Explorers and miners take note - ASIC Information Sheet 214 on forward-looking statements
On 12 April 2016, the Australian Securities and Investments Commission (ASIC) issued Information Sheet 214 Mining and resources – Forward-looking statements (INFO 214) that consolidates the rules that apply to forward-looking statements into one place.
Many investors in mining and resources companies put emphasis on forward-looking statements when considering an investment. These predictive statements may include:
- Production targets (i.e. projections or forecasts of the amount of minerals to be extracted from mining tenements two years or more ahead)
- Forecast financial information
- Income-based discounted cash flow valuations.
The purpose of INFO 214 is therefore to improve compliance and reduce the risk of litigation or regulatory action as a result of misleading statements.
What does the guidance cover?
The guidance in INFO 214 explains the existing reference sources that apply to forward-looking statements, and gives practical advice and examples of how to comply with the existing legal obligations. Included are discussions on:
- The legal requirement that forward-looking statements must be based on reasonable grounds
- How relevant industry codes, ASX Listing Rules and ASIC guidance apply to forward-looking statements
- What is a ‘forward-looking statement’, and how is it different to ‘aspirational statements’ (which do not need to be based on reasonable grounds)
- For reasonable grounds to be established, the JORC Code mineral resource estimates used must be based on a sufficient level of geological knowledge and confidence, and all JORC Code modifying factors must be sufficiently progressed
- How the ‘reasonable grounds’ legal requirement applies to ore reserve and mineral resource estimations
- How the ‘reasonable grounds’ requirement applies to the JORC Code's 'economic' modifying factor if secured funding is not in place
- The disclosure requirements for forward-looking statements and what you can disclose if you do not have reasonable grounds for forward-looking statements
- The requirements for updating forward-looking statements when your company's circumstances change or a project changes hands
- ASIC focus areas when assessing forward-looking statements.
We encourage all miners to carefully review the guidance in INFO 214 before making any forward-looking statements.