Minerals reporting standards in Europe

Stephen HenleyDeputy chairman, PERC

19 April 2023 1

A brief history

• 1991: IMM code, broadly similar to JORC• 2001: “The Reporting Code” sponsored by

professional bodies IMM, GSL, IGI, and EFG, and aligned with CRIRSCO

• 2006: Reserves committee re-formed as PERC• 2008: Updated PERC Code issued

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CRIRSCO

• Committee for Mineral Reserves International Reporting Standards

• Formed 1994• Members: JORC, CIM, SAMREC, PERC, SME,

Chile• Standard “template” defines areas of

agreement among standards

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Two main components in all CRIRSCO-aligned reporting standards

• The Competent Person concept• A standardised classification system

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The Competent Person

• Appropriate qualifications• Professional membership of a relevant

Institution • Experience relevant to the service

provided

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The Classification

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PERC Code recognition and use

• Recognised by LSE and AIM alongside other CRIRSCO reporting standards

• Recognised by CESR alongside other CRIRSCO reporting standards

• Used by some but not all minerals companies quoted on European markets

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Mining in the EU

• Physical mining activity has become less important in the EU generally, but ...

• London Stock Exchange (LSE) remains the most important exchange worldwide for mining finance.

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Mining industry market capitalisation on the LSE represented 41% of the world total at the end of 2007 (source CRU)

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Minerals reporting on other markets – for example:

• Australia: Only JORC accepted• Canada: CIM Guide written into law (NI43-101)• South Africa: Only SAMREC accepted• Strong working ties between the professional

groups responsible for the reporting standards and the regulatory authorities

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Compare and contrast!• In Australia, South Africa, and Canada – 100% report using their own CRIRSCO-aligned

standards (JORC, SAMREC, CIM)– collectively represent just 23% of market

capitalisation of all minerals companies. • On the London Stock Exchange– No consistency over reporting standards used – minerals companies represent 41% of market

capitalisation worldwide

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Compliance not monitored in EU• Although they report according to CRIRSCO-

aligned standards, these are selected by the companies themselves

• Disclosures made on European stock markets using reporting standards from other jurisdictions are not vetted by the organisations which defined them

• Irregularities are only identified and investigated if an investor complains

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London Stock Exchange• Listing rules last updated September 2006• Allows any of the following reporting standards– JORC– CIM– IMMM (= PERC)– SAMREC– SME (USA professional CRIRSCO-aligned standard, but

not yet recognised by SEC)

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London - AIM• AIM16 Guidance Note, March 2006, updated June

2009• Allows any of the following standards: – CIM– IMMM (= PERC)– JORC– Russian (*** not CRIRSCO-aligned)– SAMREC– SME

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CESR – Committee of European Securities Regulators

• Membership includes all major European Union stock market regulatory authorities

• CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses Nº 809/2004– Mineral Companies covered in paragraphs 131-133– Does not identify any particular reporting standards

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CESR Consultation 2010• CESR proposed amendments to CESR’s

recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses nº 809/2004 (CESR/05-054b) regarding mineral companies (paragraphs 131-133)–Proposed updated guidelines, much more

detailed

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CESR consultation

• CESR’s proposed menu of reporting standards:– JORC– SAMREC– CIM– SEC IG7 (*** not CRIRSCO-aligned)– PERC– Chile IIM Certification Code

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PERC’s response to CESR• Detailed submission (26 pages. Available on

www.cesr.eu)• General support for CESR proposals• Supporting submissions from CRIRSCO and from

individual CRIRSCO members (JORC, CIM, SAMREC, Chile)

• Recommending the PERC Code as the “Reference Standard” for minerals reporting on EU markets

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PERC’s proposal: A single reference standard for EU markets

• The PERC Code to be the reference standard for Europe

• Other CRIRSCO standards may be used, but if there are any material differences these should be identified, and the report reconciled to the PERC standard

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Need to avoid ambiguity

• It is important that the regulatory authority provides a clear and unambiguous set of rules for company reporting ….

