Qualified Person (QP) under Canadian NI 43-101 — Study Guide

Qualified Person (QP) under Canadian NI 43-101 — Study Guide

Designation: Qualified Person (QP) Defined by: Canadian Securities Administrators (CSA), National Instrument 43-101 — Standards of Disclosure for Mineral Projects (a statutory instrument, not a voluntary credential) Jurisdiction: Canada — applies to all issuers disclosing scientific or technical information about mineral projects on Canadian exchanges (and, in practice, to any company that wants Canadian capital) Level: Professional designation with statutory force Prerequisites: (1) An engineer or geoscientist with a relevant university degree; (2) at least 5 years of experience relevant to the subject matter of the mineral project and the specific technical disclosure; (3) experience relevant to the mineralization style and the activity undertaken; (4) good standing with a professional association that has disciplinary powers (e.g., P.Eng., P.Geo., SME Registered Member — accepted since 2011). CSA's proposed 2025 amendments clarify the membership-duration expectations. Renewal: No fixed renewal — QP status is maintained through continuous good standing with the professional association and per-project satisfaction of the relevance test. Lose good standing, lose QP status.

Why this designation matters

NI 43-101 is arguably the most consequential piece of mining regulation in the world: it was written in direct response to the Bre-X fraud (1997), where falsified gold assays wiped out billions in market value. The instrument makes it illegal for an issuer to disclose scientific or technical information about a mineral project unless a QP has prepared, supervised, or approved it. The QP is the human being the securities regulators hold accountable. Understanding NI 43-101 is therefore not optional for anyone working on Canadian-listed mining projects — it governs press releases, presentations, websites, and technical reports.

Pathway

1. Qualify professionally. Earn the degree, accumulate 5+ years of relevant experience (relevant to both the deposit type and the work — resource estimation, metallurgy, mine engineering), and join/maintain membership in a recognized association with disciplinary powers.
2. Get engaged by an issuer. The issuer (or its consultants) engages the QP for a specific project and specific technical items.
3. Personal inspection. The QP must personally inspect the property that is the subject of the technical report (with limited, disclosed exceptions). This is not delegable to a junior.
4. Prepare or supervise the technical report. The report follows Form 43-101F1 — 23 prescribed items from property description through recommendations, with a QP certificate and consent for each QP taking responsibility for specific sections.
5. Approve ongoing disclosure. Every press release, presentation, and website update containing scientific/technical information about a material project must be approved by a QP (name the QP; the market reads these lines).
6. File on SEDAR+. Technical reports supporting disclosure are filed publicly; regulators review them and issue comment letters.

Knowledge domains

Domain 1 — The QP definition (s. 1.1, 5.1)

Three cumulative tests: (a) education — engineer or geoscientist degree; (b) experience — 5 years relevant to the subject matter (a metallurgist cannot QP a resource estimate; a geologist cannot QP a reserve's mine plan); (c) good standing with an association having disciplinary powers. The "relevant experience" test is the examination in practice: regulators and courts look at whether the QP's background matches the deposit type (porphyry vs. epithermal vs. sediment-hosted), the commodity, and the activity (exploration vs. resource estimation vs. mine design vs. processing).

Domain 2 — What triggers the QP requirement

All written disclosure of scientific or technical information concerning a material mineral project: press releases, corporate presentations, website content, fact sheets, social media posts by the issuer. The disclosure must state the QP's name and relationship to the issuer, and confirm the QP approved it. Oral disclosure at conferences is technically outside the instrument but the market and regulators treat QP-backed statements as the standard.

Domain 3 — Technical report structure (Form 43-101F1)

23 items: summary, introduction, reliance on other experts, property description and location, accessibility/climate/infrastructure, history, geological setting and mineralization, deposit types, exploration, drilling, sample preparation/analysis/security, data verification, mineral processing and metallurgical testing, mineral resource estimates, mineral reserve estimates, mining methods, recovery methods, project infrastructure, market studies and contracts, environmental studies/permitting/social, capital and operating costs, economic analysis, adjacent properties, other relevant data, interpretation and conclusions, recommendations, references. Each QP signs a certificate stating qualifications, independence (or lack thereof), personal inspection details, and the specific items of the report they take responsibility for.

