Robert Holland carries a low profile but a big stick.
As chief Mining Adviser of the BC Securities Commission, Holland oversees the disclosure of most TSX Venture explorers and some of the more senior B.C.-based resource development and mining companies on the TSX big board.
For some in the mining sphere, Holland is “Mr. NI 43-101,” a reference to a regulatory term with all the obfuscation of the Dewey Decimal System for industry outsiders. However, National Instrument 43-101 is the sword his team wields over a global industry that increasingly calls Vancouver home for raising capital.
NI 43-101 is a more thorough and transparent reporting regimen born from the debacle of Bre-X gold salting in the late '90s and the prevalent pump-and-dump activities of promoters. NI 43-101 is a laundry list of practices that every company must follow and is designed to prevent confusion about their projects and mineral deposits. In short, it tells junior mining companies precisely what they can say and when they can say it.
Holland and his team ensure:
•a prospector with a moose pasture doesn't talk of “life of mine”;
•a mineral resource is based on a defensible estimation rather than an exaggeration; and
•that company disclosure is tied to reasonable forward-looking statements rather than fairy tales.
“You can't really be in the mining sector and not be involved in 43-101,” said Holland. “Obviously, you learn to live and breathe 43-101 very quickly since that's the fundamental rule around mining disclosure.”
NI 43-101 is administered jointly by regulators from all 10 provinces and three territories that make up the Canadian Securities Administrators and receives input from a mining advisory committee and various professional associations. However on Howe Street, Holland is seen as the local sheriff and a lead voice on compliance rules.
“He's been a lightning rod on this,” said Brian Abraham, national co-chairman of the mining group for law firm Fraser Milner Casgrain. “He's the one that's been front and centre in trying to enforce 43-101.”
Holland says NI 43-101 aims to create a balance between fostering development of natural resources and attracting capital, while protecting the market's overall credibility.
“We're trying not to be too prescriptive, but we're trying not to open up to 'anything goes,'” said Holland.
A couple of the more notable cases that Holland's team has stepped into include Barkerville Gold Mines Ltd. (TSXV:BGM) and Extorre Gold Mines Ltd. (TSX:XG).
In July, Barkerville was called out by the BCSC for a newly announced resource estimate that grew from 431,000 ounces in 2006 to a world-class 10.6-million-ounce deposit with “geological potential of 65-90 million ounces gold.”
The BCSC expressed concerns the resource was “estimated in a manner that appears contrary to normal industry practice and therefore could be construed as misleading.” Barkerville must now defend its estimate, and address BCSC concerns, in its required NI 43-101 compliant technical report – due some time before mid-August. And earlier this year, Extorre had to pull its $50 million financing off the table after the BCSC found the company's preliminary economic assessment for its Cerro Moro gold project was far from preliminary but rather prematurely advanced “pre-feasibility stage” in tone and terminology. This transgression forced Extorre to refile and undertake a much smaller $25 million financing and a rethink of its project development expenditures.
In June, Extorre announced it agreed to be bought by Yamana Gold Inc. (TSX: YRI).
With disclosure discipline making front-page news, Holland makes a point of remaining in the background. In conversation, he defers to his team, colleagues in both exchanges and regulatory peers in Ontario and Quebec. Not a single “I” is ever uttered. The Business in Vancouver interview represents his first significant media coverage as chief mining adviser – not that Holland is looking to win favour or ink.
“You have to [have a thick skin]. You're not going to win any popularity contests,” he said of his referee job.
Holland started out as a geologist who got his boots dirty in the field for over 15 years, mostly in B.C. and the Yukon. His exploration work during the '70s and '80s included stints with Welcome North Mines, led by John Brock and later an early player in the exploration success of what became Barrick and Goldcorp's jointly owned Marigold Mine in Nevada; and Bema Industries, then a private consulting firm that later morphed into Bema Gold, which was acquired by Kinross in 2007. However, one of the industry's ongoing cyclical downturns and Father Time led Holland to return to school.
“I really was at the point of my life where scrambling around up cliffs and rugged bush was not really as exciting as when I was younger,” he said. “I was looking for something where I could apply my MBA and mining background.”
Holland found himself a “natural fit” in joining the Vancouver Stock Exchange in 1993, when it began developing a new disclosure regulatory policy. He joined the BCSC in 2002 and assumed the top mining post four years later.
Since then, Holland has taken an active role in promoting NI 43-101 through presenting educational seminars at Vancouver's Roundup and Toronto's PDAC annual mega-conferences. He's particularly proud of the extensive consultation and outreach undertaken in revamping NI 43-101 in 2011, including soliciting input from senior and junior companies, geologists, lawyers and accountants.
“Mining and mineral exploration is an extremely complex and diverse field. And you can't have prescriptive rules that cover every possible situation,” said Holland. “Our primary focus was to eliminate or reduce the scope of certain requirements so that it wasn't as prescriptive. We wanted to build in flexibility for the issuers and the qualified professionals doing the technical reports in certain areas where we thought more discretion should be allowed to the company.”
While Holland's work is never a candidate for backslaps, high-fives and handshakes, it has garnered respect internationally.
Greg Gosson, Holland's predecessor at BCSC and currently AMEC's technical director of geology and compliance, said the stringent reporting currently required by NI 43-101 and enforced by regulators like Holland has become a competitive advantage for the local resource industry in attracting international capital.
The Australia Stock Exchange (ASX), a competing market for mining capital, is trying to cajole its members to adopt standards similar to Canada. However, there is opposition to the potential compliance costs and time burden of regularly preparing full project technical reports.
“Canada is by far dominating the mining industry as far as number of listed companies and number of financings that get done here,” said Gosson. “Institutional investors who I've talked with much prefer the 43-101 disclosure system for easy access to reliable information. And for that reason more money is flowing through Canada. The Australian Securities Exchange sees they're losing out on that. The ASX very strongly wants to have similar rules in Australia as what we have here in terms of transparency and credibility.”
