Visit www.asx.com.au

Related Links

Companies Homepage

Listing Rules - Appendix 5A - JORC Code (DOC 339KB)

Listing Rules - Chapter 5 (PDF 113 KB)

Competent Person's Consent Form (DOC 339KB)

Unsubscribe

 

 

Companies Update
3 May 2007
Update no 03/07

Important information for ASX Listed Entities

ASX / JORC INITIATIVES

For more than three decades, ASX Limited (ASX) and the Joint Ore Reserves Committee (JORC) have been working to ensure a practical and effective set of minimum reporting standards and guidelines for the mining industry. These standards and guidelines, embodied in the JORC Code (DOC 339KB), contribute significantly to Australia's reputation for offering a well-regulated and supervised marketplace. This reputation for integrity is critical to Australia's attractiveness to global capital.

Preserving confidence in the integrity of Australia's market is the mutual interest of all participants, including the market operator, industry bodies, and listed companies. Accordingly, ASX and JORC are working together on a number of initiatives designed to maintain a high standard of compliance with the JORC Code (DOC 339KB) by ASX listed entities.

One third of all ASX listed companies are mining and resources entities. A well-functioning JORC Code (DOC 339KB) not only supports Australia's status as a mining centre, it also underpins the market's overall attractiveness. Its success depends on the support of all participants.

During the March 2007 quarter, ASX identified a number reporting issues faced by companies that require some additional guidance. Consequently, this Companies Update seeks to provide clarification on the following issues; the reporting of metal equivalents, the use of extrapolation when reporting Mineral Resources, the inclusion of Competent Person Statements and obtaining written consent from a Competent Person for the release of a public report.

This Companies Update deals with:

  1. Reporting of metal equivalents;
  2. Reporting of Mineral Resources, Extrapolation, and Sampling;
  3. Competent Person's Statement and Consent Form; and
  4. Enforcement action by ASX for non-compliance with the JORC Code (DOC 339KB).

1. REPORTING OF METAL EQUIVALENTS

ASX has observed that there appears to be an increased usage of metal equivalents by companies when reporting exploration results. Metal equivalents are used by companies to report polymetallic exploration results in terms of a single equivalent grade of one major metal such as gold or copper. This metal equivalent grade is usually obtained by taking the in situ "value" (grade times price) of each of the individual metals, adding these "values" and calculating the grade of the same "value" of the primary reported metal. Such reporting may be misleading unless additional details such as estimates of metal recoverability are also provided.

The JORC Code (DOC 339KB) provides guidance in Table 1 - Data Aggregation Methods, that "The assumptions used for any reporting of metal equivalent values should be clearly stated". The reporting of metal equivalents must also adhere to the principles of transparency, materiality and competence, as set out in clause 4 of the JORC Code (DOC 339KB).

The following minimum information should accompany any report which includes reference to metal equivalents in order to conform with these principles:

  • individual assays for all metals included in the metal equivalent calculation;
  • assumed commodity prices for all metals. (Companies should disclose the actual assumed prices. It is not sufficient to refer to a spot price without disclosing the price used in calculating the metal equivalent); 
  • assumed metallurgical recoveries for all metals and the basis on which the assumed recoveries are derived (metallurgical test work, detailed mineralogy, similar deposits, etc.);
  • a clear statement that it is the company's opinion that all the elements included in the metal equivalents calculation have a reasonable potential to be recovered; and
  • the calculation formula. 

In most circumstances the metal chosen for reporting on an equivalent basis should be the one that contributes most to the metal equivalent calculation. If this is not the case, a clear explanation of the logic of choosing another metal must be included in the report.

Estimates of metallurgical recoveries for each metal are particularly important. For many projects at the Exploration Results stage, metallurgical recovery information may not be available or able to be estimated with reasonable confidence. Therefore, for many projects at the Exploration Results stage, reporting in terms of metal equivalents may not be appropriate.

2. REPORTING OF MINERAL RESOURCES, SAMPLING AND EXTRAPOLATION

All reports of Mineral Resources must satisfy the requirements of clause 19 of the JORC Code (DOC 339KB), in particular, that there are reasonable prospects for eventual economic extraction.

It is the intent of the JORC Code (DOC 339KB) that specific geological evidence required for the estimation of mineral resources must include sampling data for all classifications of Inferred, Indicated and Measured Mineral Resources. A Mineral Resource cannot be estimated in the absence of sampling information. 

For the purposes of interpretation of the JORC Code (DOC 339KB) a 'sample' may be defined as:

A statistically-significant subset selected and analysed by an industry accepted method or measured by an appropriate technique to estimate the characteristics of a larger group or population.

JORC has advised ASX that the guidance note in Table 1 of the JORC Code (DOC 339KB) on sampling techniques should not be taken as limiting the broad meaning of sampling. Sampling techniques referred to in Table 1 should be interpreted as follows:

Table 1 Sampling techniques and data

Sampling Techniques

Nature and quality of sampling (eg. cut channels, random chips, specific specialised industry standard measurement tools appropriate to minerals under investigation such as downhole gamma sondes and prompt fission neutron bore hole probes etc). Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

For further guidance on reporting of sampling techniques and data please refer to Table 1 of the JORC Code (DOC 339KB).

