Securities Law & Instruments


National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- A mining issuer wants to file a revised technical report to support prior disclosure by the issuer of results of a preliminary economic assessment that included inferred resources after it had completed a feasibility study or pre-feasibility study that established mineral reserves about the mineral project in compliance with, and within the time required under, National Instrument 43-101.

Applicable Legislative Provisions

National Instrument 43-101 Standards of Disclosure for Mineral Projects, ss. 2.3(1)(b), s. 4.3, 9.1(1).

Form 43-101 F1 Technical Report Item 25(h).

May 20, 2011




(the "Jurisdiction")








(the "Filer")



The principal regulator in the Jurisdiction has received an application from the Filer for a decision (the "Exemption Sought") under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") to grant an exemption, pursuant to Section 9.1(1) of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"), exempting the Filer from the following requirements of NI 43-101:

(a) the requirement in Section 4.3 of NI 43-101 and Item 25(h) of Form 43-101F1 -- Technical Report that only proven and probable mineral reserves be used in an economic analysis of a mineral project (the "Report Requirement"); and

(b) the prohibition in Section 2.3(1)(b) of NI 43-101 against making disclosure of results of an economic evaluation which uses inferred mineral resources (the "Disclosure Prohibition").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Yukon Territory, the Northwest Territories and Nunavut.


Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.


This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a company incorporated under the Canada Business Corporations Act with its registered and head office located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2940, Toronto, Ontario, M5J 2J2, Canada.

2. The Filer is an international mining company with its properties consisting of the Lumwana copper mine in Zambia and the Jabal Sayid copper-gold project in the Kingdom of Saudi Arabia.

3. The share capital of the Filer consists of an unlimited number of common shares (the "Common Shares") and preferred shares (the "Preferred Shares") issuable in series. As at March 31, 2011, the Filer had a total of 879,495,876 Common Shares issued and outstanding. The Common Shares are listed for trading on the Toronto Stock Exchange under the symbol "EQN". In addition to the Common Shares, Equinox CHESS Depository Interests ("CDIs") are listed for trading on the Australian Stock Exchange (the "ASX"). The CDIs are listed for trading on the ASX under the symbol "EQN".

4. As at March 31, 2011, there were no Preferred Shares issued and outstanding.

5. The Filer is a reporting issuer or its equivalent in each of the Jurisdictions.

The Original Technical Report and the Feasibility Study

6. The Lumwana copper project (the "Lumwana Project") is located in the North Western Province of Zambia and includes the Malundwe and Chimiwungo deposits. It is primarily an operating mine (since December 2008) producing copper concentrate for sale. The Filer is the operator of the Lumwana Project, and it is 100% owned by the Filer.

7. In June 2004, the Filer filed the original technical report in respect of the Lumwana Project entitled "Technical Report -- Lumwana Project, North West Province, Republic of Zambia" (the "Original Technical Report"), prepared in accordance with NI 43-101.

8. The disclosure contained in the Original Technical Report was based in part on a bankable feasibility study (the "Feasibility Study") completed by the Filer in October, 2003. The principal consultants which prepared the Feasibility Study were Kvaerner E&C on management, processing and engineering aspects, and Golder Associates Pty Ltd. ("Golder") on all geoscientific, environmental and tailings dam studies.

9. The Feasibility Study included:

(a) A two-phase drilling program (which, together with previously collected drilling and assay data, created a database of 961 holes and approximately 130,000 meters), including resource, geotechncial and hydrogeological drill programs and the collection of metallurgical samples, mine design, an extensive metallurgical testwork program, detailed processing plant design, a metal marketing review, an environmental impact assessment study and estimation of capital and operating costs.

(b) The preparation by Golder of a mine plan which included inferred resources within the defined open pit areas based on measured and indicated resources. The estimation allowed for dilution, realistic mining conditions and the likely continuity of the ore body and was followed by optimization, mine planning and financial analysis.

(c) The conclusion by Golder, based on its analysis and the data collected, that the Malundwe and Chimiwungo deposits were very large, simple deposits which are geologically well-understood and display a high continuity of copper mineralization for which the inclusion of inferred resources was deemed appropriate in the mine plan of the Lumwana Project.

(d) The estimate by Golder at that time that the Lumwana Project contained a total mineral resource of 901 million tonnes which included 632 million tonnes of inferred resources. Of this total, 348 million tonnes were contained within the defined open pit areas which included 205 million tonnes of proven and probable reserves and 143 million tonnes of inferred resources. The mining plan set out in the Feasibility Study contemplated a long-life operation of greater than 20 years. Inferred resources constituted approximately 41% of the material in the mine plan open pits, but would largely be mined only in the latter stages of the project (years 13 to 20). The mining plan contemplated that greater than 80% of the mining within the first 12 years of operations will come from proven and probable reserves.

10. On April 27, 2004, the Filer obtained exemptive relief from the Report Requirement and the Disclosure Prohibition in connection with a scheme of arrangement undertaken by the Filer under Australian law, and the Filer's initial public offering of Common Shares by way of a prospectus dated June 29, 2004.

11. Since the filing of the Original Technical Report, revised and updated versions of the report have been filed on a number of occasions to reflect updated drilling, testwork, project cost estimates, resource and reserve estimates and other ongoing developments. The most recent version of the report was filed in April 2009.

The Revised Technical Report

12. The Filer will prepare and file a revised technical report for the Lumwana Project that would provide further support for the expansion disclosure relating to the Lumwana Project (the "Revised Technical Report") disclosed in a news release on February 2, 2011 including estimated annual throughput, copper concentrate production and approximate capital costs. The revised technical report must be filed not less than three business days prior to the expiry of the take-over bid. The decision will only apply to the Revised Technical Report.

13. The Revised Technical Report will set forth (a) a "base case" description of the Lumwana Project at a production rate of approximately 25 million tonnes per annum (reflecting the completion of a debottlenecking project currently underway), and including an economic analysis based solely on proven and probable reserves and measured and indicated resources within the designed pit at Lumwana with inferred resources treated as waste; and (b) a "development case" description of the Lumwana Project that assumes completion of the proposed 45 million tonnes per annum expansion, and is based in part on the inclusion of the inferred resources located at Lumwana with the percentage of inferred resources included clearly shown and includes the disclosure required by section 2.3(3)(b) of NI 43-101.

14. The Exemption Sought from the Report Requirement and the Disclosure Prohibition is consistent with current regulatory developments and, in particular, the published amendments to NI 43-101 scheduled to come into effect on June 30, 2011. On April 8, 2011, the Canadian Securities Administrators announced the repeal and replacement of NI 43-101, Form 43-101F1 Technical Report, and Companion Policy 43-101CP ("Revised NI 43-101"). Upon coming into effect, Revised NI 43-101 will replace the current form of NI 43-101, Form 43-101F1 and Companion Policy 43-101CP.

15. In particular, Revised NI 43-101 will expand the exemption relating to the use of a preliminary assessment based on inferred mineral resources, so as to allow issuers to disclose a preliminary economic assessment that includes or is based on inferred mineral resources where the disclosure in question includes a specified disclaimer, and discloses the impact of the assessment on the results of any preliminary feasibility or feasibility study in respect of the relevant property. The Revised Technical Report will include a disclaimer and disclosure regarding the impact of the Development Case on the Feasibility Study.


The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission