Integration of Russia into the International Reporting System. Grigoriy Malukhin OERN

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2 Integration of Russia into the International Reporting System Grigoriy Malukhin OERN October

3 Outlines Russian reporting code aligned to the CRIRSCO Template (NAEN Code) development Russian Society of Subsoil Use Experts forming (OERN) Recognition OERN as RPO by NROs Recognition of the NAEN Code 3

4 The mining geological community Involvement of international mining companies, consultants, and investors in the Russian market Participation of Russian companies in mineral development projects outside the Russian Federation A need for mutual recognition of professionals of different countries, understanding of different national standards for classification and reporting of reserves and resources, improving transparency and investment attractiveness of subsurface resources

5 Russian standard for classification and reporting The existing Russian (governmental) standard for classification and reporting meets the requirements for which it was defined: reliable State accounting efficient use of mineral reserves and resources development of strategic plans for management and replenishment of mineral reserves and resources 5

6 Market reporting for Russian minerals - difficulties There are the following problems: In some places the existing Russian governmental standard and international classifications differ, and require further clarification Data presented according to the Russian classification system is not acceptable on major international capital markets Estimates quoted within the Russian classification system are liable to misunderstanding by foreign investors There is duplication of effort in evaluation of mineral deposits Reserve estimates obtained by the two systems can be difficult to reconcile 6

7 Development of mutual understanding 2006 GKZ-CRIRSCO working group founded to address basic questions 2008 Protocol of Intent GKZ-CRIRSCO 2010 Guidelines for harmonisation of reporting standards OERN Round Table to discuss Guidelines Protocol of Intent GKZ-CRIRSCO-OERN International conference: Russia and international reporting standards for mineral resouirces and reserves 2011 Russian CRIRSCOaligned Code for public reporting exploration results, resources, and reserves Adoption of the Code for public reporting Seminar on International Standards for reporting mineral reserves and resources

8 Russian Code 8

9 Parties for Development of the Russian Code NAEN National Association for Subsoil Use Auditing, Not-profit partnership includes corporate members and an association of individual specialists (OERN) Coordinates and financially supports the OERN activity for the Russian Code development OERN Russian Society of Subsoil Use Experts is self-regulating association of geologists, mining engineers, petroleum engineers, hydrogeologists, surveyors, ecologists and other specialists in related fields of subsoil use Does actual work on development the Russian Code for Reporting Russian Code GKZ Provides methodological assistance in meeting state regulatory requirements for resources/reserves reporting CRIRSCO, PERC Provides methodological assistance in meeting international requirements for resources/reserves reporting

10 The Russian (NAEN) Code Name: The Russian Code for public reporting of exploration results, reserves and resources of solid minerals (The NAEN Code) Based on the CRIRSCO Template with guidelines from the Russian classification system Establishes minimum requirements for public reporting by mining and exploration companies Designed for use in international markets, in parallel with the Russian classification used for the State purposes 10

11 Increasing level of geological knowledge and confidence Approximate equivalents - Russian Resources/Reserves vs. CRIRSCO Exploration Results Mineral Resources Mineral Reserves Inferred Resources of category P1 Indicated Russian Resources of category C2 in deposits of all complexity groups and category C1 in deposits of the 4th complexity group Measured Russian Resources of category C 1 (A,В) in deposits of 1st, 2nd, and 3rd complexity groups Probable Russian Exploitation Reserves in estimated and fully explored deposits Proved Russian Exploitation Reserves in fully explored deposits Consideration of the Modifying Factors This is not a mechanical translation but must be informed by professional knowledge and experience 11

12 Revision and Evolution of the Code Revision of the NAEN Code: Improve some provisions of the Code Update core definitions Improve stylistics Improve translation 12

13 About OERN Russian Society of Subsoil Use Experts (OERN) Was set up in 2007 Is non-profit organization Is an association of professional geologists, mining engineers, petroleum engineers, hydrogeologists, surveyors, ecologists and other specialists in related fields of subsoil use Has a Charter, a Code of professional ethics and disciplinary procedures. Has 1200 members. 13

14 OERN recognition as RPO by NROs Acceptance of OERN internationally as a RPO Allow OERN s members to act as Competent Persons Prepare reports in compliance with the International standards 14

15 OERN recognition as RPO by Comision Minera - Chile Reciprocity Agreement between NAEN, Comision Minera and OERN, signed in

16 OERN recognition as RPO by PERC

17 OERN recognition as RPO by SAMREC/SAMVAL Committee This recognition allows OERN members, providing the relevant experience, to submit a Competent Persons Report to the Johannesburg Securities Exchange. 17

18 OERN recognition as RPO by SME The SME grants the Competent Persons of the OERN status as Competent Persons under the terms set forth in the 2007 SME Guide. 18

19 OERN recognition as RPO by JORC

20 OERN and EFG OERN is a member organisation of the European Federation of Geologists (EFG) Its members can apply for the title European Geologist (EurGeol) This title allows an expert-member of OERN to act as a Competent Person in Australia, Canada, South Africa and London. 20

21 NAEN Code recognition Recognition of the NAEN Code by stock exchanges Allow to accept NAEN Code by stock exchanges Allow to prepare reports in compliance with the NAEN Code 21

22 NAEN Code recognition by ESMA 22

23 NAEN Code acceptance by CSC

24 Russian Competent Person Institution and Reporting All necessary conditions have been created to form in Russia : - the Competent Person Institution - the national reporting code (NAEN Code) based on international standards and aligned with the Russian governmental classification 24

25 Future plans We need: to continue working on development of the Russian society of Competent persons to continue working with Canada towards OERN recognition to continue working with stock exchanges to continue education program seminars, conferences, workshops to continue working on harmonization of Russian and international reporting systems in more details 25