Industry Standards - Overview

As outlined in the Assessment Work Regulations Section 3(3): if the holder of mining land personally works on the land, the work is eligible for assessment work credit at a value based on industry standards for similar work. Similarly, Section 3(4) indicates expenses are eligible for assessment work credit carried out for the purposes of exploration at a value based on industry standards for similar work if they are accompanied by a technical report under section 6 and one or more of sections 8 to 19.

What Is An Industry Standard?

An industry standard is the average cost per unit of exploration work performed (i.e. $/km of magnetometer surveying, $/metre diamond drilling ) with statistics to accommodate variations.

Why Does The Ministry Use Industry Standards

The Ministers Mining Act Advisory Committee (MMAAC) initiated and endorsed the use of industry standards as a fair and equitable means of evaluating assessment work credit for exploration work performed on mining lands.

What Is An Industry Standards Database?

The Industry Standards database is a collection of expenses reported by the exploration industry as costs for performing exploration work.

Why An Industry Standards Database?

In 1991, the method of reporting assessment work in Ontario shifted from a man day system to monetary credits. Furthermore, changes to the Assessment Work Regulation in 1996, placed even more emphasis on Industry Standards as a means of evaluating eligible costs. As a result of these changes, the Ministry was required to monitor the monetary information for various work types eligible for assessment credit.

What Is The Source Of Information For The Industry Standards Database?

The costs of performing a geotechnical survey or physical work are obtained from the prospectors and exploration companies via assessment work submissions. All inclusive costs are obtained which incorporate mining land location within the province, access to property, type of work performed, duration of work, the distance covered by a survey, etc. Dollar expenditures obtained from the exploration industry in this fashion means that the Ministry does not set the Industry Standard, instead it monitors the Industry Standard.

What Information Is Derived From The Industry Standards Database?

Variation in exploration work costs (up or down) can result from location, time of year, changes in survey costs by contractor, etc. This information is collected for the 9 separate mining divisions. We monitor the variation in costs by determining the average and standard deviation of a survey or physical work type. Accordingly, the database provides an upper limit, all-inclusive cost for each work type which is the sum of the average value plus the standard deviation value.

How Are The Industry Standards Used In The Assessment Process?

The Ministry now has a monetary database which accurately monitors costs of performing exploration work. When a submission is assessed all eligible costs are considered. Costs for individual components of the submission are assessed (i.e. line-cutting, backhoe rental, travel, etc.) as well as the composite cost for the submission. Submissions with all costs exceeding the Industry Standard will be looked at in detail to determine why such increased costs were incurred. If no reasonable explanation can be determined from the Work Report, Statement of Cost or technical report, as to why costs exceed Industry Standards, then the Ministry may issue a Notice outlining a reduction in assessment credit to Industry Standards or a request for expenditure verification. Work report submissions containing some costs above Industry Standards and some costs below will be reviewed as composite costs. In such instances, the Industry standards will be used to determine the total value of this submission. If the value of the assessment credit applied for by the claim holder, exceeds the value determined using the Industry Standards, then a notice indicating the reduction in assessment credit may be issued or a request for expenditure verification.

Do All Mining Divisions Have The Same Costs For Any One Type Of Assessment Work?

The cost of performing any survey/work in each mining division varies. However, the variation between mining divisions is typically minor for most work types. Some types of work are more prominent in some mining divisions than in others. Accordingly, the database for a particular survey/work type in a specific mining division may have a larger population and therefore a more reliable and better defined Industry Standard. In mining divisions where the database population is not adequate to determine an Industry Standard, the provincial Industry Standard is used as a guideline in the assessment process.

Does Survey/Work Costs Vary With Time?

The costs of any survey/work type will vary with time. However, the variation whether an increase or decrease will tend to be gradual. Such gradual cost variations are captured in the Industry Standard database. Therefore, major variation from the Industry Standard are uncommon and usually result from special circumstances. Costs above the upper limit may be allowed and are captured in the industry standards database. For example, between the time a grid was cut and the survey was performed, a fire destroyed the grid fabric, hence the grid had to be re-established for the survey to be completed.

How Often Is The Industry Standards Database Updated?

As the database ages accumulated information will become outdated. The Ministers Mining Act Advisory Committee (MMAAC) came to a consensus that an 18 month time period for exploration data would be adequate for assessment purposes. Therefore, the Industry Standard is based on the previous 18 months submissions to the Geoscience Assessment Office (GAO). The older data is kept and used when files are submitted for work more than 18 months old.

I Am Spending Real Dollars, Why Shouldn't I Get Credit For What I Spend?

The value of assessment work credit provided for a submission is based on four criteria: 1) exploration work must be a type of work eligible for assessment credit under the Mining Act, 2) the costs must be eligible under the Mining Act, 3) the industry standard value for similar type work, and 3) the assessment credit reflects the value of information supplied to the Provincial Assessment File database.

There can be situations where the exploration contractors or individuals/companies are not only the contractor/agent but also the land holder. These fiscal or contract arrangement may be fine for business dealings but are independent from an assessment regulation point of view. In these cases, a dollar spent may not be a dollar credited.

Can I Get A Copy Of The Industry Standards?

The MMAAC clearly indicated they do not wish the Ministry to provide copies of the Industry Standards. If the Ministry provided the industry standard we would then in fact be setting the industry standard. Instead we encourage Individuals and companies to solicit contractors, etc. to help determine costs for work performed.

The industry standard provides a fair and equitable means of evaluating assessment work. All submissions are treated individually. Conditions specific to an individual exploration project as well as the quantity of information supplied to the Provincial assessment file database are always considered during the assessment process. We all are responsible to ensure that the granting of land tenure is linked to reasonable exploration expenditures.