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Does JORC need updating?

MININGNEWS.NET | HAYDN BLACK | TUESDAY 20 MARCH 2018
THE Joint Ore Reserves Committee Code that has underpinned Australia’s resource sector for decades will inevitably be revised, but there is a difference of opinion over how pressing the need for an update is given what can be accomplished within the existing system.

Leading the charge for some changes to industry practice 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 principal 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 infrequent 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 that 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.

As a rule, if it could affect the share price it needed to be addressed, and that included metallurgical testing results, visual estimates of mineralisation and reporting of Pilbara nugget reporting without an accurate sense of scale.

Jeffress said sometimes companies had fallen short of the spirit of the JORC Code, and it was up to the defined competent person to ensure all the information required.

“That sort of stuff is not being dealt with that well by companies at the moment,” he said.

Jeffress said people may be unused to reporting on results such as Pilbara nuggets and may need additional guidance to be developed.

The code provides for companies to share as much information as they have, but companies, either through excitement, ignorance, or a desire to push the envelope “do a poor job” at making their results public, he said.

Jefferies said the immediate achievable focus was on addressed areas such as making Table 1 – that that drills down into specific geological and historic data – more logical, which could be achieved with guidance from JORC and the Australian Institution of Geoscientists.

He told MNN it took eight years for JORC Code 2004 to be revised, in part because between regulators ASX and ASIC and various opinions among interest parties it was a complicated task to find common ground between sometimes conflicting views, and that was before government sign off, which was required to make the rules binding.

The JORC Code was first devised in the wake of the 1960s Poseidon nickel boom when there were concerns about unacceptable reporting practices.

Initially, a system of self-regulation based on guidelines issued between 1972 and 1989, they fed into the first version of the code in 1989, formalising concepts such as reserves and resources.

The guidelines have been revised a number of times, including 2004 in the wake of the Bre-X scandal, with the last being in 2012.

About Mark Noppe

Mark is a leader and consultant in geosciences and the mining industry providing advice, training and mentoring in all aspects of orebody knowledge, from exploration reporting, resource definition and reporting, mine geology and grade control through to inputs into reserving.  Since graduating as a geologist in 1983, Mark has worked in South Africa, Western Australia and Queensland in exploration, mining geology, practical geostatistics applications, resource estimation and reporting, grade control, mine reconciliation, technical reviews and auditing, and professional training and mentoring.  He has been consulting since 1997 and his technical experience covers a wide range of projects, commodities, geological and mining settings.

Article first published on MiningNews.

 

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