The fossilised 2012 Joint Ore Reserves Committee (‘JORC’) Public Reporting in Australasia of Exploration Targets, Exploration Results, Mineral Resources, and Ore Reserves (‘JORC Code’ or the ‘Code’) has undergone major revision in the proposed code (‘Draft Code’) released on 1 August 2024.  

This article will detail the major changes in the Draft Code, which is now open for public submissions and is set to be released in 2025. 

The changes will impact the ore and mineral sectors in New Zealand and abroad, with particular implications for:

• entities who are either applying for, or reporting under a Tier 1 mining permit under the Crown Minerals Act 1991 and the Crown Minerals (Minerals Other than Petroleum) Regulations 2007; and
• listed entities, which are required to comply with JORC standards for their public reporting under the NZX and ASX Listing Rules.

The changes intend to bring the Code up to date by enhancing and modernising the application of the Code’s governing principles: transparency; materiality; and competence.  Perhaps the most significant change, is the new requirement to include environmental, social, and governance (‘ESG’) factors in public reports.  

Integration of ESG Factors

The Draft Code contemplates reporting on ESG factors for the first time. ESG must be reported on at all stages of an assessment, including at the resource stage, even if the factors have not yet been fully studied. The Draft Code specifically provides that excluding significant knowledge on the basis that a project is still at the resource stage is inappropriate. The Draft Code provides that Competent Persons (as defined and discussed below), may engage subject matter experts to assist with ESG reporting (as well as other specialised reporting) requirements.  

Reporting on ESG factors will be required from exploration through to closure including, but not limited to the following factors:

• commentary on whether resource access is contingent on environmental permits and land access;
• an assessment of key stakeholders’ status and potential risks to obtaining stakeholder support;
• identification of factors that could restrict access to capital and affect reasonable prospects for economic extraction;
• identification of any potential rehabilitation or project closure risks, including the basis used for reporting at the pre-feasibility/feasibility stage;
• reporting on protected or otherwise sensitive environmental areas which could impact the potential for economic extraction or how the exploration program proceeds;
• reporting on greenhouse gas emissions and the major energy sources for each project (this reporting is optional at the exploration stage);
• reporting on climate, water risks, and exposure to extreme weather events;
• costs related to climate change regulations and requirements; and
• any costs relating to regulatory requirements.

The inclusion of ESG factors aligns with growing global emphasis on sustainability and responsible mining practices. If brought into force, the ESG reporting requirements will be onerous and costly for businesses to adhere to, both at an operational and a social level. We understand that investors and their professional advisers are increasingly considering ESG factors in their decision-making processes, and the Draft Code reflects this shift, aiming to promote more responsible, sustainable and holistic reporting and business practices in the mining sector. 

The inclusion of ESG reporting factors in the proposed changes to the JORC Code may represent an overreach that could complicate the reporting landscape for mining and ore companies. These companies may already be required to adhere to disclosure obligations under New Zealand law, which already requires reporting on material climate-related risks for large listed issuers. Adding further ESG requirements within the JORC Code may create overlapping obligations, leading to increased compliance burdens without necessarily providing additional value to investors. 

Risk: Opportunities and Threats

Another newly minted element of the Draft Code requires businesses to disclose material risks, opportunities and threats associated with exploration targets, mineral resources and ore reserves. JORC has emphasised that such reporting should be levelled at the project stage being reported on, rather than using a ‘crystal ball’ to map risks and opportunities that may arise at future stages of the project.  In respect of opportunities, Competent Persons will be required to report on:

• material opportunities that have the greatest potential for positive effects on the relevant targets;
• the nature of the opportunity, potential impact, and control measures required to maximise and optimize the outcomes; and
• which control measures are being undertaken, or need to be planned to be undertaken.

Conversely, Competent Persons will also be required to report on the negative effects of the exploration targets, mineral resources or ore reserves, detailing:

• the nature of the threat and its potential impact;
• control measures that are or will be put in place to prevent occurrence and mitigate impacts; and
• clearly state if no material threat exists.

This requirement will compel businesses to conduct more thorough risk assessments, potentially uncovering both threats and opportunities that may have been previously overlooked. This proactive approach to risk management may lead to better strategic planning and risk mitigation, though it will also increase the complexity and cost of reporting.

Reasonable Prospects for Economic Extraction

The Code requires a reasonable prospects assessment by the Competent Person to evaluate the factors influencing the economic extraction of mineral resources. This assessment must consider all relevant data that could impact economic development and should reflect both realistic and potential economically extractable mineralisation under justifiable conditions, not just all drilled or sampled mineralisation.

The JORC Code requires that reports be made where there were ‘reasonable prospects of eventual economic extraction’. The Draft Code removes the word ‘eventual’ from this phrase, with the intention to clarify that the intention of the Code was not to facilitate significant delays in starting points.

The Draft Code additionally requires Competent Person must consider and disclose the impact of available data and justify the timeframe for reasonable prospects of economic extraction.  Businesses will need to invest in more detailed and rigorous reconciliation processes (outlined in more detail below), ensuring that reported data is consistent with actual production performance. This is aimed at enhancing the accuracy and reliability of reporting under the Code, but may also increase the workload and complexity of compliance for businesses.

Competent Person Requirements

Under the JORC Code, a Competent Person must be a Member or Fellow of the Australasian Institute of Mining and Metallurgy, or of the Australasian Institute of Geoscientists, or of another recognised professional organisation under the Code. Competent Persons must have a minimum of five years’ of relevant experience in working with the style of mineralisation or type of deposit that the activity relates to.

The Draft Code sets out changes to the requirements for those designated as ‘Competent Persons’. Notably, these individuals must now:

• upload a publicly accessible CV of Record on the JORC website; and
• ensure their work remains free from undue influence by the organisation or individual commissioning their work.

As mentioned above, the Draft Code provides a new mechanism for Competent Persons to call on subject matter experts to assist them with particular elements of their reporting. Specialists must be qualified professionals with at least five years of contextual experience relevant to the project type being reported. 

The increased measures for Competent Persons are designed to increase transparency and credibility of reported data. This means a potential increase in the administrative burden and cost to comply with the new requirements for businesses.

Reconciliation

The Draft Code addresses gaps in reconciliation reporting by requiring:

• comparison of current estimates to prior estimates or actual production results;
• for operating mines, documentation of material differences in prior estimates to the mine production results and their impacts, including mining depletion, resource model updates, and other factors, with explanations provided in plain language or graphically; and
• clear presentation of reconciliation results, including acceptable tolerance limits and explanations for any deviations.

Businesses will need to invest in more detailed and rigorous reconciliation processes, ensuring that reported data is consistent with actual production performance, providing a more reliable basis for investment decisions. This may enhance the accuracy and reliability of reports, but is likely to increase the workload and complexity of compliance for businesses.

Outlook for Businesses

The Draft Code's proposed changes reflect an effort to improve and update the JORC Code by addressing concerns over reporting accuracy, transparency, and sustainability in the mining sector. By enhancing the requirements for Competent Persons, refining the definition of reasonable prospects, and improving risk and reconciliation reporting, the Draft Code aims to provide a more accurate and holistic view of mineral projects. Businesses must adapt to these changes to maintain compliance, improve their public disclosures, and align with evolving investor expectations and regulatory requirements.

This article was written by Gerard Dale, a Partner, and Sophie McAllister, a Solicitor, in our corporate and commercial team.