Domain 4 — Resource and reserve definitions (CIM Definition Standards)

Resources: Inferred → Indicated → Measured, in order of increasing geological confidence. Inferred cannot be converted to reserves and cannot be used as the basis of a feasibility study (with narrow exceptions for a PEA, which must carry prescribed cautionary language). Reserves: Probable and Proven, derived from measured/indicated resources by applying the modifying factors — mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social, governmental. The reserve is an economic concept, not just a geological one: a reserve must be demonstrated as economically mineable under reasonable assumptions.

Domain 5 — Independence and personal inspection

For certain technical reports (e.g., supporting a prospectus or in specific transactions), the QP must be independent of the issuer. Independence is defined by the instrument (no employment, no significant securities holdings, etc.). Personal inspection: the QP must visit the site; if a report is updated and no material change occurred, re-inspection may not be required — but the QP must disclose the date and extent of the inspection.

Domain 6 — Data verification and QA/QC

The post-Bre-X core: the QP must verify the data underlying the disclosure. Chain of custody for samples, QA/QC protocols (blanks, standards, duplicates insertion rates — typically 5% each), umpire laboratory checks, database validation, twin-hole drilling where historic data is suspect. A technical report that merely repeats the client's database without verification is non-compliant, and regulators issue deficiency letters for exactly this.

Key concepts with working definitions

• Material mineral project: one material to the issuer (or that becomes material); all the QP rules attach to material projects.
• Modifying factors: the engineering, economic, legal, environmental, and social inputs that convert resources to reserves. A "reserve" without documented modifying factors is a fiction.
• Cut-off grade: the grade at which mineralized material is economic; must be derived from stated costs and prices, not assumed. Cut-off grade (per tonne) = operating cost per tonne ÷ (metal price × recovery × payability), in consistent units.
• Qualified person vs. competent person: same CRIRSCO-family role; "QP" is the Canadian statutory term, "Competent Person" the JORC term. The duties are parallel; the legal instruments differ.

Worked examples

Example 1 — Cut-off grade derivation. Underground gold project: mining + processing + G&A = $95/t; metallurgical recovery 92%; gold price $2,400/oz; payability 99%. Cut-off (g/t) = cost per tonne ÷ (price per gram × recovery × payability). Price per gram = 2400/31.1035 = $77.16/g. Cut-off = 95 ÷ (77.16 × 0.92 × 0.99) = 95 ÷ 70.27 ≈ 1.35 g/t. Material above 1.35 g/t is "ore" for the mine plan; the resource statement must disclose this derivation. (Exam-style trap: using spot price vs. the long-term consensus price the study actually used — the QP must state which.)

Example 2 — Resource classification from drill spacing. A gold deposit drilled on 25 m centers in the core and 100 m centers on the periphery, with variography showing a range of ~40 m. QP judgment: core → Indicated (spacing within variogram range, good QA/QC); periphery → Inferred (spacing exceeds range). Measured would require closer spacing plus demonstrated grade continuity (e.g., production data or twin holes). The QP documents the reasoning — classification is a professional judgment, not a spacing lookup table.

Example 3 — The PEA cautionary language. An issuer wants to publish a preliminary economic assessment including inferred resources. Permitted — but the disclosure must state that the PEA is preliminary, includes inferred resources considered too speculative geologically to have economic considerations applied, and there is no certainty the PEA will be realized. Omitting this language is one of the most common NI 43-101 violations.

