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Minerals reporting standards in Europe

Minerals reporting standards in Europe. Stephen Henley Deputy chairman, PERC. A brief history. 1991: IMM code , broadly similar to JORC 2001: “ The Reporting Code ” sponsored by professional bodies IMM, GSL, IGI, and EFG, and aligned with CRIRSCO 2006: Reserves committee re-formed as PERC

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Minerals reporting standards in Europe

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  1. Minerals reporting standards in Europe Stephen Henley Deputy chairman, PERC

  2. A brief history • 1991: IMM code, broadly similar to JORC • 2001: “The Reporting Code” sponsored by professional bodies IMM, GSL, IGI, and EFG, and aligned with CRIRSCO • 2006: Reserves committee re-formed as PERC • 2008: Updated PERC Code issued

  3. CRIRSCO • Committee for Mineral Reserves International Reporting Standards • Formed 1994 • Members: JORC, CIM, SAMREC, PERC, SME, Chile • Standard “template” defines areas of agreement among standards

  4. Two main components in all CRIRSCO-aligned reporting standards • The Competent Person concept • A standardised classification system

  5. The Competent Person • Appropriate qualifications • Professional membership of a relevant Institution • Experience relevant to the service provided

  6. The Classification

  7. PERC Code recognition and use • Recognised by LSE and AIM alongside other CRIRSCO reporting standards • Recognised by CESR alongside other CRIRSCO reporting standards • Used by some but not all minerals companies quoted on European markets

  8. Mining in the EU • Physical mining activity has become less important in the EU generally, but ... • London Stock Exchange (LSE) remains the most important exchange worldwide for mining finance.

  9. Mining industry market capitalisation on the LSE represented 41% of the world total at the end of 2007 (source CRU)

  10. Minerals reporting on other markets – for example: • Australia: Only JORC accepted • Canada: CIM Guide written into law (NI43-101) • South Africa: Only SAMREC accepted • Strong working ties between the professional groups responsible for the reporting standards and the regulatory authorities

  11. Compare and contrast! • In Australia, South Africa, and Canada • 100% report using their own CRIRSCO-aligned standards (JORC, SAMREC, CIM) • collectively represent just 23% of market capitalisation of all minerals companies. • On the London Stock Exchange • No consistency over reporting standards used • minerals companies represent 41% of market capitalisation worldwide

  12. Compliance not monitored in EU • Although they report according to CRIRSCO-aligned standards, these are selected by the companies themselves • Disclosures made on European stock markets using reporting standards from other jurisdictions are not vetted by the organisations which defined them • Irregularities are only identified and investigated if an investor complains

  13. London Stock Exchange • Listing rules last updated September 2006 • Allows any of the following reporting standards • JORC • CIM • IMMM (= PERC) • SAMREC • SME (USA professional CRIRSCO-aligned standard, but not yet recognised by SEC)

  14. London - AIM • AIM16 Guidance Note, March 2006, updated June 2009 • Allows any of the following standards: • CIM • IMMM (= PERC) • JORC • Russian (*** not CRIRSCO-aligned) • SAMREC • SME

  15. CESR – Committee of European Securities Regulators • Membership includes all major European Union stock market regulatory authorities • CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses Nº 809/2004 • Mineral Companies covered in paragraphs 131-133 • Does not identify any particular reporting standards

  16. CESR Consultation 2010 • CESR proposed amendments to CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses nº 809/2004 (CESR/05-054b) regarding mineral companies (paragraphs 131-133) • Proposed updated guidelines, much more detailed

  17. CESR consultation • CESR’s proposed menu of reporting standards: • JORC • SAMREC • CIM • SEC IG7 (*** not CRIRSCO-aligned) • PERC • Chile IIM Certification Code

  18. PERC’s response to CESR • Detailed submission (26 pages. Available on www.cesr.eu) • General support for CESR proposals • Supporting submissions from CRIRSCO and from individual CRIRSCO members (JORC, CIM, SAMREC, Chile) • Recommending the PERC Code as the “Reference Standard” for minerals reporting on EU markets

  19. PERC’s proposal: A single reference standard for EU markets • The PERC Code to be the reference standard for Europe • Other CRIRSCO standards may be used, but if there are any material differences these should be identified, and the report reconciled to the PERC standard

  20. Need to avoid ambiguity • It is important that the regulatory authority provides a clear and unambiguous set of rules for company reporting …. • …. but even the relatively small differences among reporting standards can create uncertainty.

