ASX considers clamp-down on miners

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Mining and resource stocks could face tougher disclosure requirements to protect investors from confusing and misleading information.

In a review process launched yesterday the ASX flagged making changes to the way mining and energy companies reported the size and potential of their assets to the market.

Deciphering news from drilling results, geological surveys, and other ASX announcements is not always straightforward.

The odds are currently slanted against the non-technical investor, and the ASX said yesterday it had concerns some companies were taking advantage of the situation.

Among a list of concerns the ASX named the use of “exploration targets” as one announcement being inappropriately used.

It said in an issues paper targets were being printed to court investors but the data informing them was at best speculative.

“It was not intended to provide an opportunity for reporting preliminary, low-confidence estimates of tonnes and grade before there was sufficient data and confidence to report an inferred mineral resource,” it said.

The ASX said it was also concerned companies were attempting to lure investors with production targets that did not fall under the JORC code, which is the Australian standard for reporting mineral resources and ore reserves.

It said it was considering forcing companies to better explain the production targets outlined in announcements and include the financial assumptions underpinning forecasts.

Pulling Australian regulations in line with the 2007 international standards drawn up by the Society of Petroleum Engineers is also being considered.

The ASX is currently seeking comments on the issue paper, with submissions closing on January 27.

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