The JORC Code

its practical application

Peter Stoker Chairman JORC
AMPLA Twilight Seminar
Sydney, 3 June 2010

Disclaimer
Peter Stoker is Chairman of the Joint Ore Reserves Committee
(JORC) Peter is also a member of CRIRSCO (Committee for
Mineral Reserves International Reporting Standards).

A strategic partner of

ICMM
International Council
On Mining and Metals

While Peter Stoker is Chairman of JORC, the views presented

are his own and should not be taken as necessarily
representing those of the committee.
You may have noticed that this disclaimer is in type face that is
readable and you will observe that it is given the same
prominence as the remainder of the presentation
Not small type face that is impossible to read and only on the screen for a millisecond

Sorry did you miss that?

Outline
How the JORC came about
Its significance - ASX Listing Rules, ASICs view,
professional bodies
Key definitions: Mineral Resources, Ore Reserves and
Competent Persons and what they mean
Implications for resources companies - listed and unlisted
JORC Competent Persons and competency / attribution
statements
Some reporting examples
The relevance of JORC estimations to legal practitioners,
principally with respect to disclosure obligations on listed
resources companies - presented by David Holland & Guy
Sanderson, Partners, Baker & McKenzie.

Windarra Nickel Mine Poseidon Nickel, Australia

Windarra Nickel
Mine Laverton WA

Perth WA

Poseidon Nickel, Australia

Where it all began for JORC!

On

October 1, 1969, Poseidon

directors issued an historic report
to the Adelaide Stock Exchange
before the start of trading. The
statement began: Further to the
report of the recovery of nickel
and
copper
sulphides
on
September 29, the directors of
Poseidon NL announce that the
assays received to date of the first
completed drill hole PH2 at
Windarra, WA, are as follows

Trevor Sykes - The Money Miners.

Poseidon Boom 1969 Report

From - to
in feet
0 - 25
25 -115
115 -145
145 -185

Length
in feet
25
90
30
40

Ni %

Cu % Type of Ore

0.4
1.53
1.6
3.56

0.1
0.25
0.4
0.55

Leached Ore
Oxide
Disseminated Sulphides
Massive Sulphides

The Consulting geologists, Burrill and Associates Pty Ltd,

quote that the mineralised zone has an indicated length of
1000 ft and a minimum width of 65 ft.

Poseidon Boom & Bust Share Price

Poseidon Bust Aftermath

Trevor Sykes in The Money Miners says:
One disturbing feature of the boom-time
geological statements is their misleading air of
precision. Poseidons statement of 3.56 percent
nickel looked like a fine calculation to onehundredth of one percent.
In fact, Poseidon had no basis on which to
make such a calculation at the time and the
actual assay of the core turned out to be
substantially lower, although still of ore grade.

Poseidon Bust Aftermath (2)

At the time of reporting, Poseidon only had early
stage, AAS assays that had been rounded down to the
nearest whole percentage point. The actual assays
were 11% lower, but the public was not given this
information until five years later.
As it turned out, the eventual recovered mine grade
was about half that reported pre-mining, with dire
consequences for the company.
The consulting geologist, Burrill, was a substantial
shareholder in the Poseidon.

Leading to
The request from Melbourne Stock Exchange and
Federal Government (Rae Commission) to AMIC
(Minerals Council of Australia) to develop a
mechanism to resolve the reporting issues.
AMIC responded and AusIMM joined promptly
JORC.
JORC
The Joint Ore Reserves Committee (JORC).
JORC the Committee.
The JORC Code the Code developed by JORC
(the committee). First Code 1989.
Code updated regularly since then.

Why have a JORC Code?

The Code applies to Public Reports of
Exploration Results, Mineral Resources or Ore
Reserves, prepared for the purpose of informing
investors or potential investors and their advisers
So the JORC Code is a Code for Reporting for
the benefit of investors
Unfortunately many seem to think it is a Code for
estimating resources and reserves and hence a
Code of interest only to mining professionals
It is a Code for Public Reporting and applies to
all, particularly company secretaries, public
relations staff and Board of Directors.

