Securities regulators said the final report of the mining standards task force, a sweeping list of 66 recommendations covering virtually every aspect of mining, is an action plan that will be adopted.
In addition to the guidelines, the report spotlights the role of the brokerage industry in the mining business.
The task force, appointed by the Toronto Stock Exchange and the Ontario Securities Commission, recommends:
News releases should contain detailed information, including geology, drill locations and assaying methods used.
"This is one task force report that isn't going to gather dust on the shelves," said John Geller, vice-chairman of the Ontario Securities Commission.
But despite his tough talk, Mr. Geller conceded there are no guarantees increased regulation will stop future mining fraud.
"There is nothing in these regulations short of closing down the marketplace that will stop criminal activities," he said. "The best we can hope for is we will make fraud more difficult at an earlier stage."
Yesterday's report also takes a look at the role played by the investment community. The Toronto Stock Exchange wants member brokerages to disclose the qualifications of mining analysts in all research reports. In addition, reports should disclose whether the analyst holds securities in the company under review.
"More is better when it comes to disclosure," said John Carson, senior vice-president of market regulation at the TSE and co-chairman of the task force.
The task force was set up after the collapse of Calgary-based junior Bre-X in March, 1997.
The company's assertions that its Busang property in Indonesia contained up to 200 million ounces of gold were proved false when U.S. partner Freeport-McMoran Copper and Gold Inc. found only insignificant traces of gold. Bre-X's shares crashed and investors lost an estimated $4-billion.
The 11-member task force included mining industry members and regulatory professionals.
The recommendations are expected to win the support of exchanges across the country.
On Monday, a committee studying Quebec's mining industry published a report that shares many of the recommendations, including improved disclosure of drill results and project risk factors. That committee includes representatives of the Montreal Exchange, the Quebec Securities Commission, and industry.
The Vancouver Stock Exchange, a market heavily weighted with junior mining issues, has also shown early support for the task force.
It's probable some recommendations "will become a matter of law" in the near future, Mr. Geller said. "Enforcement . . . will be possible and it will be one we will be zeroing in on."
The reports come at a desperate time for many mining companies. Precious and base metals are trading near 10- to 15-year lows and stock markets are wary of mining plays.
Additional regulation "will add to costs," said David Comba, director of issues management at the Prospectors & Developers Association of Canada. The report is "very good" but Mr. Comba questioned why senior producers are excluded from some recommendations. For example, he said, if a senior mining company reports a 100% increase in mineral reserves, independent evaluation is unnecessary.
"The assumption is if you're big, you don't make mistakes. And we all know that's not true."
Closer scrutiny of the mining sector is long overdue, said one small investor in Bre-X who asked not to be identified.
Nevertheless, it's "very hard to tell" what would have prevented the mining scandal, the investor said. "Once the stock price goes up, there's a sense of euphoria all around. There's nothing you can do," he said.
