• March 20, 2018

JORC reform need questioned

Published on March 20th, 2018


THE Joint Ore Reserves Committee (JORC) Code that has underpinned Australia’s resource sector for decades will inevitably be revised, but among users there is a difference of opinion over what changes should be made, and how pressing the need for a revision is.

Leading the charge for some changes to industry practise is SRK Australia chairman Mark Noppe, who has been beating the reform drum for some time, saying there are “still surprisingly large gaps in the assurance systems that companies use to protect against inaccuracy of reporting exploration results, mineral resources and ore reserves”.

CSA Global principle geologist and manager corporate Graham Jeffress (who also sits on the JORC executive) said any major revision to the JORC Code was a “non-trivial” exercise so there was no real desire to return to that process without a demonstrated need for substantial change.

Jeffress said the JORC Code was principles-based, not rules-based, and was better being overseen with regulatory guidance than wholesale reform at this stage.

“JORC can’t be perfect, because there is just too much complexity to deal with,” Jeffress said, but he agreed with Noppe that the system was generally working well, and had led to better informed markets.

Noppe argues that, as the sector enters a phase of renewed opportunity, there was a need to address a “crisis of confidence” and ensure that reserve and resource estimates can be trusted.

“Compared to assurance frameworks for financial, legal and environmental governance, there is still too little attention paid to systems related to mineral resources and ore reserves,” Noppe said recently.

In terms of results, Noppe sees a vital need to get auditing baked in early in the process of reserves and resources reporting, rather than the infrequently or ineffective peer reviews conducted today, so errors can be caught at the time they were at the highest risk of occurring, especially when exploration teams are being run mean and lean after several years of shrinking budgets.

He said allowing time for technical oversight and good peer review could help increase investment from the 2% of financial investment globally finds its way into the mining sector.

Noppe argues that there needs to be a focus on consistently providing technical audits across the sector, at multiple stages so reviewers could better understand the how and why of estimation procedures and validate estimates.

That would be beneficial as audits were retrospective and could only identify opportunities for improvements in the future, whereas reviews could help ensure errors were nipped in the bud, he said.

Jeffress told MNN while Noppe’s calls were both fair and reasonable, and he sees issues of equal importance closer at the exploration end, because the reporting of exploration results has the biggest immediate impact on a company’s value.

“When you look at the way share prices change it is easy to triple or increase the value tenfold on the back of a single exploration result,” he noted.

“You hardly ever see that happening with a reserve or resource announcement – in fact the opposite tends to happen and the price goes down.”

If there are changes to be addressed he was in the way companies are sometimes unclear on exactly what defines an exploration result.

Article first published on MiningNews


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