• …. but even the relatively small differences among reporting standards can create uncertainty.

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Less restrictive than it might seem

• JORC, CIM, SAMREC are all CRIRSCO-aligned standards

• Definitions are (almost) identical, so easy to convert from one to another as needed

• Differences are largely a result of requirements of the different regulatory regimes

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Endorsement: IoM3, GSL, IGI, EFG

• Members required to comply with the professional standards, definitions and experience requirements for a Competent Person as defined in the PERC Code.

• Disciplinary procedures will reference the PERC Code.

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EFG: 21 Member Countries• Belgium and Luxembourg - Belgo-

Luxembourg Union of Geologists• Croatia - Croatian Geological Society

(CGS)• Cyprus - Cyprus Association of

Geologists And Mining Engineers• Czech Republic - Czech Union of

Geological Associations• Finland - The Finnish Union of

Environmental Professionals• France - French Union of Geologists• Germany - Professional Association of

German Geoscientists• Greece - Association of Greek

Geologists • Hungary - Hungarian Geological Society• Ireland - Institute of Geologists of

Ireland

• Italy - Italian National Council of Geologists

• Netherlands - Royal Geological and Mining Society of the Netherlands

• Portugal - Portuguese Association of Geologists

• Russia - National Association for Subsoil Auditing

• Serbia - Serbian Geological Society• Slovenia - Slovenian Geological Society• Spain - Official Spanish Association of

Professional Geologists• Sweden - Geologist Section of the

Swedish Association of Scientists• Switzerland - Swiss Association of

Geologists• United Kingdom - Geological Society

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Endorsement: IoM3, GSL, IGI, EFG

• Members required to comply with the professional standards, definitions and experience requirements for a Competent Person as defined in the PERC Code.

• Disciplinary procedures will reference the PERC Code.

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Next steps

• CESR consultation is now closed. • Awaiting publication of their new guidelines• Even then, not binding on the national

regulatory authorities, so further discussions will be needed

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Europe is not just EU

•Huge mining market to the east: Russia

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The Soviet system: 1927• GKZ formed: State

Commission on Mineral Reserves

• Protocol No.1 of 31 May 1927

• Defined reserves categories “Proved”, “Probable”, and “Possible”

Russian classification

• “Prognostic resources” – P3: no explicit supporting evidence– P2: evidence from geophysics/geochemistry/mapping– P1: limited drill hole, trench sampling, and outcrop data

Russian classification

• “Reserves”– C2: systematic sampling, ancillary studies– C1: closer-spaced sampling, more detailed ancillary studies– B: close-spaced exploration or partly blocked-out in mine *– A: generally blocked-out ore in a producing mine *

(* A and B usually only for detailed areas within a C1 resource)

International problems 1990 onwards

• Widespread international misunderstanding of the Russian system and of differences between the reporting systems

• Many different and conflicting opinions on matching Russian and international categories

GKZ-CRIRSCO working group

• 2006: Working Group formed

• 2008: Protocol of Intentions signed

Guidelines document

published AUGUST 2010

Conversion guidelines

• Starting point: detailed comparison of Russian and CRIRSCO definitions - not subjective views from particular cases

• These are guidelines, intended to assist the Competent Person - NOT an absolute statement of equivalence of categories

• The professional judgement of the Competent Person always takes precedence – supported by objective assessment of all relevant factors

Next step – a Russian CRIRSCO standard

• Protocol of intention signed Sept 2010: to develop a CRIRSCO-aligned Russian reporting standard for public reporting

• This will operate alongside the existing Russian system

Minerals Reporting in Europe

• PERC code for EU countries• An intended new Russian reporting standard• Possibly other standards for non-EU

jurisdictions – or they may use PERC• But ALL within the CRIRSCO “family”, sharing

common definitions

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Further information

• www.perc.co• www.crirsco.com• www.gkz-rf.ru

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