Canada: New Prospectus Content Guidelines For London Listed Resource Companies

Last Updated: September 14 2011
Article by Paul Airley and Claire Atkins

Most Read Contributor in Canada, September 2018

On March 23, 2011, the European Securities and Markets Authority (ESMA), the successor entity to the Committee of European Securities Regulators (CESR), published an update of the CESR's Recommendations (Recommandations) for the consistent implementation of the European Commission's Regulation on Prospectuses, with revised guidance as to the content requirements of prospectuses issued by resource companies, including, for the first time, recommendations as to content requirements of a competent person's report (CPR). The UK Listing Authority (UKLA) will take the Recommendations into account when deciding whether to approve a prospectus, the publication of which is required for listing on the main market of the London Stock Exchange.

Background

The Recommendations were originally published in February 2005 to enable issuers and their advisors to make judgments about prospectus disclosure in a consistent manner across Europe. Issuers are obliged to prepare prospectuses according to the Recommendations (as revised from time to time) unless they are unsuitable in a particular case.

To ensure appropriate levels of transparency and assurance over reserves and resources figures reported to the market, the Recommendations contain a framework, at paragraphs 131-133, for additional disclosure by mineral companies of reserves and resources information.

In April 2010, following concerns that the original Recommendations lacked clarity compared to regulatory standards in other markets, did not reflect market practice and were not effective in standardizing resource company prospectus disclosure across the European Union (EU), the CESR published a consultation document on a new framework for disclosure. The below considers some of the key provisions of the updated Recommendations.

"Mineral Companies"

Mineral companies are now defined as "companies with material mineral projects." Accordingly, companies performing only exploration now fall within the Recommendations, which previously referred to companies whose principal activity is the extraction of mineral resources. The materiality of projects will be assessed having regard to all the company's mineral projects relative to the issuer and its group as a whole. However, mineral companies that are only issuing wholesale debt will be exempt from these provisions.

Basic Disclosure Requirements for all Prospectuses

The updated Recommendations continue to set out basic disclosure requirements for all prospectuses and issuers must explain any inconsistencies between these disclosures and information already in the public domain.

CPR: New Appendices to the Recommendations

A CPR is now required when an issuer is first admitted to trading (regardless of how long it has been a mineral company; a CPR was previously only required under the Recommendations where the issuer had been a mineral company for less than three years). However, a CPR is not required, in normal circumstances, thereafter. The issuer must have continued to report and publish details of its resources, reserves and results/prospects annually in accordance with one of the specified reporting standards for this exemption to apply. The CESR noted that market practice expects a CPR at float but not generally thereafter and the updated Recommendations are consistent with this practice.

In addition, there are now detailed requirements for the preparation of the CPR, including requirements as to the qualifications of the competent person and the acceptable reporting and valuation standards.

New appendices to the Recommendations set out recommended, rather than compulsory, CPR minimum content. This allows a degree of flexibility in preparing a CPR, which, in particular, addressed concerns that the compulsory inclusion of a valuation of reserves and resources is excessive.

The ESMA decided not to implement the proposed requirement to provide CPRs in three instances: on new assets being acquired where the acquisition is a significant gross change (although basic prospectus disclosure will be required on target assets); where there has been a (material) first-time declaration of new reserves; or where there has been a significant change in reserves levels. However, a CPR will continue to be necessary under the UKLA Listing Rules on a Class 1 acquisition or disposal of mineral resources.

Reporting and Valuation Standards

A list of reserves and reporting codes has been compiled; it includes only oil and gas codes derived from the Society of Petroleum Engineers' PRMS system and mining codes aligned with the Committee for Mineral Reserves International Reporting Standards. The ESMA removed the proposed U.S. mining reporting standards (SEC Industry Guide 7) from the list and Russian and Chinese standards are also excluded.

Cash-Flow Projection and Funding Forecast

Under the original Recommendations, mineral companies without a three-year trading history were required to include a two-year cash-flow projection validated by accountants as well as a two-year funding forecast. In the consultation, CESR proposed to abolish these requirements, and to replace them with a new requirement to include an 18-month forward-looking management-prepared projection where the fundraising proceeds are to be applied towards exploration or development projects.

The ESMA decided to proceed with the proposal to remove the requirement for a cash-flow projection and funding forecast, but not to implement the replacement provision. On reflection, the ESMA considered that general disclosure obligations as to use of proceeds are adequate.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions