Resources: Listing rules amendments
This article appeared in the September 2012 edition of the Listed @ ASX newsletter.
Disclosure changes for ASX-listed mining and oil & gas companies a step closer.
ASX has released proposed amendments to ASX Listing Rules and associated Guidance Notes for resource company reporting. The changes apply to reserves and resources reporting by ASX-listed mining and oil & gas exploration and production companies.
The consultation paper, ‘Reserves and Resources Disclosure for Mining and Oil & Gas Companies: Draft ASX Listing Rules and Guidance Notes’ is available here.
The paper is the culmination of a consultation process with resources industry stakeholders that began in October 2011. ASX sought comment on proposals to provide a more robust and transparent regime for reserves and resources reporting to investors.
ASX hosted 54 roundtable discussions and meetings in late 2011 and early 2012 with stakeholders and received 122 written submissions. Industry comments were summarised in the April 2012 ASX paper, 'Reserves and Resources Disclosure Rules for Mining and Oil and Gas Companies: Report on Consultation Feedback.'
The latest consultation paper provides the opportunity for stakeholders to comment on the operation of the proposed rules, identify if further draft guidance is required, and assess whether a 12-month transition period for the new rules is sufficient.
Listed@ASX asked Diane Lewis, ASX senior policy analyst, regulatory and public policy, about the benefits from the proposed amendments, and next steps in the consultation process.
Listed@ASX: Diane, what do the proposed amendments mean for ASX-listed resource companies and investors?
Diane Lewis: ASX is putting in place additional requirements for resource companies for material disclosures, to improve consistency and transparency in reporting across the mining and oil & gas sectors. The goal is to improve investor confidence in reporting, enhance market integrity, and support ASX-listed resource companies with efficient capital allocation in a global market.
Listed@ASX: What have been the main changes in the amendments to reflect industry feedback?
Diane Lewis: A large number of the proposals that ASX canvassed in the initial paper in October last year are being implemented, and two other issues identified in industry consultation are also now being addressed.
First, ASX has streamlined the Competent Person sign-off requirement. Currently, a competent person is required to approve all public reporting of estimates of resources and reserves. When the Listing Rules change, a Competent Person will be required to sign-off when the company first reports resources or reserves, but will not be required to sign-off again when the same information is reported, provided the underlying assumptions continue to apply. This is a practical step to reduce the administration and cost burden on resource companies, while preserving market integrity.
The second change is about reporting historical or foreign estimates of mineralisation that cannot be reported in accordance with the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Currently, companies must apply for a waiver of ASX Listing Rules to report such information. Under the amendments, ASX will provide an exception to this rule if resource companies meet certain reporting conditions. Again, this is a practical step that reduces administration costs for ASX-listed mining companies and preserves market integrity by ensuring that the market is appropriately informed where these estimates are material to the company.
Listed@ASX: What are the key benefits from the proposed changes?
Diane Lewis: The main benefit is resource companies will provide more information on their underlying material assumptions in relation to their estimates of reserves and resources and, for mining companies, their production targets. This is to provide investors with the ability to make more informed assessments about the value of these important assets, and longer-term projections of future production. ASX received broad support from industry stakeholders about the need to improve the consistency and transparency of reserves and resources reporting. The amendments reflect that view.
The change also strikes a good balance between requiring more information on material disclosures, and streamlining certain administrative requirements on non-material disclosures. ASX is conscious of the need to reduce unnecessary, costly compliance for ASX-listed resource companies, provided there are controls in place to maintain market integrity.
Another feature is more consistency between company reporting in the mining and oil & gas sectors. In the case of oil & gas, the reporting requirements in ASX Listing Rules have been comprehensively updated to align with current industry-developed practices and guidelines. Similar to the case with the JORC Code, oil and gas company reporting of petroleum resources will now be underpinned by industry sponsored guidelines – SPE PRMS.
A number of other specific changes will also benefit investors, including the new annual reporting requirements. ASX proposes that resource companies will be required to include a mineral resources and ore reserves statement or a petroleum reserves statement (as the case may be) in their annual report. In addition to setting out their aggregated reserves and resources holding in those statements, companies will also be required to reconcile changes in the statement from the previous year and explain any material changes. This will help investors better assess a company’s performance in managing is portfolio of resources.
Listed@ASX: What are the next steps in the amendments?
Diane Lewis: The latest consultation is about how the amendments will work in practice, and whether additional guidance would be helpful. ASX is also seeking comment on whether a 12-month transition period for the Listing Rules amendments to take effect is adequate.
The current consultation process will conclude by October 19, 2012. Submissions should be sent in electronic form to email@example.com and marked to the attention of Diane Lewis. Once ASX has considered industry feedback, ASX will seek regulatory clearance to bring the Listing Rule amendments into effect.
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