26/09/2017 - 17:38

ASX rejects gold royalties ‘Tanzania’ claim

26/09/2017 - 17:38

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The Australian Securities Exchange has asked the Chamber of Minerals & Energy of Western Australia to retract a statement claiming the ASX could force listed gold miners to suspend trading in their shares because of the planned increased in WA's gold royalty.

An anti-royalties rise rally was held in Kalgoorlie last week

The Australian Securities Exchange has asked the Chamber of Minerals & Energy of Western Australia to retract a statement claiming the ASX could force listed gold miners to suspend trading in their shares because of the planned increased in WA's gold royalty.

The offending statement said the ASX had likened the planned increase, from 2.5 per cent to 3.75 per cent, to dramatic legislative changes in Tanzania.

The ASX’s chief compliance officer Kevin Lewis said the Chamber’s statement was entirely inaccurate.

“We haven’t compared the two situations at all,” Mr Lewis told Business News.

He confirmed an ASX officer had contacted the Chamber on Tuesday afternoon and asked for its statement to be retracted.

“We have certainly asked them to do that.”

The Chamber’s statement was triggered by an article in The Australian, which was headlined “ASX concern over WA gold royalty impacts” .

Mr Lewis said the response was like Chinese whispers, as journalistic flourishes in the article had been translated into an official ASX position.

Today’s statement was issued in the name of Jobs First for WA, which is described as an initiative of Western Australia’s gold miners and the Chamber of Minerals and Energy.

It commenced as follows:

“The Australian Securities Exchange has likened the fate of Australian gold companies being hit with a 50 per cent royalty rate increase to the dramatic overhaul of Tanzania’s royalty and tax regime which resulted in the trading suspension of more than a dozen Australian companies,” it stated.

“In a report published in The Australian newspaper today, the ASX said it could force the suspension of most of Australia’s listed gold companies if Labor’s royalty increase is passed by the State Parliament.

“The suspension would block the gold miners from trading on the ASX until they had provided detailed explanations of the impact the 50 per cent royalty increase will have on the economics of their individual projects.”

Mr Lewis said the planned change in WA was about a one percentage point increase in gold royalties.

By contrast, the changes in Tanzania included the government expropriating a 16 per cent ownership stake in mining projects and having the right to tear up contracts.

“It’s just not the same order of magnitude,” Mr Lewis said.

He added that the ASX’s continuous disclosure guidelines specifically dealt with scenarios like a gold royalty increase.

The Chamber issued a clarifying statement late today defending its actions.

“There was no indication from the ASX to suggest the (newspaper) report was incorrect,” a chamber spokesperson said.

“Our members are understandably concerned about the potential impact the proposed 50 per cent increase in royalty rates will have on jobs, investor confidence and the economic viability of some projects.

“This uncertainty was created by the Labor Government’s backflip on the royalty issue which was announced without any industry consultation.”

Treasurer Ben Wyatt has firmly resisted the gold sector’s calls for the royalty increase to be reviewed.

Mr Wyatt will have been encouraged by a Reachtel poll published in The West Australian today, which found 58 per cent of people supported the increase in gold royalties.

Only 22 per cent opposed or strongly opposed the increase, with the balance undecided.

The poll also found strong support (61 per cent) for the planned increase in payroll tax for larger employers.

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