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MD&A for mining
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INFONEX - MDampA FOR MINING
Dentons Canada LLP
Catherine W Wade and
Alan
Monk
Catherine Wade
24 September 2014
Overview of MDampA Regulatory Standards and
Guiding Principles for Mining Companies
September 2014 Dentons Canada LLP 2
bull Compliance and disclosure standards
bull General
bull Recurring Themes
bull 2014 CSA Reviews amp Guidance (July 2014)
bull Guiding Principles from the CPA
bull OSC Review amp Guidance for Mining Companies (Feb 2014)
bull Indicators of Poor MDampA
bull Examples
bull Recent developments affecting MDampA
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 3
bull MDampA
bull Building upon the financial statements MDampA should
bull be a plain language narrative explanation and analysis that provides a balanced discussion of
results financial condition and future prospects to help both current and potential investors to
understand what has been presented in the financial statements
bull be presented through the eyes of management
bull explain how your company performed during the period covered by the financial statements
bull discuss trends and risks that have affected or may affect the financial statements in the future and
bull provide description of your companyrsquos current financial condition and future prospects by providing
information about the quality and potential variability of earnings cash flow and operations
bull ldquowhere you were where you are where you are going how you can get
pushed off trackrdquo
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 4
bull Good reasons for well written MDampA
bull Opportunity for company to explain events from managementrsquos point of view and beyond
the numbers
bull Provide current and potentially new investors with up to date information on the
underlying analysis of the financial statements
bull Facilitate capital raising efforts
bull Reduce investor complaints as to perceived lsquosurprisesrsquo and lack of communication
bull Comply with securities laws and decrease regulator comments at crucial times such as
capital raising
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 5
bull Securities law and regulation
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy
51-102CP (Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings (FS MDampA
AIF)
bull Consistent cornerstone of all continuous disclosure items
bull AIF (Annual Information Form or US filing equivalent)
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull Press releases
bull Prospectus filings
bull Offering memoranda
bull Filing Statements (TSX-V ndash Change of Business)
bull Business Acquisition Reports
bull Proxy circulars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Overview of MDampA Regulatory Standards and
Guiding Principles for Mining Companies
September 2014 Dentons Canada LLP 2
bull Compliance and disclosure standards
bull General
bull Recurring Themes
bull 2014 CSA Reviews amp Guidance (July 2014)
bull Guiding Principles from the CPA
bull OSC Review amp Guidance for Mining Companies (Feb 2014)
bull Indicators of Poor MDampA
bull Examples
bull Recent developments affecting MDampA
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 3
bull MDampA
bull Building upon the financial statements MDampA should
bull be a plain language narrative explanation and analysis that provides a balanced discussion of
results financial condition and future prospects to help both current and potential investors to
understand what has been presented in the financial statements
bull be presented through the eyes of management
bull explain how your company performed during the period covered by the financial statements
bull discuss trends and risks that have affected or may affect the financial statements in the future and
bull provide description of your companyrsquos current financial condition and future prospects by providing
information about the quality and potential variability of earnings cash flow and operations
bull ldquowhere you were where you are where you are going how you can get
pushed off trackrdquo
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 4
bull Good reasons for well written MDampA
bull Opportunity for company to explain events from managementrsquos point of view and beyond
the numbers
bull Provide current and potentially new investors with up to date information on the
underlying analysis of the financial statements
bull Facilitate capital raising efforts
bull Reduce investor complaints as to perceived lsquosurprisesrsquo and lack of communication
bull Comply with securities laws and decrease regulator comments at crucial times such as
capital raising
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 5
bull Securities law and regulation
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy
51-102CP (Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings (FS MDampA
AIF)
bull Consistent cornerstone of all continuous disclosure items
bull AIF (Annual Information Form or US filing equivalent)
