- ASX has released a consultation paper concerning potential amendments to the disclosure requirements for reserves and resources companies and is calling for comment by 27 January 2012.
- This consultation paper is separate to a current review of the Joint Ore Reserves Committee (JORC) Code, for which a separate issues paper will be issued shortly.
ASX releases consultation paper on reporting requirements for reserves and resources
On Wednesday 5 October 2011, the ASX released a consultation paper entitled "ASX Listing Rules Review Issues Paper: Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies" (Consultation Paper). The Consultation Paper discusses potential amendments to the disclosure requirements specific to listed mining, oil and gas exploration and production companies. The Consultation Paper's purpose is to:
- respond to stakeholders who have called for improvements to the standards of reporting for listed reserves and resources companies
- propose reforms that reduce the chance of misleading reserves and resources information being disclosed and to assist compliance with international best practice.
Comments on the Consultation Paper are due by 27 January 2012. The proposals of the Consultation Paper include:
Mining company, mineral resources and ore reserves reporting
- Enhanced disclosure of exploration results – disclosing greater drill hole and intercept information.
- Disclosure of exploration targets – cautionary statement regarding an exploration target should be disclosed with the same prominence as, and in a proximate location to, the exploration target.
- Disclosure of key assumptions underpinning an initial, or a materially upgraded, mineral resource and ore reserve estimate– further information disclosure requirements (such as information regarding geology, sampling and drilling techniques, lab tests, mining and metallurgical factors or assumptions and cost and revenue factors), and a requirement for disclosure of a technical report to support the disclosure.
- Minimum level of study for an initial ore reserve estimate – the introduction of a requirement that a pre-feasibility study be completed for the determination of initial ore reserve estimates.
- Disclosure of production targets – enhanced disclosure of key assumptions, key contingencies and risks regarding production targets.
- Annual reporting and reconciliation of mineral resources and ore reserves – introduction of an obligation to include the results of a company's annual review of their total holdings of mineral resources and ore reserves in their annual report, and a requirement for the disclosure of a reconciliation of aggregate mineral resources and ore reserves estimates with that from the proceeding year. This is designed to assist investors evaluate the company's performance in converting discoveries into mineral resources or converting mineral resources into ore reserves.
Oil and gas company petroleum reserves reporting
- Reserves and resources definitions and a common classification system – the development of a new reporting regime based on the SPE-PRMS petroleum resource definitions and reporting requirements.
- Annual reserves and resources reporting– introducing Listing Rule amendments requiring listed E & P companies to report annually on their company level reserves, and other aggregated company reserves, as at the company's balance date.
- Disclosure of drilling progress and exploration information – abandoning the current regime of structured disclosure at regular intervals and instead rely on the existing requirement that a company report regularly on its progress where the information would be expected to have a material effect on the price of the entity's securities.
- Disclosure of key assumptions underpinning reserve and resource estimates – requiring that key economic assumptions used to calculate reserves estimates be disclosed when the booking of initial reserves estimates are reported to the market.
- Disclosure of production targets – enhancing disclosure requirements for reporting of production targets including requirements for disclosure of key assumptions, and the inclusion of cautionary statements.
- Qualified reserves and resources evaluator requirements – amending Listing Rule 5.11 to update the qualifications required of a "qualified reserves and resources evaluator".
The Joint Ore Reserves Committee (JORC) has argued that the Consultation Paper includes proposals to move away from the more principles-based reporting on which the JORC Code is based, to more prescriptive and mandatory requirements for reporting. This may have significant impacts on the application of the JORC Code.
JORC has noted that the Consultation Paper is separate to a current review of the JORC Code, for which a separate issues paper will be issued shortly and that companies wishing to make submissions to both the ASX and JORC, will need to make duplicate submissions.
ASX will review the responses to the Consultation Paper with JORC and other professional bodies before recommending any amendments to the ASX Listing Rules.
Please contact us if you have any questions or require assistance with making submissions.
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