Mineral Project Reporting under VALMIN Code (2015)

Transcription

1 Mineral Project Reporting under VALMIN Code (2015) AIG Friday Seminar Series Valuations in Mining and Exploration 11 November 2016 Brisbane Slide 1

2 The 2005 and 2015 Codes Slide 2

3 What is the VALMIN Code? The Australasian Code for Public Reporting of Technical Assessments and Valuation of Mineral Assets. Provides guidance on matters that may be subject to Australian regulations, other provisions of law and the published policies and guidance of the Australian Securities and Investments Commission (ASIC) and the Listing Rules of the Australian Securities Exchange (ASX) or of other relevant securities exchanges. In this presentation capitalised terms are defined terms Slide 3

4 General relationship between VALMIN, Public Reports and Regulations Slide 4

5 How does VALMIN fit with JORC? For Public disclosure of: Exploration Results, Mineral Resources and/or Ore Reserves JORC Code (2012) Technical Assessment or Valuation VALMIN Code (2015) The VALMIN Code is a companion to the JORC Code Both are written from a Minerals perspective and use consistent terminology Slide 5

6 JORC VALMIN interaction Slide 6

7 Technical Reporting Codes Provide minimum standards, recommendations and guidelines Principles of transparency and materiality in reporting JORC (2012) & VALMIN (2015) Materiality All reasonable information expected Transparency Clear, unambiguous presentation Competence Work completed by Competent Person Competence Reporting is subject to interpretation, therefore require greater transparency and consistency + VALMIN (2015) Independence May be required depending on circumstance Reasonableness Impartial assessment that a third party would reach a similar conclusion Slide 7

8 What are the key changes? Reasonableness and Independence. Requirements of Technical Assessments are separated from the requirements of Valuation Reports; more succinct document that reflects its dual purpose. Terms and definitions in greater alignment with JORC Code, ASIC and IVSC. Guidance on reporting requirements, such as the Corporation Act, ASIC s regulatory guidelines and the ASX listing rules. Petroleum technical assessments and valuations may use the VALMIN Code as guidance, not mandatory. Slide 8

9 Compliance with ASIC RG 55 Statements in Disclosure Documents and PDSs*: Consent to Quote RG 111 Content of Expert Reports RG 112 Independence of Experts RG 170 Prospective Financial Information RG 228 Prospectuses: Effective disclosure for retail investors RG 230 Disclosing non IFRS** financial information ASIC Class Orders CO 07/428 and 429 Consent to Quote, and ASIC Information Sheet (INFO 214) Mining and resources Forward looking statements. Refer to looking statements/mining and resources forwardlooking statements/ * PDS = Public Disclosure Statement ** IFRS = International Financial Reporting Standards Refer to for further information and recent updates. Slide 9

10 1. Introduction Code content 2. VALMIN Practitioners: Specialists, Securities Experts 3. Code Principles: Competence, Materiality, Transparency 4. Additional requirements: Reasonableness, Independence 5. Public Report 6. Commissioning a Public Report 7. Technical Assessment 8. Valuation 9. Financial Modelling 10. Risks and opportunities 11. Other: Site Visits, Records, Indemnities 12. Declarations: Sign Offs 13. Acronyms 14. Definitions 15. Glossary Slide 10

11 Key defined terms Public Report means a report prepared for the purpose of informing investors or potential investors and their advisers when making investment decisions, or to satisfy regulatory requirements. Technical Assessment Report involves the Technical Assessment of elements that may affect the economic benefit of a Mineral Asset. Valuation Report expresses an opinion as to monetary Value of a Mineral Asset, but specifically excludes commentary on the value of any related Securities. Independent Expert Reports are defined with reference to ASIC Regulatory Guides. Slide 11

12 Public Report Examples: 1. Technical Assessment and Valuation for inclusion in an Independent Expert Report, typically used in a Scheme of Arrangement. 2. Technical Assessment Report to be included in a Prospectus used during Initial Public Offering (IPO). Slide 12

13 Non public VALMIN reports Primary purpose is not to inform the investing public or their advisors: Technical Assessment and Valuation to advise Board for internal company purposes. Technical Assessment Report to advise company for internal company purposes. Government reports e.g. stamp duty assessment for Office of State Revenue, Environmental Impact Statement (EIS) and coal inventory reports. Expert witness reports. Slide 13

