and as a net estimate.765 Many other commenters, however, strongly opposed the net reserve concept and urged the Commission to adopt the CRIRSCO definition of mineral reserve.766 Those commenters disagreed with the Commission’s statement that the calculation of a net estimate would be ‘‘relatively minor.’’ 767 Moreover, some commenters stated that, in addition to conflicting with the comparable definition under the CRIRSCO standards, the proposed definition of mineral reserve also is inconsistent with that part of the proposed definition that requires the application of the modifying factors to mineral resources in order to determine mineral reserves, and is therefore unrealistic.768 Because application of the modifying factors, which include operational and processing factors, necessarily involves dilution and allowances for losses, it is not possible to exclude them and satisfy the modifying factors prong of the mineral reserve definition.769 Several commenters were generally supportive of the proposed definitions of probable and proven mineral reserve because they are consistent with the CRIRSCO definitions.770 Several commenters also generally supported the proposed definition of modifying factors.771 One commenter stated that the proposed definition is consistent with the CRIRSCO standards.772 Other commenters recommended adding other specified factors to the definition, such as decommissioning costs, reclamation costs, and assumptions for mining losses, among other things.773 Several commenters supported the Commission’s proposal to include a life of mine plan disclosure requirement in the technical studies required to support a determination of mineral reserves.774 One commenter described the life of mine requirement as ‘‘fundamental’’ to determining whether a mine will be economically viable at the time of reporting.775 A second commenter stated that the proposed life of mine plan requirement is consistent with requirements in global
jurisdictions.776 One commenter, however, opposed a life of mine plan disclosure requirement because such a requirement would reveal commercially sensitive information and would be onerous on registrants with a large number of reserves.777 Another commenter objected to the proposed life of mine plan disclosure requirement on the grounds that, because coal mine plans often include areas not yet controlled by a company, disclosing mine life plans would allow competitors to interfere with the company’s operations by acquiring strategic mineral rights already targeted by the company.778 That commenter also stated that, because life of mine plans are always subject to change, their disclosure could lead potential investors to assume incorrectly that mining is possible under all conditions.779 Several commenters generally supported the proposed requirement that a qualified person conduct a discounted cash flow analysis to demonstrate economic viability.780 One commenter stated that discounted cash flows are the most widespread and industry accepted approach of evaluation and should be required.781 Another commenter stated that we should require a non-discounted cash flow analysis in addition to the industry standard discounted cash flow analysis.782 In contrast, one commenter opposed the proposed discounted cash flow requirement because it ‘‘is overly prescriptive compared to the CRIRSCO requirement to base reserves on studies that have determined a mine plan that is technically and economically achievable.’’ 783 Another commenter stated that annual cash flow forecasts should be omitted for operating mines ‘‘as publication may affect a competitive advantage in labor or customer negotiations.’’ 784 Similar to comments received on the proposed pricing requirement for mineral resource estimates, many commenters objected to the proposed requirement that a qualified person use a 24-month trailing average price for the discounted cash flow analysis required for the determination of mineral reserves. Commenters maintained that the proposed historical pricing requirement would conflict with the industry practice of relying on forward￾looking pricing forecasts and the

785See, e.g., letters from Amec, AngloGold, CBRR, CIM, Eggleston, JORC, NMA 1, Northern Dynasty, Randgold, Rio Tinto, SME 1, and Vale. 786See Item 1302(e) of Regulation S–K [17 CFR 229.1302(e)]. 787See 17 CFR 229.1300, which defines a mineral reserve as an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. The adopted definition further provides that a mineral reserve is the economically mineable
part of a measured or indicated mineral resource.
788See id.
789See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 30; JORC Code, supra note 175, at pt. 29; SAMREC Code, supra note 267, at pt. 35; and PERC Reporting Standard, supra note 302, at pt. 8.1. 790See supra note 768 and accompanying text. 791 17 CFR 229.1302(e)(2) [Item 1302(e)(2) of Regulation S–K] (providing in relevant part that the ‘‘determination of probable or proven mineral reserves must be based on a qualified person’s application of the modifying factors to indicated or measured mineral resources, which results in the qualified person’s determination that part of the indicated or measured mineral resource is economically mineable’’). 792 In addition, removal of the net reserve concept from the definition of mineral reserve is consistent with our elimination of the requirement to disclose mineral reserves in-situ. See infra Section II.G. 793See the definition of ‘‘modifying factors’’ in 17 CFR 229.1300. 794See supra Section II.E.4. 795See 17 CFR 229.1300. These factors are similar to the modifying factors under the CRIRSCO standards, which include ‘‘mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social, and governmental factors.’’ CRIRSCO International Reporting Template, supra note 20, at cl. 12. Rather than refer to ‘‘social’’ or ‘‘social-economic’’ factors, as in the Proposing Release, the final rules refer more specifically to factors pertaining to local individuals or groups. Examples of such matters include consideration of: Limitations on a mining project that abuts a tribal burial ground; the potential need to relocate local individuals because of the scope of the mining project; and commitments to build a community center or local clinic. We believe this change will clarify the type of factors the qualified person may wish to consider in this area. 796See letters from Golder and SRK 1. 797See CRIRSCO International Reporting Template, supra note 20, at cl. 12. 798See 17 CFR 229.1300. 799See 17 CFR 229.1302(e)(2). 800See the definition of ‘‘probable mineral reserve’’ in 17 CFR 229.1300. CRIRSCO guidance allowing the use of any reasonable and justifiable price.785
iii. Final Rules
We are revising the definition of mineral reserves (currently in Guide 7) by adopting the CRIRSCO framework of applying modifying factors to indicated or measured mineral resources in order to convert them to mineral reserves, as proposed. The adopted framework requires a registrant’s disclosure of mineral reserves to be based on a qualified person’s detailed evaluation of the modifying factors as applied to indicated or measured mineral resources, which would demonstrate the economic viability of the mining property or project.786 The adopted framework includes a series of definitions that describe the relationship between the different classes of mineral resources and reserves and underscores the incremental nature of mineral resource and reserve determination. We are adopting the definition of mineral reserve largely as proposed.787 In a change from the proposed rules, the adopted definition of mineral reserve provides that a mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined or extracted.788 We have been persuaded to remove the proposed net reserve concept from the definition of mineral reserve by commenters that maintained that such removal was necessary to make the definition consistent with the comparable CRIRSCO definition 789 and to avoid internal inconsistencies.790 As commenters noted, the CRIRSCO standards and the final rules 791 require the determination of mineral reserves to be based upon a qualified person’s application of the modifying factors to indicated or measured mineral resources. The modifying factors include mining method, which is the source of dilution and mining losses, and mineral processing methods, which determine recovery factors. Because dilution and losses are realistic consequences of applying the modifying factors, we believe it is reasonable to include both diluting materials and allowances for losses in the definition of mineral reserve.792 The final rules no longer define modifying factors to include factors used to establish the economic prospects of mineral resources. Instead, the adopted definition provides that modifying factors are the factors that a qualified person must apply to indicated and measured resources and then evaluate in order to establish the economic viability of mineral reserves.793 This change from the proposal is consistent with the change made to the initial assessment requirement, which no longer requires application of the modifying factors at the resource determination stage.794 Referencing the modifying factors solely in the context of mineral reserve determination will align the final rules with the CRIRSCO standards and avoid confusing registrants and investors about the level of analysis required at the resource determination stage. Consistent with the proposed rules, the adopted definition of modifying factors provides that a qualified person must apply and evaluate modifying factors to convert measured and indicated
mineral resources to proven and probable mineral reserves. Also largely as proposed, the adopted definition provides examples of the modifying factors, which include, but are not restricted to: Mining; processing; metallurgical; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or agreements with local individuals or groups; and governmental factors.795 Although some commenters suggested adding other specific factors to the list,796 we decline to do so because the adopted definition makes clear that the list of factors is not exclusive, and is consistent with the factors specified in the CRIRSCO definition of modifying factors.797 The adopted definition of modifying factors further states, as proposed, that the number, type and specific characteristics of the modifying factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project.798 For example, applying and evaluating processing factors means the qualified person must examine the characteristics of the mineral resource and determine that the material can be processed economically into saleable product using existing technology. Similarly, applying and evaluating legal factors means the qualified person must examine the regulatory regime of the host jurisdiction to establish that the registrant can comply (fully and economically) with all laws and regulations (e.g., mining, safety, environmental, reclamation, and permitting regulations) that are relevant to operating a mineral project using existing technology. As proposed, the final rules provide that a qualified person must subdivide mineral reserves, in order of increasing confidence in the results obtained from the application of the modifying factors to the indicated and measured mineral resources, into probable mineral reserves and proven mineral reserves.799 The final rules define ‘‘probable mineral reserve’’ to mean the economically mineable part of an indicated and, in some cases, a measured mineral resource.800 As the final rules explain, for a probable mineral reserve, the qualified person’s confidence in the results obtained from the application of the modifying factors and in the estimates of tonnage and grade or quality is lower than what is sufficient for a classification as a proven mineral reserve, but is still sufficient to

801 17 CFR 229.1302(e)(2)(i) [Item 1302(e)(2)(i) of Regulation S–K]. 802 Id. 803See the definition of ‘‘proven mineral reserve’’ in 17 CFR 229.1300. 804 17 CFR 229.1302(e)(2)(ii) [Item 1302(e)(2)(ii) of Regulation S–K]. 805See the definition of ‘‘proven mineral reserve’’ in 17 CFR 229.1300. 806See supra note 770 and accompanying text. 807See infra Section II.F.2. 808 17 CFR 229.1302(e)(1) and (3) [Item 1302(e)(1) and (3) of Regulation S–K]. 809See Item 1302(e)(3) of Regulation S–K. 810See, e.g., letters from CBRR and Eggleston; see also supra note 774. In this regard, we note that the SME Guide expressly requires a life of mine plan in its technical study. See SME Guide, supra note 177, Table 1, at 54 (‘‘Mining method(s), mine plans and production schedules defined for the life of the project’’ are required to support mineral reserve disclosure). Under the CRIRSCO-based codes, the qualified person has to develop mine plans in order to estimate cash flows, which are required by the codes for the financial analysis necessary to support mineral reserve disclosure. The cash flows must be based on costs and revenues associated with planned production over the life of the project. See, e.g., JORC Code, supra note 175, at pt. 29 (stating that ‘‘[d]eriving an Ore Reserve without a mine design or mine plan through a process of factoring of the Mineral Resource is unacceptable . . . The studies will have determined a mine plan and production schedule that is technically achievable and economically viable and from which the Ore Reserves can be derived’’). 811See supra notes 777–778 and accompanying text. 812See supra note 780 and accompanying text. 813See the definition of ‘‘economically viable’’ in 17 CFR 229.1300. Whether the investment and market assumptions are ‘‘reasonable’’ will necessarily be a facts and circumstances determination based upon the relevant economic and market factors. 814See letter from BHP. 815See letters from Eggleston and Midas. 816See, e.g., SME Guide, supra note 177, at pt. 41 (‘‘The term ‘economically viable’ implies that extraction of the Mineral Reserve has been determined or analytically demonstrated (e.g., such as by a cash flow in the report) to be viable and justifiable under reasonable investment and market assumptions’’). See also JORC Code, supra note 175, at pt. 29 (‘‘The term ‘economically mineable’ implies that extraction of the Ore Reserves has been demonstrated to be viable under reasonable financial assumptions’’). 817See the definition of ‘‘investment and market assumptions’’ in 17 CFR 229.1300. 818 17 CFR 229.1302(e)(4) [Item 1302(e)(4) of Regulation S–K]. 819See id. 820See supra Section II.E.4.iii.a. 821 In this regard, a qualified person will not be able to use inferred mineral resources to support a determination of mineral reserves unless new demonstrate that, at the time of reporting, extraction of the mineral reserve is economically viable under reasonable investment and market assumptions. The lower level
of confidence is due to higher geologic uncertainty when the qualified person converts an indicated mineral resource to a probable mineral reserve or higher risk in the results of the application of modifying factors at the time when the qualified person converts a measured mineral resource to a probable mineral reserve.801 The final rules further provide that a qualified person must classify a measured mineral resource as a probable mineral reserve when his or her confidence in the results obtained from the application of the modifying factors to the measured mineral resource is lower than what is sufficient for a proven mineral reserve.802 The final rules define ‘‘proven mineral reserve,’’ as proposed, to mean the economically mineable part of a measured mineral resource.803 For a proven mineral reserve, the qualified person must have a high degree of confidence in the results obtained from the application of the modifying factors and in the estimates of tonnage and grade or quality.804 Moreover, a proven mineral reserve can only result from conversion of a measured mineral resource.805 The adopted definitions of probable and proven mineral reserves are generally consistent with the comparable definitions under the CRIRSCO-based codes and, as such, were supported by several commenters.806 As discussed below,807 the determination that part of a measured or indicated mineral resource is economically mineable must be based on a preliminary feasibility (pre￾feasibility) or feasibility study that discusses the qualified person’s application of the modifying factors to indicated or measured mineral resources, and demonstrates that, at the time of reporting, extraction of the mineral reserve is economically viable under reasonable investment and market assumptions.808 As proposed, the final rules provide that the study must establish a life of mine plan that is technically achievable and economically viable, and which will be the basis of determining the mineral reserve.809 As commenters noted, establishing a life of mine plan is fundamental to determining the economic viability of a deposit and is consistent with global industry practice.810 Although some commenters expressed concern that requiring the disclosure of a life of mine plan could result in the disclosure of proprietary, commercially sensitive information,811 given the importance of the life of mine plan to determining the economic viability of a mining project, we believe that requiring disclosure of the life of mine plan is necessary to help an investor understand the basis of a registrant’s mineral reserves estimate. Consistent with numerous comments received,812 the final rules provide, as proposed, that when used in reference to a mineral reserve, the term ‘‘economically viable’’ means that the qualified person has determined, using a discounted cash flow analysis, or has otherwise analytically determined, that extraction of the mineral reserve is economically viable under reasonable
investment and market assumptions.813 Although one commenter disagreed,814 we believe the requirement to conduct a discounted cash flow or other similar analysis is consistent with industry practice 815 and the requirement under the CRIRSCO-based codes that mineral reserve determination must be based on a financial analysis under reasonable assumptions demonstrating that extraction of the reserve is economically viable.816 The final rules further provide, as proposed, that the term ‘‘investment and market assumptions’’ includes all assumptions made about the prices, exchange rates, interest and discount rates, sales volumes, and costs that are necessary and are used to determine the economic viability of the reserves.817 In a change from the proposed rules, however, and in response to comments received, the final rules do not require the qualified person to use a price that is no higher than the 24-month trailing average price. Instead, the qualified person must use a price for each commodity that provides a reasonable basis for establishing that the project is economically viable.818 The qualified person will be required to explain, with particularity, his or her reasons for selecting the price and the underlying material assumptions regarding the selection.819 We are adopting this change for the same reasons that we changed the pricing requirement for the cut-off estimation required for the determination of mineral resources.820 We believe that the adopted framework for mineral reserve determination and disclosure is preferable to Guide 7’s approach. Although Guide 7 similarly defines a mineral reserve as that part of a mineral deposit that can be economically and legally extracted or produced, it does not specify the level of geologic evidence that must exist or the factors that must be considered to convert the deposit to a mineral reserve. In contrast, under the adopted framework, the only estimates of grade or quality and tonnages that a registrant can disclose as mineral reserves are those parts of the indicated and measured mineral resources that, after all relevant modifying factors have been evaluated, can be shown to be part of a viable mineral project.821 The adopted

evidence (e.g., data and analysis) has first caused an increased confidence in the geologic evidence sufficient to reclassify those resources as indicated or measured mineral resources. Similarly, a qualified person will not be able to convert an indicated mineral resource to a proven mineral reserve without first determining that conclusive, rather than just adequate, geological evidence exists to support reclassification to a measured mineral resource. 822See Proposing Release, supra note 5, at
Section II.F.2.
823See id.
824See id.
825See id.
826As proposed, terms such as ‘‘full, final, comprehensive, bankable, or definitive’’ feasibility study are equivalent to a feasibility study. See id. 827See id. 828See id. 829See id. 830See id. 831We proposed to define a ‘‘preliminary market study’’ to mean a study that is sufficiently rigorous and comprehensive to determine and support the existence of a readily accessible market for the mineral. It must, at a minimum, include product specifications based on preliminary geologic and metallurgical testing, supply and demand forecasts, historical prices for the preceding five or more years, estimated long term prices, evaluation of competitors (including products and estimates of production volumes, sales, and prices), customer evaluation of product specifications, and market entry strategies. The study must provide justification for all assumptions. It can, however, be less rigorous and comprehensive than a final market study, which is required for a full feasibility study. See Proposing Release, supra note 5, at note 264 and accompanying text. 832See Proposing Release, supra note 5, at
Section II.F.2.
833See id. framework requires the qualified person to disclose the specific mining, processing, metallurgical, environmental, economic, legal, and other applicable factors that he or she has evaluated in detail, and which has led the qualified person to conclude that extraction of the deposit is economically viable. We therefore believe that the adopted framework will promote clearer, more detailed, and more accurate disclosure about the economic viability of a registrant’s mineral deposits, which should enhance an investor’s understanding of the registrant’s mining operations. When considered as a whole, and in light of the significant changes made to the proposed rules discussed above, we believe that the adopted mineral reserve disclosure framework is substantially similar to the CRIRSCO framework. As such, its adoption should enhance consistency in mining disclosure across jurisdictions and thereby facilitate comparability of information for investors. It also should limit reporting costs for the numerous mining registrants that are dual-listed and currently subject to different Commission and CRIRSCO-based disclosure requirements.
2. The Type of Study Required To
Support a Reserve Determination
i. Rule Proposal
Historically, the staff has requested a final feasibility study to support the disclosure of mineral reserves in a Commission filing. In contrast, the CRIRSCO-based codes have permitted either a pre-feasibility study or a feasibility study in support of a determination of mineral reserves. To help align the Commission’s mining property disclosure rules with the CRIRSCO standards, we proposed to permit either a preliminary feasibility study or a feasibility study to support the determination and disclosure of mineral reserves.822 We proposed to define a ‘‘preliminary feasibility study’’ (or ‘‘pre-feasibility study’’) as a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a qualified person has determined (in the case of underground mining) a preferred mining method, or (in the case of surface mining) a pit configuration, and in all cases has determined an effective method of mineral processing and an effective plan to sell the product.823 As proposed, a pre-feasibility study must include a financial analysis based on reasonable assumptions, based on appropriate testing, about the modifying factors and the evaluation of any other relevant factors that are sufficient for a qualified person to determine if all or
part of the indicated and measured
mineral resources may be converted to mineral reserves at the time of reporting.824 The study’s financial analysis must have the level of detail necessary to demonstrate, at the time of reporting, that extraction is economically viable. In addition, as noted in the proposed definition of a pre-feasibility study, while a pre￾feasibility study is less comprehensive and results in a lower confidence level than a feasibility study, a pre-feasibility study is more comprehensive and results in a higher confidence level than an initial assessment.825 We proposed to define a ‘‘feasibility study’’ 826 as a comprehensive technical and economic study of the selected development option for a mineral project, which includes detailed assessments of all applicable modifying factors together with any other relevant operational factors, and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is economically viable.827 According to the proposed definition, the results of the study may serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. Thus, a feasibility study is more comprehensive, with a higher degree of accuracy, and yielding results with a higher level of confidence, than a pre-feasibility study. Under the proposed rules, it must contain mining, infrastructure, and process designs completed with sufficient rigor to serve as the basis for an investment decision or to support project financing.828 Although the use of a pre-feasibility study could increase the uncertainty regarding a registrant’s disclosure about mineral reserves, compared to a feasibility study, we proposed to allow either study to support the determination and disclosure of mineral reserves based on our belief that any such uncertainty would be reduced by the requirements included in the proposed definitions and corresponding proposed instructions. One such proposed requirement was that all reserve disclosures based on a pre￾feasibility study must include the qualified person’s justification for using a pre-feasibility study instead of a final feasibility study.829 Another proposed requirement was that the pre-feasibility study must include a financial analysis at a level of detail sufficient to demonstrate the economic viability of extraction. A proposed instruction stated that the pre￾feasibility study must include an economic analysis that supports the property’s economic viability as assessed by a detailed discounted cash flow analysis.830 This economic analysis must describe in detail applicable taxes and provide an estimate of revenues, which in certain situations (e.g., where the products are not traded on an exchange or no established market or sales contract exists) must be based on at least a preliminary market study.831 We also proposed to prohibit a qualified person from using inferred mineral resources in the pre-feasibility study’s
financial analysis.832 In another instruction, we proposed to require the use of a final feasibility study in high risk situations.833 For example, as proposed, a final feasibility study would be required in situations where the project is the first in a particular mining district with substantially different conditions than existing company projects, such as environmental and permitting restrictions, labor availability and skills,