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull Press releases
bull Prospectus filings
bull Offering memoranda
bull Filing Statements (TSX-V ndash Change of Business)
bull Business Acquisition Reports
bull Proxy circulars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 3
bull MDampA
bull Building upon the financial statements MDampA should
bull be a plain language narrative explanation and analysis that provides a balanced discussion of
results financial condition and future prospects to help both current and potential investors to
understand what has been presented in the financial statements
bull be presented through the eyes of management
bull explain how your company performed during the period covered by the financial statements
bull discuss trends and risks that have affected or may affect the financial statements in the future and
bull provide description of your companyrsquos current financial condition and future prospects by providing
information about the quality and potential variability of earnings cash flow and operations
bull ldquowhere you were where you are where you are going how you can get
pushed off trackrdquo
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 4
bull Good reasons for well written MDampA
bull Opportunity for company to explain events from managementrsquos point of view and beyond
the numbers
bull Provide current and potentially new investors with up to date information on the
underlying analysis of the financial statements
bull Facilitate capital raising efforts
bull Reduce investor complaints as to perceived lsquosurprisesrsquo and lack of communication
bull Comply with securities laws and decrease regulator comments at crucial times such as
capital raising
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 5
bull Securities law and regulation
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy
51-102CP (Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings (FS MDampA
AIF)
bull Consistent cornerstone of all continuous disclosure items
bull AIF (Annual Information Form or US filing equivalent)
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull Press releases
bull Prospectus filings
bull Offering memoranda
bull Filing Statements (TSX-V ndash Change of Business)
bull Business Acquisition Reports
bull Proxy circulars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 4
bull Good reasons for well written MDampA
bull Opportunity for company to explain events from managementrsquos point of view and beyond
the numbers
bull Provide current and potentially new investors with up to date information on the
underlying analysis of the financial statements
bull Facilitate capital raising efforts
bull Reduce investor complaints as to perceived lsquosurprisesrsquo and lack of communication
bull Comply with securities laws and decrease regulator comments at crucial times such as
capital raising
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 5
bull Securities law and regulation
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy
51-102CP (Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings (FS MDampA
AIF)
bull Consistent cornerstone of all continuous disclosure items
bull AIF (Annual Information Form or US filing equivalent)
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull Press releases
bull Prospectus filings
bull Offering memoranda
bull Filing Statements (TSX-V ndash Change of Business)
bull Business Acquisition Reports
bull Proxy circulars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 5
bull Securities law and regulation
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy
51-102CP (Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings (FS MDampA
AIF)
bull Consistent cornerstone of all continuous disclosure items
bull AIF (Annual Information Form or US filing equivalent)
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull Press releases
bull Prospectus filings
bull Offering memoranda
bull Filing Statements (TSX-V ndash Change of Business)
bull Business Acquisition Reports
bull Proxy circulars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 6
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
Series 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders [51-
101 to 58-701] ndash Over 125 ldquoactiverdquo
News and Publications Publications
Speeches
Information for Companies
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
Series 5 5 of the Rules Instruments Policies amp Staff Notices Ongoing Requirements for Issuers and Insiders
Information for Companies
SME Institute Calendar of Upcoming Seminars
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Compliance and Disclosure Standards
September 2014 Dentons Canada LLP 7
bull Securities regulator reviews and guidance
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous
Disclosure Review Program for fiscal year ended March 31 2014 ndash review
results have been released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in
December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull OSC Staff Notice 51-722 (February 2014) Report on a Review of Mining
