Hong Kong Exchanges and Clearing Limited (HKEx) today (Thursday) published its Consultation Conclusions on New Listing Rules for Mineral Companies for both the Main Board and Growth Enterprise Market (GEM), and the New Rules for Mineral Companies.

 

The Consultation Conclusions present the outcome of the public consultation held from September 2009 to November 2009. HKEx received 42 submissions from a wide spectrum of respondents including market practitioners, listed issuers, professional and industry associations, overseas investment funds, overseas listed issuers and industry experts.

 

The New Rules for Mineral Companies will come into effect on 3 June 2010 and aim to ensure they provide investors with material, relevant and reliable information, and align the Stock Exchange’s* rules with global standards.  There is an equivalent chapter in the GEM Listing Rules.

The New Rules will affect listing applicants whose Major Activity is the exploration for and/or extraction of Natural Resources and existing listed issuers that engage in major acquisitions (ie 25 per cent or greater of existing activities) of mineral or petroleum assets.  From the effective date of the New Rules, all Mineral Companies and listed issuers that make statements on mineral or petroleum reserves and resources will be required to update such statements once a year in their annual reports.

The New Rules can be downloaded from the “Rules & Regulations – Rules and Guidance on Listing Matters – Amendments to Main Board Listing Rules" and the “Rules & Regulations – Rules and Guidance on Listing Matters – Amendments to GEM Listing Rules” sections of the HKEx website.

“The New Rules for Mineral Companies provide clear guidelines to Mineral Companies and listed issuers participating in the natural resources industry, on information to be provided to investors and shareholders.  We have adopted widely recognised reporting codes, retaining the flexibility to recognise others in the future.  Information on mineral and petroleum assets must be prepared by independent experts at the IPO stage and on significant transactions.  To be eligible for listing, Mineral Companies are required to have made a meaningful discovery of resources and outline a path to production.  As the market matures, we will consider again whether the more speculative early stage exploration ventures should be eligible for listing.” said Mark Dickens, HKEx’s Head of Listing.

* The Stock Exchange of Hong Kong Limited (the Stock Exchange) is a wholly-owned subsidiary of HKEx

Implementation

A summary of the New Rules for Mineral Companies is set out in the Attachment to this news release.

The New Rules for Mineral Companies will become effective on 3 June 2010.

The Consultation Conclusions on New Listing Rules for Mineral Companies and copies of submissions can be downloaded from the “News and Consultations – Market Consultations” section of the HKEx website.

A set of frequently asked questions relating to the New Rules for Mineral Companies has been published on the “Rules and Regulations – Rules and Guidance on Listing Matters – Frequently Asked Questions” section of the HKEx website.

ATTACHMENT

Summary of the New Rules for Mineral Companies

Conditions for listing

• Mineral Companies seeking a listing must have discovered at least a portfolio of Indicated Resources or Contingent Resources (in the case of petroleum companies) identifiable under a Reporting Standard and substantiated in a Competent Person’s Report.  This portfolio must be meaningful and of sufficient substance to justify a listing;
  

• a new applicant Mineral Company that has not yet begun production must disclose its plans to proceed to production with indicative dates and costs, which is supported by at least a Scoping Study and substantiated by the opinion of a Competent Person;
  

• a new applicant Mineral Company seeking a waiver from the financial standards requirements in rule 8.05, must establish to the Stock Exchange’s satisfaction that its directors and senior managers, taken together, have sufficient experience relevant to the exploration and/or extraction activity that the Mineral Company is pursuing. Individuals relied on must have a minimum of five years relevant industry experience;
  

• Mineral Companies include reports on Reserves and Resources prepared by Competent Persons in their listing documents.  Competent Persons must be independent of issuers.

Continuing Obligations

• Where a Mineral Company engages in a major (or above) acquisition or disposal of Mineral or Petroleum Assets (i.e. an acquisition where any percentage ratio is 25 per cent or more), it must include a Competent Person’s Report in the circular sent to shareholders.  The Stock Exchange may dispense with this requirement on disposals, where shareholders have sufficient information on the assets being disposed of;
  

• where a listed issuer engages in a major (or above) acquisition of Mineral or Petroleum Assets, it must include a Competent Person’s Report in the relevant circular;
  

• any major (or above) acquisitions of Mineral or Petroleum Assets must also be supported by Valuation Reports prepared by Competent Evaluators;
  

• a Mineral Company must include in its interim (half-yearly) and annual reports details of its exploration, development and mining production activities and a summary of expenditure incurred on these activities during the period under review; and
  

• any listed issuer that publicly discloses details of Resources and/or Reserves after implementation of the New Rules for Mineral Companies must update such details once a year in its annual report.

Reporting Standards

• Competent Person’s Reports and Valuation Reports must conform to widely accepted mineral and petroleum reporting codes (including the reporting codes adopted in Australia, Canada and South Africa for minerals reporting, or the “JORC-type* Codes”).  Where information is presented in accordance with other reporting standards, reconciliation to a JORC-type Code must be provided, until the Stock Exchange is in the position to recognise such other standards independently.  The Stock Exchange has the flexibility to approve other standards from time to time, provided they give a comparable standard of disclosure and sufficient assessment of the underlying assets.

*	JORC is the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004 edition), as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

  

Ends