The 2004
JORC Code
READ THE
CODE!!!!
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Relationship of The JORC Code

with Regulatory Authorities

Australasian Code for Reporting of Mineral Resources and Ore

Reserves (The JORC Code) is Appendix 5A of the Australian
Securities Exchange (ASX) Listing Rules, the only externally
sourced information in the ASX Listing Rules

This makes The JORC Code enforceable as Law by Australian

Securities and Investments Commission (ASIC)

There is an ASX representative on JORC

JORC, a voluntary committee meets regularly with ASX and ASIC.

ASX Listing Rule 5.6 refers to

The JORC Code (Appendix 5A)

Australian Reporting Environment

Corporations
Law

JORC Code ASICs view

ASIC regards compliance with the JORC Code as necessary to
ensure that public statements in prospectuses, take over
documents etc., meet the Corporations Law requirement for
statements to have a reasonable basis.
In Australia, regulatory responsibility for disclosure of
Exploration Results, Mineral Resources and Ore Reserves also
arises in connection with the broader Corporations Law
requirements for proper disclosure to be made to shareholders
and investors in connection with fundraisings, takeovers and
other corporate activities, and under the Trade Practices Act
1974 (Further details available in Philips and also Livesley ).

16

Professional Bodies
Australasian Code for the Reporting of Exploration Results,
Mineral Resources and Ore Reserves (The JORC Code)
prepared by the Joint Committee of The Australasian Institute of
Mining and Metallurgy, the Australian Institute of Geoscientists
and the Minerals Council of Australia (JORC)
So JORCs parents include two professional bodies and an
industry group. Both the professional bodies require
observance of the Code where it is applicable and failure to
observe the Code is a breach of the Code of Ethics of these
bodies
24 Recognised Overseas Professional Bodies (ROPOs) have
agreed to enforce the Code.
The professional bodies require a complaint to act against a
Competent Person.
17

The JORC Code What it Does

Sets minimum standards for public reporting (in Australia
& New Zealand) of Exploration Results, Mineral Resources
and Ore Reserves.
Provides a mandatory system for classification of
tonnage/grade estimates according to geological confidence
and technical/economic considerations.
Requires Public Reports to be based on work undertaken by a
Competent Person; describes the qualifications and type of
experience required to be a Competent Person.
Provides extensive guidelines on the criteria to be
considered when preparing reports on Exploration Results,
Mineral Resources and Ore Reserves.

The JORC Code Does Not ..

Regulate the procedures used by Competent Persons to
estimate and classify Mineral Resources and Ore
Reserves:
It is a Code for reporting
Regulate companies internal classification or reporting
systems.
JORC does not deal with breaches of the Code:
By companies (ASX).
By individuals. These are dealt with under code of ethics
of AIG and AusIMM or the relevant ROPO.
ROPO Recognised Overseas Professional Organisation.

JORC Code - Principles based

JORC is a principles based Code not a prescriptive Code.

The principles in Clause 4, 2004 JORC Code are:

Materiality

Transparency
clear unambiguous
presentation

JORC
Code

Competence
Based on work
by Competent Person

all reasonable
information
expected

Important Points about Mineral Resource

and Ore Reserve Estimates
Resource estimates are ESTIMATES, not
calculations. New information or a different
geological interpretation can materially
change estimates.
There is no single correct resource or
reserve estimate for a given deposit.
In fact the only thing that is certain is
that the estimate is not absolutely correct!

Relationship between Mineral Resources

and Ore Reserves Figure 1 (JORC Code)

What is a Mineral Resource?

