Standards for Reporting Minerals and Oil and Gas Reserves and Resources

Lionel Hogg, Partner, Brisbane
 
Under Australian Corporations law, mining and oil and gas companies both listed and unlisted are required to disclose ‘not generally available information, that a reasonable person would expect, if it were generally available, to have a material effect on the price of securities in a corporation’. The disclosed information however must not mislead investors.
In Queensland, coal and gas are the predominant commercial energy forms. The sophistication of the technology used to locate and extract coal and gas has advanced considerably over the past decade and end-user markets are now predominantly offshore. As a result of these and other advances the language used in these sectors has become highly specialised and continues to evolve rapidly.
The listing rules currently prescribe the JORC Code as the standard for reporting ore reserves and mineral resources. The JORC Code has been able to accommodate ore and minerals reporting in Australia for many years. However JORC as a ‘one rule for all' mineral energy types is probably no longer elastic enough. ASX suggests this in its Review Issues Paper: Reserves and Resources Disclosure for Mining and Oil & Gas Companies issued in October 2011. ASX's paper also highlights that there is no comparable standard in the listing rules for reporting oil & gas reserves and resources and suggests the gas industry possibly report under the ‘SPE-PRMS' system, which is already widely used.
In January 2012, ASIC announced its concern that disclosing exploration information ‘inferred mineral resources' under the JORC Code might be misleading in the context of the commercial future of a resource company seeking funding, in particular by way of an investor capital raising. ASIC says the resource is still too uncertain to provide reasonable grounds for a production target estimate or statement implying economic viability.
Probably at the least ASX will change the way mining companies report exploration reserves but it remains to be seen the extent to which more prescriptive standards for reporting mineral and oil and gas resources will creep into Australia's listing rules.
Yes

 


This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.