834See id.
835See id.
836See id. According to this proposed instruction, operating and capital cost estimates in a pre￾feasibility study must, at a minimum, have an accuracy level of approximately ±25% and a contingency range not exceeding 15%. 837See id. 838See id. 839See id. 840See id. 841We proposed to define a ‘‘final market study’’ to mean a comprehensive study to determine and support the existence of a readily accessible market for the mineral. Under the proposed rules, the study must, at a minimum, include product specifications based on final geologic and metallurgical testing, supply and demand forecasts, historical prices for the preceding five or more years, estimated long term prices, evaluation of competitors (including products and estimates of production volumes, sales, and prices), customer evaluation of product specifications, and market entry strategies or sales contracts. The study also must provide justification for all assumptions, which must include all material contracts required to develop and sell the reserves. See Proposing Release, supra note 5, at note 286 and accompanying text. 842See id. 843See letters from Amec, AngloGold, BHP, CBRR, CIM, Eggleston, Gold Resource, Golder, Midas, Northern Dynasty, Randgold, Rio Tinto, SAMCODES 2, SME 1, SRK 1, and Vale. 844See letters from Amec, AngloGold, Eggleston, Energy Fuels, Golder, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 845See, e.g., letters from Amec, AngloGold, Eggleston, Energy Fuels, Rio Tinto, and SRK 1. 846See letter from Amec. 847Letter from SRK 1. 848See letter from Rio Tinto. 849See letter from Columbia. The commenter also recommended requiring a feasibility study to address: Design criteria for tailing dams, specifically the risk of failure; contingency and emergency plans for tailings dam failures; drought management plans; and remediation plans. remoteness, and unique mineralization and recovery methods.834 We proposed other instructions to help ensure that the pre-feasibility study is sufficiently rigorous to support a conclusion that extraction of the reserve is economically viable. For example, one proposed instruction explained that the factors to be considered in a pre￾feasibility study are typically the same as those required for an initial assessment, but considered at a greater level of detail or at a later stage of development.835 According to another proposed instruction, the operating and capital cost estimates in a pre-feasibility study must have an accuracy level and a contingency range that are significantly narrower than those permitted to support a determination of mineral resources.836 An additional proposed instruction addressed whether and when a registrant would be required to take additional steps to support its determination of mineral reserves. As that instruction explained, a determination of mineral reserves does not necessarily require that extraction facilities are in place or operational, that the company has obtained all necessary permits, or that
the company has entered into sales contracts for the sale of mined products. However, such determination does require that the qualified person has, after reasonable investigation, not identified any obstacles to obtaining permits and entering into the necessary sales contracts, and reasonably believes that the chances of obtaining such approvals and contracts in a timely manner are highly likely.837 The qualified person must take into account the potential adverse impacts, if any, from any unresolved material matter on which extraction is contingent and which is dependent on a third party. Another proposed instruction addressed when the completion of a preliminary or final market study, as
part of a pre-feasibility or feasibility
study, may be required to support a determination of mineral reserves. As proposed, a preliminary market study (for a pre-feasibility study) or final market study (for a feasibility study) would be required where the mine’s product cannot be traded on an exchange, there is no other established market for the product, and no sales contract exists. Finally, pursuant to another proposed instruction, a pre-feasibility study must identify sources of uncertainty that require further refinement in a final feasibility study.838 We proposed this requirement to elicit appropriate disclosure about the areas of risk present in the pre-feasibility study, which we believed would help investors in assessing the reliability of the study. We proposed several instructions regarding the use of a feasibility study to support the determination and disclosure of mineral reserves. Pursuant to one instruction, a feasibility study must apply and describe all relevant modifying factors in a more detailed form and with more certainty than a pre-feasibility study.839 According to another instruction, a feasibility study must include an economic analysis that describes taxes, estimates revenues, and assesses economic viability by a detailed discounted cash flow analysis.840 In addition, in certain circumstances, the feasibility study must include an estimate of revenues based on at least a final market study 841 or possible letters of intent to purchase. Pursuant to a third proposed instruction, operating and capital cost estimates in a feasibility study, at a minimum, must have an accuracy level of approximately ±15% and a contingency range not exceeding 10%.842 As proposed, the qualified person must state the accuracy level and contingency range in the feasibility study.
ii. Comments on the Rule Proposal
Most commenters that addressed the issue supported the Commission’s proposal to permit either a pre￾feasibility or feasibility study to provide the basis for determining and reporting mineral reserves.843 While commenters generally agreed with the proposed definitions of ‘‘pre-feasibility study’’ and ‘‘feasibility study,’’ many commenters opposed the Commission’s proposal to require the use of a feasibility study in high risk situations.844 Most of those commenters believed that the decision regarding whether to use a pre-feasibility or feasibility study should be left to the discretion and professional judgment of the qualified person.845 One commenter explained that, for a pre-feasibility study, under CRIRSCO guidance, the qualified person is required to assess and disclose relevant risks, including high risks. If the qualified person has therefore met all of the requirements for a pre-feasibility study, he or she should not need to justify the use of a pre￾feasibility study to support mineral reserve estimates.846 A second commenter stated that ‘‘with a high risk project, it is even more important to complete a pre-feasibility study prior to a feasibility study to help identify and mitigate the risks before proceeding to a feasibility study.’’ 847 After stating that qualified persons should be allowed to use their discretion as to whether the risk associated with a pre-feasibility study is too high to support a reserve, a third commenter noted that if the first pre-feasibility study is inconclusive, it is common practice to not disclose mineral reserves until additional studies are completed and the development case is clear.848 In contrast, another commenter expressed its support for requiring a feasibility study for high risk situations where a proposed mining project has unique or particularly challenging conditions, such as when it is in close proximity to environmentally protected resources.849 One other commenter stated that, for ‘‘greenfield projects (including new process routes for production expansion of existing operations)’’ and other high risk situations, a feasibility study should

850See letter from CBRR.
851Letter from Alliance.
852See id.
853See letter from Amec.
854See letters from Amec, AngloGold, Eggleston, Golder, Rio Tinto, and SRK 1. 855See letter from Amec. 856See letter from Northern Dynasty. 857See letter from SAMCODES 2. 858See letter from CBRR. 859See, e.g., letters from NMA 2 and SME 1. 860See, e.g., letters from Columbia and SASB. 861 Item 1302(e)(1) of Regulation S–K. 862See id. 863See id., referencing 17 CFR 229.601(b)(96). 864See supra note 843 and accompanying text. 865See letter from Alliance. 866See the definition of ‘‘preliminary feasibility study’’ in 17 CFR 229.1300. 867See the definition of ‘‘feasibility study’’ in 17 CFR 229.1300. 868See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 38–39; JORC Code, supra note 175, at pts. 39–40; SAMREC Code, supra note 267, at pts. 46–47; and PERC Reporting Standard, supra note 302, at pts. 5.5–5.9. 869See, e.g., letters from AngloGold, BHP, CBRR, Rio Tinto, and SRK 1. support the definition of mineral reserves.850 One commenter opposed requiring either a pre-feasibility study or feasibility study to support the determination and disclosure of reserves. According to that commenter, ‘‘[f]or coal companies operating in well￾defined coal fields, these types of formal studies are not typically conducted, as on-going operations provide all the feasibility information that is required.’’ 851 That commenter estimated that requiring either type of study would cost it several million dollars without providing a benefit. Moreover, according to that commenter, due to the competitive bidding nature of the coal industry, public disclosure of information contained in those studies would likely cause it competitive harm.852 One commenter stated that the proposed accuracy and contingency levels for a pre-feasibility study are too rigid and do not reflect the diversity of mining project locations and mine project types.853 That commenter also was concerned with the level of detail required for certain items of the pre￾feasibility study, such as environmental compliance and permitting requirements. Some commenters expressly supported the Commission’s proposal to include definitions of preliminary and final market studies as part of the instructions for pre-feasibility and feasibility studies.854 One commenter stated that market studies should be required for non-freely traded commodities where there are barriers to market entry, but the Commission should not require disclosure of certain portions of the market studies if such disclosure would break confidentiality agreements or divulge planned market entry strategies that are proprietary to the company.855 Other commenters, however, opposed the proposed definitions on the grounds that they are vague,856 are not standard practice,857 or include strategic market decisions that can affect the market competition.858 Some commenters objected to our inclusion of environmental compliance and permitting requirements or interests of agencies, non-governmental organizations, communities and other
stakeholders as required items to be covered under a pre-feasibility or feasibility study.859 These commenters stated that such inclusion would introduce an ‘‘unworkable and inappropriate disclosure mandate’’ and impose high direct and indirect costs. Other commenters advocated expanding the required disclosure of environmental and sustainability factors.860
iii. Final Rules
We are adopting the proposed requirement that a registrant’s disclosure of mineral reserves must be based upon a qualified person’s pre￾feasibility study or feasibility study, which supports a determination of mineral reserves.861 The pre-feasibility or feasibility study must include the qualified person’s detailed evaluation of all applicable modifying factors to demonstrate the economic viability of the mining property or project.862 Moreover, the technical report summary submitted by the qualified person to support a determination of mineral reserves must describe the procedures, findings, and conclusions reached for the pre-feasibility or feasibility study.863 Most commenters addressing the issue supported requiring either a pre￾feasibility study or feasibility study to support a determination of mineral reserves.864 Although one commenter opposed requiring either type of study on the grounds that, because neither study is commonly undertaken in the coal industry, the proposed requirement would be costly and could result in competitive harm,865 we believe that, as evidenced by the widespread support from other commenters, the pre￾feasibility or feasibility study requirement is consistent with current industry practice under the CRIRSCO standards. We also note that, as previously explained, the final rules do not require a mining company, such as a coal company, to hire a qualified person before it can develop and extract the mined commodity. However, once the company engages in public capital￾raising, and seeks to classify and report its deposits as mineral reserves, then, consistent with the CRIRSCO standards, for the protection of investors, there must be a pre-feasibility or feasibility study to support its disclosure of reserves in Commission filings. We also are adopting the proposed definitions of preliminary feasibility study 866 and feasibility study.867 Because these definitions are substantially similar to the comparable definitions under the CRIRSCO-based codes,868 many commenters supported their adoption.869 These definitions establish that, while both a pre￾feasibility and feasibility study are comprehensive technical and economic studies, which must include a financial analysis at a level of detail necessary to demonstrate, at the time of reporting, that extraction is economically viable, a pre-feasibility study is less comprehensive and results in a lower confidence level than a feasibility study. This is because of the key differences between a pre-feasibility study and a (final) feasibility study, which include that:

• A pre-feasibility study discusses a ‘‘range
  of options’’ for the technical and economic viability of a mineral project whereas a feasibility study focuses on a particular option selected for the development of the project;
• A pre-feasibility study generally has a
  less detailed assessment of the modifying factors necessary to demonstrate that extraction is economically viable than the corresponding assessment in a feasibility study; and
• A pre-feasibility study generally has a
  less detailed financial analysis that is based on less firm budgetary considerations (e.g., historical costs rather than actual, firm quotations for major capital items) and more assumptions than the financial analysis in a feasibility study. Despite these differences, we believe that revising our rules to allow a pre￾feasibility study to support the determination and disclosure of mineral reserves benefits both registrants and investors. Permitting the use of a pre￾feasibility study to determine mineral reserves under our rules would align the Commission’s disclosure regime with those under the CRIRSCO-based codes and, as such, provide greater uniformity in global mining disclosure requirements to the benefit of both mining registrants and their investors. Permitting the use of a pre-feasibility study also could significantly reduce a mining registrant’s costs in connection

870 17 CFR 229.1302(e)(5) [Item 1302(e)(5) of Regulation S–K]. 871 17 CFR 229.1302(e)(4) [Item 1302(e)(4) of Regulation S–K]. 872See id. 873See id. Like the other adopted pricing provisions, this provision further states that the selected price and all material assumptions underlying it must be current as of the end of the registrant’s most recently completed fiscal year. When discussing the analysis in the technical report summary, the qualified person will be required to disclose the assumptions made about prices, exchange rates, discount rate, sales volumes and costs necessary to determine the economic viability of the reserves. 874See Item 1302(e)(5) of Regulation S–K. 875See, e.g., CIM Definition Standards, supra note 351, at 3 (stating that the standard ‘‘requires the completion of a Preliminary Feasibility Study as the minimum prerequisite for the conversion of Mineral Resources to Mineral Reserves’’); see also CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines 45 (2003) (in discussing work to determine the economic merits of a deposit, stating that ‘‘[t]his work specifically includes mining engineering evaluations and, most importantly, the preparation of an appropriate cash flow analysis. These aspects are normal components of both feasibility studies and preliminary feasibility studies’’). 876 17 CFR 229.1302(e)(6) [Item 1302(e)(6) of Regulation S–K]. 877 17 CFR 229.1302(e)(15) [Item 1302(e)(15) of Regulation S–K]. 878See CRIRSCO International Reporting Template, supra note 20, at cl. 22; see also JORC Code, supra note 175, at pt. 21 (‘‘Confidence in the estimate of Inferred Mineral Resources is not sufficient to allow the results of the application of technical and economic parameters to be used for detailed planning in Pre-Feasibility (Clause 39) or Feasibility (Clause 40) Studies’’). 879One provision states that the qualified person cannot convert an indicated mineral resource to a proven mineral reserve unless new evidence first justifies conversion to a measured mineral resource. See 17 CFR 229.1302(e)(14) [Item 1302(e)(14) of Regulation S–K]. Another provision states that if the uncertainties in the results obtained from the application of the modifying factors that prevented a measured mineral resource from being converted to a proven mineral reserve no longer exist, then the qualified person may convert the measured mineral resource to a proven mineral reserve. See 17 CFR 229.1302(e)(13) [Item 1302(e)(13) of Regulation S– K]. 880See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 33; JORC Code, supra note 175, at pt. 32; SAMREC Code, supra note 267, at pt. 38; and PERC Reporting Standard, supra note 302, at pt. 8.15. 881 17 CFR 229.1302(e)(7) [Item 1302(e)(7) of Regulation S–K]. 882 In the design of industrial process plants, engineers test the design concepts at increasingly larger scales. An initial step in this process is to conduct laboratory tests using a laboratory
simulation of the conceptual process plant (referred to as bench lab tests). If successful, engineers then conduct tests using a small scale field plant that can process bulk samples (referred to as pilot or demonstration plant tests). It is only when these tests are successful that designs for full scale industrial plants are approved and the plants are constructed. Feasibility studies, depending on the stage, involve bench lab scale or pilot scale tests. See, e.g., Christopher G. Morris, Academic Press Dictionary of Science and Technology 244 (1992) (defining bench-scale testing as ‘‘[t]he practice of examining materials, methods, or chemical processes on a scale that can be performed on a work bench’’). See also American Geological Institute, Dictionary of Mining, Mineral, and Related Terms 406 (2d ed. 1997) (defining a pilot plant as ‘‘a small-scale processing plant in which representative tonnages of ore can be tested under conditions which foreshadow (or imitate) those of the full-scale operation proposed for a given ore’’). 883See Item 1302(e)(7) of Regulation S–K; see also
Table 1 to paragraph (d) of Item 1302 of Regulation
S–K.
884See supra note 859 and accompanying text. with the determination of mineral reserves. We also continue to believe that the adopted requirements in the definition of, and provisions regarding, a pre￾feasibility study will limit any additional uncertainty caused by its use. For example, like a feasibility study, a pre-feasibility study must include an economic analysis that supports the property’s economic viability as assessed by a detailed discounted cash flow analysis or other similar financial analysis.870 Consistent with other adopted provisions that contain a pricing requirement, an adopted provision states that, for either type of study, a qualified person must use a price for each commodity that provides a reasonable basis for establishing that the project is economically viable.871 The qualified person must disclose the price used and explain, with particularity, his or her reasons for using the selected price, including the material assumptions underlying the selection. This explanation must include disclosure of the time frame used to estimate the price and costs and the reasons justifying the selection of that time frame.872 As with other adopted pricing provisions, for the pre￾feasibility or feasibility study, the qualified person may use a price set by contractual arrangement, provided that such price is reasonable, and the qualified person discloses that he or she is using a contractual price when disclosing the price used.873 In addition, the economic analysis for a pre-feasibility study must describe in detail applicable taxes and provide an estimate of revenues.874 We believe that this level of detail for the economic analysis in a pre-feasibility study is consistent with current practice in the industry and comparable to the requirements for mineral reserve disclosure based on a pre-feasibility study in the CRIRSCO-based jurisdictions.875 Similar to a proposed instruction, the final rules require a qualified person to exclude inferred mineral resources from the pre-feasibility study’s demonstration of economic viability in support of a disclosure of a mineral reserve.876 Under the adopted framework, a qualified person cannot convert an inferred mineral resource to a mineral reserve without first obtaining new evidence that justifies converting it to an indicated or measured mineral resource.877 This treatment of inferred resources is consistent with guidance under the CRIRSCO standards, which explains that, because confidence in the inferred resource estimate is usually not sufficient to allow the results of the application of technical and economic parameters to be used for detailed mine planning, there is no direct link from an inferred resource to any category of mineral reserves.878 Similar to proposed instructions, we are adopting other requirements that relate to the conversion of indicated or measured mineral resources into mineral reserves.879 These requirements are consistent with the mineral resource classification
scheme and mineral reserve disclosure framework under the CRIRSCO standards.880 Also similar to proposed instructions, we are adopting other provisions pertaining to the use of a pre-feasibility study. One such provision explains that factors to be considered in a pre￾feasibility study are typically the same as those required for a feasibility study, but considered at a lower level of detail or at an earlier stage of development.881 The list of factors is not exclusive. For example, a pre-feasibility study must define, analyze, or otherwise address in detail, to the extent material:

• The required access roads, infrastructure
  location and plant area, and the source of all utilities (e.g., power and water) required for development and production;
• The preferred underground mining
  method or surface mine pit configuration, with detailed mine layouts drawn for each alternative;
• The bench lab tests 882 that have been
  conducted, the process flow sheet, equipment sizes, and general arrangement that have been completed, and the plant throughput; The environmental compliance and permitting requirements, the baseline studies, and the plans for tailings disposal, reclamation and mitigation, together with an analysis establishing that permitting is possible; and
• Any other reasonable assumptions, based
  on appropriate testing, regarding the modifying factors sufficient to demonstrate that extraction is economically viable.883 Some commenters objected to the inclusion of environmental compliance and permitting requirements or the interests of agencies, non-governmental organizations, communities, and other stakeholders as required items to be disclosed in a pre-feasibility (or feasibility) study.884 We believe that the inclusion of compliance, regulatory, and legal risks that are material to the

885 17 CFR 229.1302(e)(9) [Item 1302(e)(9) of Regulation S–K]; see also Table 1 to paragraph (d) of Item 1302 of Regulation S–K. 886 17 CFR 229.1302(e)(8) [Item 1302(e)(8) of Regulation S–K]. 887See letter from Rio Tinto. 888See, e.g., letters from AngloGold, Eggleston, SAMCODES 2, and SRK 1. 889See, e.g., SME Guide, supra note 177, Tables 1–2. 890 17 CFR 229.1302(e)(3)(i) [Item 1302(e)(3)(i) of Regulation S–K]. 891See, e.g., CRIRSCO International Reporting Template, supra note 20, at cl. 30; SME Guide, supra note 267, at pt. 41; JORC Code, supra note 175, at pt. 29; and PERC Reporting Standard, supra note 302, at pt. 8.3. 892 17 CFR 229.1302(e)(3)(ii) [Item 1302(e)(3)(ii) of Regulation S–K]. 893See letter from CBRR. 894See Item 1302(e)(3)(ii) of Regulation S–K. 895See letters from Amec, AngloGold, Eggleston, Golder, Rio Tinto, and SRK 1. 896See supra note 845 and accompanying text. 897 17 CFR 229.1302(e)(10) [Item 1302(e)(10) of Regulation S–K]; see also Table 1 to paragraph (d) of Item 1302 of Regulation S–K. conclusions of the study is necessary because factors such as environmental regulatory compliance, the ability to obtain necessary permits, and other legal challenges can directly impact the economic viability of a mining project. We are adopting requirements for pre￾feasibility studies largely as proposed, but with modifications in order to simplify the description of the factors to be considered and to clarify that the pre￾feasibility (or feasibility) factors must only be analyzed and discussed if they are material to the findings of the study. Another provision requires that operating and capital cost estimates in a pre-feasibility study, at a minimum, have an accuracy level of approximately ±25% and a contingency range not exceeding 15%. The qualified person must state the accuracy level and contingency range in the pre-feasibility study.885 A further provision requires the pre￾feasibility study to identify sources of uncertainty that require further refinement in a final feasibility study, as proposed.886 This provision is consistent with the qualified person’s duty to assess risk in a pre-feasibility study. As noted by one commenter, assessment of risk is intrinsic to completion of a pre-feasibility study, and material risks must be appropriately evaluated by the qualified person and disclosed by the registrant to protect investors.887 As noted by commenters,888 these latter provisions (addressing the level at which the modifying factors are assessed, the appropriate accuracy level and contingency range for operating and capital costs, and sources of uncertainty) are generally consistent with current industry practice and comparable to requirements for the use of a pre-feasibility study in the CRIRSCO-based jurisdictions.889 As such, the adopted provisions will cause a registrant’s use of a pre-feasibility study in Commission filings to meet the industry established minimum level of detail and rigor sufficient to determine mineral
reserves. Similar to a proposed instruction, we are adopting a provision explaining that the term ‘‘mineral reserves’’ does not necessarily require that extraction facilities are in place or operational, that the company has obtained all necessary permits or that the company has entered into sales contracts for the sale of mined products. It does require, however, that the qualified person has, after reasonable investigation, not identified any obstacles to obtaining permits and entering into the necessary sales contracts, and reasonably believes that the chances of obtaining such approvals and contracts in a timely manner are highly likely.890 This provision is similar to guidance provided under the CRIRSCO standards.891 The provision further states that, in certain circumstances, the determination of mineral reserves may require the completion of at least a preliminary market study, in the context of a pre-feasibility study, or a final market study, in the context of a feasibility study, to support the qualified person’s conclusions about the chances of obtaining revenues from sales. For example, a preliminary or final market study would be required where the mine’s product cannot be traded on an exchange, there is no other established market for the product, and no sales contract exists.892 Although one commenter opposed the proposed requirement to obtain a preliminary or final market study on the grounds that it could compel the disclosure in the technical report summary of commercially sensitive information,893 the final rules do not require the disclosure of all of the details of a market study. As with exploration results, a registrant only has a duty to disclose the details that are material to investors. When assessing mineral reserves, the qualified person must take into account the potential adverse impacts, if any, from any unresolved material matter on which extraction is contingent and which is dependent on a third party.894 Several commenters generally supported this requirement.895 We believe that this provision will result in more detailed disclosure, when required under the circumstances, concerning the basis for the qualified person’s conclusions as to whether the deposit is a mineral reserve. In a change from the proposed rules, we are not requiring the qualified person to justify the use of a pre￾feasibility study in lieu of a feasibility study. We also are not requiring the use of a feasibility study in high risk situations. We are persuaded by commenters’ view that, consistent with the CRIRSCO standards, it should be left to the discretion and professional judgment of the qualified person to determine the appropriate level of study required to support the determination of mineral reserves under the circumstances.896 We believe that the adopted disclosure requirements for a pre-feasibility study, taken as a whole, will help to mitigate any increased risk resulting from permitting the use of a pre-feasibility study to support
the determination and disclosure of mineral reserves. If the qualified person satisfies those requirements, including conducting an assessment of material risks affecting the economic viability of the deposit, we do not believe additional disclosure concerning why he or she chose to conduct a pre￾feasibility study is necessary. Moreover, in high risk situations, the qualified person will have to perform additional evaluative work to meet the level of certainty required for a pre-feasibility study. If, in the judgment of the qualified person, that level of certainty has been met, we believe the pre￾feasibility study should be permitted to support the determination of mineral reserves. Similar to a proposed instruction, we are adopting a provision requiring a feasibility study to contain the application and description of all relevant modifying factors in a more detailed form and with more certainty than a pre-feasibility study.897 The list of factors is not exclusive. Pursuant to that provision, a feasibility study must define, analyze, or otherwise address in detail, to the extent material:

