National Instrument 43-101 (known by industry experts as NI 43-101) is a protocol for the Canadian classification of mineral resources that applies to all domestic and foreign mining corporations that are listed on the Canadian Mineral Stock Exchange, the world’s largest stock exchange in Toronto.
The Canadian Securities and Exchange Commission (CSA) controls NI 43-101 applications to ensure that everyone adheres to strict guidelines set by the mineral resources industry.
During the 1990s, the infamous Bre-X Minerals Ltd. committed fraud by massively inflating their mineral resource estimates by salting ore samples with gold dust. What Bre-X essentially did was contaminate their samples by ingesting gold from external sources. As a result of this international scandal, the industry has stepped in to protect investors from future dubious tactics of mineral stock promoters.
It is an old mining joke that a mine is nothing but a hole in the ground owned by a liar. Thus, to repair the tarnished reputation of the industry, new guidelines have been applied requiring a QP (qualified person) (geological engineer) with at least five (5) years of experience in the mineral resources industry, especially in mineral exploration. on the final report – basically based on their credibility for any errors, falsifications and / or omissions.
This gave birth to the gold standard of the mining industry in reporting, NI 43-101.
Major investment brokerage houses, mutual funds, banks and other financial institutions around the world swear by NI 43-101, refusing to invest in any mining company without first reviewing those documents. This paper is largely unknown to the average amateur investor and that is why this article aims to enlighten the reader about NI 43-101. The mining report contains a lot of technical geological terms, but in short there are three different classifications of mineral resources:
A mineral resource where the degree, quantity and quality are assessed based on the limited sampling of the geological region in which the sample was taken. A potential investor must understand that this is not a guarantee that the resource exists at all!
A mineral resource where the degree, quantity, and quality can be predicted with more confidence than the assumed resource, allowing sufficient parameters to be set to begin preliminary mine planning.
Mineral wealth where quality, quantity and quality are very well established and recorded.
In addition to the resources mentioned above, we have two types of “reserves”, namely the “Probable Mineral Reserve” which is an economically exploitable component of the designated resource, which can be highlighted by a preliminary feasibility study. The second type is the “Proven Mineral Reserve,” and here the economically exploitable component of the measured mineral resources can be identified by a preliminary feasibility study.
The actual NI 43-101 itself consists of many components and can be downloaded from a Canadian network database called SEDAR. A thorough explanation of how to read the NI 43-101 report is beyond the scope of this article.