Permitting and sustainability are considered together here because they are intertwined; the bulk of mine compliance obligations relate to sustainability. The new CRIRSCO template (2019) places more emphasis on permitting and sustainability and reflects the expectation that the subjects are considered from the earliest stages of project planning. This section outlines both existing requirements and new expectations, including the need to pay more attention to governance of mine waste facilities and to closure liabilities.

The term "Environmental, Social and Governance (ESG)" is not used in most of the IRRS or the new CRIRSCO template at present but is worthy of further consideration as it is now routinely used by the financial sector and the notion of ESG is applied in investment decisions. The various IRRS and the CRIRSCO template do refer to "environmental, social and governmental factors" among the modifying factors that must be considered when converting resources to reserves. These factors overlap with ESG subjects but are not identical in meaning. The word "governmental" refers to permitting and state contracts rather than governance.

The term "ESG" has become popular in recent years, corresponding with the strengthening of the economic pillar or sustainability and the emergence of the green economy. It relates to the response of an institution to sustainability imperatives and it is at the heart of responsible business conduct, responsible finance and responsible sourcing. ESG is not limited to measurement and disclosure of ESG performance. It relates to the actions that an organisation takes to ensure and improve ESG performance - "walking-of-the-talk".

The most elaborate guideline on ESG factors to be covered in public reports on resources and reserves is the South African Guideline for the Reporting of Environmental, Social and Governance Parameters within the Solid Minerals and Oil and Gas Industries (The SAMESG Guideline, 2017). The SAMESG guidelines are used with the SAMREC and SAMVAL Codes.

Permitting and Compliance Obligations

The new CRIRSCO template (2019) states that the Competent Person must ascertain whether approvals required for mining can be obtained in a timely fashion and can be retained. Legal and permitting experts should be engaged where necessary. Risks associated with approvals and legal rights must be disclosed. Most countries rich in mineral resources have modern mining legislation that provides for ESG. Generally, this requires:

• Observance of environmental and land zoning/ spatial planning legislation;
• Respect for surface rights and observance of land acquisition legislation;
• Environmental and social impact assessment (ESIA)1 approval prior to granting of a mining licence or consents to commence with construction and operational activities;
• Payment of taxes and, increasingly, tax transparency; and
• Responsible mine closure.

In many jurisdictions, the mining legislation and/or spatial planning legislation also requires:

• Preferential employment of local people (from local communities or, at least, citizens of the host country);
• Preferential procurement of goods and services from providers within the host country;
• Training of local people for realisation of economic opportunities created by the mining development; and
• Contribution to sustainable economic development in the region.

Environmental legislation generally necessitates the acquisition and renewal of a suite of additional secondary approvals including permits for water use, effluent discharges, emissions, waste disposal and use of hazardous substances.

The hundreds of compliance obligations incurred in the permitting processes need to be consolidated into registers so compliance can be tracked. These obligations include approval conditions, commitments made in legally binding Environmental and Social Management Plans (ESMPs), including water and waste management plans and closure plans, and terms of agreements, including investment agreements with government and community development agreements.

Increasingly, consequences of regulatory breaches are extending beyond fines to suspensions of operations or rescinding of environmental permits. Failure to meet to meet compliance obligations can even undermine mining title security.

Stakeholder engagement is integral to permitting processes and many compliance obligations arise from this engagement. The stakeholders include regulatory authorities, local communities, downstream water users and other parties with an interest in the impacts of the development. The obligations often take the form of promises to stakeholders made by the minerals licence holder that are captured in legally binding plans and agreements. Failure to meet these obligations undermines the social licence to operate.

Permitting needs to be carefully considered in project development timelines as it can take several years to obtain the primary approvals needed to proceed with mining.

Some mineral licence holders neglect their compliance obligations. It is still possible to get away with this in jurisdictions where enforcement is weak, but this is changing fast. New compliance enforcement tools are motivating more careful attention to tracking of conformance with compliance obligations. The enforcement tools range from remote sensing and real-time monitoring, through use of big data analytics to process compliance data, to facilitation of non-compliance reporting by neighbouring communities and public disclosure of compliance information.

The JORC Code (2012) (Table 1) requires that the status of agreements with key stakeholders and matters leading to the social licence to operate are disclosed. It also requires that status of governmental agreements and approvals critical to the viability of the project are disclosed. It states that the report should highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.

The JORC Code (2012) also has some specifications relevant to permitting. These are:

• For a PFS (section 39): Detailed assessments of environmental and socio-economic impacts and requirements will be well advanced
• For a FS (section 40): Social, environmental and governmental approvals, permits and agreements will be in place, or will be approaching finalisation within the expected development timeframe.

The new CRIRSCO template (2019) includes guidance that concurs with the above. It adds that permitting requirements should be identified in a scoping study.

The SAMESG Guideline goes a step further than the above in that it promotes disclosure of findings of legal compliance audits. South African environmental and water legislation requires regular third-party audits of compliance with obligations in approvals and corresponding legally binding management plans.

Sustainability

The new CRIRSCO template (2019) recognises that identified environmental, social and permitting risks are not only relevant to the conversion of mineral resources to reserves (among the modifying factors that must be considered). These risks are also relevant to reporting of mineral resource too; they can influence reasonable prospects for eventual economic extraction.