issuersrsquo Managementrsquos Discussion and Analysis and Guidance
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull OSC SME (small and medium enterprises) Institute seminar series
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Recurring Themes in Annual Securities Regulatory
Reviews
September 2014 Dentons Canada LLP 8
bull inappropriate use of boilerplate
bull repeating information from FS without analysis
bull analysis = lsquowhyrsquo lsquohowrsquo lsquowhatrsquo lsquowhenrsquo
bull explain why the results changed (eg Increased expenditures due tohellipnew legislation increased
environmental exposure)
bull why and when did the changes occur and how it impacted results
bull had you foreseen them in the last MDampA
bull will the events reoccur to what extent and why how have these impacted results and what is the
company doing about it
bull explain why your previously disclosed budget does not correspond with your burn rate and cap ex
spend when the budget went offside and what was the impact
bull lack of quantitative analysis in results of operations
bull insufficient disclosure of working capital requirements
bull inadequate disclosure of circumstances that could affect sources of capital
bull poor risk disclosure and analysis why was there such a significant increase in
expenditures for reasons not identified in last yearrsquos MDampArsquos risks
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Recurring Themes
September 2014 Dentons Canada LLP 9
bull No or insufficient discussion about risks and uncertainties expected to affect
future performance given current regulatory economic or industry conditions
bull Inconsistent or even contradictory MDampA disclosure over reporting periods
bull turn your MDampA into a means of providing continuity of disclosure on a cumulative basis as the
business lives and grows over time
bull Carry forward disclosure used in prior MDampA but no longer applicable or relevant
bull Insufficient discussion of assumptions underlying critical accounting estimates
bull Missing or limited disclosure of adoption of new accounting policies
bull Inadequate related party transaction disclosure
bull Non-compliant disclosure of non-GAAP financial measures
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Recurring Tips from Securities Regulatory Reviews
September 2014 Dentons Canada LLP 10
bull Use plain language
bull Focus on materiality
bull Balanced disclosure
bull Provide context including comparison to previously articulated strategy and risks
bull Identify trends
bull Plan for review time
bull Consider forward-looking information
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Regulator Reviews
September 2014 Dentons Canada LLP 11
bull Securities regulators periodically conduct full reviews and specific issue-
oriented reviews In 2014 issue-oriented reviews increased as a
percentage of all reviews from 72 in 2013 to 78 in 2014
bull 2014 Issue Review - analyzed MDampA for mining issuers - the common
areas of deficiencies identified were related to
bull Non-GAAP measures
bull Forward looking information
bull Additional disclosure for venture issuers without significant revenue
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 12
Three Themes
1 Non-GAAP Measures
bull Numerical measure related to historical or future financial performance or position
or cash flows ndash excludes or includes amounts that are included or excluded
respectively in the most directly comparable measures under GAAP such as
earnings before interest taxes depreciation and amortization (EBITDA)
bull Being adjusted for impairment restructuring or foreign exchange charges
bull Should include all material disclosure as set out in CSA Staff Notice 52-306 Non-
GAAP Financial Measures and Additional GAAP Measures
2 Forward Looking Information (FLI)
bull Key area of interest for investors can enhance transparency and increase
investorsrsquo understanding of the business and future prospects
bull Clear identification needed
bull Disclosure of material factors or assumptions
bull Update FLI and show comparison of actual results to previous FLI (why when
what how)
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
CSA CD 2014 Review Results
September 2014 Dentons Canada LLP 13
Three Themes
3 Additional Disclosure for Venture Issuers Without Significant Revenue
bull Breakdown of material components of expenditures (revenues) on comparative
basis
bull Property-by-property basis for mining exploration and evaluation assets or
expenditures
bull Regulators have an expectation of seeing relevant qualitative discussion of the
material components
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
CSA CD 20142013 Review Outcomes
September 2014 Dentons Canada LLP 14
16
9
14
24
37
2
5
14
53
26
Education and Awareness
Default CTO or Referred toEnforcement
Re-filing or Filing of Un-FiledDocument Requested
No Action Required
Prospective Change Requested
2013
2014
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles - CPA
September 2014 Dentons Canada LLP 15
Chartered Professional Accountants Canada (CPA) formerly CICA
