From December 2013, ASX listed resources entities will
need to change the way they publicly report their exploration
results, mineral resources and ore reserves.
While large miners may already be substantially
compliant with the new reporting requirements, the jury is out on
how the revised code will impact small to mid cap
Will the changes be nothing more than an additional
compliance burden or will they help level the 'playing
field' for junior miners, particularly when it comes to
The Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (the JORC Code) sets out
the manner in which resources companies must report on their
exploration activities and reserves. Compliance with the JORC Code
is required under the ASX and NZX listing rules in respect of all
Originally published in 1989, the JORC Code was updated several
times between 1992 and 2004, but has remained untouched since then:
even as Australia experienced an unprecedented mining boom and
notwithstanding that other countries (such as Canada and South
Africa) have continued to evolve their reporting codes to improve
transparency for investors.
Over time, the 2004 JORC Code fell behind the standards being
applied in other major mining jurisdictions. However, this changed
last year with the release of the JORC Code 2012 Edition.
The principles governing the changes in the new edition are:
Transparency – language across reports is
to be clear and unambiguous, to minimise the risk of information
being misleading or omitting to disclose material information.
Materiality – all information reasonably
considered to be material to an investor or their advisers in
determining whether to invest in an entity is to be disclosed, to
enable investors to may make a reasoned and balanced judgement on
the information contained in the public report.
Competence – the person preparing the
public report must be suitably qualified and experienced
At the core of the changes is better disclosure of material
information when an exploration result or reserve is being publicly
reported either for the first time, or when there has been a
material change since the last report. The Competent Person
preparing the public report must explain the material assumptions
underlying the declared exploration results or reserves.
Further, the reporting must be on an "if not, why not"
basis. This means that if the Competent Person does not disclose
information required under the JORC Code, they must justify why
they are not providing that information.
The changes are a marked improvement in the rigour of JORC Code
reporting and will benefit investors through greater transparency
However, there is still a substantial risk that Competent
Persons do not estimate resources or reserves consistently. The
2012 Code attempts to address this issue by regulating who may be a
Competent Person, but whether this really reduces the potential for
inconsistency is questionable. Reporting is only as good as the
person preparing it and the JORC Code cautions that references to
"JORC compliant" in reports does not affirm the estimate,
but only the manner of reporting.
The 2012 edition of the JORC Code has also addressed an issue
around non-public reporting. A drawback of the 2004 JORC Code was
that it was limited to public reports. These are prepared for the
purpose of informing investors or potential investors and do not
extend to a junior miners' financial institutions.
So while annual and quarterly company reports, press releases,
website postings and public presentations were required to be
compliant with JORC, it did not extend to information prepared
internally or which was not publically disseminated.
This created confusion and the 2012 Code now recommends that all
non-public disclosures not compliant with the JORC Code are clearly
identified as such.
While the improved rigour of the updated reporting requirements
do place an additional cost on ASX listed entities, it does have
the benefit of allowing not only investors but also financiers to
evaluate junior miners on a like for like basis.
Compliance with the new Code will hopefully place junior miners
in a better position to obtain finance debt when their reserves
clearly indicate real value, and we anticipate that JORC compliance
will become a standard feature of reporting to financial
The JORC Code is clearly not a panacea for all the problems
facing junior and mid cap miners in raising debt and equity
financing, but it will help those with real jewels in their crowns
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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