jorc update - what you need to know!

West End Briefing

Ignorance is no longer bliss…. ASX/JORC Updates Panel Discussion Wednesday 12 March 2014

Jane Gouvernet

Regional Commissioner

ASIC

Ignorance is no longer bliss:

ASIC perspective

Jane Gouvernet

Regional Commissioner of Western Australia

Senior Executive Leader - Emerging Mining and Resources

Perth, 12 March 2014

ASIC’s remit and priorities

Corporations Act 2001 and Australian Securities and

Investments Commission Act 2001

ASIC’s current strategic priorities are to focus on three key

outcomes:

• Confident and informed investors and financial

consumers

• Fair and efficient financial markets

• Efficient registration and licensing

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ASIC’s involvement

ASIC’s concerns were to ensure:

• Compliance with the Corporations Act, including the

general continuous disclosure regime and

requirements regarding forward looking statements

• Market Integrity

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ASIC’s involvement

Documents lodged under the following Chapters of the

Corporations Act 2001 are also ‘Public Reports’

• 2E – Related Party Transactions

• 5 – Arrangements and Reconstructions (Schemes)

• 6 – Takeovers

• 6CA – Continuous Disclosure, listed and unlisted

• 6D - Fundraising

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Forward looking statements

Corporations Act provisions derive from Trade Practices Act

1974 s51A (now s4 of the Australian Consumer Law)

Corporations Act:

• s670A(2) (takeovers/ control transactions)

• s728(2) (fundraising)

• s769C (financial products and services)

ASIC Act:

• s12BB(1) (Consumer protection)

Global considerations

• Competition and cost of capital

• Accepted definitions of different levels of studies

• Incorporation of SPE PRMS as the oil & gas reporting

framework

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To conclude

• ASIC endorses the 2012 JORC Code and the revised

ASX Listing Rules

• The need to have a reasonable basis for a forward

looking statement applies to all industries and remains

the same following transition to the new disclosure rules

• ASIC expects the content of analysts’ briefings to also

be in accordance with these rules

Disclosure Information Package

The following guidance is strongly recommended, it is most effective when read

as an entire package:

• ASX Listing Rules Chapter 5

• ASX Guidance Notes 31 on mining (and 32 on oil and gas)

• ASX Mining FAQs

• ASIC RG 111 Content of expert reports

• ASIC RG 170 Prospective financial information

Supplementary guidance

• ASX Guidance Note 8 on continuous disclosure

• ASIC RG 112 Independence of experts

• ASIC RG 228 Prospectuses: Effective disclosure for retail investors

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Disclosure Information Resources ASX FAQ & Guidance Notes

http://www.asx.com.au/regulation/compliance/asx-mining-reporting-faqs.htm

http://www.asx.com.au/regulation/compliance/compliance-downloads.htm

(for new ASX Listing Rules Chapter 5 for mining and oil and gas, and ASX Guidance Notes 31 on

mining and 32 on oil and gas, ASX Guidance Note 8 on continuous disclosure)

ASIC Regulatory Guides:

http://www.asic.gov.au/asic/asic.nsf/byheadline/Regulatory+guides?openDocument

RG 111 Content of expert reports

RG 112 Independence of experts

RG 170 Prospective financial information

RG 228 Prospectuses: Effective disclosure for retail investors

JORC website : http://www.jorc.org/

Case: ASIC V McLeod (2000) 18 ACLC 424

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James Rowe

State Manager

ASX

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ASX Listing Rule Amendments – Reporting Requirements for Mining

Companies

ASX Presentation 2014 - Company Directors

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Overview

ASX review & consultation

New reporting requirements under the ASX Listing Rules,

including Guidance Note 31

Transition period & implementation

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ASX Review & Consultation

New ASX Listing Rules developed following extensive consultation

2 rounds of consultation, with 2 consultation papers

138 written submissions received

64 consultation roundtables and consultation meetings

all peak industry bodies and shareholder groups actively involved

in the process – JORC, AIG, AusIMM, MCA, AMEC, ASA

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Summary of the New Reporting Framework

Chapter 5 Listing Rule reporting requirements for material mining

company resource disclosures

underpinned by 2012 JORC Code

remains principles-based but acknowledges need for enhanced

disclosure standards

Guidance Note 31 - Reporting on Mining Activities

FAQ’s

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Rules Focused on Materiality

