08/19/2024 | News release | Distributed by Public on 08/19/2024 05:01
The fossilised 2012 Joint Ore Reserves Committee ('JORC') Public Reporting in Australasia of Exploration Targets, Exploration Results, Mineral Resources, and Ore Reserves ('JORC Code' or the 'Code') has undergone major revision in the proposed code ('Draft Code') released on 1 August 2024.
This article will detail the major changes in the Draft Code, which is now open for public submissions and is set to be released in 2025.
The changes will impact the ore and mineral sectors in New Zealand and abroad, with particular implications for:
The changes intend to bring the Code up to date by enhancing and modernising the application of the Code's governing principles: transparency; materiality; and competence. Perhaps the most significant change, is the new requirement to include environmental, social, and governance ('ESG') factors in public reports.
The Draft Code contemplates reporting on ESG factors for the first time. ESG must be reported on at all stages of an assessment, including at the resource stage, even if the factors have not yet been fully studied. The Draft Code specifically provides that excluding significant knowledge on the basis that a project is still at the resource stage is inappropriate. The Draft Code provides that Competent Persons (as defined and discussed below), may engage subject matter experts to assist with ESG reporting (as well as other specialised reporting) requirements.
Reporting on ESG factors will be required from exploration through to closure including, but not limited to the following factors:
The inclusion of ESG factors aligns with growing global emphasis on sustainability and responsible mining practices. If brought into force, the ESG reporting requirements will be onerous and costly for businesses to adhere to, both at an operational and a social level. We understand that investors and their professional advisers are increasingly considering ESG factors in their decision-making processes, and the Draft Code reflects this shift, aiming to promote more responsible, sustainable and holistic reporting and business practices in the mining sector.
The inclusion of ESG reporting factors in the proposed changes to the JORC Code may represent an overreach that could complicate the reporting landscape for mining and ore companies. These companies may already be required to adhere to disclosure obligations under New Zealand law, which already requires reporting on material climate-related risks for large listed issuers. Adding further ESG requirements within the JORC Code may create overlapping obligations, leading to increased compliance burdens without necessarily providing additional value to investors.
Another newly minted element of the Draft Code requires businesses to disclose material risks, opportunities and threats associated with exploration targets, mineral resources and ore reserves. JORC has emphasised that such reporting should be levelled at the project stage being reported on, rather than using a 'crystal ball' to map risks and opportunities that may arise at future stages of the project. In respect of opportunities, Competent Persons will be required to report on:
Conversely, Competent Persons will also be required to report on the negative effects of the exploration targets, mineral resources or ore reserves, detailing:
This requirement will compel businesses to conduct more thorough risk assessments, potentially uncovering both threats and opportunities that may have been previously overlooked. This proactive approach to risk management may lead to better strategic planning and risk mitigation, though it will also increase the complexity and cost of reporting.
The Code requires a reasonable prospects assessment by the Competent Person to evaluate the factors influencing the economic extraction of mineral resources. This assessment must consider all relevant data that could impact economic development and should reflect both realistic and potential economically extractable mineralisation under justifiable conditions, not just all drilled or sampled mineralisation.
The JORC Code requires that reports be made where there were 'reasonable prospects of eventual economic extraction'. The Draft Code removes the word 'eventual' from this phrase, with the intention to clarify that the intention of the Code was not to facilitate significant delays in starting points.
The Draft Code additionally requires Competent Person must consider and disclose the impact of available data and justify the timeframe for reasonable prospects of economic extraction. Businesses will need to invest in more detailed and rigorous reconciliation processes (outlined in more detail below), ensuring that reported data is consistent with actual production performance. This is aimed at enhancing the accuracy and reliability of reporting under the Code, but may also increase the workload and complexity of compliance for businesses.
Under the JORC Code, a Competent Person must be a Member or Fellow of the Australasian Institute of Mining and Metallurgy, or of the Australasian Institute of Geoscientists, or of another recognised professional organisation under the Code. Competent Persons must have a minimum of five years' of relevant experience in working with the style of mineralisation or type of deposit that the activity relates to.
The Draft Code sets out changes to the requirements for those designated as 'Competent Persons'. Notably, these individuals must now:
As mentioned above, the Draft Code provides a new mechanism for Competent Persons to call on subject matter experts to assist them with particular elements of their reporting. Specialists must be qualified professionals with at least five years of contextual experience relevant to the project type being reported.
The increased measures for Competent Persons are designed to increase transparency and credibility of reported data. This means a potential increase in the administrative burden and cost to comply with the new requirements for businesses.
The Draft Code addresses gaps in reconciliation reporting by requiring:
Businesses will need to invest in more detailed and rigorous reconciliation processes, ensuring that reported data is consistent with actual production performance, providing a more reliable basis for investment decisions. This may enhance the accuracy and reliability of reports, but is likely to increase the workload and complexity of compliance for businesses.
The Draft Code's proposed changes reflect an effort to improve and update the JORC Code by addressing concerns over reporting accuracy, transparency, and sustainability in the mining sector. By enhancing the requirements for Competent Persons, refining the definition of reasonable prospects, and improving risk and reconciliation reporting, the Draft Code aims to provide a more accurate and holistic view of mineral projects. Businesses must adapt to these changes to maintain compliance, improve their public disclosures, and align with evolving investor expectations and regulatory requirements.