Leading the charge for changes is SRK Australia chairman Mark Noppe, who has been beating the reform drum for some time, saying there is a need to tackle gaps in the JORC code before the upswing grabs hold.
However, CSA Global principle geologist and manager corporate Graham Jeffress (who also sits on the JORC executive), said any major revision was a “non-trivial” exercise, and there was no real desire to return to that process without a demonstrated need for substantial change given the code was largely working.
He said JORC was principles-based not rules-based, and was better being overseen with regulatory guidance than wholesale reform at this stage.
Since last year Noppe has been warning of “surprisingly large gaps” in the downstream assurance systems that companies use to protect against the inaccuracy of reporting exploration results, resources and reserves under JORC 2012.
Noppe argues miners need to tighten up their assurance processes because, as the sector enters a phase of renewed opportunity, there was a need to address a “crisis of confidence” in the resources sector 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.
Jeffress told MNN while Noppe’s calls were both fair and reasonable, he sees equal issues further upstream closer at the exploration end, because the reporting of exploration results has the biggest 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 JORC, 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.
JORC 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.
Noppe, however, still sees a need to get auditing baked in early in the process of reserves and resources, rather than the infrequently or ineffective peer reviews conducted today, so errors can be caught as the time they were at the high risk of occurring, especially when exploration teams were 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 the next revision of JORC should offer way of 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.
“JORC can’t be perfect, because there is just too much complexity to deal with,” Jeffress said.
He said the system was generally working well, and had led to better informed markets and 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.
Jeffress told MNN it took eight years for JORC 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.
JORC 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 JORC 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.
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