The JORC Code 2012 Edition: Exploration Targets
I have been asked by a number of investors to comment on the effect of changes in the 2012 Edition of the JORC Code (explained below). These changes will be implemented on 1 December 2013. In particular, there is concern that listed companies will be severely constrained in the reporting of Exploration Targets.
In fact, there are no substantial changes. The primary objective of the JORC Code is, and has been, to ensure that an Exploration Target cannot be misconstrued as an estimate of a Mineral Resource or Ore Reserve.
There are only a few requirements when reporting Exploration Targets, and, in my opinion, they are all quite reasonable.
An exploration target must be reported as a range of grade and tonnes. For example: “the Exploration Target is 100-200 million tonnes of disseminated copper mineralisation at a grade of 0.5% to 0.7% copper.”.
Any Public Report (typically to ASX) must clarify whether the target is based on actual exploration results, or on proposed exploration programs. Where it is based upon exploration data, the data must be included.
The exploration target must not be a “headline statement” and a specific clarification statement (full statement below) is required.
The exploration activity proposed to test the validity of the exploration target must be detailed, along with a time frame for these activities.
An exploration target is a very useful concept to assist investors in understanding the risk/reward of any exploration venture. The reporting requirements for exploration targets are not onerous, but in fact quite fair and reasonable. I would encourage exploration companies to consider incorporating exploration targets in any public reporting. In fact, the absence of an exploration target could one day be a cause for concern.
The JORC Code
The JORC Code is formally defined as follows:
“The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code’) is a professional code of practice that sets minimum standards for Public Reporting of Minerals Exploration Results, Mineral Resources and Ore Reserves.”
The JORC Code is the product of a committee: the Australasian “Joint Ore Reserves Committee”. The committee includes representatives from the Australian mining industry, industry professional bodies and delegates from ASX and FinSIA (“Financial Services Institute of Australia”).
The JORC Code is essentially a compulsory code for the reporting of exploration results and mineral resources and reserves. This particularly applies to “Public Reports” , typically prepared for release to the investment community.
A statement that says “the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to estimate a Mineral Resource and that it is uncertain if further exploration will result in the estimation of a Mineral Resource”.