Geologists support JORC Code “principles” over “prescription”

THE BOURSE WHISPERER: The Australian Securities Exchange has flagged changes to the way mining companies report Resources to the market.

The national body of Australia’s geologists, The Australian Institute of Geoscientists, has said it would prefer to see the ASX adopt a “principles” approach rather than a “prescriptive” approach if there is to be any structural changes to the country’s world-famous reporting standard for minerals resources, the JORC Code.

The Australian Securities Exchange is currently reviewing the way the country’s listed miners and explorers report their updates on Exploration Results, Mineral Resources and Ore Reserves under what is known as the JORC Code.

“JORC, as a principles-based system can deal with the complexity of mineral deposits and, backed by qualified geologists, meet clear standards able to properly inform the public,” Australian Institute of Geoscientists president Andrew Waltho said.

Waltho’s comments and the Institute’s concerns stem from industry apprehension that the ASX appears to favour a “checklist” or “prescriptive” approach in its recently released ASX Listing Rules discussion paper.

The Australian Institute of Geoscientists – one of the parent bodies of the JORC Code – said that the JORC Code had for more than three decades, well served regulators, the public and the industry alike in ensuring that all relevant minerals information was objectively disclosed.

The Institute suggests a “checklist approach” may not deliver additional market transparency or the materiality of reporting by resources companies, compared to the current JORC approach.

“We note that every other resources reporting code in the world except Canada follows the JORC model,” Waltho said.

“No overseas minerals jurisdiction has adopted the prescriptive Canadian model now being considered by the ASX – so that is a performance yardstick that needs to be given some weight if there are major changes eventually proposed by the ASX”.

“We would not want to see changes in reporting guidelines that either reduced the quality of reporting or damaged investor confidence in a sector now very much driving jobs and project growth in this country.
“It may more be a case that the JORC code itself does not need changing but that because of the mining booms underway at state and national levels in Australia, that the ASX’s regulatory staff may need additional resources to achieve timely administration and policing of minerals reporting.”

Waltho said JORC had become internationally recognised and respected as a balanced and proven process for minimising market manipulation through deliberate misinformation.

Since the introduction of the JORC Code in 1989, there had been no serious problems with the regime of self-regulated public reporting of resource company information it established in Australia.

“This has largely been due to the strength of the system created in Australia by JORC and the ASX working closely together,” Waltho continued.

“The Institute knows that the JORC Committee would welcome ongoing consultation with the ASX on its proposed new regulatory regime.

“The overseas experience with a prescriptive approach has not prevented serious problems such as deliberate fraud.

“The JORC Code review presents an opportunity for the ASX, the Institute and other key stakeholder groups to continuously improve the transparency and materiality of information disclosed to investors.

“This in turn would further maintain Australia’s leadership and reputation in geoscience reporting integrity and investor confidence.”

Waltho said the Institute formally supported a measured and evolutionary refinement of securities exchange reporting of Exploration Results, Mineral Resources and Ore Reserves as any changes to the JORC Code would also have international impacts in the equities and resources sectors.

“The ultimate effectiveness of a principles-based approach to public reporting must be the ability of regulators to competently assess technical information presented in public announcements of exploration results, resources and reserves, as these constitute price sensitive information,” he said.

“Investor confidence in the resources sector is paramount to the continued strength of Australia’s exploration and mining industries.”