The Hong Kong Exchanges and Clearing Limited ("Hong Kong Stock Exchange") recently released new listing rules for natural resources companies. These new rules come into effect on 3 June 2010 ("Effective Date").


Chapter 18 of the listing rules of the Hong Kong Stock Exchange ("Listing Rules") applies to mineral companies whose principal activities involve the exploration or production of natural resources, including minerals, oil and gas or solid fuel. The existing Chapter 18 has been replaced with a new Chapter 18 which introduces a new regime for the listing of mineral companies on the Hong Kong Stock Exchange. The new regime includes new conditions for listing, new requirements for the contents of listing documents for mineral companies and new rules for continuing obligations of listed mineral companies. These new rules include relevant notifiable transactions involving the acquisition or disposal of mineral or petroleum assets and continuing obligations, including an annual update of mineral or petroleum reserves.

There are new definitions covering a number of relevant areas for example "Major Activity," "Mineral Company," "Reporting Standard," "Reserve" and "Resource."


These new rules will affect:

  • listing applicants whose major activity (25% or more of the total assets, revenue or operating expenses of the issuer) include the exploration for and/or extraction of minerals, oil and gas or solid fuel;
  • existing mineral companies; and
  • existing listed companies that acquire or dispose (25% or greater of existing activities) of mineral assets. Existing listed issuers will need to have a Competent Person's Report and Valuation Report to support any such major acquisition.

From the Effective Date, all companies (including mineral companies) that make statements on mineral or petroleum reserves and resources will be required to update such statements in their annual report.

The new rules now incorporate the reporting standards for specifying reserves including the Australian, Canadian and South African mineral codes (the JORC Code, NI 43-101 and the SAMREC Code), the Petroleum Resources Management System and the Australian, Canadian and South African valuation codes (CIMVAL, SAMVAL Code and the VALMIN Code).

The new rules also require reports from a Competent Person who must have a minimum of five years relevant experience, be professionally qualified and independent from the issuer or listed company.

Early exploitation companies, without any identifiable mineral or petroleum reserves or resources, will not be regarded as suitable for listing.

Conditions for listing

  • Mineral Companies seeking a listing must have a percentage of reserves identified under a Reporting Standard and substantiated in a Competent Person's Report. The reserves must be meaningful and of sufficient substance to justify a listing;
  • a new applicant Mineral Company that has not commenced production must disclose its plans to proceed to production with indicative dates and costs, supported by a Scoping Study and substantiated by the opinion of a Competent Person;
  • a new applicant Mineral Company seeking a waiver from the financial standards requirements in Listing Rule 8.05, must satisfy the Hong Kong Stock Exchange that its directors and senior managers, have sufficient combined experience relevant to the exploration and/or extraction activity that the Mineral Company is pursuing, including a minimum of five years relevant industry experience
  • the listing documents of Mineral Companies must include reports on reserves and resources prepared by Competent Persons.

Continuing Obligations

  • a Mineral Company or a listed company that engages in an acquisition or disposal of mineral or petroleum assets (where any percentage ratio is 25 per cent or more), must include a Competent Person's Report in the shareholders circular and valuation reports prepared by Competent Evaluators. The Hong Kong Stock Exchange may dispense with this requirement on disposals, where shareholders have sufficient information on the assets being disposed of.
  • a Mineral Company must include in its interim (half-yearly) and annual reports details of its exploration, development and mining production activities and a summary of expenditure incurred on these activities during the relevant period; and
  • any listed issuer that discloses details of Resources and/or Reserves after the implementation of these new rules must update the details in its annual report.

Reporting Standards

  • Competent Person's Reports and Valuation Reports must comply with widely accepted mineral and petroleum reporting codes (including the reporting codes adopted in Australia, Canada and South Africa for minerals reporting, or the "JORC-type Codes"). Where information is presented in accordance with other reporting standards, reconciliation to a JORC-type Code must be provided. The Hong Kong Stock Exchange has the flexibility to approve other standards from time to time, provided they give a comparable standard of disclosure and sufficient assessment of the underlying assets.

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.