The regulatory landscape for mining companies is constantly evolving. It is crucial for listed mining companies to understand and adhere to the latest ASX requirements to avoid any enforcement action being taken against them.
If ASX determines that a listed mining company is not complying with their disclosure requirements, then they may take corrective action, including rejecting an announcement, requiring a retraction or correction, or even suspending trading in the entity’s securities until the necessary corrective measures are taken.
In this article, we outline key aspects of disclosure relevant to listed entities involved in mining activities, highlighting areas where ASX is likely to focus its enforcement efforts.
Production targets
ASX is closely monitoring the release of production targets by listed mining and exploration companies. These targets must be grounded in reasonable assumptions, or otherwise they risk being considered misleading. If a significant portion of the production target relies on exploration targets or inferred mineral resources, then ASX is likely to challenge the target’s validity.
Classification of mineral resources and reserves
Under the ASX Listing Rules (the Listing Rules) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code), when reporting mineral resources in public reports, the categories of ‘Inferred’, ‘Indicated’, and ‘Measured’ must be clearly specified. These categories should not be grouped together in a single figure unless the details for each category are disclosed separately. Along with this, mineral resources cannot be expressed solely as contained metal or mineral content unless the associated tonnage and grade are also provided. Terms such as ‘global resources’ should not be used unless the individual resource categories are also disclosed. In practice, when contained metal is reported, it is typically done in terms of ounces and grade, without the inclusion of tonnage.
Under the JORC Code, if both mineral resources and ore reserves are disclosed, then a statement must be included to specify whether the mineral resources are part of, or in addition to, the ore reserves. It is critical that ore reserve estimates are not combined with mineral resource estimates in a single reported figure.
Peer comparisons
If a listed mining company makes a peer comparison, then it must clearly outline the material assumptions and reference the source of the data used in making the comparison. This includes citing the date of the peer’s announcement and the basis for comparison. ASX might otherwise deem the peer comparison to be misleading and take enforcement action.
Visual estimates
Listed mining companies must avoid making statements about the quality or grade of mineralisation simply based on visual inspections (such as photographs) without any supporting assay results. Such statements could mislead stakeholders, and ASX may intervene by retracting, correcting, or rejecting announcements if they include mineralisation estimates derived solely from visual observations.
Social media posts
All listed entities must refrain from sharing market-sensitive information on social media platforms before it has been disclosed on the ASX market announcements platform. Any social media post by a listed company must adhere to the Listing Rules and in the case of mining companies, the JORC Code.
Investor presentations
ASX has emphasised that investor presentation materials prepared by listed mining companies are considered public reports and therefore must comply with the Listing Rules and the JORC Code. This is particularly relevant during resource sector conferences and AGMs. In this respect, ASX will focus on a number of issues:
- ASX expects any new or materially changed information reported under the Listing Rules to be disclosed in a stand-alone announcement before it is included in investor presentations. ASX’s view is that it is vital that relevant information is easily accessible to investors.
- Proximate cautionary statements must appear on the same page, in the same paragraph, or immediately before or after the related information, with equal prominence. This requires the proximate cautionary statement to match the font type, size, and colour of the associated information. This includes statements related to exploration targets, visual estimates, historical or foreign estimates of mineralisation, and production targets.
- Under the Listing Rules, investor presentations that report new or materially changed exploration results, mineral resources, or ore reserves must include a competent person statement. If the information included has been previously disclosed, then a streamlined competent person statement can be used instead. However, when reporting an exploration target, the JORC Code still requires a competent person statement, even if that information has been previously disclosed.
This article was written by David Naoum, Partner and Rustu Buyukcakar, Solicitor.
