By Jack Caldwell

Additional perspectives on the use of the JORC, SAMREC, and Valmin, codes for reporting on the valuation of mineral properties: This from the pen of Catherine Telfer of Venmyn.(Also at this link.)

As a mineral or mining company using the services of a Competent Person did you know that, according to the Valmin and JORC Codes, you may be liable for any inaccurate or incomplete information provided to them and that they are entitled to written confirmation that all Material information is correct? Read on for further details and other related issues…..

The recent minerals boom and increased number of listings on the various exchanges globally is putting pressure on the Competent Persons preparing these reports. Pressures are typically in the form of the following:-

  • time. Time pressures on Competent Persons have been a direct result of:

    • the requirement for independence in many of the exchanges and thus necessitating the use of consultants;
    • general shortage of skills in the consulting areas. Most skills have returned to employment within the minerals and mining companies;
    • the listing timing requirements of these companies, i.e. the rush to list before the minerals market takes a downturn;

  • costs. The costs must always be kept to a minimum. The consultancies are battling to attract and retain expert skills due to the very high salaries which mining companies are currently able to offer; and
  • a promotional nature. The minerals and mining companies are pressuring the Competent Persons to modify their reports to best reflect their mineral assets in the market. This places the independence of their report in jeopardy.

I draw your attention to the three fundamental principals of the JORC and SAMREC Codes, in particular, which are required to be met by the Competent Person and the Commissioning :

  • transparency. “This requires that the reader of a Public Report is provided with sufficient information, the presentation of which is clear and unambiguous, to understand the report and is not misled”;
  • materiality. “This requires that a Public Report contains all the relevant information which investors and their professional advisers would reasonably require, and reasonably expect to find in the report, for the purpose of making a reasoned and balance judgement regarding Exploration Results, Mineral Resources and Ore Reserves being reported”; and
  • competence. “This requires that the Public Report be based on work that is the responsibility of suitably qualified and experienced persons who are subject to an enforceable professional code of ethics”.

Further, it is most important that the mineral and mining companies note that, according to the Valmin Code, the Expert or Competent Persons should obtain, from the Commissioning Entity, an indemnity under which they will be compensated for any liability:

  • resulting from their reliance on information provided by the Commissioning Entity that is Materially inaccurate or incomplete; or
  • relating to any consequential extension of workload through queries, questions or public hearing arising from the Report.

The Code also advises the Expert to make written enquiries of the directors or management about prior reports, particularly if it is considered that information in these reports has not been sufficiently disclosed by the entity.

The Code goes further to specify that the Expert MUST not undertake to sign off a report unless the entity has confirmed the following in writing:

  • full, accurate and true disclosure of all Material information will be made to the Expert;
  • all necessary access to the Commissioning Entity’s personnel and records will be assured; and
  • the Independence of the Expert will be respected.

One final word from the Valmin Code with respect to the pressures outlined above is that “Time and cost constraints MUST NOT be permitted to compromise fundamental compliance with the requirements of the Code. Any restrictions so caused to the depth of analysis or extent of detail required MUST be recorded in the Report.”

We recommend that all Competent Persons make their clients aware of these requirements, prior to commissioning, to ensure a good relationship between all parties and that the principals of compliance and investor protection are upheld.

For further information contact Catherine@venmyn.com