A Mineral Resource is an estimate of tonnage and grade for a
mineralised body, based on sampling of that body.
The estimate represents a realistic inventory that, under
assumed and justifiable technical and economic conditions,
might, in whole or in part, become economically extractable.
Portions of a deposit that do not have reasonable prospects
for eventual economic extraction are NOT Mineral Resources.
Sub-divided, in order of increasing geological confidence, into:
Inferred Mineral Resources (low level of confidence).
Indicated Mineral Resources (reasonable level of
confidence).
Measured Mineral Resources (high level of confidence).

Mineral Resource Classification

Classification that part of a Mineral Resource for which:
Inferred

tonnage, grade and mineral content can be estimated with

a low level of confidence. It is inferred from geological
evidence and assumed but not verified geological
and/or grade continuity.

Indicated

tonnage, densities, shape, physical characteristics, grade

and mineral content can be estimated with a reasonable
level of confidence. The sampling locations are too widely
or inappropriately spaced to confirm geological and/or
grade continuity but are spaced closely enough for
continuity to be assumed.

Continuity is
important

Measured

Continuity is
between not
around

tonnage, densities, shape, physical characteristics, grade

and mineral content can be estimated with a high level of
confidence. The sampling locations are spaced closely
enough to confirm geological and grade continuity.

Inferred Resources

Indicated
Resources

Measured Resources

What is an Ore Reserve?

An Ore Reserve is the economically mineable part of Measured and

Indicated Mineral Resources.
It includes diluting materials and allowances for losses which may
occur when the material is mined.
Appropriate assessments and studies have been carried out, and
include consideration of and modification by the application of
realistically assumed Modifying Factors.
These assessments demonstrate at the time of reporting that
extraction could reasonably be justified.
Sub-divided, in order of increasing confidence, into:
Probable Ore Reserves.
Proved Ore Reserves.

Modifying Factors
The term Modifying Factors is defined to include:
Mining
Metallurgical
Economic
Marketing
Legal
Environmental
Social
Governmental considerations

Ore Reserve Classification

Classification

that part of an Ore Reserve which is:

Probable
Reserve

Derived from Indicated, and in some

circumstances, a Measured Mineral
Resource, when not all the Modifying Factors
may be known with confidence.

Proved
Reserve

Derived from a Measured Mineral Resource,

and for which the modifying factors are
known with appropriate confidence .

Ore Reserves (for public reporting) may not be derived from

Inferred Mineral Resources.

What are Appropriate

Assessments and Studies?

Many companies develop a system where the level of study

required by the company to satisfy conversion of a mineral resource
to an ore reserve is specified it is not specified in The JORC Code
but is in some of the CRIRSCO family reporting standards.
Guidance in Clause of the JORC Code indicates:
In order to achieve the required level of confidence in the Modifying
Factors, appropriate studies will have been carried out prior to
determination of the Ore Reserves. The studies will have
determined a mine plan that is technically achievable and
economically viable and from which the Ore Reserves can be
derived. It may not be necessary for these studies to be at the level
of a final feasibility study.

What is a Competent
Person?
10. A Competent Person
is a person who is a Member or
Fellow of The Australasian Institute of Mining and Metallurgy, or
of the Australian Institute of Geoscientists, or of a Recognised
Overseas Professional Organisation (ROPO) included in a list
promulgated from time to time.
A Competent Person must have a minimum of five years
experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which
that person is undertaking.
If the Competent Person is preparing a report on Exploration
Results, the relevant experience must be in exploration. If the
Competent Person is estimating, or supervising the estimation of
Mineral Resources, the relevant experience must be in the
estimation, assessment and evaluation of Mineral Resources. If
the Competent Person is estimating, or supervising the
estimation of Ore Reserves, the relevant experience must be in
the estimation, assessment, evaluation and economic extraction
of Ore Reserves.

