SEC Adopts New Mine Safety Disclosure Rules

February 9, 2012

The US Securities and Exchange Commission (the "SEC") has adopted final rules implementing the disclosure requirements set forth in Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Section 1503(a) of the Dodd-Frank Act requires reporting companies that are operators, or that have a subsidiary that is an operator, of a coal or other mine to disclose specified information in their annual and quarterly reports filed with the SEC. Section 1503(b) of the Dodd-Frank Act requires such reporting companies to file a current report on Form 8-K with the SEC reporting receipt of certain shutdown orders and notices of patterns or potential patterns of violations. Reporting companies have been required to comply with the disclosure requirements of Section 1503 since the Dodd-Frank Act took effect on August 20, 2010. The SEC's new rules specify in more detail the applicability and disclosure requirements of Section 1503.

Applicability

Section 1503 applies to an operator of a coal or other mine.

An operator is defined as any owner, lessee, or other person who operates, controls, or supervises a coal or other mine or any independent contractor performing services or construction at such mine.

Among other things, a coal or other mine is defined as:

• an area of land from which minerals are extracted in nonliquid form or, if in liquid form, are extracted with workers underground;
• private ways and roads appurtenant to such area; and
• lands, excavations, underground passageways, shafts, slopes, tunnels and workings, structures, facilities, equipment, machines, tools, or other property including impoundments, retention dams, and tailings ponds, on the surface or underground, used in, or to be used in, or resulting from, the work of extracting such minerals from their natural deposits in nonliquid form, or if in liquid form, with workers underground, or used in, or to be used in, the milling of such minerals, or the work of preparing coal or other minerals, and includes custom coal preparation facilities.

The new rules apply only to mines located inside the United States and its territories. Although companies are not required to provide information about mines located outside the United States, disclosure still could be required in other sections of a periodic report (such as MD&A, Description of Business and Risk Factors) to the extent mine safety issues outside the United States are material to a company.

The new rules require separate disclosure for each mine that has an identification number issued by the Mine Safety and Health Administration ("MSHA"). Groupings of mines with separate MSHA mine identification numbers is not permitted. A company would not need to report orders and citations issued to independent contractors who are working at the company's mine site if such independent contractors are not subsidiaries of the company.

The new periodic reporting rules apply for annual reports on Form 10-K, Form 20-F and Form 40-F, and quarterly reports on Form 10-Q. Companies must provide disclosure for the quarter covered by the report in each Form 10-Q and disclosure covering the entire fiscal year in their annual reports.

The new rules apply to all issuers that are required to file reports under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including smaller reporting companies and foreign private issuers.

Annual and Quarterly Reporting Requirements

Required Information

Companies are required to provide the information listed below for each mine they operate (or have a subsidiary that operates) that is subject to the Federal Mine Safety and Health Act of 1977 (the "Mine Act").

• the total number of significant and substantial violations of mandatory health or safety standards under section 104 of the Mine Act for which the operator received a citation from MSHA;
• the total number of orders issued under section 104(b) of the Mine Act, which covers previous violations that have not been totally abated within the prescribed time period;
• the total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health and safety standards under section 104(d) of the Mine Act;
• the total number of flagrant violations under section 110(b)(2) of the Mine Act;
• the total number of imminent danger orders issued under section 107(a) of the Mine Act;
• the total dollar value of proposed assessments from MSHA under the Mine Act, regardless of whether such proposed assessments are being contested or were dismissed or reduced prior to the date of filing the periodic report; and
• the total number of mining-related fatalities, which means all fatalities required to be reported to MSHA under its regulations, except those that have been determined by MSHA to be non-chargeable to the mining industry.

Companies are required to provide a list of the mines that have received written notice from MSHA of:

• a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety standards under section 104(e) of the Mine Act; or
• the potential to have such a pattern.

Companies are required to provide the total number of legal actions before the Federal Mine Safety and Health Review Commission ("FMSHRC") as of the last day of the period covered by the periodic report, as well as the aggregate number of legal actions instituted and the aggregate number of legal actions resolved during the reporting period. With respect to the total number of legal actions as of the last day of the period covered by the report, companies are also required to categorize the legal actions according to the type of proceeding. The categories of proceedings are:

• contests of citations and orders, which typically are filed prior to an operator's receipt of a proposed penalty assessment from MSHA or relate to orders for which penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act);
• contests of proposed penalties, which are administrative proceedings before the FMSHRC challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order;
• complaints for compensation, which are cases under section 111 of the Mine Act that may be filed with the FMSHRC by miners idled by a closure order issued by MSHA who are entitled to compensation;
• complaints of discharge, discrimination or interference under section 105 of the Mine Act, which cover:
  • discrimination proceedings involving a miner's allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint, and
  • temporary reinstatement proceedings involving cases in which a miner has filed a complaint with MSHA stating that he or she has suffered such discrimination and has lost his or her position;
• applications for temporary relief, which are applications under section 105(b)(2) of the Mine Act for temporary relief from any modification or termination of any order or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act); and
• appeals of judges' decisions or orders to the FMSHRC, including petitions for discretionary review and review by the FMSHRC on its own motion.

The new rules add these requirements as Item 104 of Regulation S-K (per Item 4 of Part I of Form 10-K and Item 4 of Part II of Form 10-Q), Item 16H of Form 20-F and Paragraph (16) to General Instruction B of Form 40-F.

Location of Information

A company must provide the information listed above in an exhibit to the appropriate periodic report (Exhibit 95 in Forms 10-K and 10-Q (per new Item 601(b)(95) of Regulation S-K) and Exhibit 16 in Form 20-F). In addition, the company must provide a statement in such periodic report that the information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and the applicable item of such periodic report is included in an exhibit to the filing.

The statement referencing mine safety disclosure should appear under the following item numbers:

• Form 10-Q - Part II - Item 4, which is now captioned Mine Safety Disclosures
• Form 10-K - Part I - Item 4, which is now captioned Mine Safety Disclosures
• Form 20-F has new Item 16H captioned Mine Safety Disclosure
• Form 40-F has new Paragraph (16) of General Instruction B

The new rules do not require any particular presentation for the information in the exhibit, but the SEC encourages companies to use tables whenever possible if doing so would make the information easier for investors to understand. The adopting release for the new rules contains an example of a possible tabular presentation that companies may use if they choose.

Form 8-K Reporting Requirement

The Dodd-Frank Act added a requirement for companies to file a Form 8-K when they receive notice from MSHA of:

• an imminent danger order under section 107(a) of the Mine Act;
• written notice of a pattern of violations under section 104(e) of the Mine Act; or
• written notice of the potential to have a pattern of such violations.

The new rules add this requirement as Item 1.04 of Form 8-K. The required Form 8-K must be filed within four business days after the company receives one of the specified orders or notices, and it must include disclosure about the type of notice received, the date it was received, and the name and location of the mine involved.

A late filing of the Form 8-K will not affect a company's eligibility to use Form S-3 short-form registration.

This new Form 8-K reporting requirement does not apply to foreign private issuers, but such information will be part of the new annual reporting requirements under Item 16H of Form 20-F and Paragraph (16) to General Instruction B of Form 40-F.