principles and framework to help identify and organize MDampA disclosures
bull Improved Communication with Supplementary Financial Measures General
Principles and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
wwwcicaca ndash Performance Reporting Resource Centre
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 16
MDampA should
1 Enable readers to view the information through the eyes of
management
2 Compliment and supplement the financial statements
useful quantitative and qualitative information about performance of the
business that adds to whatrsquos already in the financials
explain the conditions and events that shaped the results in the financials
how those past conditions relate to future (predictive or not and why)
3 Be complete fair and balanced and provide information that is
lsquomaterialrsquo to the decision making needs of the reader
Transparent discussion of the range of possible outcomes
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 17
4 Have a forward looking orientation (whereas the financials are
historical)
explain past events decisions circumstances performance in the context of
whether they are likely to be indicative of future prospects
describe the future events decisions circumstances opportunities
management considers likely to materially impact future prospects
5 Focus on managementrsquos strategy for generating value over time
what is the applicable time horizon for companyrsquos strategy ndash industry specific
discuss performance against milestones showing implementation of goals
and (hopefully) progress against goals
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 18
6 Be written in plain language with candor and without exaggeration be
understandable relevant and comparable over reporting periods
graphics and tables to enhance understanding
not a list of every issue facing the company - focus on significant matters
and the approach to them
comparability facilitates benchmarking enables trend identification and
analysis
if previous information is no longer relevant or material explain why
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 19
bull MDampA disclosure framework in schematic as an integrative tool not a
template
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 20
bull Core business and strategy for value creation
investors need clear understanding of this and also the significant factors
trends opportunities and threats (internal and external) that shape the
strategy
what why how the company was trying to do in the past and what why how
it wants to achieve in the future
bull Key performance drivers
external and internal drivers and why they are critical to the companyrsquos
successful implementation of strategy and achievement of goals
also the key performance indicators (financial and non-financial) that
management uses to monitor progress on the drivers
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 21
bull Capacity to deliver results
discussion of the resources needed to deliver on companyrsquos strategy and
achieve its goals including tangible and intangible assets working capital
and other aspects of liquidity financial resources leadership labour force
and systems
cash generating potential cash utilization requirements and working capital
requirements
historical analysis and future expectations for liquidity and productive
capacity
how executive compensation metrics (a) support the business strategy and
performance drivers and (b) relate to the KPIs
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 22
bull Results and outlook
insightful explanation of (a) company performance against its strategy and
goals and (b) management effectiveness in use of resources
discussion of key performance driver and indicator trends changes and
fluctuations (eg seasonality)
why actual results have differed from expectationstargets
how why extent to which past results are indicative of future prospects or
not
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 23
bull Risk
pervades the whole framework and is the context for all discussions
explain the principal risks strategies employed for managing them and their
potential impact on core strategy performance drivers capabilities and
results including liquidity and capital resources
why is this a risk for this company and how is it managed
match the downside andor upside to the related risk
provide specific quantitative information about the potential
variabilitysensitivity of results depending on the outcome of the released risk
monitor risk disclosures to remain currentrelevant and when risks change
explain the removal or addition of specific risk disclosures
should not be a boilerplate listing of all conceivable risks or wholesale cross
reference to AIF risk factors
instead provide a deeper discussion of those risks that are particularly
relevant probable impactful
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 24
bull Recurring themes in MDampA best practices commentary
bull Discuss financial condition not financial position through discussion of
