REVIEW OF SEC GUIDELINE NO. 7 – APPLICATION FOR THE INDUSTRIAL SAND INDUSTRY

As the industrial sand mining industry continues to develop and mature in the upper Midwest, market competition, oil costs and product price structuring are becoming increasingly important factors. The economic future of the sand mining industry will likely move into more public investor financed operations.

Public offerings of industrial sand properties and operations in the US are regulated by the Security and Exchange Commission (SEC), specifically Guide No. 7. These SEC regulations are necessary to protect the investor, mining industry and the US economy. The three sections of Guide 7 include; a) Definitions, b) Mining Operation Disclosure, and c) Supplemental Information. Sections from Guide No. 7 will be presented with application and emphasis on the industrial sand mining industry.

Geologists play a key role in development of the Mining Operation Disclosure by interpreting the sand deposit and calculating/classifying the resources/reserves. Particular importance will be placed on the application of sound geological methodologies and data interpretations at industrial sand sites. The concept and qualifications of “Competent Persons” or “Qualified Persons” in development of the Mining Operation Disclosure are very important in SEC analyst reviews. “Competent” or “Qualified” persons involved in a Mining Operation Disclosure may include; geologists, mining engineers, environmental engineers, financial analysts and legal counsel.

The lack of detailed methodologies and definitions in Guide No. 7 has led many Mining Operation Disclosure submitters to use additional resource publications such as “Principles of a Resource/Reserve Classification for Minerals” (USGS, 1976); “The SME Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves” (SME, 2014); “Estimation of Mineral Resources and Mineral Reserves - Best Practice Guidelines” (CIM, 2003); and the Canadian Securities Administrators publication, “NI 43-101”. The use of these additional sources will be discussed as related to the sand mining industry. A hypothetical example will be utilized to develop an approach for submitting a Mining Operation Disclosure for an industrial sand site.