30

Am I a Competent Person?
There is no register of Competent Persons it is a system of
self declaration.
The questions for the individual are:
Do I belong to an appropriate professional organisation?
(appropriate membership of the AusIMM, AIG or a ROPO)

Do I have at least the required minimum relevant

experience?
(must have a minimum of five years experience which is
relevant to the style of mineralisation and type of deposit
under consideration and to the activity which that person is
undertaking)
The key qualifier in the definition of a Competent Person is the
word relevant.
Relevant also means that it is not always necessary for a
person to have five years experience in each and every type of
deposit in order to act as a Competent Person.
31

Am I a Competent Person?
And on the question of relevant experience the
question for the individual is:
Am I satisfied in that I could face my peers and
demonstrate competence (that is possess the
required relevant experience) in the commodity,
type of deposit and activity under consideration?
If doubt exists, the person should either seek
opinions from appropriately experienced colleagues
or should decline to act as a Competent Person.
Has been common to undertake such peer reviews
within companies.

32

Competent Persons consent

The public report must:
name the Competent Person(s) and the Competent
Persons firm or employer;
state that the public report is based on the
documentation compiled by the Competent Person;
obtain the prior written consent of the Competent
Person(s) to the form and context in which the
public report refers to the information in the
documentation prepared by the Competent
Person, and
include a statement that this consent has been
obtained; this is now facilitated by the existence of
the Competent Person consent form
Recent examples where this has not happened, note
the written consent may be requested by ASX and
placed on the Company Announcements Platform
33

Implications for resources companies listed and unlisted

Listed companies are obliged by the ASX Listing Rules (LR5.6)
to report in accordance with the JORC Code (Appendix 5a)
For both listed and unlisted companies when conducting any
financial transaction, which falls under ASICs remit, ASIC
regards compliance with the JORC Code as ensuring that
public statements in prospectuses, take over documents etc.,
meet the Corporations Law requirement for statements to have
a reasonable basis.
For any public statement intended to inform investors or
potential investors and their advisers, any member of the
professional bodies, being responsible for the statement must
comply with the JORC Code.

JORC Competent Persons and

competency / attribution statements
The Code requires in Clause 8 that:
The report shall be issued with the (prior) written
consent of the Competent Person or Persons as
to the form and context in which it appears.
Clause 8 provides a pro-forma for inclusion in the
Public reports, while the JORC and ASX
websites include a Competent Persons consent
from which facilitates seeking and providing this
consent.

Monitoring compliance with

The JORC Code

Apparent breaches by Companies - ASX

Earlier this year (14 May 2009) ASX released a

Review of Compliance with the JORC Code which

noted that 94% of announcements required no action
by ASX

Of the 6% that required action, the most common

breach was a deficient or missing Competent Person
statement. Other breaches included; insufficient
information on Exploration Results - lack of drill hole
information; exploration target statements reported
incorrectly and combined or unspecified categories of
Resources or Reserves, see:
http://www.asx.com.au/about/pdf/mr_140509_jorc_code_review.pdf

Apparent breaches by Individuals

Professional Bodies
AIG have run a complaints column in the AIG News for

some time keeping people up to date with compliance.

The AusIMM August Bulletin contained a series of

articles on ethics, disciplinary procedures and cases and
compliance.
Note, examples of the Competent Persons not giving
consent, and this being a defence in a subsequent ethics
action
Note the banning of one individual for committing fraud
ROPOs have to report annually on any complaints
lodged and actions taken.

Some reporting examples

Resolving the conflict between continuous

disclosure and JORC compliance an example
Sinovus Mining Limited (ASX: SNV) on 16 June 2009 announced the
acquisition of Sino Coal Limited an unlisted company
The principal assets of Sino Coal are controlling interests in two coal
mining projects in PRC, the XinYuan coal mine and the YangShang
coal mine. The mines were owned and operated by Chinese
companies with coal quantities reported according to the Chinese
standards.
Reporting information related to these mines is obviously material to
Sinovus shareholders and needs to be included in the Independent
Experts Report to shareholders.
The company applied for and ASX granted a waiver WLC090376-001
from Listing Rule 5.6 (must report according to the JORC Code)
under the conditions in ASX Companies Update 11/07 which deals
with historical and foreign estimates: see page 8 of August Register of Waivers
http://www.asx.com.au/supervision/pdf/waivers/200908a_listing_rule_waivers.pdf
40

