Canadian Regulators Find Fault With Smaller Mining Companies’ Disclosures – by Alistair MacDonald (Wall Street Journal – April 10, 2015)

CSA report underscores investors’ chronic complaints of poor reporting standards

Canadian securities regulators said Thursday that a review of publicly traded mining companies revealed often misleading and incomplete disclosures, underscoring investors’ chronic complaints of poor reporting standards among smaller companies.

The Canadian Securities Administrators, an umbrella group for Canada’s provincial regulators, said it reviewed presentations to investors made on the websites of 130 mining companies, and it asked 49 of them to correct disclosures that didn’t comply with regulations.

“Overall, our review found that mining issuers’ website disclosure needs improvement. Incomplete information and overly promotional language are key areas of concern,” said Louis Morisset, the group’s chairman and president and chief executive of the Autorité des marches financiers, Quebec’s securities regulator.

The CSA cited a number of areas in which the companies need to improve disclosures. Those include a need to provide cautionary statements on the limitations of their exploration targets and preliminary economic assessments, in which mining companies give early estimates on the size of their deposits and likely costs to develop them.

The group also said mining companies must name the technical experts who give such opinions and note their relationship to the issuer, in case of potential conflicts of interest.

In general, the CSA said mining companies should avoid overly promotional terms and potentially misleading information.

“Securities legislation prohibits misleading disclosure and misrepresentation,” the report said.

Investors have long complained about what they see as poor disclosure among smaller mining companies on Canadian exchanges.

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