Example 4 — Independence failure. A consulting firm's principal owns 8% of the junior issuer and is asked to author the technical report supporting a prospectus offering. The principal is not independent (prescribed threshold concepts apply) and cannot author that report — the issuer needs an independent QP. For a non-prospectus technical report, a non-independent QP may author it but must disclose the relationship.

Example 5 — Data verification in practice. Historic drill database: 200 holes from the 1980s, no QA/QC, paper logs. QP's verification program: re-log 10% of available core, twin 5 historic holes, re-assay pulps at an umpire lab, rebuild the database with validation rules. Result: historic assays replicate within acceptable limits → data usable with disclosed limitations; or they don't → the historic holes are excluded from the estimate. Either outcome is reported transparently.

Standards/regulations cross-reference

• NI 43-101 itself (the instrument) + Form 43-101F1 (report format) + Companion Policy 43-101CP (regulatory guidance — read this; it explains what staff actually expect).
• CIM Definition Standards on Mineral Resources and Mineral Reserves — incorporated by reference; the definitions are examinable substance.
• CIM Best Practice Guidelines (exploration, estimation, etc.) — what "industry standard practice" means in a deficiency letter.
• SEC S-K 1300 — the US parallel; know the differences (initial assessment, inferred-resource treatment, filing mechanics).
• JORC Code / CRIRSCO Template — the international family.

Pitfalls and trap patterns

1. "Relevant" experience is narrowly judged. Five years in mining is not enough; five years in the relevant deposit type and activity is the test.
2. Disclosure creep. The marketing team updates the website with a new cross-section that hasn't been QP-approved. The QP's name on file doesn't cover new disclosure — every new technical claim needs QP review.
3. Inferred resources in economic studies. Inferred can go in a PEA (with cautionary language) but not in a pre-feasibility or feasibility study as the basis for reserves.
4. Reliance on other experts. Permitted for legal, environmental, tax matters — but the QP must name the expert and the item, and cannot delegate the core technical judgments.
5. The consent. Filing a technical report requires each QP's written consent. An issuer cannot file a report over a QP's objection by removing their name from items they actually prepared.

Practice problems

1. Define the three QP qualification tests in one sentence each.
2. An issuer's press release announces "proven and probable reserves of 2.1 Moz" based on a PEA-level study. Identify all NI 43-101 problems with this disclosure.
3. A QP personally inspected the property in 2019. In 2026 the issuer files an updated technical report with no material changes to the project. Must the QP re-inspect? What must be disclosed?
4. Compute a copper cut-off grade: total operating cost $28/t, recovery 88%, Cu price $4.20/lb, payability 96.5%. Express in % Cu.
5. A junior's website shows a 3D block model labeled "5 Moz gold resource" with no QP name, no classification, no cut-off. List the deficiencies.

Answers

1. (a) Education: holds an engineering or geoscience degree. (b) Experience: ≥5 years relevant to the subject matter, deposit type, and activity. (c) Standing: member in good standing of a professional association with disciplinary powers.
2. (a) Reserves cannot be declared on a PEA — reserves require at least a pre-feasibility study with full modifying-factor analysis. (b) "Proven and probable" without the underlying measured/indicated resource disclosure and study level is non-compliant. (c) The press release must name the QP and confirm approval.
3. Re-inspection is not strictly required if nothing material changed, but the report must disclose the date of the last personal inspection (2019) and the QP must be satisfied the inspection remains representative — if site conditions changed materially, re-inspection is required.
4. Price per tonne of Cu = 4.20 $/lb × 2204.6 lb/t = $9,259/t. Cut-off = 28 ÷ (9259 × 0.88 × 0.965) = 28 ÷ 7862 ≈ 0.00356 = 0.36% Cu.
5. No QP identified; no resource classification (inferred/indicated/measured); no cut-off grade or basis; no statement of QP approval — the disclosure is non-compliant on every element NI 43-101 requires.

Original ETS reference writing, verified against public sources on 2026-09-30. Thin sourcing is flagged inline. Not legal advice — confirm current editions with the issuing body.