• Final requirements for site infrastructure,
  including well-defined access roads, finalized plans for infrastructure location, plant area, and camp or town site, and the established source of all required utilities (e.g., power and water) for development and production;
• A finalized mining method, including
  detailed mine layouts and final development and production plan for the preferred alternative with the required equipment fleet specified, together with detailed mining schedules, construction and production ramp up, and project execution plans;

898See supra note 882 and accompanying text. 899See Item 1302(e)(10) of Regulation S–K; see also Table 1 to paragraph (d) of Item 1302(d) of Regulation S–K. 900 17 CFR 229.1302(e)(11) [Item 1302(e)(11) of Regulation S–K]. 901See Item 1302(e)(4) of Regulation S–K. 902 17 CFR 229.1302(e)(12) [Item 1302(e)(12) of Regulation S–K]. 903See, e.g., letters from Eggleston, SAMCODES 2, and SRK 1. 904See, e.g., SME Guide, supra note 177, Tables 1–2. 905See Proposing Release, supra note 5, at
Section II.G.1. The proposed provision specified
that the registrant would be required to provide summary disclosure for all properties that: The registrant owns or in which it has, or it is probable that it will have, a direct or indirect economic interest; it operates, or it is probable that it will operate, under a lease or other legal agreement that grants the registrant ownership or similar rights that authorize it, as principal, to sell or otherwise dispose of the mineral; and for which it has, or it is probable that it will have, an associated royalty or similar right. 906See id. 907See id. 908See id. 909See id. 910See id. 911See id. 912See id. 913See id.

• Completed detailed bench lab tests and
  a pilot plant test,898 if required, based on risk, in addition to final requirements for process flow sheet, equipment sizes, general arrangement, and the final plant throughput;
• The final identification and detailed
  analysis of environmental compliance and permitting requirements, together with the completion of baseline studies and finalized plans for tailings disposal, reclamation, and mitigation; and
• Detailed assessments of other modifying
  factors necessary to demonstrate that extraction is economically viable.899 Similar to another proposed instruction, we are adopting a provision requiring a feasibility study to include an economic analysis that describes taxes in detail, estimates revenues, and assesses economic viability by a detailed discounted cash flow analysis.900 The qualified person must use a price for each commodity in the economic analysis that meets the requirements of the earlier described pricing provision.901 Thus, as long as the price provides a reasonable basis for establishing that the project is economically viable, and the qualified person explains, with particularity, his or her reasons for using the selected price, including the material assumptions regarding the selection, the price used may be either a historical price or one based on forward-looking pricing forecasts. Finally, similar to a proposed instruction, we are adopting a provision requiring that operating and capital cost estimates in a feasibility study, at a minimum, have an accuracy level of approximately ±15 percent and a contingency range not exceeding 10 percent. The qualified person must state the accuracy level and contingency range in the feasibility study.902 These requirements for the use of a feasibility study to support mineral reserve estimates are intended to promote accurate and uniform disclosure of mineral reserves in Commission filings, which should benefit investors as well as registrants. As commenters noted,903 the requirements concerning the level of detail or stage of development for the evaluation of modifying factors, and those regarding the accuracy level and contingency range for operating and capital cost estimates, are generally comparable to those required for the use of a feasibility study to support mineral reserve estimates under the CRIRSCO￾based codes.904 We believe aligning the Commission’s disclosure requirements with international standards will benefit investors and registrants by promoting uniformity in mining disclosure standards. In addition, these requirements are generally consistent with current practices regarding the use of a feasibility study to support a determination and disclosure of mineral reserves. G. Specific Disclosure Requirements

1. Requirements for Summary
   Disclosure
   i. Rule Proposal
   We proposed that registrants with material mining operations that own two or more mining properties must provide summary disclosure of their mining operations.905 We proposed the summary disclosure requirement based on our belief that investors would benefit from an overview of a registrant’s mining operations in addition to a property by property description. We also believed that this proposed requirement would help foster more efficient and more effective disclosure, as a registrant would be able to provide summary disclosure about all of its properties where some or all are not individually material.906 As part of its summary disclosure, we proposed to require a registrant to include a map or maps showing the locations of all mining properties.907 The proposed map requirement would provide investors a point of reference to assess the geographic and socio-political risks associated with the registrant’s mining operations.908 We also proposed that the summary disclosure must include a presentation, in tabular form (Table 2 of the proposed rules), of certain specified information about the 20 properties with the largest asset values (or fewer, if the registrant has an economic interest in fewer than 20 mining properties).909 For the purpose of determining the top 20 properties by asset value, we proposed to permit a registrant with interrelated mining operations to treat those operations as one mining property.910 As proposed, for each of the properties required to be included in the summary disclosure, a registrant would be required to identify the property, report the total production from the property for the three most recently completed fiscal years, and disclose the following information:

• The location of the property;
• The type and amount of ownership
  interest;
• The identity of the operator;
• Title, mineral rights, leases or options
  and acreage involved;
• The stage of the property (exploration,
  development or production);
• Key permit conditions;
• Mine type and mineralization style; and
• Processing plant and other available
  facilities.911
  We proposed this requirement to provide investors with an appropriately comprehensive and thorough understanding of a registrant’s mining operations. We further proposed to require a registrant to provide a summary, in tabular form (Table 3 of the proposed rules), of its mineral resources and mineral reserves at the end of its most recently completed fiscal year, by commodity and geographic area, and for each property containing 10 percent or more of the registrant’s mineral reserves or 10 percent or more of the registrant’s combined measured and indicated mineral resources.912 The registrant would be required to provide this summary for each class of mineral reserves (probable and proven) and resources (inferred, indicated, and measured), together with total mineral reserves and total measured and indicated mineral resources.913 As proposed, all mineral reserves and resources reported in the summary table must be based on, and accurately reflect, information and supporting documentation prepared by a qualified person. The Commission also proposed several instructions to the proposed summary disclosure requirement that:
• Defined the term ‘‘by geographic area’’ to
  mean by individual country, regions of a country, state, groups of states, mining

914See id.
915See infra Section II.G.2.
916See Proposing Release, supra note 5, at
Section II.G.1.
917See, e.g., letters from AngloGold, CBRR, Columbia, Davis Polk, Midas, Rio Tinto, and SRK 1. 918See id. 919See letters from Alliance, CBRR, FCX, Midas, and SRK 1. 920See letter from Midas. 921See id. 922See letter from SRK 1. 923See letters from AIPG, Amec, BHP, Chamber, CIM, Cleary & Gottlieb, Cloud Peak, Coeur, Eggleston, Graves, Newmont, NMA 1, NSSGA, Royal Gold, SAMCODES 1, SME 1, Vale, and Willis. 924See letters from AIPG, Chamber, Cleary & Gottlieb, NMA 1, NSSGA, SAMCODES 1, and SME 1. 925See letters from AIPG, Graves, NMA 1, SME 1, and Vale. Similarly, most commenters that responded to our request for comment opposed requiring the summary disclosure to be formatted in XBRL on the grounds that the data required to be disclosed in those tables was largely specific to each registrant and would not benefit from presentation in a structured format. See letters from AIPG, Alliance, Amec, AngloGold, CBRR, Chamber, Eggleston, MMSA, Rio Tinto, and SME 1. 926See letter from Cloud Peak. 927See, e.g., letters from Coeur, SME 1, and Willis. 928See letter from Amec. 929See letter from Cleary & Gottlieb. 930See letters from AIPG, FCX, Newmont, and SME 1. 931See letters from AIPG, BHP, CIM, Cleary & Gottlieb, SME 1, and Vale. 932See, e.g., letters from BHP 1 and SAMCODES 1. 933See letters from Amec, AngloGold, BHP, CIM, Eggleston, FCX, Newmont, Rio Tinto, SAMCODES 1, SME 1, and Vale. district, or other political units, to the extent material to and necessary for an investor’s understanding of a registrant’s mining operations;

• Explained that all disclosure of mineral
  resources must be exclusive of mineral reserves;
• Required that all disclosure of mineral
  resources and reserves must be only for the portion of the resources or reserves attributable to the registrant’s interest in the property;
• Required all mineral resource and
  reserve estimates to be based on prices that are no higher than the average spot price during the 24-month period prior to the end of the fiscal year covered by the report, determined as an unweighted arithmetic average of the daily closing price for each trading day within such period, unless prices are defined by contractual arrangements; and
• Required that the mineral resource and
  reserve estimates called for in Table 3 of the proposed rules must be in terms of saleable product.914 As proposed, for a registrant with mining operations that are, in the aggregate, material but for which no individual property is material, this summary disclosure would be the only mining disclosure required in the registrant’s filings. For a registrant with individual properties that are material, we proposed additional, more detailed, disclosure about such properties.915 We proposed to exclude a registrant with only one mining property from the summary disclosure requirement because we did not see any benefit to requiring summary disclosure, in addition to individual disclosure, for a single material property.916
  ii. Comments on the Rule Proposal
  Several commenters offered conditional support for the Commission’s summary disclosure proposal.917 One commenter supported the proposed summary disclosure requirement but recommended that the requirement apply to 80% of the registrant’s mining properties based on asset value rather than the top 20 properties out of concern that the proposed requirement would be costly for registrants with numerous immaterial properties and only a few material properties.918 A number of commenters supported the proposed summary disclosure requirements but stated that the requirement to disclose information about the top 20 properties by asset value should include only material properties.919 One of those commenters also suggested allowing certain information, such as the description of mineral rights and key permit conditions, to be disclosed in abbreviated form.920 That commenter also supported a version of the summary disclosure of mineral resources and reserves in tabular form because summary disclosure of mineral resource and mineral reserves in table form is industry practice and widely used.921 Another commenter recommended merging the two tables for summary disclosure into one, excluding geographic disclosure, and eliminating the map requirement for summary disclosure.922 Many other commenters opposed the proposed summary disclosure requirements on the grounds that they were overly prescriptive, were inconsistent with CRIRSCO requirements, and/or would be burdensome in particular for U.S. registrants that are dual-listed in one of the CRIRSCO-based jurisdictions.923 Commenters that indicated the proposed tables were too prescriptive stated that their ‘‘one-size-fits-all’’ approach reflected a lack of appreciation for the diversity of operations within the mining industry and the fact that many of the details required to be disclosed would not be comparable.924 Some commenters urged the Commission to delete all of the tables and allow the registrant and its qualified persons to determine the most appropriate format for presentation of the required disclosure items (whether in text summaries or in tables designed by the registrant or its qualified persons).925 Another commenter stated that summary disclosure and accompanying tables should be left to the discretion of the registrant as long as the disclosure follows an existing global standard, such as JORC, NI 43–101, or CRIRSCO.926 Some commenters further stated that the Commission should limit the tables to a list of material properties and statements of mineral resources and mineral reserves.927 One commenter indicated that disclosure of information on the top 20 properties, by asset value, would not be useful for investors.928 That commenter stated that a technical report summary would provide more meaningful information in a context that would allow an investor to understand better the value of a project. Another commenter opposed the proposed summary disclosure requirement because it ‘‘all but
  eliminates’’ the discretion of the registrant and qualified person to determine the most suitable presentation of material information relating to each property. That commenter noted that other alternative bases for grouping operations other than by asset value, such as geographic region, commodity or reporting segment, may be more informative for investors.929 Other commenters stated that the disclosure required regarding the top 20 properties by asset value was too complex to be put in a table.930 Several commenters opposed the proposed tabular presentation of summary disclosure of mineral resources and reserves because they believed it conflicted with CRIRSCO requirements that resources and reserves should not be reported in the same table, and inferred resources should not be presented alongside indicated and measured resources, in order to avoid misleading investors that resource estimates are as economically feasible as reserve estimates.931 Some of the commenters, however, maintained that mineral resources should include reserves, as permitted under the CRIRSCO-based codes.932 Many commenters opposed the proposed instruction requiring the mineral resource and reserve estimates in proposed Table 3 to be in terms of saleable product.933 Most of those commenters maintained that it is customary under the CRIRSCO-based

934See letters from BHP, CIM, Eggleston, Newmont, Rio Tinto, and SME 1. 935 ‘‘Run of mine’’ ore refers to ore in its unprocessed form (i.e., in the form mined), while plant/mill feed refers to the material that is fed to a processing plant. Both terms are used in the mining industry, in this context, to refer to material that is affected by mining dilution and losses but is yet to be processed. 936See letters from AngloGold, CIM, Golder, Newmont, SME 1, and Vale. See also letter from FCX (mineral reserves should either be disclosed as ‘‘run-of-mine (plant/mill feed) ore tons, contained product before plant recovery and saleable product after plant recovery’’). 937See letters from CRIRSCO, Golder, Rio Tinto, SME 1, and Vale. 938See letter from NSSGA. 939 17 CFR 229.1303(a)(1) [Item 1303(a)(1) of Regulation S–K]. The registrant must provide the summary disclosure for all properties that the registrant owns or in which it has, or it is probable that it will have, a direct or indirect economic interest. It also must provide summary disclosure for properties that it operates, or it is probable that it will operate, under a lease or other legal agreement that grants the registrant ownership or similar rights that authorize it, as principal, to sell or otherwise dispose of the mineral. Further, a registrant must provide summary disclosure for properties for which it has, or it is probable that it will have, an associated royalty or similar right, unless the registrant lacks access to the information about the underlying properties, as specified in Item 1303(b) of Regulation S–K, and the registrant meets the conditions for omitting the summary disclosure pursuant to Item 1303(a)(3) of Regulation S–K. See supra Section II.B.4. 940See, e.g., letters from AngloGold, CBRR, Columbia, Davis Polk, Midas, Rio Tinto and SRK 1. 941See supra note 923 and accompanying text. 942See 17 CFR 229.1303(b)(2). 943 In a change from the proposed rules, the final rules eliminate the proposed instruction that would permit a registrant with interrelated mining operations to treat those operations as one mining property for the purpose of providing summary disclosure. Since we are no longer requiring the disclosure of specified information for each of a registrant’s top 20 properties, and are only requiring such disclosure in the aggregate, we no longer believe that instruction to be necessary. 944 17 CFR 229.1303(b)(2)(i) [Item 1303(b)(2)(i) of Regulation S–K]. 945As proposed, the summary disclosure must include a map or maps showing the locations of all mining properties. See Item 1303(b)(1) of Regulation S–K [17 CFR 229.1303(b)(1)]. We continue to believe the map requirement is an effective means of providing investors with a point of reference to assess the geographic and socio￾political risks associated with the registrant’s mining operations. Item 102 requires registrants to provide ‘‘appropriate maps’’ disclosing ‘‘the location’’ of significant properties, but does not
address whether or when registrants with multiple properties, none of which are material, should provide a map (or maps) showing the location of all its mining properties. We believe that the adopted map requirement, which is consistent with current practices, will help ensure that investors are provided with beneficial information without significantly impacting current disclosure practices. 946 17 CFR 229.1303(b)(2)(ii) [Item 1303(b)(2)(ii) of Regulation S–K]. 947 17 CFR 229.1303(b)(2)(iii) [Item 1303(b)(2)(iii) of Regulation S–K]. 948See id. 949See infra Section II.G.2. 950See Proposing Release, supra note 5, Section II.G.1. codes to disclose mineral resources on an in situ basis and that the proposed instruction would effectively define a mineral resource as a mineral reserve.934 Commenters further recommended requiring the disclosure of reserves on either a run of mine or plant/mill feed basis 935 (for metals and some coal and industrial mines) 936 or in terms of saleable product (if customary for some coal and industrial mines) and not on an in situ basis.937 One commenter stated that, due to the nature of the aggregates industry, where products are relatively low-priced, mines are shallow, the costs of developing an aggregates quarry or underground mine are far less, and the risks are low compared to other types of mines, many of the proposed tabular disclosure items about reserves, resources and related data points appeared to be either immaterial to investors or to consist of proprietary information the disclosure of which would harm an aggregates company’s competitive position.938
iii. Final Rules
With some modification, we are adopting the proposed requirement that registrants with material mining operations, which own or otherwise have economic interests in two or more mining properties, provide summary disclosure of their mining operations.939 Many commenters agreed with our proposal to require summary disclosure even if they disagreed with one or more of the specific disclosure items.940 We continue to believe that, for registrants with material mining operations, requiring an overview of their mining operations, regardless of whether they have material individual properties, will be useful to investors and help foster more efficient and effective disclosure. We recognize that many commenters opposed our proposal to require a presentation of summary disclosure, in tabular form, of certain specified information about the 20 properties with the largest asset values because they believed it to be overly prescriptive, inconsistent with CRIRSCO requirements, or burdensome in particular for U.S. registrants that are dual-listed in one of the CRIRSCO-based jurisdictions.941 To reduce the prescriptive nature of the summary disclosure requirement, consistent with commenters’ suggestions, the final rules will permit a registrant to present an overview of its mining properties and operations in either narrative or tabular format.942 In addition, in a change from the proposed rules, which required the disclosure of the total production from each of the registrant’s top 20 properties by asset value for the three most recently completed fiscal years, the final rules require that the overview must include annual production on an aggregated basis 943 for the registrant’s mining properties during each of the three most recently completed fiscal years.944 Moreover, rather than require the disclosure of other specified information for each of a registrant’s top 20 properties by asset value, the final rules provide that the overview should include the following information for the registrant’s mining properties considered in the aggregate, and only as relevant:

• The location of the properties; 945
• The type and amount of ownership
  interests;
• The identity of the operator or operators;
• Titles, mineral rights, leases or options
  and acreage involved;
• The stages of the properties (exploration,
  development, or production);
• Key permit conditions;
• Mine types and mineralization styles;
  and
• Processing plants and other available
  facilities.946
  The final rules also include a provision explaining that, when presenting the overview, the registrant should include the amount and type of disclosure concerning its mining properties that is material to an investor’s understanding of the registrant’s properties and mining operations in the aggregate.947 The provision further states that this disclosure will depend upon a registrant’s specific facts and circumstances and may vary from registrant to registrant. Finally, this provision asks registrants to refer to, rather than duplicate, any disclosure concerning individually material properties provided in response to the individual disclosure requirements,948 discussed below.949 We believe this more principles-based approach to eliciting summary disclosure on a registrant’s mining operations addresses commenters’ concerns while still providing a meaningful overview of registrants’ mining operations, particularly for those registrants with no or only a few individually material properties. As previously explained, Guide 7 currently calls for the disclosure of all of the above listed items of information.950 We note, for instance, that most registrants engaged in industrial minerals and aggregates mining have no or only a few individually material properties and currently provide disclosure similar to

