National Instrument 43-101

National Instrument 43-101 (often shortened to NI 43-101) is a set of rules and standards for how mining and exploration companies must report scientific and technical information about their mineral projects to the public. It’s a Canadian law, but its influence is global. Developed by the Canadian Securities Administrators (CSA), its primary goal is to protect investors from being misled by overly optimistic or fraudulent claims. The rule was born from the ashes of the infamous Bre-X scandal in the 1990s, where a company’s claims of a massive gold deposit in Borneo turned out to be a complete fabrication, costing investors billions. Today, any mining company listed on a Canadian stock exchange, like the Toronto Stock Exchange (TSX) or the TSX Venture Exchange, must follow NI 43-101. Because of its rigor, the NI 43-101 report has become the gold standard for project disclosure worldwide, providing a trusted framework that helps investors make more informed decisions.

For investors, especially value investors, wading into the mining sector can feel like navigating a minefield of hype and speculation. NI 43-101 is your best geological map and compass. It forces companies to ground their exciting press releases in scientific fact and standardized reporting.

The heart of NI 43-101 is the requirement for a technical report to be prepared by or under the supervision of a Qualified Person (QP). A QP is an independent geoscientist or engineer with specific professional credentials and relevant experience. They are legally and professionally accountable for the information presented. Think of a QP as a certified public accountant for rocks; their sign-off gives the data a crucial layer of credibility. If a company makes a big announcement about a new discovery but can’t produce a report signed by a QP, a massive red flag should go up.

Before NI 43-101, companies could use all sorts of creative and inconsistent language to describe their deposits, making it impossible to compare one project to another. This regulation establishes a common vocabulary, defining specific categories for mineral resources and reserves. This allows you, the investor, to compare projects on an apples-to-apples basis, cutting through the marketing jargon to assess the real substance of a company's assets.

An NI 43-101 technical report can be long and dense, but you don't need to be a geologist to pull out the most important information. Knowing where to look and what the key terms mean is half the battle.

• Property Description and Location: Does the company actually have the legal rights to mine the land? This is a fundamental check.
• Accessibility, Climate, and Infrastructure: Can they even get to the minerals? Is there water, power, and a nearby town? A fantastic deposit in an impossibly remote location is worthless.
• Geological Setting and Exploration: This section explains why the company believes valuable minerals are there. It details the history of exploration and the results of things like geophysical surveys.
• Drilling and Sampling: This is the hard evidence. It describes how the company collected its physical samples (e.g., drill cores) and the procedures used to ensure they are high-quality and unbiased.
• Mineral Resource and Mineral Reserve Estimates: This is the most critical section for investors. It quantifies the potential size and quality of the mineral deposit.

Understanding the difference between a “resource” and a “reserve” is non-negotiable for any serious mining investor. They are not the same thing.

• Mineral Resource: This is a concentration of material in or on the Earth’s crust in such form and quantity that there are reasonable prospects for eventual economic extraction. It's an estimate of what might be there, categorized by confidence level:
  • Inferred Resource: The lowest level of confidence. It's a preliminary estimate based on limited geological evidence. Think of it as seeing smoke in the distance—there’s probably a fire, but you don’t know how big it is.
  • Indicated Resource: A higher level of confidence. More drilling and sampling has been done to give a better idea of the deposit's size and grade. You can now see the flames.
  • Measured Resource: The highest level of confidence. The deposit has been drilled and sampled so thoroughly that its dimensions, grade, and tonnage are well-established. You’ve measured the fire's heat and dimensions.
• Mineral Reserve: This is the economically mineable part of a Measured or Indicated Mineral Resource. A reserve is what you get when you apply real-world modifying factors—like the price of the metal, the cost to mine and process it, and legal permits—to a resource. A reserve is what can actually make money.
  • Probable Reserve: The economically mineable part of an Indicated Resource. Lower confidence.
  • Proven Reserve: The economically mineable part of a Measured Resource. The highest level of confidence and the closest thing to money in the bank.

A company with 10 million ounces of Proven Reserves is in a vastly different—and much stronger—position than a company with 10 million ounces of Inferred Resources.

An NI 43-101 report is not a guarantee that a mine will be profitable or that an investment will succeed. However, it is an indispensable tool for due diligence. It transforms mining investment from a wild gamble into a calculated risk. Never, ever invest in a junior mining company based on a flashy presentation or a hyped-up press release. Your first question should always be: “Where is the NI 43-101 report?” Reading that report, and specifically understanding the difference between its resource and reserve estimates, is your first and most important step in separating geological potential from a hole in the ground that will just swallow your money. For a value investor, the report is the blueprint that shows whether a company has a realistic plan to turn rocks into revenue.