liquidity capital resources overall financial health of the business current and
future considerations events risks uncertainties that might impact financial
condition
bull Be analytical rather than merely descriptive (what how why)
bull Better organized and easier to read Use table of contents charts and tables
formatting
bull Donrsquot just repeat FS items Provide additional interpretive information eg
discussion about cost structures non-operational information like emerging
contingent liabilities
bull Link results to previously established targets
bull Discuss future goals and associated rationale
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Guiding Principles
September 2014 Dentons Canada LLP 25
bull Recurring best practices themes (contrsquod)
bull View of the company through managementrsquos eyes but also balanced discussion
of negative and positive
bull Must include forward looking information (FLI) and must treat it properly
(reasonable basis for making the statement and appropriate caveats about
factors that could influence its achievement)
bull Examples of FLI discussion of potential future projects sales order status of
completion of new facility
bull Avoid irrelevant information
bull Identify the most significant risks and discuss analysis of the companyrsquos
sensitivity to them
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 26
bull Venture issuer disclosure
bull If no significant revenue from operations in either of its last 2 financial years to disclose on a
comparative basis then provide the following break down to assist investors to understand the work
that was performed and how funds are expended and the affect of the spend on moving the project
forward
bull Exploration and evaluation assets (ie assays and geochem camp drilling geology geophysics travel and
lodging salaries consulting)
bull General and admin expenses (ie legal accounting)
bull Other material costs
bull Issuers without producing mines
bull Describe significant projects including
bull Plan for the project
bull Status of the project relative to the plan
bull Expenditures - by type
bull How the expenditures related to anticipated timing and cost for next stage of project plan (ie they were less
and you slowed down or shut down the project due to drilling results or you focused on an alternative property)
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
OSC Review and Guidance for Mining Issuers
(February 2014)
September 2014 Dentons Canada LLP 27
bull purpose is to provide information necessary for investors to understand the
material mineral projects
bull particularly important for a venture issuer that does not file an AIF and for
issuers that have not yet filed a technical report on the particular project
bull disclosure should include (on a property by property basis) bull Description of the project
bull Location
bull Ownership
bull Ongoing obligations to maintain interest
bull Commodities
bull Geological setting
bull Exploration work to date
bull Mineral resources or reserves
bull Qualified person (if technical report)
bull Work completed and expenditures during the period
bull Current status ndash plans and budgets
bull Explanation of relationship of expenditure to expected timing and cost for next stage of development
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
OSC Staff Notice 51-722 ndash Report on a Review of
Mining Issuersrsquo MDampA - Themes
September 2014 Dentons Canada LLP 28
bull Venture issuers without significant revenue from operations did not provide the
breakdown of material components of exploration and evaluation assets or
expenditures
bull Disclosure is necessary to assist investors to understand
bull What is being done
bull How $ is spent
bull Evaluate how the $ spent moves a project forward
bull Issuers with exploration projects did not discuss and itemize their work
completed and exploration expenditures
bull Disclosure necessary to assist investors to understand and follow the progress of the project
bull Issuers with a working capital deficiency provided very general discussion or
no discussion about potential sources of financing and how they plan on
continuing operations
bull Disclosure necessary to assist investors in assessing viability of the company or a particular project
bull Issuers did not appropriately disclose the identity of the party involved in the
related party transaction
bull Failure to update use of financing proceeds
bull Disclosure necessary to ensure funds used for purposes raised
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
You Know Your MDampA Process Needs Work Whenhellip
September 2014 Dentons Canada LLP 29
bull Correspondence from securities regulator (BCSC OSC etc) or from
external auditor
bull Donrsquot seem to have any key performance drivers or indicators
bull FS process takes too long or not commenced early enough resulting in a
mad rush
bull Internal accountingaudit and reporting function staff need more training
bull Too much reliance on one or very few staff members
bull Reinventing the wheel every quarter
bull Senior management distracted by other priorities