951See, e.g., letter from NMA 2.
952Another provision states that, as proposed, a registrant with a royalty or similar economic interest should provide only the portion of the production that led to royalty or other incomes for each of the three most recently completed fiscal years. See Item 1303(b)(2)(iv) of Regulation S–K. We continue to believe that registrants with a royalty or similar economic interest in mining properties, if they have access to such information, should only report the portion of production leading to their incomes to reduce the risk of confusing investors. 953Similar to a proposed instruction, the final rules define ‘‘by geographic area’’ to mean by individual country, regions of a country, state, groups of states, mining district, or other political units, to the extent material to and necessary for an investor’s understanding of a registrant’s mining operations. See 17 CFR 229.1303(b)(3)(i) [Item 1303(b)(3)(i) of Regulation S–K]. We continue to believe this breakdown is necessary for investors to understand the source and associated socio￾political risks of the registrant’s mineral reserves and resources. 954See 17 CFR 229.1303(b)(3). As previously discussed, all mineral reserves and resources reported in the summary disclosure must be based on, and accurately reflect, information and supporting documentation prepared by a qualified person. See Item 1302(a) of Regulation S–K; see also
Section II.C.1. for a discussion of the final rules’
stipulations on the responsibilities of the qualified person and the registrant. 955See, e.g., R. L. Robinson and B. W. Mackenzie, Economic Comparison of Mineral Exploration and Acquisition Strategies to Obtain Ore Reserves 281– 282 (1987). (‘‘Mining company objectives are . . . profit, growth, and survival . . . To survive, the company must successfully invest . . . in replacing the depleted ore reserves. An underlying thread among the profit, growth, and survival objectives is ore reserve replacement and growth’’). See also H. R. Bullis, Gold Deposits, Exploration Realities, and the Unsustainability of Very Large Gold Producers 313–320 (2003). 956See, e.g., letter from NSSGA. 957See supra note 931 and accompanying text. 958 17 CFR 229.1303(b)(3)(ii) [Item 1303(b)(3)(ii) of Regulation S–K]. 959See infra Section II.G.3. for a discussion of the adopted provision that permits a qualified person to disclose resources inclusive of reserves in the technical report summary as long as he or she also discloses resources as excluding reserves. 960 17 CFR 229.1303(b)(3)(iii) [Item 1303(b)(3)(iii) of Regulation S–K]. 961Only one commenter addressed this proposed instruction. That commenter stated that, although it believed the decision to report mineral resources or mineral reserves on a 100% or other ownership basis should be at the discretion of the registrant, it considered ‘‘that the information on the registrant’s interest in the property is important information and should be included with the reporting of Mineral Resource and Mineral Reserve estimates.’’ Letter from Amec. 962See Proposing Release, supra note 5, at
Section II.G.1.
963See supra Sections II.E.4., II.F.2. summary disclosure called for by Guide 7. This more principles-based approach is also intended to address the concern of some commenters that the proposed rules established a ‘‘one size fits all’’ approach that did not account for the diversity of operations within the mining industry.951 By requiring a registrant to provide an overview of its mining operations that includes the suggested items of information, as relevant, tailored to its particular facts and circumstances,952 and presented in a manner of the registrant’s choosing, we believe the final rules will elicit material information for investors without unduly burdening the registrant. As proposed, the final rules require a registrant to provide a summary of its mineral resources and mineral reserves at the end of its most recently completed fiscal year, by commodity and geographic area,953 and for each property containing 10 percent or more of the registrant’s mineral reserves or 10 percent or more of the registrant’s combined measured and indicated mineral resources. The registrant will be required to provide this summary, including the amount and grade or quality, for each class of mineral reserves (probable and proven) and resources (inferred, indicated, and measured), together with total mineral reserves and total measured and indicated mineral resources.954 We continue to believe that the summary disclosure of mineral resources and reserves is necessary to understand a registrant’s material mining operations at fiscal year’s end. For example, an understanding of the registrant’s total mineral resources and reserves and where those mineral resources and reserves are located can enable investors to understand and evaluate the registrant’s projected future earnings from its mining operations and its ability to replenish depleting mineral reserves, a well-established measure of financial performance in mining.955 The breakdown of the mineral resources and reserves by category and source (geographic area and property) also will provide investors with a measure of the associated risk. Contrary to the concerns of some commenters,956 the final rules’ requirement that a registrant provide a summary of its mineral resources and reserves does not impose an affirmative obligation to estimate mineral resources and reserves, as defined in these rules, on a mining property where the registrant has not estimated mineral resources and reserves. Registrants will have an obligation to disclose mineral resources and reserves in their summary disclosure only to the extent that they have already engaged a qualified person or persons to estimate such mineral resources and reserves. In order to standardize the disclosure, facilitate a registrant’s compliance with the disclosure requirements, and enhance investor understanding of this information, similar to our proposal, the final rules require that a registrant provide the summary of all mineral resources and
reserves at the end of the most recently completed fiscal year in tabular format. However, we agree with those commenters that maintained that we should separate disclosure of mineral resources and reserves in order to reduce the potential for investor confusion.957 Accordingly, the final rules require registrants to use separate tables when reporting mineral resources and reserves, as required by Item 1303(b)(3) of Regulation S–K. The disclosure should follow the format of the tables designated as Tables 1 and 2 to paragraph (b) of Item 1303. Similar to a proposed instruction, we are adopting a provision requiring mineral resources, reported in the summary disclosure provided in Table 1 to paragraph (b) of Item 1303, to be exclusive of mineral reserves.958 We continue to believe that requiring the disclosure of mineral resources exclusive of reserves in the main disclosure document (as opposed to such disclosure in the technical report summary, which is attached as an exhibit to the Commission filing) will reduce the risk of investor confusion. In contrast, we believe that, because the technical report summary is more likely to be read by analysts or investors possessing a more sophisticated understanding of the mining industry and its current practices than the average retail investor, permitting mineral resources to include mineral reserves when disclosed in the technical report summary is less likely to cause confusion.959 Similar to another proposed instruction, we are adopting a provision requiring that all disclosure of mineral resources and reserves be only for the portion of the resources or reserves attributable to the registrant’s interest in the property.960 Commenters did not oppose this proposed instruction.961 For the reasons stated in the Proposing Release, we continue to believe that this provision is reasonable and would help reduce investor confusion.962 As previously discussed, we are revising our approach to what is permitted regarding selecting an appropriate price to determine ‘‘prospects of economic extraction’’ for mineral resources and ‘‘economic viability’’ for mineral reserves.963 Consequently, the final rules provide that each mineral resource and reserve estimate must be based on a reasonable and justifiable price, selected by a qualified person, which provides a

964 17 CFR 229.1303(b)(3)(iv) [Item 1303(b)(3)(iv) of Regulation S–K]. 965See supra note 933 and accompanying text. 966 17 CFR 229.1303(b)(3)(v) [Item 1303(b)(3)(v) of Regulation S–K]. 967 17 CFR 229.1303(b)(3)(vi) [Item 1303(b)(3)(vi) of Regulation S–K]. However, a registrant may not modify the tabular format to remove any of the required disclosure from the tables. 968See letters from AIPG, Chamber, Cleary & Gottlieb, NMA, NSSGA, SAMCODES 1, and SME 1. 969 17 CFR 229.1303(b)(3)(vii) [Item 1303(b)(3)(vii) of Regulation S–K]. 970See Proposing Release, supra note 5, at
Section II.G.2.
971See id.
972See id.
973See id.
974See id.
975See id. reasonable basis for establishing the prospects of economic extraction for mineral resources, and is the basis for determining the economic viability of the deposit for mineral reserves.964 We believe this approach will further align the Commission’s rules with the CRIRSCO requirements and help limit the compliance burden on registrants. Many commenters stated that requiring registrants to disclose mineral resources and reserves at a specific point of reference (in this case, as saleable product) is counter to the CRIRSCO-based codes and current industry practice, which permit the estimation of resources and reserves at a disclosed single point of reference selected by the qualified person.965 To help limit the compliance burden for registrants, especially those that are cross-listed in CRIRSCO-based jurisdictions, the final rules will permit a registrant and its qualified person(s) to disclose mineral resources and reserves at any point of reference as long as they disclose the selected point of reference. For summary disclosure, the final rules require that each mineral resource and reserve estimate in Tables 1 and 2 to paragraph (b) of Item 1303 be based on a specific point of reference selected by a qualified person. The registrant also must disclose the selected point of reference for each of these Tables 1 and 2.966 Another provision stipulates, as proposed, that the registrant may modify the tabular formats in Tables 1 and 2 to paragraph (b) of Item 1303 for ease of presentation or to add information.967 While we continue to believe that the tabular presentation of summary resources and reserves disclosure will standardize the disclosure and make it easier for investors to understand and assess investments in registrants engaged in material mining operations, we emphasize that the tables can be modified to fit a registrant’s particular situation. Contrary to the views of several commenters,968 like the proposed rules, the final rules expressly provide, in recognition of the diversity in the mining sector, that registrants can modify the tables to fit their own particular facts and circumstances. A final provision states that all material assumptions and information pertaining to the summary disclosure of a registrant’s mineral resources and mineral reserves required by this
section, including material assumptions
related to price estimates, must be current as of the end of the registrant’s most recently completed fiscal year.969 We believe this provision is a useful reminder that, although the qualified person is responsible for determining the mineral resource or reserve estimates included in the summary disclosure, the registrant bears the ultimate responsibility for ensuring that those estimates, and the material assumptions underlying them, remain current as of the date for which the mineral resource or reserve estimates have been disclosed.
2. Requirements for Individual Property
Disclosure
i. Rule Proposal
We proposed that a registrant with material mining operations provide, in addition to summary disclosure, more detailed information for each of its individual properties that is material to its business or financial condition.970 We made this proposal because of our belief that summary property disclosure alone would not provide all relevant information about the properties and assets that generate a mining registrant’s revenues. We therefore proposed that, for each material individual property, a registrant would have to provide a brief description of the property, including:

• The property’s location, accurate to
  within one mile, using an easily recognizable coordinate system (e.g., latitude and longitude), including appropriate maps, with proper engineering detail (such as scale, orientation, and titles), which must be legible on the page when printed;
• Existing infrastructure, including roads,
  railroads, airports, towns, ports, sources of water, electricity, and personnel; and
• A brief description, including the name
  or number and size (acreage), of the titles, claims, concessions, mineral rights, leases or options under which the registrant and its subsidiaries have or will have the right to hold or operate the property, and how such rights are obtained at this location, indicating any conditions that the registrant must meet in order to obtain or retain the property. If held by leases or options or if the mineral rights otherwise have termination provisions, the registrant would have to provide the expiration dates of such leases, options or mineral rights and associated payments.971 For each material property, the proposed rules also required a registrant to disclose a history of previous operations, a description of the condition and status of the property, and a description of any significant encumbrances to the property, including current and future permitting requirements and associated deadlines, permit conditions, regulatory violations and associated fines.972 We also proposed to require several items of disclosure in tabular form, including a summary of the exploration activity for the most recently completed fiscal year (Table 4 of the proposed rules), a summary of material exploration results for the most recently completed fiscal year (Table 5 of the proposed rules), a summary of all mineral resources and reserves (if mineral resources or reserves have been determined) (Table 6 of the proposed rules), and a comparison of the property’s mineral resources and reserves as of the end of the last fiscal year against the mineral resources and reserves as of the end of the preceding fiscal year, with an explanation of any material change between the two (Tables 7 and 8 of the proposed rules).973 A proposed instruction provided that registrants would be permitted to modify the tables for ease of presentation, to add information, or to combine two or more required tables throughout their disclosure.974 We further proposed that, if the registrant has not previously disclosed mineral reserve or resource estimates in a filing with the Commission or is disclosing material changes to its previously disclosed mineral reserve or resource estimates, it must provide a brief discussion of the material assumptions and criteria underlying the estimates and cite to the corresponding sections of the technical report summary, which would be filed as an exhibit.975 We similarly proposed that, if the registrant has not previously disclosed material exploration results in a filing with the Commission, or is disclosing material changes to its previously disclosed exploration results, it must provide sufficient information to allow for an accurate understanding of the significance of the exploration results and cite to corresponding sections of the summary technical

976See id.
977See id.
978See id.
979See id.
980See id.
981See, e.g., letters from Eggleston, Midas, and Rio Tinto. 982See letters from AIPG, Amec, AngloGold, BHP, CBRR, CIM, Cleary & Gottlieb, Coeur, Davis Polk, Eggleston, FCX, Gold Resource, Midas, MMSA, Newmont, NSSGA, Rio Tinto, SAMCODES 1, SME 1, SRK 1, Vale, and Willis. 983See letter from Amec. 984See letter from Newmont; see also letter from Amec (objecting to some of the proposed requirements as requesting unnecessary detail for an annual disclosure filing, including the requirement to provide: A summary of the exploration activity and material exploration results for the most recently completed year; a description of any significant encumbrances to the property; a description of the titles, claims, concessions, mineral rights, leases or options regarding the property; and a history of previous operations) and letter from Cleary & Gottlieb (objecting to the proposed requirement to disclose the age and physical condition of the property on the grounds that it would not be useful to investors and would be very burdensome to a company with significant mining operations). 985See letter from BHP. 986See letters from Amec, AngloGold, Cleary & Gottlieb, FCX, Midas, MMSA, SME 1, SRK 1, and Vale. 987See, e.g., letters from NSSGA, SME 1, SRK 1, and Vale. 988See, e.g., letters from SRK 1 (recommending removal of proposed Table 5) and Vale (recommending removal of both proposed Tables 4 and 5). 989See, e.g., letter from and SME 1; see also letter from Cleary (recommending a principles-based approach generally to the information required to be disclosed in tabular format, which would allow a registrant and its qualified persons to exercise greater judgment in determining the most suitable format and content of material mining disclosure). 990See, e.g., letters from AngloGold, Eggleston, and Rio Tinto. report, which would be filed as an exhibit.976 We proposed additional individual property disclosure instructions applicable to registrants that have not previously disclosed mineral resource or reserve estimates or material exploration results or that are disclosing a material change in previously disclosed mineral resource or reserve estimates or material exploration results. Most of those proposed instructions were designed to assist registrants in determining whether there has been a material change in estimates of mineral resources, mineral reserves, or material exploration results. For example, according to one proposed instruction, whether a change in exploration results, mineral resources, or mineral reserves, is material must be based on all facts and circumstances, both quantitative and qualitative. Pursuant to another proposed instruction, a change in exploration results that significantly alters the potential of the exploration target is considered material. Other proposed instructions would establish quantitative thresholds for presumed materiality of a change in estimates of mineral resources or reserves. For example, according to one proposed
instruction, an annual change in total resources or reserves of 10 percent or more, excluding production as reported in Tables 7 and 8 of the proposed rules, is presumed to be material, and thus would need to be disclosed.977 According to another proposed instruction, a cumulative change in total resources or reserves of 30 percent or more in absolute terms, excluding production as reported in Tables 7 and 8 of the proposed rules, from the current filed technical report summary is presumed to be material. A third proposed instruction would require that, when applying these quantitative thresholds for presumed materiality, the registrant should consider the change in total resources or reserves on the basis of total tonnage or volume of saleable product.978 We also proposed an instruction that would require a registrant to consider whether the filed technical report summary is current with respect to all material assumptions and information, including assumptions relating to or underlying all modifying factors and scientific and technical information (e.g., sampling data, estimation assumptions, and methods). To the extent that the registrant is not filing a technical report summary, but instead is basing the required disclosure upon a previously filed report, that report would also have to be current in these respects. If the previously filed report is not current in these respects, the registrant would have to file a revised or new summary technical report from a qualified person, which supports the registrant’s mining property disclosures.979 Finally, we proposed an instruction explaining that a report containing estimates of the quantity, grade, or metal or mineral content of a deposit or exploration results that a registrant has not verified as a current mineral resource, mineral reserve, or exploration results, and which was prepared before the registrant acquired, or entered into an agreement to acquire, an interest in the property that contains the deposit, would not be considered current and could not be filed in support of disclosure.980
ii. Comments on the Rule Proposal
Many of the comments on the proposed individual property disclosure requirements were substantially similar to the comments in response to the proposed summary disclosure provisions. While commenters acknowledged the importance of disclosure on individually material properties,981 many believed the proposed disclosure requirements were overly prescriptive and many were critical of one or more of the proposed tables.982 One commenter opposed Tables 4–8 altogether because of the level of detail required, which in the commenter’s view would likely result in any useful information being obscured, and which would be overly burdensome for registrants to produce.983 Another commenter stated that certain proposed provisions, which would require detailed information about leases, mining rights and encumbrances, would likely result in over-disclosure of information that is not material to investors.984 In addition, one commenter stated that the Commission should revise the individual property disclosure requirements in proposed Item 1304 to align it with the checklist content and format in CRIRSCO Template Table 1.985 Several commenters opposed requiring the proposed tables for exploration activity and exploration results (Tables 4 and 5 of the proposed rules) on the grounds that they are inconsistent with CRIRSCO standards, are onerous to produce, and would result in disclosure that is potentially competitively harmful, or would not be meaningful to most investors.986 Some of the commenters opposed Tables 4 and 5 of the proposed rules because, in their view, the tables implied that drilling is the only form of exploration and ignored various other forms of data collection and analysis, such as geochemical and geophysical surveys, which are routinely used in exploration.987 Maintaining that it would be too difficult to include thousands of datum points regarding exploration into a single table, those commenters recommended that Tables 4 and 5 of the proposed rules either should be eliminated from the final rules 988 or allowed either in narrative form or in company-designed tables.989 While commenters generally supported the disclosure of mineral resources and reserves in tabular format,990 most commenters that addressed the issue were critical of
Table 6 of the proposed rules in various
respects. Several commenters opposed proposed Table 6 on the grounds that it would require the disclosure of mineral resources and reserves in the same table, as well as inferred resources alongside

991See letters from AIPG, BHP, CBRR, CIM, and SME 1. 992See letters from BHP, CIM, Newmont, and SRK 1. 993See letters from AngloGold, BHP, and JORC. 994See letter from JORC. 995See letters from Amec, BHP, CIM, Eggleston, JORC, MMSA, Newmont, Randgold, Royal Gold, SME 1, and SRK 1. 996See, e.g., letters from Amec, CIM, Newmont, Randgold, and Rio Tinto. 997See, e.g., letters from CIM, Randgold, and SME 1. 998See, e.g., letters from MMSA, Randgold, and SME 1; see also letters from CBRR and FCX (recommending the reporting of reserves as run-of￾mine (plant/mill feed) ore tons, contained product before plant recovery and saleable product after plant recovery). 999See letter from SME 1; see also letter from JORC (generally opposing all of the tables as being inconsistent with the diversity in the mining industry). 1000See letter from Vale. 1001See letters from AIPG, Alliance, AngloGold, BHP, CBRR, Chamber, CIM, Cleary & Gottlieb, Coeur, Davis Polk, Dorsey & Whitney, Eggleston, Gold Resource, Newmont, NMA 1, Northern Dynasty, Randgold, Rio Tinto, SAMCODES 1 and 2, Shearman & Sterling, SME 1, Vale, and Willis. 1002See, e.g., letter from BHP; see also letter from NSSGA (opposing the disclosure of a weighted contract price in Table 3 on similar grounds). 1003Letter from CBRR. 1004See letter from Gold Resource. 1005See letter from AngloGold (supporting the proposed requirement for reconciliation, but also recommending leaving the ‘‘level of granularity in the reconciliation’’ to the discretion of the qualified person); letter from Eggleston (stating that requiring a comparison of mineral resources and reserves would be useful, but also maintaining that a meaningful comparison of mineral reserves could not be obtained using the proposed table); and letter from SRK 1 (stating that the proposed tables may provide useful information to a technically knowledgeable reader but may also create confusion for investors). 1006See letters from Amec, MMSA, and Rio Tinto. 1007Letters from AIPG and SME 1; see also letter from Vale (recommending that inclusion and format of Tables 7 and 8 be left to the discretion of the qualified person). 1008See, e.g., letters from AngloGold, CBRR, Eggleston, Midas, Rio Tinto, and SRK 1. 1009See letter from Rio Tinto. 1010See letter from AngloGold. 1011See letter from Eggleston. 1012See id. 1013See letter from CBRR. 1014See letter from Newmont. Another commenter suggested a 25% materiality threshold for contained metal in reserves and a 50% threshold for contained metal in resources together with an ‘‘additional overriding qualitative obligation that any change the registrant deems a material change should be disclosed.’’ Letter from Midas. 1015See, e.g., letters from AIPG, Alliance, Amec, AngloGold, CBRR, Chamber, Eggleston, MMSA, Rio Tinto, and SME 1. 1016See letter from SME 1. indicated and measured mineral resources, which would be inconsistent with CRIRSCO standards.991 Commenters also opposed proposed
Table 6 because it would require the
disclosure of mineral reserves net of allowances for dilution and losses, which would be contrary to industry practice under the CRIRSCO-based codes.992 For similar reasons, some commenters also opposed proposed
Table 6 because it would require the
disclosure of mineral resources as exclusive of mineral reserves.993 One of those commenters stated that a registrant should be permitted to disclose mineral resources as inclusive or exclusive of mineral reserves as long as it clearly explains the basis of its disclosed estimate.994 Numerous commenters also opposed proposed Table 6 because it would require the disclosure of mineral reserves on the basis of three points of reference.995 Commenters maintained that, to be consistent with the CRIRSCO￾based codes, the Commission should only require the disclosure of mineral resources on an in situ basis 996 and reserves on a run of mine 997 or saleable product basis.998 One commenter stated that proposed
Table 6 incorrectly suggests that
different types of mining projects are comparable, which is inconsistent with the diversity found in the mining industry.999 Another commenter opposed the overly prescriptive nature of Table 6 and recommended leaving its inclusion and format to the discretion of the qualified person.1000 In addition, many commenters opposed Table 6 because it would require the determination and disclosure of mineral resources and reserves based on a 24-month trailing average price.1001 Some commenters further objected to the inclusion of the total cost or book value of a mining property and the commodity price in the case of commodities traded under contract, the terms of which are confidential.1002 One commenter supported the proposed reconciliation requirement in Tables 7 and 8 of the proposed rules because ‘‘[r]econciliation between numbers on consecutive fiscal years is important to validate uncertainty assumptions and resource/reserve classification.’’ 1003 Other commenters either supported proposed Tables 7 and 8 with little to no discussion 1004 or supported having a reconciliation requirement while disagreeing with various aspects of the proposed tabular format.1005 Some commenters objected to the high granularity of disclosure required in proposed Tables 7 and 8, which they stated would impose a significant reporting burden for a registrant with a large number of properties reported.1006 Noting that the mining industry has only formalized reconciliation reporting in the past 10 years, and stating that obtaining accurate reconciliation has been difficult for a variety of reasons, other commenters recommended that the Commission make resource and reserve reconciliation voluntary.1007 Some commenters provided conditional support for the Commission’s proposed requirement to provide a discussion of the material assumptions underlying a registrant’s disclosure of mineral resources, mineral reserves, or material exploration results when first disclosing them or when disclosing material changes to the previously disclosed estimates and results.1008 One commenter stated that it supported the Commission’s proposed requirement to provide a discussion of material assumptions as long as the Commission deemed the summaries prepared for CRIRSCO reporting (e.g., based on JORC Table 1) to be acceptable for Commission reporting purposes.1009 Another commenter supported the proposed disclosure requirement for material assumptions but opposed any prescriptive requirement, such as the proposed percentage thresholds that would trigger when a material change has occurred, relating to such disclosure.1010 A third commenter stated that, consistent with international practice, a detailed discussion of the material assumptions should be included in the technical report while a summary of material assumptions should occur in annual filings.1011 This commenter, however, stated that while the proposed instruction, providing that an annual change in total resources or reserves of 10%
or more is presumed to be material, was reasonable, a change of 25% might be better.1012 A fourth commenter approved of the 30% cumulative change threshold while recommending a 15% threshold for an annual change.1013 A fifth commenter believed that the 10% threshold for defining a material change for both mineral resources and reserves was too narrow. That commenter recommended allowing the qualified person to determine when a material change has occurred.1014 In response to our request for comment, most commenters that addressed the issue opposed requiring presentation of Tables 4 through 8 of the proposed rules in XBRL format.1015 Commenters primarily objected to such a requirement because it would be expensive 1016 and, ‘‘given the uniqueness of the information to the registrant,’’ they did not feel there was any useful information that would benefit from being presented in a