Sinovus and
Sino Coal
The conditions of ASX
Companies Update 11/07
are based on the
materiality and
transparency principles
of the JORC Code
Note that ASX generally
only provide the waiver
for a single disclosure, as
it is not generally
possible for a Competent
Person to take
responsibility for an
estimate immediately
41

Reporting of Exploration Targets

Clause 18 of The JORC Code allows the reporting of
exploration targets (separated from the clause on
reporting of Exploration Results, but under the section
heading Reporting of Exploration Results, hence is
interpreted as being a report of Exploration Results and
requiring a Competent Person sign off).
There are numerous circumstances when a company
may wish to refer to exploration targets (or an equivalent
term).
This approach is designed to facilitate responsible reporting
by all explorers.
What is an exploration target?

Clause 18 Reporting of Exploration

Targets
It is recognised that it is common practice for a company to comment
on and discuss its exploration in terms of target size and type. Any
such information relating to exploration targets must be expressed so
that it cannot be misrepresented or misconstrued as an estimate of
Mineral Resources or Ore Reserves. The terms Resource(s) or
Reserve(s) must not be used in this context. Any statement referring to
potential quantity and grade of the target must be expressed as ranges
and must include (1) a detailed explanation of the basis for the
statement, and (2) a proximate statement that the potential quantity
and grade is conceptual in nature, that there has been insufficient
exploration to define a Mineral Resource and that it is uncertain if
further exploration will result in the determination of a Mineral
Resource.

We are in a World Class Porphyry..

We are in a world
class porphyry copper
gold domain and we
think our tenements
have the potential to
contain a significant
deposit because..

We Have Drilled Three Holes

We have drilled three holes, the results of which
are consistent with our target which is .

Reporting of Exploration Targets is Still Not

Handled Well Example
BHPB issued a PowerPoint in late 2008 which included reference to the
Yeelirrie uranium deposit in Western Australia.
What is wrong with this announcement

Reporting of Exploration Targets is Still Not Handled Well

BHPB
subsequently
reissued the
slide dealing with
Yeelirrie
Could you
improve on the
subsequent
announcement?

Australasian Code for the Reporting of Exploration

Results, Mineral Resources and Ore Reserves

But this blemish in reporting (not following established internal principles)

was addressed at the BHP Billiton Board and resulted in a senior executive
loosing their job.

Improved Reporting - OCallaghans

OCallaghans comments
This report covers the material information
that is necessary for an investor or their
professional advisor to make a reasoned
and balanced judgement regarding the new
release of a mineral resource estimate for
the OCallaghans tungsten deposit:
geology
estimation technique
reconciliation with previous estimate.

Newcrest 2009 Concise Annual

Report
The Newcrest 2009 Concise Annual Report
contains a narrative outlining the changes to
the Mineral Resources and Ore Reserves
and the important features of the 2008
Mineral Resources and Ore Reserves
statements and the statements themselves.

Statement that
Ore Reserves are
a subset of the
Mineral
Resources

Location of
more detailed
information in the
Supplementary
Information

2009 Concise Annual Report

The tables (both Mineral Resources and Ore Reserves) generally
comply with the JORC Code, the Competent Persons are named, and
there is a Competent Persons statement as required by the Code.
Clause 8 states:
The report shall be issued with the written consent of the Competent
Person or Persons as to the form and context in which it appears.
While its guideline sets out the form of the required statement:
(Insert name of Competent Person) consents to the inclusion in the
report of the matters based on his (or her) information in the form and
context in which it appears.
However Newcrest has again reported with an unwarranted apparent
precision with 4 significant figures for Cadia East Underground.

