Australia: Proposed Changes to the ASX Listing Rules - How the Changes Will Affect New Listings and Disclosure for Mining and Oil & Gas Companies

Last Updated: 21 November 2011
Article by Anthony Addison and Li-Jean Chew

ASX has recently issued two releases that may result in amendments to the ASX Listing Rules:

  • a proposal to require directors of entities wishing to be listed to be of "good fame and character"; and
  • a public consultation paper on the Listing Rule reporting requirements applicable to mining and oil & gas companies.

1. New listings - "Good fame and character" requirement

1.1 ASX proposes to amend the Listing Rules with effect from 1 January 2012 to:

  • add a new condition 17 to Listing Rule 1.1 to require an applicant for ASX listing to satisfy ASX that its directors and proposed directors as at the date of listing are of good fame and character;
  • amend Appendix 1A to add a requirement that all applicants provide to ASX:
    • a police/CrimTrac national crimes history check (or its overseas equivalent) for each director and proposed director;
    • an ITSA Bankruptcy check (or its overseas equivalent) for each director and proposed director; and
    • a completed statutory declaration from each director and proposed director affirming, amongst other things, that they have not been subject of relevant disciplinary or enforcement action by an exchange or securities market regulator; and
  • add a note to Listing Rule 1.1 stating that ASX will primarily have regard to the documents mentioned above in considering whether an applicant's directors and proposed directors meet the "good fame and character" requirement. However, ASX may also have regard to any other information it has and may require an applicant to provide additional information about its directors or proposed directors.

1.2 The above requirements will apply to:

  • applications for new listings that are lodged on or after 1 January 2012; and
  • listed entities that are required on or after 1 January 2012 to re-comply with Chapters 1 and 2 of the Listing Rules pursuant to Listing Rule 11.1.3 (proposed change to nature or scale of activities).

1.3 The new Listing Rules will not impose any equivalent "good fame and character" requirement in relation to directors appointed following admission, but ASX expects the board of a listed entity to undertake appropriate background checks on any person it proposes to appoint as a director or put forward at a meeting of shareholders for election as a director.

1.4 ASX will make available on its website the proposed Listing Rule amendments (and draft rewritten Guidance Note 1 (Applying for Admission and Quotation) and Guidance Note 4 (Foreign Entities)) when they have been formally lodged with ASIC.

2. Proposals for increased disclosure for mining and oil & gas companies

2.1 On 5 October 2011, ASX released a consultation paper, ASX Listing Rule Review Issues Paper: Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies (Consultation Paper). The Consultation Paper examines the key reporting issues and options for improving the public reporting of exploration information, resources and reserves, and production targets by listed mining and oil & gas companies.

2.2 The release of the Consultation Paper is in part prompted by the growth in the number of ASX-listed mining and oil & gas companies (which, according to ASX's media release on 5 October 2011, represent approximately 32% of the total listed equity market capitalisation), and the fact that the reporting requirements and standards applicable to reserves and resources are integral to company reporting in the mining and oil & gas industries as a large proportion of material announcements by mining and oil & gas companies includes reserves and resources information.

2.3 The Consultation Paper seeks comments on, in particular, the scope for:

  • enhancing the quality of reporting of information relevant to exploration programmes, Mineral Resource and Ore Reserves estimates and associated production targets to promote greater efficiency in the capital formation process for listed mining exploration and production companies; and
  • promoting greater consistency and confidence in the public reporting of petroleum reserves, other petroleum resources and related production targets by adopting standardised technical definitions, a comprehensive petroleum classification system and updated general reporting requirements in the Listing Rules.

2.4 The key issues and proposals examined in the Consultation Paper are summarised below:

Mining Company Mineral Resources and Ore Reserves Reporting


Disclosure of Exploration Results

Introduction of a requirement that specific drill-hole and intercept information be disclosed when Exploration Results are reported.


Disclosure of exploration targets

Introduction of additional disclosure requirements relating to the placement and prominence of the cautionary statement relative to the reported exploration target.  The cautionary statement should be disclosed with the same prominence as, and in a proximate location to, the reported exploration target.

Clarification that the disclosure of preliminary and low confidence estimates of mineralisation (including those estimates which are based on initial drilling or pre-existing historical drilling) is prohibited under the Listing Rules.