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 30
Boilerplate example
In 2013 the Company continued its exploration efforts on the XYZ Lake property including
additional drilling on the Fire Zone which continued to intersect significant zone of
mineralization In addition geophysical surveys identified several targets for testing which
may represent zones of mineralization similar to the Fire Zone
In 2014 the Company expects to continue its drilling efforts to outline the Fire Zone
mineralization and also drill test the geophysical targets The Company anticipates it will be
in a position to disclose and initial mineral resource estimate on the XYZ Lake property in
2014
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Projects Not Yet Generating Revenue - Example
September 2014 Dentons Canada LLP 31
In 2013 the Company spent $873100 on exploration expenses on the XYZ Lake property
which consisted mainly of two phases of diamond drilling on the Fire Zone (totaling 25
holes for 4820 meters) that were completed in February 2013 and September 2013 This
drilling continued to outline significant zones of mineralization the results of which were
reported by the Company in news releases dated May 30 2013 June 24 2013 and
November 29 2013 In addition an airborne geophysical survey (703 line km) was
completed in the summer which identified several targets for testing that may represent
zones of mineralization similar to the Fire Zone
In early 2014 the Company expects to spend approximately $800000 conducting
additional diamond drilling on the Fire Zone as well as follow-up drill testing of the high
priority geophysical targets It is expected that both drilling programs will consist of
approximately 20 drill holes totaling about 5000 meters By the third quarter of 2014 the
Company anticipates it will have completed a sufficient amount of drilling in order to
commission an initial independent NI 43-101 mineral resource estimate on the Fire Zone
which is expected to be disclosed by the end of 2014
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Variances in Use of Proceeds
September 2014 Dentons Canada LLP 32
bull Requirement to compare in tabular form the changes in the use of proceeds and to
explain the impact of those changes on the companyrsquos ability to achieve its business
objectives and milestones
bull Mini questionnaire tool to help articulate the analysis
bull Have the following considerations relating to variances been disclosed in the table and
the introductory text bull How does the nature and amount of expenditures made to date compare to the previous disclosure about use of
proceeds from a previous financing
bull How do variances impact future operations
bull How will the variances affect the companyrsquos ability to achieve its business objectives and milestones
bull Will the company require additional financing to meet the next milestone bull Has financing been sourced
bull Does the disclosure comply with the MDampA requirements
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Capital Resources
51-102F1 ndash Part 2 Item 17
September 2014 Dentons Canada LLP 33
bull Analysis should include
bull Commitments for capital expenditures as of the date of the financial statements
detailing
bull the amount nature and purpose of the commitments
bull the expected source of funds to meet the commitments
bull the expenditures not yet committed but required to maintain capacity to meet growth or fund
development activities
bull Known trends or expected fluctuations in the companyrsquos capital resources
bull Sources of financing the company has arranged but not yet used
bull Explain the planned activities to meet growth and fund development
plans along with a quantification of the capital expenditures needed for
those planned activities
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Capital Resources
September 2014 Dentons Canada LLP 34
bull Mini questionnaire tool to help articulate the analysis
bull Is there analysis of the companyrsquos spending requirements relating to
bull Capital expenditure commitments
bull Continuation of key projects
bull The nature amount and purpose of expenditure commitments and expected source of
funds to meet those commitments
bull Sources of financing
bull Is there discussion as to how difficulties in obtaining financing could affect
bull Status of projects
bull Ability to continue as a going concern
bull Have expected sources of financing that are being pursued been identified
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Financial Condition
September 2014 Dentons Canada LLP 35
bull Discussion of financial condition should include important trends and
risks that have affected financial condition as well as trends and risks
that are likely to affect the financial condition in the future
bull In discussion of changes in financial condition and results include
analysis of the effect on continuing operations of material acquisitions
dispositions write offs abandonment etc
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Didnrsquot Meet Regulatorsrsquo Expectations