  21. Less restrictive than it might seem • JORC, CIM, SAMREC are all CRIRSCO-aligned standards • Definitions are (almost) identical, so easy to convert from one to another as needed • Differences are largely a result of requirements of the different regulatory regimes

  22. Endorsement: IoM3, GSL, IGI, EFG • Members required to comply with the professional standards, definitions and experience requirements for a Competent Person as defined in the PERC Code. • Disciplinary procedures will reference the PERC Code.

  23. EFG: 21 Member Countries Italy - Italian National Council of Geologists Netherlands - Royal Geological and Mining Society of the Netherlands Portugal - Portuguese Association of Geologists Russia - National Association for Subsoil Auditing Serbia - Serbian Geological Society Slovenia - Slovenian Geological Society Spain - Official Spanish Association of Professional Geologists Sweden - Geologist Section of the Swedish Association of Scientists Switzerland - Swiss Association of Geologists United Kingdom - Geological Society • Belgium and Luxembourg - Belgo-Luxembourg Union of Geologists • Croatia - Croatian Geological Society (CGS) • Cyprus - Cyprus Association of Geologists And Mining Engineers • Czech Republic - Czech Union of Geological Associations • Finland - The Finnish Union of Environmental Professionals • France - French Union of Geologists • Germany - Professional Association of German Geoscientists • Greece - Association of Greek Geologists • Hungary - Hungarian Geological Society • Ireland - Institute of Geologists of Ireland

  24. Endorsement: IoM3, GSL, IGI, EFG • Members required to comply with the professional standards, definitions and experience requirements for a Competent Person as defined in the PERC Code. • Disciplinary procedures will reference the PERC Code.

  25. Next steps • CESR consultation is now closed. • Awaiting publication of their new guidelines • Even then, not binding on the national regulatory authorities, so further discussions will be needed

  26. Europe is not just EU • Huge mining market to the east: Russia

  27. The Soviet system: 1927 • GKZ formed: State Commission on Mineral Reserves • Protocol No.1 of 31 May 1927 • Defined reserves categories “Proved”, “Probable”, and “Possible”

  28. Russian classification • “Prognostic resources” • P3: no explicit supporting evidence • P2: evidence from geophysics/geochemistry/mapping • P1: limited drill hole, trench sampling, and outcrop data

  29. Russian classification • “Reserves” • C2: systematic sampling, ancillary studies • C1: closer-spaced sampling, more detailed ancillary studies • B: close-spaced exploration or partly blocked-out in mine * • A: generally blocked-out ore in a producing mine * (* A and B usually only for detailed areas within a C1 resource)

  30. International problems 1990 onwards • Widespread international misunderstanding of the Russian system and of differences between the reporting systems • Many different and conflicting opinions on matching Russian and international categories

  31. GKZ-CRIRSCO working group • 2006: Working Group formed • 2008: Protocol of Intentions signed

  32. Guidelines document published AUGUST 2010

  33. Conversion guidelines • Starting point: detailed comparison of Russian and CRIRSCO definitions - not subjective views from particular cases • These are guidelines, intended to assist the Competent Person - NOT an absolute statement of equivalence of categories • The professional judgement of the Competent Person always takes precedence – supported by objective assessment of all relevant factors

  34. Next step – a Russian CRIRSCO standard • Protocol of intention signed Sept 2010: to develop a CRIRSCO-aligned Russian reporting standard for public reporting • This will operate alongside the existing Russian system

  35. Minerals Reporting in Europe • PERC code for EU countries • An intended new Russian reporting standard • Possibly other standards for non-EU jurisdictions – or they may use PERC • But ALL within the CRIRSCO “family”, sharing common definitions

  36. Further information • www.perc.co • www.crirsco.com • www.gkz-rf.ru

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