JORC has advised ASX that future editions of the JORC Code (DOC 339KB) and Guidelines will reflect this interpretation of sampling techniques.

Where the Mineral Resource that is being reported is predominantly an Inferred Resource (that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence), sufficient supporting information must be provided to enable the investor to evaluate and assess the risk associated with the reported Mineral Resource. In circumstances where the estimation of the Inferred Resource is presented on the basis of extrapolation, that is, an estimation that extends to an area beyond that of the sample data, clause 26 and Table 1 of the JORC Code (DOC 339KB) and the JORC Code (DOC 339KB) principles of materiality and transparency require the report to contain sufficient information to inform the investor of:

  • the maximum distance that the resource is extrapolated beyond the sample points; 
  • the proportion of the resource that is based on extrapolated data; 
  • the basis on which the resource is extrapolated to these limits; and
  • a diagrammatic representation of the Inferred Resource showing clearly the extrapolated part of the estimated resource.

3. COMPETENT PERSON'S STATEMENT AND CONSENT FORM

Clause 5 of the JORC Code (DOC 339KB) provides that a public report is "a report or reporting on Exploration Results, Mineral Resources or Ore Reserves, prepared for the purpose of informing investors or potential investors and their advisers. This includes a report or reporting to satisfy regulatory requirements". The JORC Code (DOC 339KB) goes on to provide guidance as to the type of reports that could be considered to be "public reports". They include, but are not limited to, company annual reports, quarterly reports and other reports to ASX, and include other publicly released company information in the form of website postings and briefings for shareholders, stockbrokers and investment analysts.

Companies reporting Exploration Results, Mineral Resources or Ore Reserves are reminded that while a public report is the responsibility of the company acting through its Board of Directors, clause 8 the JORC Code (DOC 339KB) requires that any such report "must be based on, and fairly reflect the information and supporting documentation prepared by a Competent Person or Persons". In releasing public reports that contain information in relation to Exploration Results, Mineral Resources and/or Ore Reserves, companies are required under clause 8 the JORC Code (DOC 339KB) to do the following:

  • disclose the name(s) of the Competent Person or Persons, state whether the Competent Person is a full-time employee of the company, and, if not, name the Competent Person's employer;
  • ensure that the Competent Person has a minimum of five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which that person is undertaking; and
  • ensure that the public report is issued with the prior written consent of the Competent Person or Persons as to the form and context in which it appears. 

In order to assist Competent Persons and companies to comply with these requirements, and to emphasise the need for companies to obtain the written consent of Competent Persons for their material to be included in the form and context in which it appears in the public report, ASX, together with JORC, have developed a Competent Person's Consent Form that incorporates the requirements of the JORC Code (DOC 339KB).

ASX advises that it: 

  • regards the completion of a consent form to be good practice and will accept the completed form, whether in the format provided or another equivalent format, as evidence that the required written consent has been obtained; and
  • may request a company to release to the market evidence that it has obtained the Competent Person's written consent to the inclusion, in the form and context in which it appears in the public report, of information based on their work in relation to Exploration Results, Mineral Resources and/or Ore Reserves.

Having the Competent Person's Consent Form completed will ensure that evidence of the written consent is readily available if ASX subsequently makes a request for the consent to be released to the market. The Competent Person's Consent Form(s), or other evidence of the Competent Person's written consent, should be retained by the company to ensure that the written consent can be promptly provided to ASX if requested.

The Competent Person's Consent Form (DOC 49KB) is available to download from asx.com.au.

4. ENFORCEMENT ACTION BY ASX FOR NON-COMPLIANCE WITH THE JORC CODE

ASX reminds companies that Chapter 5 (PDF 113 KB) of the ASX Listing Rules requires listed companies to report Exploration Results, Mineral Resources or Ore Reserve estimates in compliance with the JORC Code (DOC 339KB). Where it appears that a company may not be in compliance with listing rule 5.6, ASX may write to the company pursuant to listing rule 18.7 seeking further information and requesting that the response be provided in a format suitable for release to the market.

Where ASX is concerned that the circumstances of the possible non-compliance may lead to a disorderly or uninformed market, ASX may suspend a company's securities from quotation and/or refer the matter to the Australian Securities & Investments Commission for their consideration. 

ASX looks forward to your company's cooperation in helping to maintain the highest standards in reporting Exploration Results, Mineral Resources or Ore Reserves. 

To help keep our Listed Entities informed of information and events ASX will be sending emails to the Company Secretary's Office from time to time. You are receiving this email because you have been identified as a key contact within the Company Secretary's Office at your organisation. If you would like to update your email address please do so via the Directors/Senior Management page on ASX Online for Companies. Feel free to forward this email to any relevant parties within your organisation.