Many Chapter 5 requirements for additional disclosure are triggered when

reporting on ‘material projects’:

exploration results (minerals)

initial & materially changed estimates of mineral resource (inferred,

indicated, measured)

historical and foreign estimates

longer term production targets not based on ore reserve & an operating

mine

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New Reporting Requirements

Exploration results

Mineral resources

Ore reserves

Competent person sign-off

Historical and foreign estimates

Production targets

Cautionary statements

Annual disclosure

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Exploration Results

LR 5.7 – disclosure of exploration results for a material project:

material drill-holes, a drill-hole table showing specific location &

intercept information:

• easting, northing, elevation, dip, azimuth, down hole width &

depth & end of hole

if not, then an explanation of why the company has determined

that this information is not material to understanding the reported

results

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Exploration Results (cont.)

requirement for a report based on sections 1 (sampling techniques and data) &

2 (reporting of exploration results) of Table 1 of the JORC Code to be attached

to the market announcement

• the report can be prepared on an ‘if not, why not’ basis

• if an entity determines that one or more of these criteria is not material it

must identify each criterion and explain why it has been determined that it

is not material to understanding the exploration results

streamlined CP sign-off

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Mineral Resources LR 5.8 – disclosure of initial (or materially changed) estimates of mineral resources

for a material project:

requirement for a summary of prescribed parameters in the market

announcement

• geology, sampling techniques & analysis, drilling techniques, data spacing, estimation

methodology, cut-off grade, mining & metallurgical methods & parameters considered to date

requirement for a report based on sections 1-3 of Table 1 of the JORC Code to

be prepared on an ‘if not, why not’ basis and attached to the market

announcement


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Ore Reserves

LR 5.9 – disclosure of initial (or materially changed) estimates of ore

reserves for a material project:

requirement for a summary of prescribed parameters in the market

announcement

• material assumptions & outcomes of PFS, criteria used for

classification, estimation methodology, basis of cut-off grade

selected, mining & processing methods selected, material

modifying factors

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Ore Reserves (cont.)

requirement for a report based on sections 1-4 of Table 1 of the

JORC Code to be attached to the market announcement


Guidance Note 31 – guidance on commercially sensitive economic

assumptions – why the information is considered commercially

sensitive and methodology used to be disclosed

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Competent Person Sign-off

Streamlined competent person sign-off requirements:

prior written consent required when reporting for the first time

exploration results & estimates of MR & OR for a material project

subsequent reporting of the same information does not require CP

sign-off, subject to certain conditions being met

new CP sign-off required where there is a material change to the

estimates and/or a material change to the assumptions & technical

parameters underpinning the estimates

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Historical and Foreign Estimates

LRs 5.10 to 5.14 – disclosure of historical & foreign estimates:

requirement for the disclosure of supporting information

annual reporting requirements for updating progress on converting

the estimates to MR/OR reported in accordance with the JORC

Code

prohibition on including historical & foreign estimates (other than

qualifying foreign estimates) in economic studies

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Production Targets/Forecast Financial Information

LRs 5.15 to 5.19 – disclosure of production targets:

rules apply to longer term projections of production not underpinned by operating mine(s) &

solely underpinned by:

• OR

• OR & measured MR

• OR and measured MR and/or indicated MR

prohibition on the disclosure of a production target based:

• solely on an exploration target

• solely on a combination of inferred MR and an exploration target

• on historical & foreign estimates (other than qualifying foreign estimates)

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additional disclosure required:

• material assumptions

• company to confirm underlying mineralisation signed-off by a CP

• respective proportions of OR, MR & exploration potential underpinning the

target to be disclosed

where it includes inferred MR & exploration potential – proximate cautionary

statements required & disclose the basis for including exploration potential

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additional requirements when it is based solely on inferred MR:

• disclose the basis for target & level of confidence of inferred MR

• completion of a technical report of a sufficient level of confidence to

support the production target

• public release of the technical report

• technical report prepared by independent CP

• cautionary statements

• Guidance Note 31 - guidance in relation to it being in exceptional

circumstances where a company may have a basis for this

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Cautionary Statements

Cautionary statements for production targets and historical estimates:

must be proximate – on the same page and same paragraph or immediately

preceding or following paragraph

not satisfactory in a footnote or a general disclaimer

must have equal prominence – same font type, size and colour as the relevant

information

if statement in a heading, cautionary statement must also be in a heading

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Annual Disclosure

LRs 5.20 & 5.21 – annual MR & OR statement in the annual report which discloses:

results of annual review of MR & OR

aggregated holdings of MR & OR by commodity & by geographical area

comparison of MR & OR aggregated holdings against estimates from previous

year – explaining material changes

summary of governance arrangements and internal controls

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New Reporting Requirements – 2012 JORC Code