Disclosure of key assumptions underpinning an initial or materially upgraded Mineral Resource and Ore Reserve estimate

ASX proposes several options:

  • Introduction of a requirement for information relating to a subset of the criteria in Table 1 in the JORC Code to be disclosed when an initial, or material change to a, Mineral Resource or Ore Reserve estimate is reported.
  • Introduction of a requirement for the disclosure of the key assumptions relied on in the relevant study underpinning the Mineral Resource and Ore Reserve estimates when initial, or a material change to, Mineral Resource and Ore Reserve estimates are reported.
  • Introduction of a requirement for a technical report to be disclosed to the market to support the disclosure of an initial or materially changed Mineral Resource or Ore Reserve estimates on a mineral property material to an issuer.


Minimum level of study for an initial Ore Reserve estimate

Introduction of a requirement for the completion of a pre-feasibility study, at a minimum, for the conversion of the relevant estimated Mineral Resources to Ore Reserves.

Proposal for "scoping study", "pre-feasibility study" and "feasibility study" to be defined on terms consistent with the CRIRSCO core standard definitions.


Disclosure of production targets

Introduction of disclosure requirements for the reporting of production targets and forecast financial information derived from production targets. 

ASX also favours a prohibition on the disclosure of a production target or forecast financial information derived from a production target that is based solely on an exploration target.


Annual reporting and reconciliation of Mineral Resources and Ore Reserves

Introduction of a requirement for companies to report on the results of their annual review of their Mineral Resources and Ore Reserves and their aggregated holdings, together with a reconciliation with the estimates from the previous year, in their annual report or a separate document released with the annual report.

Companies would also be required to report their estimates of Mineral Resources and Ore Reserves in tabular form by commodity, by Mineral Resource and Ore Reserve category and at a level of disaggregation to be determined by the company based on materiality.

Oil and Gas Company Petroleum Reserves and Resources Reporting


Reserves and Resources definitions & a common classification system

Introduction of a new Listing Rule requirement mandating the reporting of petroleum reserves and resources in accordance with the "Petroleum Resources Management System" (SPE-PRMS) (sponsored by various industry societies and associations).


General reporting requirements applicable to the reporting of petroleum resources

Introduction of a number of general reporting requirements for public reporting of petroleum reserves and resources to provide a regulatory framework to complement SPE-PRMS.


Annual Reserves and Resources Reporting

Introduction of a Listing Rule requiring listed E & P companies to report annually on their company level reserves, and other aggregated reserves information, as at the company's balance date.

It is also proposed that a reconciliation of reported estimates of company level reserves against the estimates from the previous year be reported annually.


Disclosure of drilling progress and exploration information

Update of the reporting requirements under Listing Rule 5.9 applicable to the reporting of exploration and drilling results to provide for the disclosure of more meaningful information for the purpose of assessing the significance of the reported results.

Deletion from Guidance Note 8 (Continuous Disclosure: Listing Rule 3.1), certain guidance relating to the adoption of a regime of structured disclosure for each drilling programme, to the extent that it promotes the reporting of immaterial exploration and drilling information.


Disclosure of key assumptions underpinning reserve & resource estimates

Consideration is being given by ASX to the introduction of a requirement for the key assumptions and other specific information to be disclosed to support the booking of initial estimates of reserves, contingent resources and prospective resources (and materially upgraded estimates) in relation to a specific field, property or project when such estimates are publicly reported.


Disclosure of production targets

Consideration is being given by ASX to the introduction of reporting requirements for production targets and related forecast financial information to provide a better basis for investors to understand and assess the basis for, and the key risks and level of uncertainty associated with, the reported production target and related forecast financial information.

It is also proposed that reporting a production target and related forecast financial information based solely on prospective resources will be prohibited.


Qualified reserves and resources evaluator requirements

Update the Listing Rule requirements in relation to the minimum professional qualifications and experience required to be recognised as a "qualified reserves and resources evaluator" to enhance alignment with industry and international best practice.

Next steps

2.5 Mining and oil & gas companies will need to closely consider how the proposals in the Consultation Paper will affect their reporting and disclosure obligations and practices.

2.6 ASX is inviting comments from all interested stakeholders on the issues and proposals raised in the Consultation Paper. As such, stakeholders should consider submitting their comments to assist ASX in its development of the proposed new requirements. The due date for submissions is 27 January 2012.

2.7 ASX also plans to hold roundtable events and separate meetings with companies and other key stakeholders to elicit feedback.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Li-Jean Chew
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