1017Letter from AngloGold; see also letters from AIPG and SME 1. 1018Letter from SRK 1. 1019As one of the commenters explained, under Canada’s NI 43–101, the use of a historical estimate is contingent upon the registrant disclosing: The date and source of the historical estimate; the relevance and reliability of the historical estimate; the key assumptions, parameters and methods used to prepare the historical estimate if known; the work that needs to be done to upgrade or verify the historical estimate; and that the qualified person has not done sufficient work to classify the historical estimate as a current estimate and, therefore, the registrant is not treating the historical estimate as a current estimate of mineral resources or reserves. See letter from Coeur. 1020See letters from Amec, Coeur, Gold Resource, Newmont, and NMA 1. 1021See letters from Newmont and NMA 1. 1022 17 CFR 229.1304(a)(1) [Item 1304(a)(1) of Regulation S–K]. 1023See id. The registrant would have to apply those standards and other considerations to each individual property that it owns or in which it has, or it is probable that it will have, a direct or indirect economic interest. It also would have to provide individual disclosure for each material property that it operates, or it is probable that it will operate, under a lease or other legal agreement that grants the registrant ownership or similar rights that authorize it, as principal, to sell or otherwise dispose of the mineral. Further, a registrant would have to provide individual disclosure for each material property for which it has, or it is probable that it will have, an associated royalty or similar right, unless the registrant lacks access to the information about the underlying properties, as specified in Item 1304(b) of Regulation S–K, and the registrant meets the conditions for omitting the individual property disclosure pursuant to Item 1304(a)(2) of Regulation S–K. See supra Section II.B.4. 1024See Item 1304(b)(1)(i) of Regulation S–K [17 CFR 229.1304(b)(1)(i)], which requires the description of the property’s location to be accurate to within one mile, using an easily recognizable coordinate system, including appropriate maps, with proper engineering detail (such as scale, orientation, and titles) that must be legible on the
page when printed. We continue to believe that this
level of detail is similar to the level of detail required by the CRIRSCO-based codes. See, e.g., PERC Reporting Standard, supra note 302, Table 1 (requirement on key plan, maps and diagrams, which calls for ‘‘a location or index map and more detailed maps showing all important features described in the text, including all relevant cadastral and other infrastructure features . . . All maps, plans and sections noted in this checklist, should be legible, and include a legend, coordinates, coordinate system, scale bar and north arrow’’). See also SAMREC Code, supra note 267,
Table 1 (calling for a ‘‘detailed topo-cadastral
map’’).
1025 17 CFR 229.1304(b)(1)(ii) [Item 1304(b)(1)(ii) of Regulation S–K]. 1026 Item 1304(b)(1)(iii) of Regulation S–K [17 CFR 229.1304(b)(1)(iii)], which also requires a description of how such property rights were obtained at this location, indicating any conditions that the registrant must meet in order to obtain or retain the property. If held by leases or options or if the mineral rights otherwise have termination provisions, the registrant must provide the expiration dates of such leases, options, or mineral rights and associated payments. 1027 Item 1304(b)(2)(i) of Regulation S–K [17 CFR 229.1304(b)(2)(i)], which also requires the registrant to identify mines as either surface or underground, with a brief description of the mining method and processing operations. If the property is without known reserves and the proposed program is exploratory in nature or the registrant has started extraction without determining mineral reserves, the registrant must provide a statement to that effect. 1028 17 CFR 229.1304(b)(2)(ii) [Item 1304(b)(2)(ii) of Regulation S–K]. 1029 17 CFR 229.1304(b)(2)(iii) [Item 1304(b)(2)(iii) of Regulation S–K]. 1030 17 CFR 229.1304(b)(2)(iv) [Item 1304(b)(2)(iv) of Regulation S–K]. 1031 17 CFR 229.1304(b)(2)(v) [Item 1304(b)(2)(v) of Regulation S–K]. 1032See letters from Alliance, Amec, BHP, CBRR, FCX, Newmont, and SRK 1. 1033For example, paragraph (b) of Guide 7 calls for registrants to disclose the location and means of access to the property, a description of the title, claim, lease or option under which the registrant operates the property with appropriate maps to portray the location, a history of previous operations, a description of the present condition of the property, the work completed by the registrant on the property, the registrant’s proposed program of exploration and development, the current state of exploration or development of the property, and a description of the rock formations and mineralization of existing or potential economic significance on the property, including the identity of the principal metallic or other constituents insofar as known. structured format.1017 One commenter, however, supported requiring the presentation of proposed Tables 4 through 8 in XBRL because it would ‘‘likely benefit investors and potential investors as well as align SEC reporting requirements with potential industry standards in the near future.’’ 1018 Some commenters recommended that, consistent with CRIRSCO standards, such as NI 43–101 1019 and JORC, but contrary to the Commission’s proposal, the Commission allow a registrant and its qualified person(s) to use historical estimates of the quantity, grade or mineral content of a deposit that the registrant has not verified and that was prepared before the registrant acquired or entered into an agreement to acquire an interest in the property containing the deposit.1020 As two of those commenters explained, the inability to use historical estimates in a Commission
filing could render a proposed acquisition a practical impossibility because there could be insufficient time to complete an independent estimate of the resources or reserves for the target property.1021
iii. Final Rules
With modifications, we are adopting the proposed requirement that a registrant with material mining operations must disclose certain information about each property that is material to its business or financial condition.1022 When determining the materiality of a property relative to its business or financial condition, a registrant must apply the same standards and other considerations to each individual property as required when determining whether its mining operations as a whole are material.1023 We continue to believe that, because summary property disclosure alone will not provide all relevant information about the properties and assets that generate a mining registrant’s revenues, detailed disclosure regarding a registrant’s individually material properties is necessary to provide investors with a comprehensive understanding of a registrant’s mining operations. As proposed, the final rules require a registrant to provide a brief description of each material property, including: the property’s location; 1024 existing infrastructure, including roads, railroads, airports, towns, ports, sources of water, electricity, and personnel; 1025 and a brief description, including the name or number and size (acreage), of the titles, claims, concessions, mineral rights, leases or options under which the registrant and its subsidiaries have or will have the right to hold or operate the property.1026 Further, as proposed, the final rules will require registrants with individually material mining properties to provide, as relevant to each material property: A brief description of the present condition of the property, the work completed by the registrant on the property, the registrant’s proposed program of exploration or development, the current stage of the property as exploration, development or production, the current state of exploration or development of the property, and the current production activities; 1027 the age, details as to modernization and physical condition of the equipment, facilities, infrastructure, and underground development; 1028 the total cost for or book value of the property and its associated plant and equipment; 1029 a brief history of previous operations, including the names of previous operators, insofar as known; 1030 and a brief description of any significant encumbrances to the property, including current and future permitting requirements and associated timelines, permit conditions, and violations and fines.1031 Although several commenters opposed some of these individual disclosure requirements on the basis that they are too prescriptive and would be burdensome on registrants,1032 the above items of disclosure are substantially similar to items called for by Item 102 of Regulation S–K and Guide 7.1033 Also, these disclosures are

1034See, e.g., ASX Listing Rules 5.1 and 5.3, which call for similar disclosures including, as relevant to mining exploration or production entities, details of exploration activities, mining production and development activities, exploration, mining and development expenditures, and information on mining tenements. 1035See supra Section II.B.5.iii (discussing Item 1304(c)(1) of Regulation S–K). 1036 17 CFR 229.1304(c)(2) [Item 1304(c)(2) of Regulation S–K]. 1037 17 CFR 229.1304(d)(1). 1038See supra note 991 and accompanying text. 1039See 17 CFR 229.1304(d)(1). 1040See id.. 1041 Instruction 1 to 17 CFR 229.1304(d)(1). As previously noted, a registrant may not modify the required tables to remove any of the required disclosure from the tables. 1042See id. 1043 17 CFR 229.1304(d)(2) [Item 1304(d)(2) of Regulation S–K]. 1044See supra note 959 and accompanying text. As previously discussed, see supra Section II.B.4., a third instruction states that a registrant with only a royalty interest should provide only the portion of the resources or reserves that are subject to the royalty or similar agreement. See 17 CFR 229.1304(d)(3). 1045 17 CFR 229.1304(e) [Item 1304(e) of Regulation S–K]. 1046See supra note 1005. 1047 17 CFR 229.1304(e)(1)–(4) [Items 1304(e)(1)– (4) of Regulation S–K]. 1048See, e.g., letters from AngloGold, CBRR, and Eggleston. 1049 17 CFR 229.1304(f)(1) [Item 1304(f)(1) of Regulation S–K]. 1050 17 CFR 229.1304(f)(3) [Item 1304(f)(3) of Regulation S–K]. substantially similar to what is called for under CRIRSCO-based rules.1034 We continue to believe that these items elicit material information for investors. Similar to a proposed instruction, the final rules include a provision that establishes guidelines for classifying the current stage of a property as exploration, development, or production.1035 Also as proposed, a second provision advises registrants to include only geological information that is brief and relevant to property disclosure rather than an extensive description of regional geology.1036 We believe that this latter provision is consistent with the transparency principle under the CRIRSCO standards and will help investors better understand a registrant’s mining operations. As proposed, we are adopting final rules that would require a registrant to disclose, if mineral resources or reserves have been determined, a summary of all mineral resources or reserves as of the end of the most recently completed fiscal year.1037 While we are still requiring the same disclosure, in response to those commenters who noted that reporting mineral resources and reserves together is counter to the principles of the CRIRSCO-based codes and could cause investor confusion, we are modifying the presentation of the disclosure.1038 Consequently, instead of one table (proposed Table 6), the final rules require that, for each property, the registrant disclose in tabular format, as provided in Table 1 to paragraph (d) of Item 1304, for each class
of mineral resources (measured, indicated, and inferred), together with total measured and indicated mineral resources, the estimated tonnages and grades (or quality, where appropriate), and in
Table 2 to paragraph (d) of Item 1304,
for each class of mineral reserves (proven and probable), together with total mineral reserves, the estimated tonnages, grades (or quality, where appropriate), cut-off grades and metallurgical recovery. Furthermore, consistent with our approach to summary disclosure and in light of commenters’ concerns about requiring three points of reference, the disclosures in these Tables 1 and 2 will be based on a specific point of reference selected by a qualified person.1039 The registrant must disclose the selected point of reference for each of Tables 1 and 2 to paragraph (d) of Item 1304.1040 Similar to a proposed instruction, we are adopting an instruction that would permit a registrant to modify the tabular formats in these Tables 1 and 2 for ease of presentation, to add information, or to combine two or more required tables.1041 This instruction is intended to provide registrants with the flexibility to organize the required data to fit their own particular circumstances. For example, depending on the number of individually material properties owned or operated, a registrant may decide to disclose mineral resources on separate properties all in one table or in multiple tables, and mineral reserves on separate properties all in one table or in multiple tables. The adopted instruction makes clear, however, that when combining tables, the registrant should not report mineral resources and reserves in the same table.1042 Another provision states that all disclosure of mineral resources by the registrant must be exclusive of mineral reserves.1043 We are adopting this provision for the same reasons as our adoption of a substantially similar provision for summary disclosure.1044 We are adopting rules that, as proposed, will require a registrant to compare each material property’s mineral resources and reserves as of the end of the last fiscal year with the mineral resources and reserves as of the end of the preceding fiscal year, and explain any material change between the two.1045 However, unlike our rule proposal, and in response to comments received about various challenges associated with providing this disclosure,1046 the final rules provide that the comparison may be in either narrative or tabular format. This will provide registrants greater flexibility in presenting their disclosure and should help limit the compliance burden for registrants, especially those with large numbers of reported properties. Like the proposed rules, the final rules specify that the comparison must disclose information concerning:

• The mineral resources or reserves at the
  end of the last two fiscal years;
• The net difference between the mineral
  resources or reserves at the end of the last completed fiscal year and the preceding fiscal year, as a percentage of the resources or reserves at the end of the fiscal year preceding the last completed one;
• An explanation of the causes of any
  discrepancy in mineral resources including depletion or production, changes in commodity prices, additional resources discovered through exploration, and changes due to the methods employed; and
• An explanation of the causes of any
  discrepancy in mineral reserves including depletion or production, changes in the resource model, changes in commodity prices and operating costs, changes due to the methods employed, and changes due to acquisition or disposal of properties.1047 This comparative disclosure requirement will help investors understand the reasons for the year to year changes in a registrant’s mineral resources and reserves, which should help them analyze and evaluate a registrant’s future prospects. While Guide 7 calls for annual disclosure of mineral reserves, it does not call for registrants to compare their current mineral reserve disclosure with previously provided disclosure. Registrants, however, provide much of the disclosure required under the comparative disclosure provision pursuant to current disclosure practices.1048 If the registrant has not previously disclosed mineral reserve or resource estimates in a Commission filing or is disclosing material changes to its previously disclosed mineral reserve or resource estimates, we are adopting rules, as proposed, requiring it to provide a brief discussion of the material assumptions and criteria underlying the estimates.1049 The material assumptions and criteria will depend on the specific facts and circumstances surrounding the particular property and the mineral resource and reserve estimates.1050 However, the disclosure of these assumptions and criteria must include all of the material information necessary

1051See 17 CFR 229.1304(f)(1).
1052See supra Section II.D.3.
1053 17 CFR 229.1304(g)(1) [Item 1304(g)(1) of Regulation S–K]. 1054 17 CFR 229.1304(g)(2) [Item 1304(g)(2) of Regulation S–K]. 1055See id. 1056 17 CFR 229.1304(g)(3) [Item 1304(g)(3) of Regulation S–K]. 1057See, e.g., letters from Cleary & Gottlieb, NSSGA, SME 1, SRK 1, and Vale. 1058See letters from Cleary & Gottlieb and SME

1. Whether in narrative or tabular format (and, if in
   tabular format, whether the tables are similar to proposed Tables 4 and 5 or are tables designed by the registrant), the disclosure of exploration activity and material exploration results must be reasonably comprehensive and not omit material facts that may make the disclosure misleading. 1059See 17 CFR 229.1304(g)(5). 1060See supra Section II.D.3. 1061 17 CFR 229.1304(g)(6)(i) [Item 1304(g)(6)(i) of Regulation S–K]. 1062See id. 1063 17 CFR 229.1304(f)(3) [Item 1304(f)(3) of Regulation S–K]; and 17 CFR 229.1304(g)(6)(ii) [Item 1304(g)(6)(ii) of Regulation S–K]. 1064 17 CFR 229.1304(g)(6)(iii) [Item 1304(g)(6)(iii) of Regulation S–K]. 1065See, e.g., letter from AngloGold. 1066 17 CFR 229.1304(f)(2) [Item 1304(f)(2) of Regulation S–K]. 1067See id. for investors reasonably to understand the disclosed mineral resources or reserves. In addition, the registrant must cite to corresponding sections of the technical report summary if one is filed as an exhibit pursuant to Item 1302(b).1051 As previously discussed, we have revised the proposed rules to state that, if a registrant is disclosing exploration activity and exploration results for any material property for its most recently completed fiscal year, it must provide summaries that include certain specified information.1052 For exploration activity, the summary must describe, for each material property as relevant, the sampling methods used, and, for each sampling method used, the number of samples, the total size or length of the samples, and the total number of assays.1053 For exploration results, the summary must identify, for each relevant material property, the hole, trench or other sample that generated the exploration results, describe the length, lithology, and key geologic properties of the exploration results, and include a brief discussion of the exploration results’ context and relevance.1054 If the summary of exploration results only includes results from selected samples and intersections, it should be accompanied with a discussion of the context and justification for excluding other results.1055 In a change from the proposed rules, in response to comments received, the final rules will permit registrants to provide the summaries of exploration activity and exploration results in narrative or tabular format.1056 We believe this change will address the concerns of commenters that opposed Tables 4 and 5 of the proposed rules because those tables suggested that drilling is the only form of exploration and because it would be too difficult to include thousands of datum points regarding exploration into a single
   table.1057 We agree that, as some
   commenters suggested, permitting registrants to provide disclosure on exploration activity and exploration results in narrative or tabular format will help limit the final rules’ compliance burden while still providing important benefits to investors.1058 As previously noted, the final rules permit a registrant to disclose an exploration target when discussing exploration results or exploration activity related to a material property as long as the disclosure is accompanied by the cautionary and explanatory statements specified in Item 1302(c) of Regulation S–K.1059 Consistent with similar requirements under the CRIRSCO-based codes, the disclosure about an exploration target will help investors understand the significance of a registrant’s disclosed exploration results and exploration activities, while the required accompanying statements will help investors understand the conceptual basis and limitations of the exploration target.1060 Similar to the disclosure requirement for mineral resources or mineral reserves, if the registrant has not previously disclosed exploration results in a filing with the Commission, or is disclosing material changes to its previously disclosed exploration results, the final rules require it to provide sufficient information to allow for an accurate understanding of the significance of the exploration results.1061 This must include information such as exploration context, type and method of sampling, sampling intervals and methods, relevant sample locations, distribution, dimensions, and relative location of all relevant assay and physical data, data aggregation methods, land tenure status, and any additional material information that may be necessary to make the disclosure concerning the registrant’s exploration results not misleading. The registrant must cite to corresponding sections of the summary technical report if one is filed.1062 Similar to proposed instructions, we also are adopting individual property disclosure provisions applicable to registrants that have not previously disclosed mineral resource or reserve estimates or exploration results or that are disclosing a material change in previously disclosed mineral resource or reserve estimates or exploration results. Most of these provisions are designed to assist registrants in determining whether there has been a material change in estimates of mineral resources, mineral reserves, or exploration results. For example, a pair of provisions explains that whether a change in exploration results, mineral resources, or mineral reserves, is material must be based on all facts and circumstances, both quantitative and qualitative.1063 Another provision states that a change in exploration results that significantly alters the potential of the subject deposit is considered material.1064 In a change from the proposed rules, we are not providing quantitative guidance for what is presumed to be a material change in estimates of mineral resources or reserves. We have
   been persuaded by commenters that objected to the proposed quantitative guidance as being overly prescriptive.1065 If material assumptions in the filed technical report summary are no longer valid, under current facts and circumstances, then using such a technical report summary to support disclosure of mineral resources or reserves can be misleading to investors. Consequently, we are adopting a provision, similar to a proposed instruction, that requires a filed technical report summary to be current with respect to all material assumptions and information, including assumptions relating to all modifying factors and scientific and technical information (e.g., sampling data, estimation assumptions and methods), as of the end of the registrant’s most recently completed fiscal year.1066 To the extent that the registrant is not filing a technical report summary but instead is basing the required disclosure upon a previously filed report, that report must also be current in these material respects. If the previously filed report is not current in these material respects, the registrant must file a revised or new summary technical report from a qualified person that supports the registrant’s mining property disclosures.1067 Finally, we are adopting a provision stating that a report containing one or more estimates of the quantity, grade, or metal or mineral content of a deposit or exploration results that a registrant has not verified as a current mineral

