NEW MANDATORY JORC REQUIREMENT FOR REPORTING ORE RESERVES COMES INTO EFFECT ON 1 DECEMBER 2014
Higher threshold to declare ore reserve estimates
In early 2013, amendments were made to the ASX Listing Rules to enhance the public reporting of reserves, ,resources and exploration results and targets by listed mining companies and also ensure reporting was in line with the 2012 edition of the JORC Code (Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (2012 JORC Code). Compliance with most of the changes/new rules became mandatory from 1 December 2013, however, the requirement to have completed a pre-feasibility or feasibility study in order to report an ore reserve, applies from 1 December 2014. Previously it was not mandatory to have defined the ore reserve, being the economically mineable part of a measured and/or indicated mineral resource, through such studies, though prudent explorers and miners generally do so.
Clause 29 of the JORC Code states that an ore reserve is the economically mineable part of a measured and/or indicated mineral resource. It will include diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate, which includes the application of modifying factors.
Specifically, from 1 December 2014, companies with ore reserves must ensure compliance with clause 29 of the 2012 JORC Code which provides that an ore reserve is the economically mineable part of a measured and/or indicated mineral resource where:
(a) diluting materials and allowances for losses, which may occur when the material is mined or extracted; and
(b) the ore reserve has been defined through a pre-feasibility study or a feasibility study, as appropriate, which has involved the application of modifying factors such as mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
Resources companies should take action to avoid non-compliance and being forced by the regulators to downgrade their resource. We recommend that all listed companies with existing ore reserves review their mine plans and ore reserve definition data to ensure compliance as this new requirement may affect resources companies in different ways, for example:
(a) if the company has an operating mine for an ore reserve and the life of mine plan does not contain information that is of a pre-feasibility or feasibility study standard, the company will have to upgrade its life of mine plan before 1 December 2014 or else downgrade the ore reserve to a mineral resource; or
(b) if a company does not have an operating mine and it has not undertaken studies at the pre-feasibility or feasibility level as appropriate before declaring an ore reserve, it will need to do so before 1 December 2014 or else downgrade the ore reserve to a mineral resource, pending compliance with the requirements.
Please note that clause 29 of the 2012 JORC Code does not require a formal pre-feasibility or feasibility study, but rather “studies at pre-feasibility or feasibility level” and so, the information related to the modifying factors must be at “pre-feasibility or feasibility level”.
Should you require more information or advice regarding JORC compliance and disclosure, GRT Lawyers has an experienced and specialised team to assist you prepare for this change.
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