The VALMIN Code Explained

Transcription

1 The VALMIN Code Explained Including the updated 2015 Code Sue Border METALS EXPLORATION INDUSTRIAL MINERALS ENERGY RESOURCES TENEMENTS MANAGEMENT

2 Introducing Geos Mining A specialist geological consultancy Established skilled consultants Coal, metals, industrial minerals, brines, CSG Key services: Valuations Independent Reports Due Diligence Resource Estimation Geological Modelling Data Management Exploration Field Services Tenement Management

3 We go anywhere (if they pay us)

4 For more information or specific advice Contact Tom Bradbury (Managing Director) or Murray Hutton (Principal Consultant) on (02)

5 The VALMIN Code History Both JORC and Valmin codes designed to counter abuses that occurred during Australian nickel boom Purpose To promote good professional practice for independent valuation and assessment. Applies to PUBLIC REPORTS including - Project Valuations and Assessments of Mineral Assets (Clause 5.1 lists types of report) Valmin2015 may be used for petroleum assets but not mandatory

6 Why the Update Previous version 2005 Mainly to bring Valmin into line with changes in Corporations Act, ASIC RGs, IASB, AASB, JORC Also to simplify, clarify, and rectify issues arising in application of the previous code. 103 clauses in 2005 code now grouped into 12 clauses (with sub clauses). Must be used from 1 July 2016

7 When to use VALMIN MUST be used for public IERs where required by a stock exchange or other authority. EG ASX, ASIC, Singapore Stock Exchange, HKX etc MUST be used for public reports by members of certain professional associations (AusIMM & AIG). Best practice for many other technical reports. May be used in other cases eg reporting to Governments, feasibility studies, etc. Public report is one which investors may rely on

8 Who can write VALMIN 2015 reports? PRACTITIONERS - include both Securities Experts who can value shares and Specialists (= Technical Specialist) can value or assess mineral assets. If a collaborative report, must accept responsibility for your contribution (and state in report who s done what). May all sign or have one overall signature. Specialists may be required to consult other relevant professionals to supplement their expertise (clause 3.1)

9 Principles of VALMIN Code, 2015 Edition Competence Materiality Transparency also Reasonableness Independence

10 Competence Relevant education Qualifications Experience Professional Expertise Any Licence /registration required by law. Familiarity with Codes & applicable laws and regulations. Specialist MUST have (clause 2.2): >5 years recent experience relevant to asset >5 years minimum assessment experience or if valuing, >10 years valuation experience Appropriate degree qualifications. Member of professional association with code of ethics. Experience must be relevant to asset development stage.

11 Competence new items Familiarity with relevant laws and regulations: Relevant experience by stage (expln/advanced expln, or development/operations). Also note: ALSO NOTE :No one person can be expert in all aspects of a major mining operation. So it s a team effort, signatories must know team skills and manage the team.

12 Materiality Material makes a difference to assessment, conclusions, investment decision, or value. Less than 5% value not material, 5 10% possibly material, >10% is material. Any item which could risk over 10% of project value must be included Eg country risk, natural hazards. Materiality applies to items/data to assess/review and to items to include in the report. (See also relevant laws). Must include sources of all material data and information. Must also note if any material items were not available to review, Eg old drill core, old reports, no longer available. ALL MATERIAL UNCERTAINTIES AND ASSUMPTIONS TO BE INCLUDED.

13 Transparency Reader must be able to understand how the conclusions have been reached. This applies to: Resources/reserves Data and assumptions used eg extraction techniques, scale of operations Method of assessment/valuation. If your report is transparent Another competent expert could reproduce what you have done and reach essentially the same conclusion. A reader who is not a technical expert could understand the assessment and conclusions. Transparency now on if not why not basis (clause 3.3). Assessment process must be rigorous and conclusions reasonable.

14 Reasonableness new clause 4.1 Must be logical Must perform check that final conclusion is reasonable. Vital that peer reviewer makes this check, and this should be recorded.

15 Independence (NB, no longer always required by VALMIN) NO financial (or other) incentive NO financial dependence ABLE to be impartial Cannot be director, employee or stakeholder of commissioning entity (client company), other companies in a transaction, - or any related companies. - or any property being valued/assessed - IF NOT INDEPENDENT, CHECK IF LAW PERMITS, THEN DECLARE IT.

16 Independence Criteria SATISFY any legal requirements for independence NO benefit from outcome of transaction or valuation in any way NO commission or results-based payment.

17 Fees and Commissioning Fees should be declared in the report, approximate monetary value is now required. Commissioning written clear scope and agreement. Previous assessments, valuations must be provided (and you should explain differences in conclusions) so should ask for any material reports.

18 Definition of Value The VALMIN code defines value as market value NOTE Valmin also permits use of Technical Value, based on technical assessment of future income, without reference to current market conditions.

19 Valuation Methods VALMIN gives guidance but does not mandate the methods used to value an asset. Clause 8.2 Valuation Approaches (note useful references) should use 2 or more methods if not why not. Clause 8.6 MUST give range of values, state risks, and should include sensitivity.

20 Site Visit usually required Unless it will not make any material difference to the valuation or assessment. If no visit must explain why not. If a number of assets, not all may need to be visited. Practitioner, not commissioning entity, must decide if a visit is required. If included, should be current (may need to be repeated if assessment is delayed and there have been material changes).

21 The Public Report Must state purpose (Clause 5.1) Be clear concise and effective (Clause 5.2a) Must and should contain various items (Clause 5.2, use this as checklist) In Australia, comply with ASIC RG111 Must state all material sources of information. Disclose the cost (Clause 6.3) Clause 10 risks and opportunities. Clause 7 includes all that must be considered for a Technical Assessment useful checklist when commissioning to see what special expertise is required.

22 Valmin Take Home Message New 2015 code to be used for any Valmin reports dated after 1 st July Ensure all authors are competent as defined in the code and independent if required Assist specialists with interpretation of relevant regulations - particularly recent changes, new RGs etc Ensure any issues (eg lack of data) or conflicts are declared Check logic Check transparency is the report readable? Check materiality does it contain all material information? Do a reasonableness check Do a peer review.