1068 17 CFR 229.1304(h) [Item 1304(h) of Regulation S–K]. 1069See id. 1070See Canada’s NI 43–101, supra note 123, at pt. 2.4. 1071See supra notes 1015–1017 and accompanying text. 1072See Proposing Release, Section II.G.3. 1073See id. 1074See id. 1075See Canada’s Form 43–101F1 (prescribing 27 sections for the technical report summary required for each material property pursuant to Canada’s NI 43–101), http://web.cim.org/standards/documents/ Block484_Doc111.pdf. 1076See, e.g., W. Hustrulid, M. Kuchta, and R. Martin, 1 Open Pit Mine Planning & Design 14–16 (3rd ed. 2013); Richard West, Preliminary, Prefeasibility and Feasibility Studies, Australian Mineral Economics—A Survey of Important Issues (Philip Maxwell and Pietro Guj, eds, 2006). 1077See Proposing Release, supra note 5, at
Section II.G.
1078See id.
1079See 17 CFR 230.421 [Securities Act Rule 421] and 17 CFR 240.13a–20 [Securities Exchange Act Rule 13a–20]. 1080See Instruction 3 to Form 43–101F1 (‘‘The qualified person preparing the technical report should keep in mind that the intended audience is the investing public and their advisors who, in most cases, will not be mining experts. Therefore, to the extent possible, technical reports should be simplified and understandable to a reasonable investor. However, the technical report should include sufficient context and cautionary language to allow a reasonable investor to understand the nature, importance, and limitations of the data, interpretations, and conclusions summarized in the technical report’’). 1081See Proposing Release, supra note 5, at
Section II.G.3.
1082See id. resource, mineral reserve, or exploration results, and which was prepared before the registrant acquired, or entered into an agreement to acquire, an interest in the property that contains the deposit (i.e., a ‘‘historical estimate’’), is not considered current and cannot be filed in support of disclosure.1068 However, in a change from the proposed rules, and as a result of comments received, we are adopting a targeted accommodation that permits a registrant to include a historical estimate in a Commission filing that pertains to a merger, acquisition, or business combination if the registrant is unable to update the estimate prior to the completion of the relevant transaction. In that event, when referring to the estimate, the registrant must disclose the source and date of the estimate, and state that a qualified person has not done sufficient work to classify the estimate as a current estimate of mineral resources, mineral reserves, or exploration results, and that the registrant is not treating the estimate as a current estimate of mineral resources, mineral reserves, or exploration results.1069 These conditions are generally consistent with those required for the use of historical estimates under Canada’s NI 43–101.1070 This change should address the concern of commenters that the proposed prohibition regarding the use of historical estimates could render some acquisitions or other similar business transactions a practical impossibility. At the same time, to mitigate any potential risk from the use of older information, the adopted provision requires that investors be provided with additional information to help them evaluate an investment in a registrant that has engaged in a merger or similar business transaction involving the use of a historical estimate. We believe these provisions will help a registrant determine when it must file a technical report summary as an exhibit to the filing and provide the appropriate accompanying disclosure in the filing about the resource or reserve estimates and exploration results. At the same time, the adopted provisions will help to ensure that investors are provided with current information about the registrant’s mineral resources and reserves and exploration results. Like the proposed rules, the final rules do not require a registrant to format any of its disclosure about its individually material properties in XBRL. In light of the flexibility provided in the final rules for these disclosures, which will permit registrants to tailor the disclosures to their unique facts and circumstances, we believe that presentation in a structured format, such as XBRL, would impose additional burdens on registrants without providing substantial additional benefits for users of the information.1071 For similar reasons, we are not requiring registrants’ summary disclosure to be formatted in XBRL.
3. Requirements for Technical Report
Summaries
i. Rule Proposal
We proposed rules that would require a registrant to file, as an exhibit, a technical report summary to support the disclosure of mineral resources, mineral reserves, or material exploration results for each material property.1072 The proposed rules would require a qualified person to identify and summarize the scientific and technical information and conclusions reached concerning material mineral exploration results, initial assessments used to support disclosure of mineral resources, and preliminary or final feasibility studies used to support disclosure of mineral reserves, for each material property, in the technical report summary.1073 The qualified person also would be required to sign and date the technical report summary.1074 We proposed this latter requirement to help ensure the reliability of the technical report summary. We proposed specific requirements for the contents of the technical report summary to elicit scientific and technical information to support the determination and disclosure of mineral resources, mineral reserves, and material exploration results. The proposed requirements are similar in most respects to the items of information required for the summary report under Canada’s NI 43–101.1075 They are also similar to the contents suggested in the mining engineering literature.1076 In the Proposing Release, we stated that these similarities support our view that the proposed sections of the technical report summary would provide relevant and useful information to facilitate an investor’s understanding of a registrant’s mineral resources, mineral reserves, and material exploration results.1077 We proposed that the technical report summary must not include large amounts of technical or other project data, either in the report or as appendices to the report.1078 In addition, the proposed rules required the qualified person to draft the summary to conform, to the extent practicable, with plain English principles under the Securities Act and Exchange Act.1079 While the proposed requirements were designed primarily to help improve the readability of the technical report summary for the benefit of those investors who do not have a technical scientific or engineering background, they would also benefit more sophisticated investors to the extent that they result in a more readable and understandable document. They also are consistent with similar Canadian mining disclosure standards.1080 We proposed that the technical report summary consist of some or all of 26 sections, depending upon the specific scope of the summary.1081 As proposed, a technical report summary that reports the results of a preliminary or final feasibility study would have to include all 26 sections. A technical report summary that reports the results of an initial assessment or that reports material exploration results could omit information required by certain of the proposed technical report summary sections.1082 Although the proposed sections were similar in
most respects to the items of information required for the summary

1083See supra note 1075 and accompanying text. 1084 In contrast, Canada’s NI 43–101 would permit the qualified person to include a disclaimer of responsibility if he or she relies on a report, opinion, or statement of another expert who is not a qualified person in preparing the technical report summary. See Item 3 of Canada’s Form NI 43– 101F1. 1085See letters from AIPG, Amec, Coeur, Eggleston, Gold Resource, Northern Dynasty, SME 1, and Willis. 1086Letter from AIPG. 1087See letters from AngloGold, BHP, JORC, MMSA, Randgold, Rio Tinto, and SAMCODES 1. 1088See letter from BHP. 1089See letter from CRIRSCO. 1090See letters from Chamber and NSSGA. 1091See letter from Chamber. 1092See letter from NSSGA. 1093See id. 1094See letter from PDAC. 1095See letters from AIPG, Coeur, Eggleston, Gold Resource, Midas, and SME 1. 1096See letter from Midas; see also letter from MMSA. 1097See letter from Eggleston; see also letter from SRK 1 (recommending excluding those sections for both exploration results and resource estimation). 1098See letter from Andrews & Kurth; see also letter from Amec (recommending exclusion of hydrogeology and geotechnical sections in conjunction with recommendation to exclude mineral brines and geothermal energy from scope of rules). 1099See letter from CBRR. 1100 Id. 1101Letter from Earthworks. 1102See Id. report under Canada’s NI 43–101,1083 there were a couple of notable differences. First, the proposed rules did not permit a qualified person to include a disclaimer of responsibility if he or she relies on a report, opinion, or statement of another expert in preparing the technical report summary.1084 Second, we proposed to include sections about hydrogeology and geotechnical data, including testing and analysis, which are not included in Canada’s NI 43–101.
ii. Comments on the Rule Proposal
While acknowledging that the Commission’s proposal to require 26 specified sections in the technical report summary is similar to the content required under Canada’s NI 43–101, numerous commenters urged the Commission to follow explicitly the content and format of Canada’s Form 43–101F1 so that technical report summaries filed with the Commission would be interchangeable with technical reports prepared under Canada’s NI 43–101.1085 One of those commenters also recommended that the Commission explicitly incorporate the Canadian form by reference, ‘‘which would allow for regular updates without going through additional rulemaking.’’ 1086 Several other commenters, however, recommended that the technical report summary follow the format of CRIRSCO’s Table 1 and the corresponding guidance in JORC or SAMREC rather than the format and guidance under Canada’s NI43–101 because they viewed the latter as being too prescriptive.1087 One of those commenters further recommended that the Commission adopt ‘‘carve-outs’’ for commercially sensitive information.1088 Another commenter opposed the proposed technical report summary requirement as being too prescriptive and recommended that the Commission refer U.S. registrants to the 2014 SME Guide, which would be included as an
appendix to the final rules.1089
Two commenters opposed the technical report summary filing requirement on the grounds that it ‘‘is a significant change to the current SEC rules and goes beyond most CRIRSCO￾based disclosure regimes, other than Canada and Australia, which do not require filing of expert reports.’’ 1090 One of those commenters also believed that many of the required sections in the proposed technical report summary seemed designed to satisfy some unstated social or political goal rather than to provide material information to investors.1091 The other commenter stated that the proposed rules would require a registrant in the aggregates business to collect and report on data that management typically does not use in its own analysis of its business.1092 Because that commenter believed that many sections of the technical report summary would result in immaterial information to investors due to the nature of the aggregates industry, and because of its concern that some of the requested information, such as pricing, would place confidential business plan information into the public domain to the detriment of its competitive position, the commenter requested that the Commission exclude registrants in the aggregates business from having to comply with the technical report summary requirement.1093 One commenter who opposed the proposed technical report summary because of its differences with CRIRSCO-based disclosure requirements stated that ideally the Commission should adopt mining disclosure rules that are substantially the same as the CRIRSCO-based codes. As an alternative, however, that commenter recommended that the Commission adopt a ‘‘reciprocal recognition’’ approach that would allow foreign issuers to file their home country (CRIRSCO-based) reports in satisfaction of the U.S. rules and U.S. issuers to file U.S. compliant reports in satisfaction of foreign requirements.1094 Several commenters recommended changing the name of the technical report summary to either ‘‘summary technical report’’ or just ‘‘technical report.’’ 1095 Commenters urged such a change in order to align the name of the required report with that required under the CRIRSCO-based codes and because the Commission’s proposed name suggests that there is a full technical report when in many instances there is not. Some commenters generally approved of the proposed 26 sections of the technical report summary while suggesting modifications for certain sections. For example, one commenter stated that adding sections on hydrogeology and geotechnical would be appropriate for reserve determination but not for resource estimation because such information is typically not available.1096 Another commenter recommended excluding those sections when disclosing exploration results for the same reason.1097 A third commenter recommended excluding from the technical report summary detailed hydrogeology and geotechnical data as well as any other detailed technical data that most investors would not find
meaningful.1098 Another commenter, however, supported the inclusion of sections on hydrology and rock mechanics.1099 This commenter agreed with most of the topics included in the proposed technical report summary requirement, but opposed requiring annual cash flow forecasts and measures of economic viability, such as net present value, internal rate of return and payback period of capital, under ‘‘results of the economic analysis’’ on the grounds that such information is sensitive and should only be requested under specific situations and afforded confidential treatment.1100 One commenter urged the Commission to adopt a technical report summary provision requiring ‘‘detailed descriptions of infrastructure needs for mining projects, especially dams, tailings disposal, water and energy access.’’ 1101 That commenter also supported adoption of the technical report summary provision requiring descriptions of the environmental, permitting, and social or community factors related to the project, which the commenter indicated would include a description of ‘‘social license to operate’’ risks.1102 Another commenter disagreed with the proposed requirement that a

1103See letter from Amec.
1104See letters from Alliance, Amec, AngloGold, CRIRSCO, Eggleston, JORC, Midas, Newmont, NMA 1, Rio Tinto, SME 1, and SRK 1. See also letter from CBRR (stating that the proposed items are sufficient but suggesting that the Commission clarify that a registrant may add ‘‘any other significant information that is relevant to the project’’). 1105See, e.g., letter from Alliance (‘‘We believe that requiring disclosure of issues related to environmental, permitting and social or community factors, such as how the registrant is going to manage greenhouse gases, workforce health, safety and well-being, within the technical report summary could require a qualified person to attempt to estimate amounts or impacts for which they have no expertise. . . . We believe that a qualified person should include in the technical report those amounts that can be readily determined based on the professional qualifications of the qualified person’’). 1106See letter from Newmont. 1107See id. 1108See letters from Carbon Tracker, Columbia, CRIRSCO, CSP2, Earthworks, and SASB. 1109See letter from Carbon Tracker. Such a provision would require a qualified person, as part of his or her coal resource and reserve determinations, to consider, as a modifying factor, whether the reserve could be economically produced in a scenario in which demand is consistent with the climate change prevention goal of maintaining a global temperature increase of no greater than 2° C on an annual basis. 1110See id. 1111See letter from SASB. 1112See id; see also letter from CSP2 (stressing the importance of identifying potential environmental liabilities in the technical report summary); letter from Columbia (recommending requiring in the technical report summary a detailed discussion of three particular areas of water-related risk: Water scarcity; tailings dam operation and extreme rainfall; and environmental performance); and letter from Earthworks (recommending requiring a registrant to disclose several additional material environmental and social risks associated with its mining operations, including: Externalized impacts resulting from a particular mining project that fall upon the local community rather than the mining company; risks resulting from a registrant’s reliance on self-bonds and other corporate guarantees; the potential for acid mine drainage and heavy metal discharge as revealed by initial exploratory drilling; risks from litigation or permit challenges; and local, regional, and state government resolutions against a mining project). 1113See letter from CRIRSCO. 1114See id. 1115See letter from JORC. 1116See letter from Moats. 1117 Id. Another commenter recommended substituting for proposed Instruction 2 to paragraph (b)(96)(iv)(B)(16) the following: ‘‘If the processing method, plant design or other parameters have never been used to successfully extract the valuable product from such mineralization and is still under development, then it is the responsibility of the Qualified
Person to assess the scale and type of testing that has been completed and the entirety of the metallurgical data to determine whether or not mineral resources or mineral reserves can be disclosed. Justifications for the disclosures must be fully reported and detailed.’’ Letter from Newmont. That commenter suggested this revised instruction to avoid unnecessarily restricting the application of future processing methods or designs in delineating resource and reserve estimates. qualified person opine on whether all issues relating to all relevant modifying factors can be resolved with further work. The commenter further opposed the proposed provision requiring a qualified person to justify the use of a pre-feasibility study instead of a feasibility study. According to that commenter, because the CRIRSCO standards require a pre-feasibility study to be sufficient for a competent person, acting reasonably, to determine if all or
part of a mineral resource may be
converted to a mineral reserve at the time of reporting, no additional justification for use of a pre-feasibility should be required.1103 In response to our solicitation of comment regarding whether we should expand the disclosure required by the technical report summary, most commenters 1104 that addressed the issue did not favor expanding the technical report summary provision that would require the qualified person to describe the environmental, permitting, and social or community factors related to the project.1105 One of those commenters objected to expanding the mining property disclosure requirements to include a more detailed discussion regarding sustainability and related issues on the grounds that it already discloses material environmental, social, and governance information for investors in its corporate social responsibility reports that it publishes annually on its web site.1106 The commenter further noted that, to the extent that sustainability issues present a material risk, a registrant would already have to disclose that risk in the Risk Factors section of its Exchange Act annual report.1107 Some commenters, however, recommended that the Commission require a registrant and its qualified person(s) to consider sustainability factors when determining mineral resources and reserves.1108 For example, one commenter suggested that the Commission explicitly require a carbon budget analysis in the economic viability determination for proven reserves.1109 This commenter also recommended that the Commission: (i) Require the use of a spectrum of price forecasts and sensitivity analysis in assessing the economic recoverability of a coal deposit; and (ii) expand the definition of a qualified person to require an expertise in conducting a carbon budget analysis.1110 Another commenter urged the Commission to require the consideration of numerous sustainability topics when applying the modifying factors in mineral resource and reserve determinations.1111 Under this approach, for metals mining, a qualified person would have to consider greenhouse gas emissions, air quality, biodiversity impacts, community relations and rights of indigenous peoples, and workforce health, safety, and well-being together with energy management, water management, and waste and hazardous materials management. The commenter further recommended that the Commission explicitly require a qualified person to have relevant experience to assess and render judgment on any potential modifying factor.1112 One commenter supported the consideration of climate, environmental, social, safety, and health modifying factors both in technical studies and company reports.1113 Noting that most companies address sustainability issues in detail in separate reports, the commenter recommended that sustainability information should only be provided in a technical report in summary form.1114 Another commenter noted that, although environmental and social matters have become ‘‘extremely
important’’ in the estimation of mineral resources and reserves, those matters are already part of the modifying factors required to be considered under the CRIRSCO framework.1115 One commenter requested clarification of two instructions to the proposed technical report summary provision that requires a qualified person to describe the current or proposed mineral processing methods and the reasons for selecting these methods as the most suitable for extracting the valuable products from the mineralization under consideration. That commenter objected to the use of the term ‘‘successfully’’ to qualify processing methods, plant designs, and other parameters that have not yet been used in a commercial production of the valuable product from the mineralization under consideration because he believed that the term was vague.1116 The commenter found the phrase ‘‘successfully extract’’ to be technically vague and questioned whether there is a particular scale at which extraction is successful and whether ‘‘successful’’ means economically profitable or technically demonstrated. The commenter recommended replacing ‘‘successfully extract’’ with ‘‘commercially’’ or ‘‘in production.’’ The commenter also stated that ‘‘[f]urther clarification is warranted to clarify if demonstration plants or pilot plant operations can be used to warrant a process method as ‘successful’.’’ 1117 Some commenters urged the Commission to modify the proposed

1118See letters from Amec, Newmont, SME 1, and Vale. 1119See letters from Alliance, Amec, AngloGold, CBRR, Gold Resource, Midas, Northern Dynasty, Rio Tinto, and SRK 1. 1120See letter from Eggleston. 1121See letter from CSP2. 1122See letters from Amec, AngloGold, Carbon Tracker, Eggleston, Gold Resource, Midas, Northern Dynasty, Rio Tinto, SME 1, SRK 1, and Willis. Amec and Gold Resource supported the proposed filing requirement for mineral resources and reserves but not for material exploration results. 1123See letter from Davis Polk. 1124See letters from Alliance and FCX. 1125See letter from FCX. 1126 17 CFR 229.601(b)(96)(i) [Item 601(b)(96)(i) of Regulation S–K]. 1127There is substantial overlap in the substantive requirements under Canada’s NI 43– 101F1 and the criteria specified in CRIRSCO’s Table 1 and JORC’s Table 1. The primary difference between Canada’s NI 43–101F1 and the latter two Tables is in the format and organization of the resulting report. The ‘‘checklist’’ format of the two Tables tends to result in more abbreviated reporting than the more formal requirements of Canada’s NI 43–101F1. 1128See supra note 193 and accompanying text. 1129See letter from SRK 1. 1130For example, the South African SAMREC Code includes requirements for a competent person’s report that are substantially similar to our final rule requirements and those under Canada’s NI 43–101F1 both in terms of content and organizational format. The SAMREC code recommends that all public disclosure of exploration results, mineral resources, and mineral reserves include a competent person’s report or a reference to one. See SAMREC Code (2016), supra note 267, Appendix 1. The London Stock Exchange and its Alternative Investment Market also require a competent person’s report from mining issuers as
part of their initial listing requirements. These
requirements are also similar to our final rule requirements. See London Stock Exchange, AIM Note for Mining and Oil & Gas Companies (June 2009). 1131See Item 601(b)(96)(i) of Regulation S–K. As previously discussed, see supra Section II.C.1.iii., each qualified person who has prepared the technical report summary must sign and date the technical report summary. If more than one qualified person has prepared the technical report summary, the technical report summary must clearly delineate the section or sections of the summary prepared by each qualified person. See Item 1302(b)(1) of Regulation S–K. The qualified person’s signature must comply with 17 CFR 230.402(e) or 17 CFR 240.12b–11(d). 1132See supra note 1075 and accompanying text. 1133See supra note 1076 and accompanying text. technical report summary provision requiring a qualified person to describe the results of the economic analysis, including annual cash flow forecasts based on an annual production schedule for the life of the project. Those commenters requested that the Commission follow Canada’s NI 43–101 by allowing producing registrants to omit annual cash flow forecasts unless a material expansion of existing production is planned on the grounds that detailed information regarding costs, production, and cash flow is confidential business information.1118 Most commenters that addressed the issue agreed with the Commission’s proposal that the technical report summary not include large amounts of technical or other project data either in the report or as appendices to the report.1119 One commenter, however, stated that technical reports must include sufficient data to demonstrate the viability of mineral resources and mineral reserves, questioned the point at which the number of data becomes ‘‘large,’’ and recommended that the Commission require the inclusion of as much summary data as practicable.1120 Another commenter stated that it is not necessary that large amounts of technical data, such as hydrologic and geotechnical information, be included as appendices in the technical report as long as the information is publicly available and accessible, and references to the information are provided.1121 Most commenters that addressed the issue also supported the Commission’s proposal to require the public filing of the technical report summary as an exhibit to the Commission filing in which the registrant first discloses mineral resources, mineral reserves, or material exploration results or reports a material change to the previously disclosed estimates.1122 Some commenters, however, opposed the proposed public filing requirement of a technical report summary on the grounds that: Because currently only two jurisdictions (Canada and Australia) require the public filing of a technical report summary, the proposed requirement would result in an incremental reporting burden in the United States relative to most other jurisdictions; 1123 or the technical report summary would require the
inclusion of voluminous amounts of technical data, some of which would be competitively sensitive, and most of which would not be meaningful to investors, and which would be burdensome to produce.1124 In lieu of a technical report summary, one of those commenters suggested that the Commission allow registrants to prepare reports in accordance with the guidelines set forth in CRIRSCO Table 1 or JORC Table 1.1125
iii. Final Rules
Like the proposed rules, the final rules require a registrant disclosing information concerning its mineral resources or mineral reserves determined to be on a material property to file a technical report summary by one or more qualified persons to support such disclosure of mineral resources or reserves.1126 While the disclosure requirements for the technical report summary are based in particular on Canada’s NI 43–101F1, they are substantially similar to the criteria specified in CRIRSCO’s Table 1 and JORC’s Table 1, which must be considered by the qualified or competent person when preparing reports on exploration results, mineral resources, or mineral reserves.1127 Many commenters supported the Commission’s proposal to require a registrant to obtain a technical report summary from the qualified person for each material property when first reporting estimates of mineral resources or mineral reserves, or when reporting a material change in previously reported estimates.1128 As one commenter indicated, many mining companies, including U.S. registrants that are cross￾listed, already prepare technical reports in CRIRSCO-based jurisdictions either for public filing or for internal use.1129 In addition to Canada and Australia, other foreign jurisdictions have adopted formal requirements for a technical report by a qualified or competent person, which are substantially similar to our final rule requirements.1130 This confirms our view that our technical report summary requirement is consistent with the CRIRSCO standards and will help promote comparability in the reporting by qualified persons. The final rules require that, for each material property, the qualified person(s) must identify and summarize the scientific and technical information and conclusions reached concerning initial assessments used to support disclosure of mineral resources, or concerning preliminary or final feasibility studies used to support disclosure of mineral reserves, in the technical report summary.1131 The requirements for the contents of the technical report summary are intended to elicit the scientific and technical information necessary to support the determination and disclosure of mineral resources, mineral reserves, and, as applicable, exploration results, to the extent they are material to investors. Because these requirements are similar in most respects to the items of information required for the summary report under Canada’s NI 43–101 1132 and the criteria specified in CRIRSCO
Table 1 and JORC Table 1 as well as to
the contents suggested in the mining engineering literature,1133 we continue to believe that the specified sections of the technical report summary will provide relevant and useful information to facilitate an investor’s understanding of a registrant’s mineral resources, mineral reserves, and material exploration results.