Frequently Asked Questions:

Transition to new disclosure rules

Competent Person Statement

Exploration Targets

Production Targets

http://www.asx.com.au/regulation/compliance/asx-mining-

reporting-faqs.htm#post-transition

http://www.asx.com.au/regulation/compliance/asx-mining-reporting-faqs.htm#post-transition









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Enquiries

Contact:

James Rowe

State Manager

ASX Listings Compliance (Perth)

Email questions – [email protected]

mailto:[email protected]

Jillian Terry

Acting VP Geoscience, BHP Billiton

BHP Billiton


Timeline

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Previous

• 2004 JORC Code

• ASX Companies Updates (2005-2008)

Consultation

• October 2011 Issues Paper (114 written Submissions)

• September 2012 Exposure Draft (82 written submissions)

New

• December JORC 2012 edition released

• December 1st 2013 mandatory (Reserves December 1st 2014)

The JORC Committee is the copyright holder for this presentation. Use and reproduction of the 2012 JORC Code has been authorised by the Joint Ore Reserves Committee (JORC). The workshop presenter acknowledges JORC as the copyright owner of the Code.


Key changes in the 2012 Code • The requirement to report against Table 1 on an ‘if not, why not’ basis — Clauses

2, 5, 19, 27, 35, and the introduction to Table 1. • Competent Person attributions — Clause 9 (potential conflict of interest &

subsequent reporting) • Exploration Target — now defined in the revised Clause 17. • Extrapolation of Inferred Resources. • At least a Pre-Feasibility Study required for an Ore Reserve declaration — Clause

29 (minimum benchmark for technical and economic study of modifying factors). • Technical studies definitions — Clauses 37, 38, 39, and 40. • Metal equivalents — Clause 50. • In situ or ‘in ground’ values — Clause 51 (financial valuations). • Additional guidance on reporting requirements for Competent Persons — Table 1

body of table.

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Table 1 Structure Section 1 Sampling Techniques and Data

Section 2 Reporting of Exploration Results

Section 3 Estimation and Reporting of Mineral Resources

Section 4 Estimation and Reporting of Ore Reserves

Section 5 Estimation and Reporting of Diamonds and Other Gemstones

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Clause 4 2012 Code —Explanation of Principles

“Transparency and Materiality are guiding principles of the Code, and the Competent Person must provide explanatory commentary on the material assumptions underlying the declaration of Exploration Results, Mineral Resources or Ore Reserves.

In particular, they must consider that the benchmark of Materiality is that which includes all aspects relating to the Exploration Results, Mineral Resources or Ore Reserves that an investor or their advisers would reasonably expect to see explicit comment on from the Competent Person. The Competent Person must not remain silent on any material aspect for which the presence or absence of comment could affect the public perception or value of the mineral occurrence.”

This slide contains extracts only of

Clause 4, 2012 JORC Code

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2012 Code — some new terms Significant project: • “An exploration or mineral development project that has or could have a significant influence

on the market value or operations of the listed company, and/or has specific prominence in Public Reports and announcements.” (Appendix 1).

Material change: • “A material change could be a change in the estimated tonnage or grade or in the

classification of the Mineral Resources or Ore Reserves. Whether there has been a material change in relation to a significant project must be considered by taking into account all of the relevant circumstances, including the style of mineralisation. This includes considering whether the change in estimates is likely to have a material effect on the price or value of the company’s securities.” (Guideline to Clause 5).

‘if not, why not’: • “means that each item listed in the relevant section of Table 1 must be discussed and if it is

not discussed then the Competent Person must explain why it has been omitted from the documentation.” (Guideline to Clause 5).

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Clause 17 2012 Code — Exploration Target now defined • No headline statement • Quote as a range of tonnes and a range of grade (or quality) • Terms Resource and Reserve must not be used • Requires CP Consent to Publish • Clarify if based on actual or proposed exploration • Requires a detailed explanation of the basis for the statement

including description of exploration activity completed and results available. Same paragraph as first reference to the target.

• Clarification of conceptual in nature, insufficient exploration to estimate a resource and uncertain if a resource will result

• Detail proposed exploration activities to test validity of the target and timeframe for expected completion

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jorc update - what you need to know!

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new disclosure rules

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