On 18 September 2012, ASX released a consultation paper proposing amendments to the Listing Rules and Guidance Notes for reporting of reserves and resources by mining and oil & gas companies. For a copy of the consultation paper, please see here. ASX aims to ensure greater consistency in, and quality of, the public reporting of such resource assets.
These proposed amendments are a result of lengthy discussions with resource companies, the JORC, industry and investor groups, and ASIC. ASX also took into consideration the submissions which it received for the Issues Paper on Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies. Our earlier eAlert outlining the proposals in the Issues Paper as well as feedback on this can be found here.
In parallel with these proposed amendments, JORC simultaneously released an exposure draft of a revised and updated JORC Code, and which together with the Society of Petroleum Engineers -Petroleum Resources Management System (SPE-PRMS) for oil & gas companies, will underpin the new reporting requirements in the Listing Rules.
Resources companies will be required to report in accordance with the reporting framework set out in the revised Listing Rules. Mining companies must report according to the JORC Code and oil & gas companies must report according to the SPE-PRMS.
Relevance to mining companies
The proposed changes will affect disclosures by mining companies in their public reports including market announcements. Some of the more material proposed changes for common types of disclosures are summarised below.
|Type of disclosure||Summary|
|1||Exploration results||Requirement1 to disclose sampling techniques, data and specific drill hole and intercept information for material drill holes, on an "if not why not" basis against specified JORC Code criteria.|
Extension of JORC Code requirements to:
|3||Initial or updated mineral resource estimates||Requirement¹ to disclose certain material information including geological information, sampling and drilling techniques, estimation methodology and mining and metallurgical methods, on an "if not, why not " basis against specified JORC Code criteria.|
|4||Additional detail on mineral resources||
Extension of JORC Code requirements to disclose:
|5||Ore reserves estimates||Requirement to include a summary of all information material to
the understanding of reported estimates, on an "if not why
not" basis against specified JORC Code criteria.
The estimate of the ore reserve must be based on a pre-feasibility or feasibility study that demonstrates at the time of reporting, extraction could be reasonably justified. The key underlying assumptions and outcomes of the pre-feasibility or feasibility study must also be disclosed at the same time.
|6||Disclosure of historical and foreign estimates||
The prior obligation to obtain a waiver from the requirement to report in accordance with the JORC Code in order to report historical and foreign estimates of mineralisation has been replaced. Entities will now be able to make such disclosures provided that it contains:
|7||Production targets and forecast financial information||
Companies will be prohibited from disclosing production targets
and forecast financial information that are based solely on
exploration targets, or based solely or partly on historical
estimates or foreign estimates of mineralisation.
Forecast financial information based on such production targets must also include all material assumptions and if a "significant proportion" of the production target is based on an exploration target, the implications for the forecast financial information if that exploration target was not included.
|8||Annual mineral resources and ore reserves statement||
This statement to include:
|9||Reporting of in situ or in-ground values||Extension of the JORC Code requirements to prohibit such reporting of in situ or in-ground values which are based on exploration results, mineral resources or deposit size, ie before all the modifying factors affecting the economic value of a deposit.|
Relevance to oil & gas companies
There are also a range of proposed changes to the Listing Rules affecting disclosures by oil & gas companies in their public reports including market announcements. Some of the more material proposed changes for common types of disclosures are summarised below:
|Type of disclosure||Summary|
|1||General||Requirement for all publicly reported petroleum resources to be classified and reported in accordance with most specific resource classes within SPE-PRMS together with additional general requirements for reporting of petroleum resources and reserves. This is intended to provide for greater consistency in reporting and to minimise disclosure misleading or confusing investors.|
|2||Exploration and drilling information||Removing the requirement for regular reporting for each drilling programme with a company being required to only provide a progress update when the information is expected to have a material effect on a company's share price.|
|3||Petroleum reserves, contingent resources and prospective resources||
Requirement2 to provide additional information to be
disclosed when a company reports an initial, or materially updated,
estimate of petroleum reserves, contingent resources or prospective
resources for material oil and gas projects. The additional
information includes material assumptions, details of operator
interests, types of permits or licences held, and a brief
description of the basis of the calculation of such reserves and
resources. These estimates must be prepared by a qualified
petroleum resources and reserves evaluator and must only be issued
with their prior consent.
|4||Annual reserves statement||
Requirement for oil & gas companies to include an annual reserves statement in their annual reports which provides:
ASX is proposing a 12 month transition period for companies to comply with these new reporting requirements.
The deadline for submissions on these amendments to the Listing Rules and the new guidance notes, and the exposure draft of the revised and updated JORC Code, is 26 October 2012. Middletons would be happy to assist you if you would like to lodge a submission.
1 Note: these are for "material
mining projects" only. A "material mining project"
defined as a mining project which "is, or likely to be,
material in the context of the overall business operations or
financial results" of the entity or its
2 Materiality of a "material oil and gas projects" is defined on a similar basis to "material mining projects".
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.