1134 17 CFR 229.601(b)(96)(iii)(B) [Item 601(b)(96)(iii)(B) of Regulation S–K], which is set forth in its entirety in Section VII, below. A technical report summary that reports the results of a preliminary or final feasibility study must include all of the information specified in these sections. A technical report summary that reports the results of an initial assessment or that reports material exploration results could omit information required by certain of these sections. See 17 CFR 229.601(b)(96)(iii)(A) [Item 601(b)(96)(iii)(A) of Regulation S–K]. 1135See, e.g., letters from Chamber and NSSGA. 1136See Item 601(b)(96)(iii)(B) of Regulation S–K. 1137See 17 CFR 229.601(b)(96)(iii)(B)(11)(v). 1138See 17 CFR 229.601(b)(96)(iii)(B)(11)(ii) [Item 601(b)(96)(iii)(B)(11)(ii) of Regulation S–K ]. The qualified person must also disclose mineral resource estimates that exclude the mineral reserves. 1139See 17 CFR 229.601(b)(96)(iii)(B)(11)(iii) [Item 601(b)(96) )(iii)(B)(11)(iii) of Regulation S–K]; and 17 CFR 229.601(b)(96)(iii)(B)(12)(iii) [Item 601(b)(96) )(iii)(B)(12)(iii) of Regulation S–K ]. 1140See 17 CFR 229.601(b)(96)(iii)(B)(11)(i) [Item 601(b)(96)(iii)(B)(11)(i) of Regulation S–K]; and 17 CFR 229.601(b)(96)(iii)(B)(12)(i) [Item 601(b)(96)(iii)(B)(12)(i) of Regulation S–K]. 1141See 17 CFR 229.601(b)(96)(iii)(B)(19)(iv) [Item 601(b)(96)(iii)(B)(19)(iv) of Regulation S–K]. 1142See 17 CFR 229.601(b)(96)(iii)(B)(3)(vii) [Item 601(b)(96)(iii)(B)(3)(vii) of Regulation S–K]. 1143See Item 601(b)(96)(i) of Regulation S–K. 1144See supra notes 1097–1098 and accompanying text. 1145 17 CFR 229.601(b)(96)(iii)(B)(7) [Item 601(b)(96)(iii)(B)(7) of Regulation S–K]. 1146See, e.g., letters from Midas and MMSA. 1147See letter from Moats. 1148This provision is similar, although not identical, to the instruction suggested by another commenter. See letter from Newmont. 1149 17 CFR 229.601(b)(96)(iii)(B)(14)(iv) [Item 601(b)(96)(iii)(B)(14)(iv) of Regulation S–K]. 1150 Instruction 1 to 17 CFR 229.601(b)(96)(iii)(B)(14) [Item 601(b)(96)(iii)(B)(14) of Regulation S–K]. 1151See letter from Amec. 1152See supra note 1119 and accompanying text. 1153 17 CFR 229.601(b)(96)(ii) [Item 601(b)(96)(ii) of Regulation S–K]. 1154See id; see also Securities Act Rule 421 and Securities Exchange Act Rule 13a–20. While we are adopting the technical report summary requirements largely as proposed,1134 in response to the concern of some commenters 1135 that the proposed technical report summary requirement would impose an undue compliance burden on registrants, we have made a number of changes in the required content of the technical report summary. For example, the final rules clarify that the information specified under the various sections of the technical report summary is to be provided only to the extent that it is material.1136 This clarification recognizes that, due to the diversity of operations in the mining industry, some sections may require little to no disclosure for
certain registrants because those sections are not material to an investor’s understanding of their particular mining operations. Other revisions to the required content of the technical report summary reflect changes to the proposed disclosure rules that have already been discussed in some detail. We believe these changes will help decrease the compliance burden of the technical report summary requirement, relative to the proposed requirement. For example, the final rules:

• No longer require the technical report
  summary to include a quantitative assessment of risk for resource determination; 1137
• permit the qualified person to disclose
  mineral resource estimates that include mineral reserves; 1138
• permit the qualified person to use any
  reasonable and justifiable price when determining both mineral resource and reserve estimates; 1139
• permit the qualified person to estimate
  both mineral resources and mineral reserves at a single point of reference selected by the qualified person; 1140
• permit the qualified person to include
  inferred resources in the technical report summary’s economic analysis when determining and disclosing mineral resource estimates; 1141 and
• require the qualified person to provide
  information describing the underlying property in which a royalty company registrant holds an interest only to the extent known or reasonably available.1142 In addition, unlike the proposed rules, the final rules permit, but do not require, a registrant to file a technical report summary to support the disclosure of material exploration results.1143 We believe that this elective treatment will also help limit the final rules’ compliance burden. In another change from the proposed rules, in response to comments received,1144 the final rules do not require separate sections about hydrogeology and geotechnical data, including testing and analysis. We have instead included the requirements for hydrogeology and geotechnical data, including testing and analysis, in the requirements for exploration data.1145 Consistent with the views of some commenters,1146 we continue to believe that disclosure regarding these two items, to the extent that they are material, is important and will benefit investors. Hydrogeology and geotechnical data are the basis for determining several design parameters that directly affect the safety of the designed mine. Moreover, these design parameters can affect the operating and capital costs and can, therefore, directly affect the economics of the mine (i.e., the determination of reserves). Detailed hydrogeology and geotechnical data will therefore provide insight into the adequacy and appropriateness of the mine’s design parameters, which will allow investors and their advisors to evaluate fully the disclosed economic viability of the mine. Nevertheless, by moving the disclosure requirements for these two items in the section regarding exploration data, we believe that it will be easier for registrants to understand and comply with those requirements since they will be placed within their proper context. In response to the commenter 1147 who suggested that our instructions to the required disclosure on ‘‘processing and recovery methods’’ were vague because we used the term ‘‘successfully’’ to qualify processing methods, plant designs, and other parameters that have not yet been used in a commercial production of the valuable product from the mineralization under consideration, we are adopting an alternative provision.1148 This provision states that, if the processing method, plant design or other parameters have never been used to ‘‘commercially’’ extract the valuable product from such mineralization, the qualified person must so state and provide a justification for why he or she believes the approach will be successful in this instance.1149 Similarly, an instruction provides that, if the processing method, plant design, or other parameter has never been used to ‘‘commercially’’ extract the valuable product from such mineralization and is still under development, then no mineral resources or reserves can be disclosed on the basis of that method, design, or other parameter.1150 We are also clarifying, in response to a
  commenter’s concern,1151 that we consider a processing method or plant design that has been demonstrated to be effective in a demonstration or pilot plant to be adequate to meet the standard that it is no longer ‘‘under development.’’ Such a processing method, plant design, or other parameters resulting from the demonstration or pilot plant can, therefore, be the basis for disclosure of mineral resources or reserves. Consistent with comments received,1152 we are adopting final rules, as proposed, that restrict the technical report summary from including large amounts of technical or other project data, either in the report or as appendices to the report.1153 In addition, the qualified person must draft the summary to conform, to the extent practicable, with the plain English principles set forth under the Securities Act and Exchange Act.1154 These

1155See Instruction 3 to Canada’s Form 43–101F1. 1156CRIRSCO International Reporting Template, supra note 20, at cl. 3. Also as proposed, the final rules similarly require a registrant, when providing either summary or individual property disclosure:
To use plain English principles, to the extent practicable; to not include detailed illustrations and technical reports, full feasibility studies, or other highly technical data, but to furnish such reports and other material supplementally to the staff upon request; and to provide an appropriate glossary if the disclosure requires the use of technical terms relating to geology, mining, or related matters, which cannot readily be found in conventional dictionaries. See 17 CFR 229.1301(d). The first two requirements are consistent with Securities Act Rule 421 and Exchange Act Rule 13a–20. The third requirement is consistent with current practice pursuant to Guide 7’s guidance that an appropriate glossary should be included in a Commission filing if technical terms relating to geology, mining, or related matters, whose definition cannot readily be found in conventional dictionaries, are used. See paragraph (b)(6) of Guide 7. 1157See supra note 1095 and accompanying text. 1158See supra note 1104 and accompanying text. 1159See Item 601(b)(96)(iii)(B)(17) of Regulation S–K. 1160See id. 1161See, e.g., letter from CRIRSCO. 1162 17 CFR 229.601(b)(96)(iii)(B)(19) [Item 601(b)(96)(iii)(B)(19) of Regulation S–K]. 1163See, e.g., Canada’s NI 43–101 F1, Item 22 (requesting the qualified person to ‘‘[p]rovide an economic analysis that includes . . . (c) a discussion of net present value (NPV), internal rate of return (IRR), and payback period of capital with imputed or actual interest’’). See also JORC Code, supra note 175, Table 1, Section 4 (requesting ‘‘[t]he inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc. NPV ranges and sensitivity to variations in the significant assumptions and inputs’’). 1164For example, Canada’s NI 43–101 and JORC provide no exemptions from the requirement to provide technical report summaries to support mining property disclosures. We also note that Canadian registrants are subject to a broader technical report summary requirement in NI 43– 101, which requires all material properties to have a technical report regardless of whether the registrant is disclosing mineral resources and reserves or not. 1165See supra note 1118 and accompanying text. requirements should help improve the readability of the technical report summary for the benefit of investors, particularly for those who lack a scientific background, but also for more sophisticated investors who may be familiar with the mining industry but who are not geologists or mining engineers. These requirements are consistent with similar Canadian mining disclosure standards 1155 and also with the transparency principle under the CRIRSCO standards, which ‘‘requires that the reader of a Public Report is provided with sufficient information, the presentation of which is clear and unambiguous, so as to understand the report and not to be misled.’’ 1156
While we acknowledge the concerns of those commenters 1157 that stated that we should use a different name, we continue to believe ‘‘technical report summary’’ more accurately reflects the disclosure we are requiring. By using this name, we do not mean to imply that there necessarily exists, in all cases, a single compilation of all the technical information and documentation (a ‘‘technical report’’) from which the qualified person will summarize the information and prepare the technical report summary. However, we believe that, in all cases, there will be such information and documentation (even if there is no single compilation), which forms the basis of the qualified person’s (or persons’) determination that there exist exploration results, mineral resources, or mineral reserves. Because, in preparing the technical report summary, the qualified person must summarize such information, we believe the name is appropriate. We agree with those commenters that stated there is no need to expand the technical report summary provision to require the qualified person to describe in more detail the factors pertaining to environmental compliance, permitting, and local individuals or groups, which are related to the project. We do not believe it is necessary to prescribe more specific requirements about those factors because they are already required to be considered and disclosed by the qualified person as a technical or modifying factor.1158 As is current industry practice, the final rules require the qualified person to describe all relevant factors pertaining to environmental compliance, permitting, and local individuals or groups, which are material to establishing reasonable prospects of economic extraction for mineral resources and economic viability for mineral reserves.1159 The final rules require the technical report summary to include, among other matters: The results of environmental studies, such as environmental baseline studies or impact assessments; requirements and plans for waste and tailings disposal; project permitting requirements; plans, negotiations, and agreements with local individuals or groups; and mine closure plans, including remediation and reclamation plans, and the associated costs.1160 The technical report summary must also include the qualified person’s opinion on the adequacy of current plans to address any issues related to environmental compliance, permitting, and local individuals or groups. We believe the scope of these technical report summary requirements is sufficient to address the environmental and sustainability issues of concern to investors. We also agree with those commenters that stated that requiring additional disclosure on these issues in a registrant’s technical report summary would be overly prescriptive and could duplicate disclosure that the registrant may provide in its corporate social responsibility report.1161 As proposed, the adopted rules require the qualified person to provide the results of
the economic analysis in the technical report summary, which is filed as an exhibit to the registrant’s disclosure.1162 This further aligns our rules with the transparency principle underlying the CRIRSCO-based codes by requiring public disclosure of the underlying technical and economic analysis that is the basis for a disclosure of mineral resources or reserves. We note that Canada’s NI 43–101 and Australia’s JORC require disclosure of investment decision criteria such as net present value (NPV) and internal rate of return (IRR) to support the disclosure of mineral resources and reserves.1163 Therefore, we believe this requirement should not impose an unduly high compliance burden, especially for those US registrants that are dual-listed in Canada or Australia. The final rules do not provide exemptions for any particular class of registrants because we believe investors in all registrants with material mining operations will benefit from the requirement to file a technical report summary. This is generally consistent with the approach taken in those CRIRSCO-based jurisdictions that require disclosure of technical report summaries.1164 Although some commenters requested that we permit producing registrants to omit cash flow forecasts under certain circumstances,1165 we decline to do so because we believe that such an exemption could result in the omission of material information, to the detriment of investors. Cash flow forecasts are essential to establishing whether portions of indicated and measured mineral resources can be mined economically (at a profit) and, thus, meet the definition of a mineral reserve. Without this information, investors will have no basis to know the level of confidence to associate with any mineral reserve determination, especially since registrants, through management, choose what economic criteria to apply to make the determination that the mining is economic. For similar reasons, we decline to exempt registrants from disclosing the qualified person’s price assumption

1166For example, both CRIRSCO Table 1 and JORC Table 1 require disclosure of the price for mineral reserve disclosure under ‘‘revenue factors.’’ 1167See letters from Alliance and NSSGA. 1168See supra note 1085 and accompanying text. 1169See supra note 1087 and accompanying text. 1170See letter from NMA 2 and SME 3. 1171See supra Section II.C.2. 1172See, e.g., letters from Dorsey & Whitney and PDAC. 1173Other differences include the final rules’ requirement that a registrant disclose resource estimates exclusive of reserves and the inclusion of mineral brines in the definition of mineral resources. 1174 Internal controls in this context refers to the internal controls used to ensure reliable disclosure of exploration results and estimation of mineral resources and mineral reserves. It is not to be confused with internal control over financial reporting. In this regard, the Commission’s disclosure requirements for registrants engaged in oil and gas producing activities require similar disclosure of internal controls over estimation efforts. See 17 CFR 229.1202(a)(7) [Item 1202(a)(7) of Regulation S–K]. 1175See Proposing Release, supra note 5, at
Section II.G.4.
1176See id.
1177See, e.g., letters from AngloGold, CBRR, Eggleston, Midas and Rio Tinto. 1178See letter from Alliance. 1179See letter from Randgold. 1180See letter from AngloGold. 1181See letter from Amec. 1182See id. 1183 17 CFR 229.1305(a) [Item 1305(a) of Regulation S–K]. 1184See id. In this regard we are not adopting the detailed internal controls disclosure framework suggested by one commenter. See letter from AngloGold. While we recognize that some registrants may find it useful to model their internal controls disclosure along the lines suggested by this commenter, other registrants may reasonably used to determine whether portions of indicated and measured mineral resources can be mined economically, in the technical report summary. We note that CRIRSCO-based codes also consider the price assumption to be a material assumption that the registrant must disclose in the supporting documentation.1166 We also are not exempting registrants in the industrial minerals or aggregates industry from the technical report summary requirements, as requested by some commenters.1167 We note that industrial minerals or aggregates registrants are much less likely to ever have to provide technical report summaries since most have no individually material mining properties. If such a registrant has individually material properties, then we believe it is appropriate to provide a technical report summary as any disclosure of mineral resources and reserves on those properties will likely be material to investors. Also, since industrial minerals and aggregates registrants go through the same scientific and engineering analysis to estimate mineral resources and reserves, they should already generate much of the information we are requesting in the technical report summaries. The final rules also do not incorporate by reference or otherwise adopt on a going forward basis the technical report requirements in Canada’s NI 43–101,1168 JORC,1169 or the SME Guide,1170 as suggested by some commenters. As previously mentioned, we believe that doing so would effectively bind the Commission’s rules to current and future iterations and interpretations of these requirements, over which the Commission would have little to no control or influence.1171 We also are not adopting a ‘‘reciprocal recognition’’ approach that would allow non-U.S. foreign issuers to file their home country (CRIRSCO-based) reports in satisfaction of the Commission’s rules, as suggested by some commenters.1172 We do not believe a reciprocal recognition approach is appropriate because, although we have more closely aligned our technical report summary requirements with the CRIRSCO standards and, in particular, with the Canadian technical report requirements, there are nevertheless important differences, such as the final rules’ prohibition against disclaimers of liability for information provided by the qualified person based on the work of a third-party specialist who the qualified person has hired.1173 We believe
these differences provide meaningful protection for investors.
4. Requirements for Internal Controls
Disclosure
i. Rule Proposal
We proposed to require that a registrant describe the internal controls 1174 that it uses in its exploration and mineral resource and reserve estimation efforts. As proposed, such disclosure should address quality control and quality assurance programs, verification of analytical procedures, and comprehensive risk inherent in the estimation.1175 We proposed an instruction stating that a registrant must provide the required internal controls disclosure whether it is providing summary disclosure under proposed Item 1303, individual property disclosure under proposed Item 1304, or under both items.1176
ii. Comments on the Rule Proposal
Most commenters that addressed the issue supported the proposal to require registrants to describe the internal controls that they use to help ensure the reliability of their disclosure of exploration results and estimates of mineral resources and mineral reserves.1177 One commenter, however, opposed such a requirement, other than for mineral reserve estimates, indicating that this information should already be included as part of management’s discussion of internal controls over financial reporting. According to that commenter, anything beyond that would create a significant burden on registrants and greatly outweigh any marginal benefit to investors.1178 A second commenter opposed an internal controls disclosure requirement as part of the Commission’s revised mining property disclosure rules on the grounds that there should be a global alignment of minimum reporting requirements for mining registrants. According to that commenter, the proposed internal controls disclosure requirement would impose a greater disclosure requirement on registrants reporting under a CRIRSCO-based code, such as JORC or SAMREC.1179 One commenter suggested a more detailed framework for the disclosure of internal controls. This framework addressed the accountability of management in the assessment of exploration results and estimates of mineral resources and mineral reserves, the assessment of internal controls over the reporting of exploration results and estimates of mineral resources and reserves, and changes in internal controls over the reporting of exploration results and estimates of mineral resources and reserves.1180 Another commenter stated that it is common industry practice to have QA/ QC programs when undertaking mineral exploration.1181 According to the commenter, however, the Commission’s proposed internal control provision may have inappropriately included internal controls for corporate governance purposes. That commenter therefore requested that the Commission provide clear instructions regarding how the mining industry can achieve the objective of the internal controls requirement.1182
iii. Final Rules
We are adopting rules that, as proposed, require a registrant to describe the internal controls that it uses in its exploration and mineral resource and reserve estimation efforts, as proposed.1183 The final rules specify that such disclosure should address quality control and quality assurance programs, verification of analytical procedures, and comprehensive risk inherent in the estimation.1184 We

conclude that a different or more abbreviated format is suitable for their mining operations. 1185See, e.g., JORC Code, supra note 175, Table 1; Canada’s NI 43–101, supra note 123, at pt. 3.3; SAMREC Code, supra note 267, Table 1, at pt. 3.6. The SME Petition also recognized the need for and importance of appropriate internal and disclosure controls in the estimation of mineral reserves. See SME Petition for Rulemaking, supra note 6, at 17. 1186See, e.g., ASX Listing Rule 5.21.5 (requiring registrants to disclose ‘‘[a] summary of the governance arrangements and internal controls that the mining entity has put in place with respect to its estimates of mineral resources and ore reserves and the estimation process’’). 1187See 17 CFR 229.1305(b) [Item 1305(b) of Regulation S–K]. 1188See S. C. Kazmierczak, Laboratory Quality Control: Using Patient Data to Assess Analytical Performance, Clinical Chemistry and Laboratory Medicine 617–627 (2003); see generally M. J. Chandra, Statistical Quality Control (2001). 1189See letters by FCX and Amec. 1190A foreign private issuer is any foreign issuer other than a foreign government, except for an issuer that has more than 50% of its outstanding voting securities held of record by U.S. residents, and regarding which any of the following is true:
A majority of its officers and directors are citizens or residents of the United States, more than 50 percent of its assets are located in the United States, or its business is principally administered in the United States. See Securities Act Rule 405 and 17 CFR 240.3b–4(c) [Exchange Act Rule 3b–4(c)]. 1191 17 CFR 249.220f. 1192 15 U.S.C. 78l. 1193 15 U.S.C. 78m(a). 1194 15 U.S.C. 78o(d). 1195 17 CFR 239.31. 1196 17 CFR 239.33. 1197 17 CFR 239.34. 1198See Securities Act Release No. 33–7745 (September 28, 1999) [64 FR 53900]. 1199Form 20–F Item 4.D provides that the registrant must provide information regarding any material tangible fixed assets, including leased properties, and any major encumbrances thereon, including a description of the size and uses of the property; productive capacity and extent of utilization of the company’s facilities; how the assets are held; the products produced; and the location. The registrant must also describe any environmental issues that may affect the company’s utilization of the assets. With regard to any material plans to construct, expand or improve facilities, the registrant must describe the nature of and reason for the plan, an estimate of the amount of expenditures including the amount of expenditures already paid, a description of the method of financing the activity, the estimated dates of start and completion of the activity, and the increase of production capacity anticipated after completion. 1200 Instruction 1 to Item 4 of Form 20–F. 1201See Proposing Release, supra note 5, at
Section II.H.1.
continue to believe that such internal controls disclosure would be beneficial to investors as it would help them evaluate whether the registrant has established acceptable levels of certainty and precision during exploration and whether and how it has verified and validated the quality of the data used in its analyses. This requirement is consistent with disclosure requirements in most foreign mining jurisdictions. The CRIRSCO￾based codes require the disclosure of quality control and quality assurance procedures as they relate to exploration results (data) and techniques and assumptions (analysis) used for mineral resource and reserve estimation.1185 In addition, the listing rules of some of these jurisdictions specifically call for disclosure of the internal controls relating to estimates of mineral resources and reserves.1186 Although not called for by Guide 7, some registrants provide disclosure about their internal controls, including quality control and quality assurance measures, which they have put in place to help ensure the reliability of their disclosure of exploration results and estimates of mineral resources and mineral reserves. The staff has also requested, on a case by case basis, that registrants provide a brief description of the quality control and quality assurance protocols for sample preparation, controls, custody, assay precision and accuracy as they relate to exploration programs. This current practice reinforces our belief that requiring internal controls disclosure by registrants regarding their exploration results and mineral resource and reserve estimates is appropriate and should not impose an undue burden. Another provision states that a registrant must provide the required internal controls disclosure whether it is providing summary disclosure under Item 1303, individual property disclosure under Item 1304, or under both items.1187 Estimating mineral resources and reserves requires use of statistical techniques to estimate tonnages and grades based on data derived from laboratory analysis of representative samples. In any such scientific study, best practice requires the analyst to disclose the quality control and quality assurance techniques employed to ensure the data used in the analysis is reliable.1188 We believe this same practice should apply when preparing and analyzing data for the purpose of individually material property disclosure as well as disclosure regarding properties that are only material in the aggregate. We also believe an internal controls disclosure requirement is particularly important for a company with multiple properties to ensure that best practice is followed across all properties. In response to commenters,1189 we are clarifying that Item 1305 requires disclosure of internal controls that the registrant has put in place to ensure that its exploration results and mineral resource and reserve estimates on its mining properties are reliable, and not for any other purpose. Given the
similarity between our mining property internal controls requirement and those of other mining jurisdictions, our requirement should not significantly alter the disclosure practices of those registrants that are listed in these jurisdictions. For registrants that are not currently subject to an internal controls disclosure requirement, and for which providing such disclosure has not become current practice, we believe investors will benefit from such disclosure, though we recognize that registrants will incur additional costs. H. Conforming Changes to Certain Forms Not Subject to Regulation S–K

