JORC has, up until recently, been working in cooperation with the ASX Group on formulating a consultation paper which would spell out the rules for reporting mining reserves, but this no longer appears to be the case.
“We thought we were still in the process of negotiating a satisfactorily mutual outcome but have since discovered they [the ASX] have decided to go it alone,” JORC chairman Peter Stoker told MiningNews.net.
Stoker said that during the process of drafting the issues paper it became clear that the ASX had a preference to move away from the JORC code, without the support of JORC, in favour of the Canadian model.
The mining sector has been governed by the JORC code since it was incorporated into ASX listing rules in 1989 but the ASX Group says it is now timely for reporting requirements to be reviewed – hence the consultation paper, which is the first stage in its review process.
It has invited comments from interested stakeholders on the key reporting issues and the proposals examined in the consultation paper by January 27 next year.
The review will examine a number of issues, including greater alignment of reporting requirements in other developed mining markets with the domestic regulatory framework.
“We have to ensure when making the listing rules prescriptive that we don’t make the code something that stands alone, because it is used in so many other jurisdictions,” Stoker told MNN.
“They [ASX] are saying that it [Canada’s National Instrument 43-101] is world’s best practice but we believe the JORC code is best practice when it is honoured successfully.
“The JORC code will not stop illegal practices or activities, but neither does the Canadian model, but what it [NI43-101] has done is create work for consultants and lawyers, which I don’t think is necessarily a good thing.
“Under the Canadian system, you as a consultant prepare a report for the client and over the next two weeks you answer questions from the lawyers, not from the technical people. It is quite bizarre.”
Stoker said the JORC issues paper would address areas not dealt with by the ASX paper, particularly when it came to the interpretation of what a company classified as “material” in their reporting practices.
“One of the big reporting differences is how people interpret this word ‘material’ and one of the principles of the JORC code is that you have to provide all the ‘material’ information,” Stoker said.
“But there is another meaning of material in public reporting: will it affect the share price?
“My position is if you decide you are going to report something, whether it is material or not, you then need to report all that material information.”
Another area of contention is perceived conflict of interest by “competent person(s)” who sign off on JORC.
“We rely on the competent person to act in a professional manner. The current version of JORC code simply asks the competent person to declare whether they are an employee or not of the company,” Stoker explained.
“I am surprised this was not included in the ASX paper, but there is potential at least for a perception of conflict of interest when a competent person is also a significant shareholder or a director of the company, and in our view that needs to be better disclosed.”
Stoker said there were also a number of “company updates” from the last JORC code revision that needed to be incorporated in the new model, to align international definitions.
“Over time the international definitions have moved apart and CRIRSCO [Committee for Mineral Reserves International Reporting Standards] recently issued a set of core definitions, and it would be good if we could make that uniform across all the codes internationally,” he said.
“The principal reason for that is the International Accounting Standards Board for the Extractive Industries Working Group has referenced the CRIRSCO template in its draft discussion paper on a new international financial reporting standard which would recognise reserves and resources.
“Unless we have the definitions the same across all of the codes, the template will not reflect what is going on in reality.”
JORC was established in 1971.