Newcrest 2009 Concise Annual Report

Includes a reference to more detailed information on the
methods and parameters used to estimate the Mineral
Resources and Ore Reserves and notes that is
presented on our website at www.newcrest.com.au.
The two documents accessible from the website are:
2009 Resources and Reserves Statement and the 2009
Mineral Resources and Ore Reserves Explanatory Notes
, the statement (issued 17 August), and the explanatory
notes issued the same day.

An Example of Good Reporting of

Ore Reserves
Good Public Reporting of an ore reserve due to:
Clear and concise summary
All material information in the Explanatory Notes
Might be argued there is too much information
Note that Newcrest also have a two tiered reporting
structure, see 2009 Annual Report example following.

Significant recent international

developments
CRIRSCO is the umbrella organisation of national reporting
organisations
Australia, South Africa, Canada, UK, Ireland & Western
Europe, USA and Chile
CRIRSCO has recently established a strategic partnership
with the International Council for Mining and Metals (ICMM)
covering 2010 & 2011.

ICMM
International Council
On Mining and Metals

Recent International Developments

The IASB extractive activities research project, has recently issued a
working draft of a discussion paper, now available at
http://www.iasb.org/Current+Projects/IASB+Projects/Extractive+Activities/Summary.htm
http://www.iasb.org/NR/rdonlyres/23F1424B-05E4-4BD1-AFD8-382125765D8E/0/ExtractivesDPworkingdraft10August2009.pdf

Quote from draft: 2.66: The project team recommends that the
CRIRSCO Template and PRMS definitions of reserves and resources
are suitable for use in a future IFRS for extractive activities....
CRIRSCO in cooperation with GKZ is preparing a draft conversion
from the Russian classification system into the CRIRSCO
classification.

ICMM
International Council
On Mining and Metals

Acknowledgements
To my JORC & CRIRSCO colleagues for assistance and
support and some of the slides and JORC parents which are:

Preparing this
talk and
attending this
seminar was
supported by :

JORC Seminar
Supplementary Slides

Public Reports
There are examples of reports that may not
appear to be in accordance with the JORC Code
They should do something is the cry
But who is they and how do we know if they are
doing something?
The most important

they is you.

What should you do? Look on the JORC website

for advice. But dont expect someone else to do it
for you. It is our industry and we all must ensure
the standards are kept high.

Companies Updates relevant to The JORC

Code are now available (consolidated) with
the Code on the JORC website
Since 2004, after extensive discussion with JORC, ASX has
issued four Companies Updates of relevance to interpreting
the JORC Code and its use in Public Reporting.
These ASX Companies Updates provide guidance on the
application of The JORC Code:
05/04 non compliant reporting
03/07 metal equivalents, Inferred Resources reporting &
Competent Person Consent Forms
11/07 Historical estimates
03/08 Inappropriateness of reporting in ground value

A copy of these ASX Companies Updates has been appended

to both versions of the Code and will automatically download
with them from the JORC website.
Readers of The JORC Code are advised to consult these
Updates.

Update and Review of the

2004 JORC Code
A two stage process

First Stage
A tidying up of the 2004 JORC Code to incorporate
appropriate matters from recent ASX Companies Updates
05/04, 03/07 and 03/08, but not 11/07 which deals with
historical and foreign estimates, which is outside the current
operation of The JORC Code
Several other minor inconsistencies will be rectified at the
same time.
Exposure draft to be issued for comment, expected in this
year, with a request comments be restricted to the matters
amended. This version will be the 2004 JORC Code
amended 2010, which will probably be issued later in the year
after approval by the parent bodies, ASX and ASIC.
JORC does not envisage any material changes in this first
stage.
64

Second Stage
Immediately following the finalisation of the first
stage, JORC will call for public submissions on
matters relating to the JORC Code.
JORC would also expect to consider matters arising
from recent revisions to other international Codes
(SAMREC 2007, PERC 2009 and the SME Guide
2007), as well as matters resulting from the current
review of Canadian NI 43-101.
JORC has established a number of sub-committees
to undertake the initial review, and is facilitating the
reconvening of the Coal Guidelines committee.
65