Reports satisfying the environmental and social disclosure specifications in existing IRRS and the new CRIRSCO template could fail to deliver some of the information financiers are looking for. Neither the CRIRSCO template nor the various IRRS emphasize the increased interest of investors in:

• Decarbonization;
• Climate change adaptation - the physical risks associated with climate change;
• Human rights impacts;
• Tailings governance - as defined in the Global Industry Standard on Tailings Management (GISTM) (2020);
• Supply chain due diligence; and
• Sustainable corporate governance

It is important to recognise that any ESG information provided in public reports will be combed over by data vendors. Data providers to financial firms, traders, and investors scour through whatever ESG data they can get from companies to provide some assessment of ESG performance.

There is a much discussion at present about the quality of ESG data available and how it can be improved. A plethora of standards and guidelines for reporting on ESG performance have been developed. Over 50 of these initiatives are presented as being applicable to the mining industry. This is overwhelming for both mining companies and their stakeholders. Some institutions, such as the ICMM and International Financial Reporting Standards (IFRS), are working to find equivalence between the standards.

Soon third-party validation of performance against an internationally recognised sustainability standards will become common practice in the mining industry. This will be undertaken independently from mineral resource and reserve reporting.

Competent persons should ensure that the reports on mineral resources and reserves do not omit material ESG risks and opportunities identified in other disclosure documents such as sustainability reports and annual reports, including disclosures made against the Task Force for Climate Related Financial Disclosures (TCFD) recommendations. They should ensure that there is financial provision for the risks and opportunities and the associated strategies to address them.

The new CRIRSCO template (2019) states: "Public reports should discuss environmental, social, and health and safety impacts that are expected during development, operation and after closure. These impacts will affect employees, contractors, neighbouring communities and customers." The corresponding guidance given in the new template correlates with information disclosure specifications given in the JORC Code (2012) and the Canadian NI 43-101 Technical Report Template.

Existing IRRS and the new CRIRSCO template suggest that environmental and social information can be omitted from public reports on exploration properties. However, this information can add value where ESG factors have been considered in exploration decisions. This is particularly true in sensitive settings, for example areas where mineral resource development could significantly impact on biodiversity or water resources or result in displacement of people.

The CRIRSCO template is not prescriptive about the material risks to be covered, recognising that these will differ from one mineral asset to another, depending on the unique environmental and social setting and the nature of the proposed operations. However, some the IRRS do have specifications information to be disclosed as outlined below.

The JORC Code (2012) states reporting should cover:

• The status of studies of potential environmental impacts of the mining and processing operation
• Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported;
• The status of agreements with key stakeholders and matters leading to the social licence to operate.

Reporting requirements defined for certain securities commissions (Canada: NI 43-101 Technical Report) requires that the relevant subjects listed below are covered.

• Item 4, Property description and location - To the extent applicable, describes:
• (d) the nature and extent of the issuer's title to, or interest in, the property including surface rights, legal access, the obligations that must be met to retain the property, and the expiration date of claims, licences, or other property tenure rights
• (f) to the extent known, all environmental liabilities to which the property is subject
• (g) to the extent known, the permits that must be acquired to conduct the work proposed for the property, and if the permits have been obtained
• (h) to the extent known, any other significant factors and risks that may affect access, title, or the right or ability to perform work on the property.
• Item 20, Environmental studies, permitting, and social or community impact - Discusses reasonably available information on environmental, permitting, and social or community factors related to the project. Consider and, where relevant, include:
• A summary of the results of any environmental studies and a discussion of any known environmental issues that could materially impact the issuer's ability to extract the mineral resources or mineral reserves
• Requirements and plans for waste and tailings disposal, site monitoring, and water management both during operations and post mine closure;
• Project permitting requirements, the status of any permit applications, and any known requirements to post performance or reclamation bonds;
• A discussion of any potential social or community related requirements and plans for the project and the status of any negotiations or agreements with local communities; and
• A discussion of mine closure (remediation & reclamation) requirements and costs.

Closure

As outlined above, both the JORC Code (2012) and the NI 43-101 Technical Report guidance specify that environmental liabilities should be covered when reporting on reserves. The new CRIRSCO template (2019) recommends that there is a discussion of closure requirements and costs and that the closure costs are accounted for in the mineral reserve estimate. In Table 2, under the heading "basis of capital estimate", it states that the environmental compliance/closure cost should be:

• For a scoping study, factored from a historic estimate;
• For a PFS, estimated from experience or factored from a similar project;
• For a FS, based on an estimate prepared from a detailed zero-based budget for design engineering and specific permit requirements.

The ICMM has produced a useful document entitled "Financial Concepts for Mine Closure" that facilitates understanding of key financial concepts as they relate to mine closure, enabling consistent communication of these concepts within relevant disciplines both internally and externally across the mining industry. SRK notes that many mines tend to have only financial liability estimates for accounting purposes (asset retirement obligation estimates) and/or regulator cost estimates (prepared for government financial assurance) and that inconsistencies between these estimates are not uncommon. Few mines have the life of mine (LOM) cost estimates that should ideally accompany LOM plans. The estimates should include long-term water management costs, socio-economic costs, employee retrenchment costs, land holding costs and a contingency.