JUNIOR miners have been given some relief in the struggle to raise cash from cautious equity markets, but it could be offset by additional compliance costs.
A two-year process to update both the ASX listing rules and the JORC Code (the framework for reporting mineral resources and reserves) culminates this year, with juniors required to adhere to the new rules by the end of 2013.
The revision of the ASX listing rules includes allowing small companies to raise additional capital, with those sitting outside the S&P/ASX 300 and with market capitalisation of $300 million or less now able to issue a further 10 per cent of share capital in 12 months – taking total capacity up to 25 per cent.
Association of Mining and Exploration Companies chief executive Simon Bennison said the changes eased the pressure on juniors without jeopardising stock integrity.
“[The maximum share placement] has always been a restriction on the smaller explorers in capital raisings. Obviously shareholders and companies get concerned about dilution in capital raisings, and for that reason there have always been restrictions,” Mr Bennison said.
The new listing rules also require companies to adhere to the updated JORC Code, which comes into effect this year.
The changes are intended to standardise the way junior miners report results from mineral exploration, giving investors more clarity around a company’s activity and confidence in the stock.
It includes the introduction of a requirement for miners to have at least carried out a pre-feasibility study on a project before making a declaration of mineral reserves within that project.
The compliance requirement around verification by a ‘competent person’ of a public report of exploration results, mineral resources or ore reserves has also been significantly expanded.
A new section has also been added requiring companies to detail technical and economic studies, with specific definitions for scoping, pre-feasibility and feasibility studies.
Mr Bennison said while the changes would help standardise reporting, and had avoided being overly prescriptive, there was a risk of costs over-burdening companies if compliance requirements went too far.
“We’ve tried to make sure that the ASX only requires information to be provided that is crucial to shareholder decision making,” he said.
“We’ve asked them to make sure the rules aren’t too prescriptive; unfortunately some of these organisations tend to get a little but pedantic about the amount of information companies need to provide.
“We’re not opposed to [the changes] being made, we’re just making sure there’s a balance to all of this.”