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Australian miners, ASIC hit road block on forward-looking statements

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Australian miners, ASIC hit road block on forward-looking statements

The Australian Securities and Investments Commission, or ASIC, has released a draft of its regulations around forward-looking statements provided by Australian miners following two years of discussions with the industry.

Known as Information Sheet 214, or IS 214, the document, which is a sore point with the industry, relates to production targets and forecast financial information that is allowed to be released by miners and explorers.

ASIC said Oct. 12 that it has made some minor drafting changes to clarify its guidance in response to concerns and misunderstandings that arose at the time of the original release of IS 214 in April.

The regulator clarified that production targets and forecast financial information can be published even if secured funding is not in place, but a company still needs to be able to demonstrate “reasonable grounds” that it could obtain the necessary finance as and when required.

Production targets and forecast financial information can also be published based not only on reserves but also on resource estimates — provided there are “reasonable grounds” for that estimated mineralization, as well as factors used in determining reserves.

ASIC said a company that does not have reasonable grounds for forward-looking statements and therefore cannot make statements of this kind should still disclose reliable and relevant information of a technical nature, for example from scoping studies, to ensure the market is properly informed of the company's prospects.

The Association of Mining and Exploration Companies has been engaged with ASIC for the past two years to try and reach acceptable terms on forward-looking statements.

CEO Simon Bennison told delegates Oct. 11 at the Precious Metals Investment Symposium in Sydney, Australia, that one of the issues addressed involved a shift away from using specific numbers in financial forecasts.

“I think from what we have now resolved within the sphere of forward-looking statements around financial information, whether they’re [net present values] or whatever the case may be, I think the move away from specific numbers and into a range, where at least you can put an NPV range if you wanted to, is pretty much deemed as acceptable,” he said.

However, the two organizations have reached an “impasse” over what is considered acceptable with respect to secured funding.

“IS 214 is going to still remain as a draft ... and it will still have issues around secured funding,” Bennison said. “We haven’t been able to clarify those and finalize those to a point of satisfaction from the industry and there is still some more consultation to be done with JORC, [and] between ASIC and JORC, in some of the JORC implications for IS 214.”

Meanwhile, Bennison said the ASX has released interim guidance to help companies work through the process of what is deemed acceptable in scoping documents.

The ASX has formed a working group, which includes Stavely Minerals Ltd. Managing Director Chris Cairns, to formulate the regulatory framework based on IS 214 and the guidance material released by the exchange.