Small mining companies often have a hard time meeting their disclosure requirements, according to a new report from the Ontario Securities Commission (OSC) that aims to provide guidance to improve compliance.

The OSC issued a report examining the management discussion and analysis (MD&A) disclosure provided by small mining firms (those with a market capitalization of less than $100 million). “We found that many smaller mining issuers continue to struggle to provide complete and meaningful MD&A disclosure,” it says.

The report cites specific areas for improvement, including: venture issuers without significant revenue from operations that do not provide the breakdown of material components of exploration and evaluation (E&E) assets or expenditures; issuers with exploration projects that do not discuss and itemize their exploration expenditures; issuers with a working capital deficiency provide very general discussion, or no discussion, about potential sources of financing and how they plan on continuing operations; and, issuers that de not appropriately disclose the identity of the party involved in the related party transaction.

The OSC says that its review of over 100 mining issuers found that the size of an issuer (as defined by market capitalization) “was not a predictive factor as to whether an issuer met MD&A disclosure requirements. However, we note that issuers in the exploration stage generally need more guidance on appropriate entity-specific disclosure to be included in their MD&A than issuers in the development and production stages.”

The report provides guidance for firms in an effort to help them comply with their disclosure obligations, noting that accurate MD&A and a complete continuous disclosure record will help ensure the process for obtaining a prospectus receipt is not delayed.

“Small mining issuers contribute to Ontario’s economic growth, but face limited funding and resources, which can make it difficult to meet regulatory obligations,” said Howard Wetston, chair and CEO of the OSC. “The OSC is assisting small mining issuers with tailored guidance to help them better communicate with investors by providing clear, transparent, and relevant information about financial condition and future prospects.”