APEGS ANNUAL MEETING AND PROFESSIONAL DEVELOPMENT CONFERENCE
The Importance of a Qualified Person in Reporting
If the name Michael de Guzman doesn’t ring a bell, then Bre-X Minerals most certainly will.
Bre-X Minerals was a Calgary-based company in the 1990s that boasted it had discovered the richest gold deposit ever in a remote jungle in Indonesia. Bre-X’s top geologist at the time predicted the deposit might contain more than 200 million ounces of gold.
As expected, the company’s value skyrocketed. From initial private offerings at 30 cents a share, Bre-X stock climbed to more than $285 on the open market. At its peak, Bre-X was valued at more than $6 billion.
Major mining companies fought an epic battle to get a piece of the deposit. Investment firms and mutual fund companies poured incredible amounts into the stock.
And then everything fell apart in a big way. The Indonesian government eventually revoked Bre-X’s exploration permits. A new company took over the mine and soon learned there was no gold to be found.
It’s a scandal rich with fraud, negligence and irresponsible reporting and one that rocked the professional geoscience community.
John G. Pearson, P.Geo., M.Sc., FGC, FEC. (Hon.) referred to this tale during his presentation Geoethics in Reporting for Resource Companies at the APEGS annual meeting.
The Bre-X scandal spurred new reporting standards. In Canada, regulators implemented NI 43-101 reporting standards in the early 2000s. Different jurisdictions around the world (South Africa, Australia, New Zealand and other popular mining hotspots) have their own version of NI 43-101 and what is required to work in those jurisdictions.
Included in the NI 43-101, it states all reports, news releases and associated reporting for mining projects be vetted by a Qualified Person – a professional geoscientist or engineer.
This defined who could do the work and a series of quality assurances and quality control on the analysis. It developed a framework for reporting. It also made sure that any publications are approved by a Qualified Person to ensure legitimacy.
“Anything that is published that is going to affect the value of the company and its investors all has to be reported and all has to be approved by a Qualified Person. You need to report everything … the good and the bad.”
– John G. Pearson, P.Geo., M.Sc., FGC, FEC. (Hon.)
A Qualified Person could be an in-house employee or an independent.
“I was a mineral exploration geologist for the majority of my career,” Pearson says. “I couldn’t and wouldn’t report on an oil reserve estimate because I have no experience with that.”
Pearson is a former director for Geoscience Canada who played a role in developing a program for students related to specifics of a Qualified Person in mining and oil and gas industries.
Once you’re a Qualified Person, it outlines what the expectations are for your career.
Pearson noted it is not possible to legislate ethical behaviour and reporting. He said it is the responsibility of each professional geoscientist and engineer to maintain ethical standards in practice and reporting.