Mining, oil and gas companies are set to be faced with a new spate of legal requirements around the reporting of reserves and resources. In early October the Australian Stock Exchange Group (ASX) released a consultation paper on the Listing Rule requirements applicable to reserves and resources reporting by listed mining, oil and gas companies. The new rules are aimed at improving certainty for investors.

According to Perth-based Middletons partner Adam Levine the new requirements would make ASX-listed companies disclosure obligations more prescriptive, and closer to what occurs in larger jurisdictions such as Canada. “It is going to become more burdensome. And the requirements before you can disclose, particularly around exploration, are going to be more restrictive compared to what the companies can do now,” said Levine. “Nowdays it’s pretty common for mining companies to comment and discuss exploration plans, but the ASX consultation paper is proposing a much stricter approach.”

For companies this means greater regulatory burden; but for lawyers it could spell more work, as companies seek to tick all the boxes. “I imagine lawyers will become involved much earlier,” said Levine. “I would anticipate that it is going to generate more work for lawyers. But, once again, that goes down to the burdensome nature of more compliance for companies.”

McCullough Robertson has already started seeing work arise from the proposed changes, through client submissions and inquiries. The firm is also participating in a working group, chaired by the Queensland Resources Council, established to make submissions to both ASX and Australasian Joint Ore Reserves Committee (JORC) on their respective consultation papers. JORC and the ASX are at loggerheads over the best way to ensure companies and investors are being looked after. While the two organisations were originally working on the changes together Levine says JORC has come up with a different proposal to what the ASX has proposed.

McCullough Robertson senior associate Garth Silva says the proposed changes would generally be supported by clients. “If the actual proposal does not increase the compliance burden on resources companies, and if a principles-based approach is maintained, instead of a prescriptive approach,” he said.

The consultation period for submissions closes on 27 January 2012.

What the ASX is proposing:
The consultation paper seeks to enhance reserves and resources disclosure by listed mining and oil and gas companies by:
• improving the standards of public reporting of reserves and resources, and promoting confidence in the public reporting of this information;
• reducing the potential for the disclosure of reserves and resources information to be misleading;
• promoting greater efficiency in the capital formation process for listed mining and oil and gas companies; and
• ensuring the reporting requirements are aligned with international best practice, but without a disproportionate compliance burden for listed companies.