Broad support for reporting reform
This article appeared in the May 2012 edition of the Listed @ ASX newsletter.
Resource industry response to issues paper mostly positive, says ASX’s Diane Lewis
The Australian Securities Exchange has received broad support for proposed changes to improve reserves and resources reporting requirements for ASX-listed mining and oil and gas companies.
ASX released a public consultation paper in October 2011 on a range of proposals, including those relevant to the rules encompassed in the Joint Ore Reserves Committee (JORC) Code in Appendix 5A of ASX Listing Rules (listing rules). The paper reviewed six reporting issues:
1. Disclosure of exploration results.
2. Disclosure of exploration targets.
3. Disclosure of key assumptions underpinning mineral resource and or reserve estimates.
4. Defining the level of study for a maiden ore reserve declaration.
5. Disclosure of production targets.
6. Annual reporting and reconciliation of mineral resource and ore reserve estimates.
ASX received 122 submissions to ASX Listing Review Issues Paper: Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies’ (PDF 512KB), and subsequently held 54 roundtable discussions and other meetings across Australia to seek resource industry input on any changes.
In April this year, ASX released a Report on Consultation Feedback (PDF 329KB) that summarises industry comments.
ASX is now determining its policy positions on the proposed changes and will continue to work with resource industry stakeholders to improve the reporting framework for ASX-listed resource companies. ASX expects to issue draft amendments to its listing rules for further public consultation in the second half of 2012.
Listed@ASX spoke to Diane Lewis, ASX senior policy analyst, regulatory and public policy, about the consultation process and industry feedback so far.
Listed@ASX: Diane, what has the response to the issues paper been like so far?
Diane Lewis: It’s very encouraging. To receive 122 written submissions from industry and other stakeholders shows the strong level of interest in these proposed changes. ASX consulted widely to gauge as many views as possible. We recognised that some resource industry stakeholders were concerned about aspects of the proposed changes, so we met extensively to understand any reservations and explain ASX’s position.
I believe the industry recognises that the JORC Code, which is an important part of ASX’s disclosure framework, is due for an update [the last was in 2004] and that strengthened listing rules will improve market confidence, provide greater reporting certainty for resource companies, and help Australian resource companies compete for capital in global markets.
Listed@ASX: How would you describe the industry support for the proposed changes?
Diane Lewis: There is good support for most proposed changes and scope for ASX to refine some of the changes in response to industry comments. Further industry consultation will be sought on any amendments to ASX listing rules later this year.
Listed@ASX: Which specific proposed changes received most support?
Diane Lewis: There was strong support for the implementation of revised reporting requirements around disclosure of exploration targets; disclosure of key assumptions underpinning mineral resource and ore reserve estimates; defining the level of study for a maiden ore reserve declaration; and annual reporting and reconciliation of mineral resource and ore reserve estimates.
Listed@ASX: What were the main sticking points?
Diane Lewis: There was a considerable divergence of views on new reporting requirements for the disclosure of exploration results and production targets. Views differed on whether production targets and associated forecast financial information should be disclosed based solely on inferred mineral resources.
Listed@ASX: What other reporting issues arose in the course of the consultation process?
Diane Lewis: There were two key issues. The first was streamlining the “competent person” sign-off for public reporting of mineral resource and ore reserve estimates. The second was removing the requirement to obtain a waiver from the listing rules to report historical estimates of mineralisation that cannot be reported in accordance with the JORC Code, and to develop clear listing rule requirements that allow the reporting of historical estimates. ASX believes both issues have merit and will progress them through the review process.
Listed@ASX: What was the industry’s view around requiring technical reports to support mineral resource and ore reserve estimates, similar to those in place under the Canadian reporting regime?
Diane Lewis: There was strong industry opposition to requiring technical reports. ASX has a similar view; in the issues paper, ASX effectively recommended against the adoption of such a requirement. We recognise that it would unnecessarily burden resource companies with extra compliance costs.
Listed@ASX: What was the industry’s feedback on the JORC Code itself?
Diane Lewis: Several respondents commented on governance issues around the JORC Code, relating to the supervision of compliance with the JORC Code, and a lack of enforcement of the Code’s key principles, especially with respect to competence. Several respondents said more education and awareness is needed around the JORC Code.
Listed@ASX: How will ASX respond to JORC Code governance issues?
Diane Lewis: ASX does not have jurisdiction over the level of competence demonstrated by competent persons when evaluation and estimating mineral resources and ore reserves. ASX is, however, considering forming a panel of experts that can be called upon as needed to advise ASX on the adequacy of the disclosure of key technical information supporting publically reported exploration results, mineral resources and ore reserves, and to help ASX respond to legitimate complaints.
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