September 2014 Dentons Canada LLP 36
In this example the RI provided a boilerplate description of potential sources of funding and a general disclaimer that the
anticipated sources of funding may not actually be available As a result this disclosure does not offer readers any insight
into the RIrsquos ability to generate sufficient amounts of cash and cash equivalents Rather than generic disclaimers we would
expect RIs to describe the entity-specific material circumstances that could affect the sources of cash and cash equivalents
that are reasonably likely to occur
In addition the RI was ambiguous in disclosing that the anticipated sources of funding may not be available This ambiguity
may result in readers questioning the implications of the RI not obtaining the needed funding ndash such as whether this lack
of funding could impair the RIrsquos ability to undertake essential transactions meet planned growth or development activities
and discharge its working capital requirements
Capital Resources
At December 31 2011 the Company had bank indebtedness of $01 million and a working capital
deficiency of $16 million The Company does not have sufficient working capital at this time to meet its
ongoing financial obligations for the next twelve months and fund its business plan It will require
additional funds either from revenues or financing to continue its operations While management of the
Company believes that it will be able to generate funding through sales or equity financing there can be
no guarantee that the Company will be successful in obtaining sufficient revenues or financing to
continue operations beyond this date
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Meets Expectations
September 2014 Dentons Canada LLP 37
The Companyrsquos consolidated working capital deficiency (current assets less current liabilities) as
at March 31 2012 is $25 million The Company received $55 million (before costs) from an
issue of convertible debentures which closed on May 5th 2012 which covered the working
capital deficiency In addition to these funds the Company expects to be able to access further
capital through farmouts and selected asset sales although none have been completed to date
and there is no certainty we will find buyers on acceptable terms The latter are likely only to be
partial sales or reductions in working interest for the Companyrsquos exploration assets Funds
received from farmouts and asset sales will provide the Company with a different risk profile on
those particular projects farmed out and reduce the requirements on the Companyrsquos cash
balances while at the same time ensuring exploration activities continue
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 38
bull Recurring deficiency repeat information from FS notes not identifying the related person or
entity
bull Need to supplement that with
bull qualitative and quantitative discussion about the business purpose and economic
substance of the transaction
bull description of the parties and their relationship
bull recorded amount and the measurement basis used
bull ongoing contractual or other commitments resulting from the transaction
bull Example of common related party transactions
bull Office space rented from a company with officers and directors in common with the
company
bull Administrative services provided by a company controlled by a director
bull Advisory fees management fees or other services to companies controlled by officers or
directors
bull Loans and advances provided by a director to the company or vice-versa
bull Equity investments made by the company in other entities with common officers and
directors
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Related Party Transactions
51-102 F1 ndash Part 2 Item 19
September 2014 Dentons Canada LLP 39
Boilerplate example
During the year the Company paid $148541 for services to a firm in which a
director is a partner
Entity-specific example
During the year the Company paid professional fees of $148541 to Best Miner
LLP a law firm of which Joe Prospector a director of the Board is a partner
These services were incurred in the normal course of operations for general
corporate matters attendance at committee and board meetings as well as
evaluating business opportunities All services were made on terms equivalent to
those that prevail with armrsquos length transactions
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Other Sources of MDampA Requirements
September 2014 Dentons Canada LLP 40
bull NI 52-109 ndash MDampA disclosure requirements arise from Certification of
Disclosure in Annual and Interim Filings
bull Form 52-109F1 and Form 52-109F2 Requires Annual and Interim MDampA
Disclosure concerning DCampP ICFR
bull OSC Staff Notice 51-721 (June 2013) Forward Looking Financial Information
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-
GAAP Financial Measures and Additional GAAP Measures
bull Environmental Climate Change and Sustainability
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Resources
September 2014 Dentons Canada LLP 41