1. Form 20–F
   i. Rule Proposal
   Foreign private issuers 1190 use Form 20–F 1191 as a registration statement under Section 12 of the Exchange Act 1192 or as an annual or transition report filed under Section 13(a) 1193 or 15(d) of the Exchange Act.1194 Form 20– F also provides much of the substantive disclosure requirements for foreign private issuers filing Securities Act registration statements on Forms F– 1,1195 F–3 1196 and F–4.1197 The Commission revised Form 20–F in 1999 to conform its disclosure requirements to the international disclosure standards endorsed by the International Organization of Securities Commissions (‘‘IOSCO’’) in September
   1998.1198 As a result, Form 20–F, rather
   than Regulation S–K, provides the primary non-financial disclosure requirements for foreign private issuers under the Securities Act and the Exchange Act. For example, Item 4.D of Form 20–F sets forth the disclosure requirements for a foreign private issuer’s property 1199 rather than Item 102 of Regulation S–K. An instruction to Item 4 directs the registrant to ‘‘[f]urnish the information specified in any industry guide listed in subpart 229.800 of Regulation S–K.’’ 1200 Thus, like domestic registrants, foreign private issuers currently provide the disclosures set forth in Guide 7. Because of our belief that the Commission’s mining property disclosure rules should continue to apply to both foreign private issuers and domestic registrants, we proposed to amend Form 20–F by adding an instruction to Item 4 that issuers engaged in mining operations must refer to and, if required, provide the disclosure under subpart 1300 of Regulation S–K.1201 We further proposed to remove in their entirety the current instructions to Item 4.D of Form 20–F, which, among other matters, limit

1202These instructions provide, among other matters, that, in the case of an extractive enterprise, other than an oil and gas producing activity, the issuer must provide material information about production, reserves, locations, developments and the nature of its interest. If individual properties are of major significance, the issuer must provide more detailed information about those properties and use maps to disclose information about their location. These instructions further provide that, in documents filed publicly with the Commission, the issuer must not disclose estimates of reserves unless the reserves are proven or probable and must not give estimated values of those reserves, unless foreign or state law requires the issuer to disclose the information. See Instruction 1 to Item 4.D of Form 20–F. 1203See Proposing Release, Section II.H.1. Because Forms F–1, F–3, and F–4 are already subject to the exhibit requirements of Item 601 of Regulation S–K, registrants using those forms that meet the requirements of proposed Item 1302(b)(2) would be required to file a technical report summary as an exhibit pursuant to proposed Item 601(b)(96). 1204See supra Section II.E.1. 1205The MJDS permits seasoned Canadian issuers meeting certain other requirements to use their Canadian disclosure documents when filing their Exchange Act registration statements and annual reports on Form 40–F or their Securities Act registration statements on Forms F–10, F–7, F–8 and F–80. 1206See letters from Alliance, Amec, AngloGold, CBRR, Eggleston, Midas, Rio Tinto, SAMCODES 2, and SRK 1. 1207See letter from CBRR. 1208See letters from Amec, AngloGold, Dorsey & Whitney, Eggleston, Midas, SAMCODES 2, SME 1, SRK 1, and Troutman Sanders. 1209Letter from Troutman Sanders. 1210See letters from AngloGold, Midas, and Rio Tinto. 1211See, e.g., letters from Eggleston, Energy Fuels, and SME 1. 1212See, e.g., letters from Dorsey & Whitney, SME 1, and Troutman Sanders. 1213See supra Section I.B. for a summary of the principal changes to the proposed rules. 1214See Proposing Release, supra note 5, at
Section II.H.1.
the disclosure of estimates to proven and probable reserves.1202 In addition, we proposed to add an instruction to the exhibits section of Form 20–F stating that a registrant that is required to file a technical report summary pursuant to Item 1302(b)(2) of Regulation S–K must provide the information specified in Item 601(b)(96) of Regulation S–K as an exhibit to its registration statement or annual report on Form 20–F.1203 As previously mentioned, we proposed to eliminate the ‘‘foreign or state law’’ exception under Item 102 and Guide 7 whereby Canadian registrants that report pursuant to Form 20–F and file registration statements on Forms F– 1, F–3, and F–4 are currently permitted to provide mining disclosure that meets the requirements of Canada’s NI 43–
101.1204 Thus, as proposed, the sole
group of Canadian registrants that could continue to report pursuant to Canadian disclosure requirements following adoption of the revised mining disclosure rules would be those Canadian issuers that report pursuant to the Multijurisdictional Disclosure System (‘‘MJDS’’).1205
ii. Comments on the Rule Proposal
Commenters that addressed the issue supported the Commission’s proposal to amend Form 20–F to conform it to the disclosure requirements of proposed subpart 1300 and proposed Item 601(b)(96) of Regulation S–K so that foreign private issuers that use or refer to Form 20–F for their Commission filings would be subject to the same mining disclosure requirements as domestic mining registrants.1206 One commenter also approved of the proposal to preclude Canadian issuers, other than MJDS issuers, from providing reports pursuant to Canada’s NI 43–101 in order to ensure comparability of reporting under the proposed rules.1207 Numerous commenters, however, recommended permitting Canadian registrants, including those that do not qualify for the MJDS, to continue providing mining disclosure that meets the requirements of Canada’s NI 43–
101.1208 As one commenter explained,
‘‘the Foreign Law Exception should remain in place for Canadian foreign private issuers of all sizes as a recognition of the sufficiency of NI 43– 101 for the protection of investors and the burdens of dual compliance for Canadian 20–F Filers.’’ 1209 Some commenters recommended allowing non-Canadian issuers to file the disclosure documents produced under their home country listing requirements as long as those requirements met CRIRSCO standards, such as JORC or SAMREC.1210 Some commenters stated that not permitting these issuers to file their CRIRSCO￾based disclosure documents would be burdensome particularly if the Commission adopted the mining property disclosure requirements as proposed.1211
iii. Final Rules
We are adopting the proposed revisions to Form 20–F so that foreign private issuers that use Form 20–F to file their Exchange Act annual reports and registration statements, or that refer to Form 20–F for their Securities Act registration statements on Forms F–1, F–3, and F–4, will have to comply with the mining disclosure requirements of new subpart 1300 of Regulation S–K and the technical report summary requirements in Item 601(b)(96), as applicable. We continue to believe that, with the exception of MJDS registrants, foreign private issuers with material mining operations should be subject to the same mining property disclosure requirements as domestic registrants. This treatment will protect investors, who require information about the material mining operations of foreign registrants just as much as those of domestic registrants, and facilitate the comparison of mining property disclosure among most registrants. The final rules do not permit Canadian registrants that are not MJDS￾eligible to continue to provide disclosure that meets the requirements of Canada’s NI 43–101, nor do they permit non-Canadian registrants to file disclosure documents that meet the requirements of another CRIRSCO-based code to satisfy their U.S. reporting obligations, as recommended by some commenters. Commenters that made these recommendations were concerned about the significant differences between the CRIRSCO standards and the proposed rules, and the correspondingly significant compliance burden that a dual-listed registrant would incur if the Commission adopted those rules as proposed.1212 The final rules eliminate many of these differences, and are less prescriptive than the proposed rules in several respects.1213 For example, the final rules permit the registrant and its qualified person to use any reasonable and justifiable price when determining and disclosing estimates of mineral resources or mineral reserves. The final rules also permit a qualified person to prepare a pre-feasibility study for reserve determination, even in high risk situations, without being required to justify its use instead of a final feasibility study. We believe that these changes to the proposed rules, together with many others that we are adopting, will significantly limit the incremental burden of the final rules for dual-listed issuers, and in particular for Canadian registrants. Furthermore, although most of the technical report summary requirements are based on the Canadian NI 43–101F1, there nevertheless are important differences between the Canadian technical report requirements and the final rules, such as the final rules’ general prohibition against using disclaimers of liability. For these reasons, we do not believe it is necessary or appropriate to continue to permit Canadian issuers to prepare and submit their Commission filings in accordance with Canada’s NI 43–101 under the ‘‘foreign or state law’’ exception or otherwise. We are not requiring MJDS registrants to comply
with new subpart 1300 because, as we explained in the Proposing Release,1214 the ability of

1215See letter from Dorsey & Whitney. 1216See 17 CFR 230.251(d) [Securities Act Rule 251(d)]. 1217See 17 CFR 230.251(a) [Securities Act Rule 251(a)]. 1218See 17 CFR 230.257 [Securities Act Rule 257]. 1219 17 CFR 230.251–230.263. 1220See Securities Act Release No. 33–9741 (March 25, 2015) [80 FR 21806] (‘‘Regulation A Adopting Release’’). 1221See Form 1–A, Part II, Item 7(c). 1222See Proposing Release, supra note 5, at
Section II.H.2. See also Item 8 of Part II to Form
1–A (Description of Property) (requiring that an issuer: ‘‘[s]tate briefly the location and general character of any principal plants or other material physical properties of the issuer and its subsidiaries. If any such property is not held in fee or is held subject to any major encumbrance, so state and briefly describe how held. Include information regarding the suitability, adequacy, productive capacity and extent of utilization of the properties and facilities used in the issuer’s business’’). We proposed to designate this current provision as paragraph (a) of Item 8. 1223See Proposing Release, supra note 5, at
Section II.H.2.
1224See letters from Alliance, AngloGold, CBRR, Midas, Rio Tinto, and SRK 1. 1225See letter from Alliance. 1226See letter from Rio Tinto. 1227See letters from AngloGold, CBRR, Midas, and SRK 1. One other commenter stated that he had no comment regarding the proposal. See letter from Eggleston. 1228The Proposing Release did not specify a particular compliance date for the proposed rules. 1229See letters from Cleary & Gottlieb, FCX, SME 1, and Vale. 1230See letters from Davis Polk and NMA 1. 1231See letter from Vale. 1232See, e.g., letter from Davis Polk. 1233See id. those registrants to use their Canadian disclosure documents for purposes of their Exchange Act and Securities Act filings is based on their eligibility to file under the MJDS, and not on the ‘‘foreign or state law’’ exception under Guide 7 and Item 102. At least one commenter expressly approved of the Commission’s proposal to permit MJDS filers to continue to meet their mining property disclosure obligations pursuant to Canada’s NI 43–101.1215
2. Form 1–A
i. Rule Proposal
Regulation A provides an exemption from the registration requirements of the Securities Act for certain securities offerings that satisfy specified conditions, such as filing an offering statement with the Commission,1216 limiting the dollar amount of the offering 1217 and, in certain instances, filing ongoing reports with the Commission.1218 Form 1–A is the offering statement used by issuers that are eligible to engage in securities offerings under Regulation A.1219 When the Commission amended Regulation A in 2015,1220 it updated Item 7 of Part II of Form 1–A concerning the required ‘‘Description of Business’’ disclosure by adding a provision stating that the disclosure guidelines in all Securities Act Industry Guides must be followed. The provision also stated that, to the extent that the industry guides are codified into Regulation S–K, the Regulation S–K industry disclosure items must be followed.1221 Because this provision, however, only appears in Item 7(c) of Part II, which governs ‘‘business’’ disclosure, we proposed to amend Part II of Form 1– A to apply the scope of the requirement to the description of property for certain issuers by adding similar language under Item 8 of Part II to Form 1–A.1222 Specifically, in order to require the Form 1–A property disclosure requirements to include the mining disclosure provisions under proposed subpart 1300 of Regulation S–K, we proposed to add a provision stating that issuers engaged in mining operations must refer to and, if required, provide the disclosure under subpart 1300 of Regulation S–K in addition to any disclosure required by Item 8. We also proposed to amend the instruction to Item 8, which currently provides that ‘‘[d]etailed descriptions of the physical characteristics of individual properties or legal descriptions by metes and bounds are not required and should not be given.’’ Because much of the disclosure under proposed subpart 1300 would require detailed descriptions of mining properties, we proposed to amend this instruction by excepting from its scope the disclosure required under the proposed rules, as referenced in paragraph (b) of Item 8. In order to require Regulation A issuers engaged in mining operations to be subject to the new subpart’s technical report summary filing requirement, we proposed to amend Item 17 (Description of Exhibits) of Part III under Form 1–A by adding a provision stating that an issuer that is required to file a technical report summary pursuant to Item 1302(b)(2) of Regulation S–K must provide the information specified in Item 601(b)(96) of Regulation S–K as an exhibit to its Form 1–A.1223
ii. Comments on the Rule Proposal
Several commenters addressed the Commission’s proposal to amend Form 1–A to conform it to the disclosure requirements of proposed subpart 1300 and proposed Item 601(b)(96) of Regulation S–K so that Regulation A issuers engaged in mining operations would be subject to the same disclosure requirements as other issuers with mining operations.1224 One commenter stated that because Form 1–A filers are subject to the property disclosures outlined in Guide 7, it would be appropriate to subject them to the new mining property disclosure requirements.1225 Another commenter supported including Form 1–A filers within the scope of the new rules in order to align the mining property disclosure standards regardless of the type of registrant.1226 The other commenters supported the proposal without explanation.1227 No commenter opposed including Regulation A issuers within the scope of the new rules.
iii. Final Rules
We are adopting the proposed revisions to Form 1–A to require Regulation A issuers with material mining operations to comply with all of the disclosure requirements in subpart 1300 of Regulation S–K as well as the technical report summary requirements in Item 601(b)(96), as applicable. We continue to believe that investors in Regulation A offerings by issuers with material mining operations require the same information about those operations as investors in registered offerings. This treatment will also facilitate a comparison of mining property disclosure among issuers regardless of the type of issuer.
I. Transition Period and Compliance
Date
Several commenters requested that the Commission provide a transition period in order to give registrants ample time to prepare their Commission filings in compliance with the new mining property disclosure regime.1228 Several commenters recommended that the Commission provide a two-year transition period before the new regime would become mandatory.1229 Other commenters recommended a three-year transition period.1230 Commenters justified the need for a transition period based on the extensive changes to the current disclosure framework under Guide 7 1231 and because some registrants may not be subject to similar disclosure requirements under the CRIRSCO-based codes.1232 One of the commenters suggested that the Commission should permit registrants to comply earlier on a voluntary basis.1233 Although we have made numerous changes to the proposed rules that will more closely align our mining property disclosure regime with the CRIRSCO standards, we are persuaded by commenters that adoption of an appropriate transition period would

1234Notice of EDGAR system readiness will be provided in a manner similar to notices of EDGAR Filer Manual updates. 1235 15 U.S.C. 77b(b) and 15 U.S.C. 78c(f). 1236 15 U.S.C. 78w(a)(2). 1237See letters from Coeur, Midas Gold, NMA, SME 1, SRK 1, and Ur-Energy. 1238See letters from SRK 1 and Royal Gold. help to ease the burden of complying with the final rules. We are therefore adopting a two-year transition period so that a registrant will not be required to comply with the new rules until the first fiscal year beginning on or after January 1, 2021. Thus, for a calendar year-end company, a registrant will be required to comply with the final rules when filing Securities Act and Exchange Act registration statements on or after this date and when filing its Form 10–K or Form 20–F annual report for the fiscal year ended December 31, 2021. We believe this transition period will provide ample time for mining registrants that are not familiar with the CRIRSCO standards to comply with the new rules. If any registrant not subject to the CRIRSCO standards finds that it faces unique challenges meeting the new disclosure requirements, we encourage such registrant to contact the staff. The transition period also will help registrants that are currently subject to one or more of the CRIRSCO-based codes to comply with the few requirements under subpart 1300 that differ from the CRIRSCO standards (e.g., the general prohibition against using disclaimers of liability). At the same time, we do not believe this transition period will significantly delay the benefits of the final rules for investors. A registrant may decide that it would like to take advantage of the final rules (e.g., by disclosing mineral resources in a Commission filing) prior to the completion of the transition period. Once the Commission has completed EDGAR reprogramming made necessary by the final rules, we will permit registrants to comply with the new mining property disclosure rules prior to the compliance date as long as they abide by all of subpart 1300’s requirements.1234 Until then, registrants should continue looking to Guide 7 for their mining property disclosures. Guide 7 will remain effective until all registrants are required to comply with the final rules, at which time Guide 7 will be rescinded.
III. Other Matters
If any of the provisions of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
IV. Economic Analysis
We are adopting amendments to modernize the property disclosure requirements for mining registrants, and related guidance, currently set forth in Item 102 of Regulation S–K and in Industry Guide 7. The discussion below addresses the economic effects of the final rules, including the likely costs and benefits of those rules, as well as the likely effect of the final rules on efficiency, competition, and capital formation. We are mindful of the costs imposed by, and the benefits obtained from, the rules we adopt. Securities Act Section 2(b) and Exchange Act Section 3(f) require us, when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.1235 Exchange Act Section 23(a)(2) requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule would have on competition and to not adopt any rule that would impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.1236 We have considered the likely costs and benefits that will result from the final rules, as well as the potential effects on efficiency, competition, and capital formation. We also have analyzed the potential benefits and costs of reasonable alternatives to the final rules. The alternatives we consider below represent different approaches to achieving the goal of modernizing the Commission’s mining property disclosure requirements and policies. Given the goal of updating the existing regulatory framework, we evaluate the potential costs and benefits of these alternative approaches against the potential costs and benefits of the final rules’ disclosure requirements, rather than against the baseline. The final rules are intended to modernize the Commission’s mining property disclosure requirements by providing investors with a more comprehensive and accurate understanding of a registrant’s mining properties, all of which should help investors make more informed investment decisions. This, in turn, will reduce the cost of capital and enhance capital formation. As suggested by several commenters,1237 the U.S. capital markets may be comparatively less attractive to potential mining registrants due, in part, to the Commission’s current disclosure regime, with some commenters 1238 citing the comparatively low amount of capital among mining companies in the U.S. markets. The final rules will also align more closely with industry practices and standards as reflected in CRIRSCO￾based disclosure standards. A. Baseline To assess the economic impact of the final rules, we consider, as part of our baseline, the current disclosure requirements and policies in Item 102 of Regulation S–K, Guide 7, Form 20–F, and Form 1–A, as well as current market practices. We also consider the disclosure standards of
various CRIRSCO-based disclosure standards, because mining registrants compete in the international commodities and capital markets, making international disclosure standards an important benchmark for analysts and investors evaluating mining companies. Furthermore, these standards are relevant to consider because, as discussed above, many mining registrants are foreign private issuers or U.S.-incorporated registrants with reporting obligations in foreign jurisdictions. Thus, to the extent that the final rules align the Commission’s requirements with CRIRSCO-based disclosure standards, we expect their economic impact to be less for these registrants.

1. Affected Parties
   The final rules will primarily affect registrants with mining activities that are subject to the mining disclosure requirements and policies contained in Item 102 of Regulation S–K and in Guide 7. In addition to U.S. registrants with mining operations that are required to report under Regulation S–K in their annual reports and registration statements, the final rules will affect foreign private issuers with mining operations that file their Exchange Act annual reports and registration statements using Form 20–F or that refer to Form 20–F for certain of their disclosure obligations under Securities Act registration statements filed on Forms F–1, F–3, and F–4. Moreover, the affected registrants will include mining companies filing Form 1–A offering statements under Regulation A. Investors, analysts, and other users of