14 New terms in VALMIN Code (2015) A Practitioner is a collective term relating to an Expert who prepares a Public Report. It includes: Specialists are persons whose profession, reputation and relevant industry experience in a technical discipline (such as geology, mine engineering or metallurgy) provides them with the authority to assess or value Mineral Assets, and who prepare and accept responsibility for a Public Report. Securities Experts are persons whose profession, reputation or experience provides them with the authority to assess or value Securities, and who prepare and accept responsibility for a Public Report. Slide 14

15 What is a Specialist? JORC (2012) & VALMIN (2015) VALMIN (2015) Membership Member or Fellow of: AusIMM AIG Recognised Professional Organisation with an enforceable code of ethics Experience Minimum 5 years experience in: style of mineralisation or type of deposit under consideration, and activity which that person is undertaking Experience Technical Assessment: Minimum 5 years experience in Technical Assessment Valuation: Minimum additional 5 years (i.e. ten years in total) experience in valuation of mineral assets Familiarity VALMIN & JORC Codes, Corps Act, ASIC/ASX policy & court decisions Slide 15

16 What is a Securities Expert? Where a Securities Expert participates in a Valuation of, or is seen to be providing advice in relation to Mineral Securities (as opposed to the valuation of the underlying related Mineral Assets), they must hold appropriate financial licences. In Australia, Securities Experts are required to hold an Australian Financial Services Licence as required by Chapter 7 of the Corporations Act. Slide 16

17 What is reasonable? Reasonableness implies that an assessment which is impartial, rational, realistic and logical in its treatment of the inputs to a Valuation or Technical Assessment has been used, to the extent that another Practitioner with the same information would make a similar Technical Assessment or Valuation. Reasonable Grounds Requirement has the meaning referred to in sections of the Corporations Act and sections of the Australian Securities and Investments Commission Act 2001 that require statements about future matters to be based on reasonable grounds (as of the date of making the statement) or else they will be taken to be misleading. Slide 17

18 Independence Independence or being Independent requires that there is no present or contingent interest in the Mineral Asset(s), nor is there any association with the Commissioning Entity or related parties that is likely to lead to bias. The Corporations Act and ASIC RGs define those transactions where independence is required, e.g. Vendor Consideration. Slide 18

19 New guidance on Valuation Approach Slide 19

20 Market based Valuation Is based primarily on the notion of substitution. In this Valuation Approach the Mineral Asset being valued is compared with the transaction value of similar Mineral Assets under similar time and circumstance on an open market. Include but are not limited to comparable sales transactions and joint venture terms. Slide 20

21 Income based Valuation Income based, which is based on the notion of cashflow generation. In this Valuation Approach the anticipated benefits of the potential income or cash flow of a Mineral Asset are analysed. Valuation Methods include but are not limited to discounted cashflow and multiples of earnings. Slide 21

22 Cost based Valuation Cost based, which is based on the notion of cost contribution to Value. In this Valuation Approach the costs incurred on the Mineral Asset are the basis of analysis. Valuation Methods include but are not limited to sunk costs or current replacement costs. Slide 22

23 Valuation Method selection A Practitioner must make use of Valuation Methods that are suitable for the Mineral Assets under consideration. Selection of an appropriate Valuation Method will depend on such factors as the: (a) nature of the Valuation; (b) development status of the Mineral Assets; and (c) extent and reliability of available information. Slide 23

24 Triangulate A Valuation Report should make use of at least two Valuation Approaches. Where more than one Valuation Approach is used, the Practitioner should comment on how the results compare and on the reasons for selecting the Value adopted. If it is impractical to use two Valuation Approaches, the Practitioner must clearly and unambiguously outline the reasons for not doing so. Slide 24

25 Standard Declaration Where there is a public report consistent with JORC 2012 the VALMIN Practitioner can refer to that declaration. The Practitioner may need to provide additional declarations under JORC if the technical assessment is materially different. VALMIN (2015) introduces a requirement for a Technical Assessment and Valuation declaration. Slide 25

26 New requirements for declarations Slide 26

27 What do you need to do? READ THE CODE Comply with the VALMIN Code and all other regulatory obligations: Sign off: A Practitioner must not sign a Public Report unless the Commissioning Entity has confirmed in writing that: (a) full, accurate and true disclosure of all Material information has been made to the Practitioner; (b) all necessary access to the Commissioning Entity s personnel and records has been assured; (c) whether any information from the Commissioning Entity is confidential; and (d) the integrity of the Practitioner and the conclusion of the Public Report has not been compromised. The Practitioner must be provided with a draft of the Public Report so that the Practitioner can consent in writing to the form and context in which the Practitioner s report will appear. Slide 27

28 Thank you Contact: Jeames McKibben Principal Consultant SRK (Project Evaluation) M: E: Slide 28