wwwbcscbcca
Securities Law amp Policy
Instruments amp Policies
5 Ongoing Requirements for Issuers and Insiders [51-101 to 58-305]
wwwoscgovonca
Securities Law amp Instruments
Instruments Rules amp Policies
5 Ongoing Requirements for Issuers and Insiders
wwwbcscbcca
News and Publications
Publications
wwwoscgovonca
Information for Companies
SME Institute Calendar of Upcoming Seminars
cpa Canada wwwcicaca Focus on Practice Areas ndash Reporting and Capital Markets
Applying the Standards
Financial Reporting
Managementrsquos Discussion and Analysis and Other Beyond-GAAP Reporting
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Resources
September 2014 Dentons Canada LLP 42
bull NI 51-102 Continuous Disclosure Obligations (Part 5) and companion policy 51-102CP
(Part 5)
bull Prescribed form 51-102F1
bull NI 52-109 Certification of Disclosure in Annual and Interim Filings
bull NI 51-101 Standards of Disclosure for Oil and Gas Activities
bull NI 43-101 Standards of Disclosure for Mineral Projects
bull BCSC ndash Website for Investors ndash Defaulting Reporting Issuers
bull OSC Policy 51-601 Reporting Issuer Defaults
bull NI 51-102 Continuous Disclosure Obligations ndash Part 4A Forward-Looking Information
Part 4B FOFI and Financial Outlooks Section 58 Disclosure Relating to Previously
Disclosed Material Forward-looking Information
bull NI 51-102 Companion Policy ndash Part 4A Forward-Looking Information Section 55
Previously Disclosed Material Forward-looking Information
bull NP 51-201 Disclosure Standards
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Resources
September 2014 Dentons Canada LLP 43
bull CSA (Canadian Securities Administrators) Staff Notice 51-341 Continuous Disclosure Review
Program for fiscal year ended March 31 2014 released annually in July since 2010
bull ASC annual Corporate Finance Disclosure Report released annually in December
bull OSC annual Corporate Finance Report under OSC Staff Notice 51-706
bull OSC Staff Notice 52-720 (Feb 2012) Financial Reporting Bulletin
bull CSA Staff Notice 51-333 Environmental Reporting Guidance (Oct 2010)
bull CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures and Additional GAAP Measures
bull CSA Staff Notice 51-328 Continuous Disclosure Considerations Related to Current Economic
Conditions
bull OSC Policy 51-604 Defence for Misrepresentations in Forward-Looking Information
bull CSA Staff Notice 51-330 Guidance Regarding Application of Forward-looking Information
Requirements under NI 51-102
bull OSC Staff Notice 51-721 Forward-Looking Information Disclosure (June 2013)
bull OSC Staff Notice 51-722 Report on a Review of Mining Issuersrsquo Managementrsquos Discussion and
Analysis and Guidance (February 2014)
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Resources
September 2014 Dentons Canada LLP 44
bull OSC Staff Notice 52-722 (December 2013) Report of Staffrsquos Review of Non-GAAP Financial
Measures and Additional GAAP Measures
bull OSC Corporate Sustainability Initiative Report to the Minister of Finance (Dec 2009)
bull OSC Notice 51-717 Corporate Governance and Environmental Disclosure (Dec 2009)
bull OSC SME (small and medium enterprises) Institute seminar series
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Resources
September 2014 Dentons Canada LLP 45
CPRB Managementrsquos Discussion and Analysis Guidance on Preparation and Disclosure last
update July 2009 (update 3) and other guidance
bull Improved Communication with Supplementary Financial Measures General Principles
and Guidance for Reporting Free Cash Flow and EBITDA April 2013
bull Fair Value Discussions in the MDampA January 2013
bull Quarter-End Financial Communications December 2010
bull Guidance on Improved Strategy and Outlook Disclosures November 2010
bull Evaluating and Improving MDampA ndash A Baseline Report October 2008
bull Building a Better MDampA ndash Risk Disclosure March 2008
bull Building a Better MDampA ndash A Guide for Small Issuers November 2007
bull 20 Questions Directors Should Ask About MDampA
bull CPA Market Value - Professional Investorsrsquo Views About Financial Reporting in Canada
2013
bull CPRP Building a Better MDampA ndash Climate Change Disclosure (Oct 2008)
bull CSA Corporate Reporting Awards
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
Thank you
Catherine Wade Dentons Canada LLP 20th Floor 250 Howe Street Vancouver BC V6C 3R8
copy 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates This publication is not designed to provide legal or other advice and you should not take or refrain from taking
action based on its content Please see dentonscom for Legal Notices
Dentons is the global law firm created by international law firm Salans LLP Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law
firm SNR Denton and is driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
The preceding presentation contains examples of the kinds of issues companies dealing with Mining could face If you are faced with one of these issues please retain professional assistance as each situation is unique September 2014
Dentons Canada LLP
