ASIC Information Sheet 214 on forward-looking statements

Explorers and miners take note - ASIC Information Sheet 214 on forward-looking statements

On 12 April 2016, the Australian Securities and Investments Commission (ASIC) issued Information Sheet 214 Mining and resources – Forward-looking statements (INFO 214) that consolidates the rules that apply to forward-looking statements into one place.

Many investors in mining and resources companies put emphasis on forward-looking statements when considering an investment. These predictive statements may include:

  • Production targets (i.e. projections or forecasts of the amount of minerals to be extracted from mining tenements two years or more ahead)
  • Forecast financial information
  • Income-based discounted cash flow valuations.

The purpose of INFO 214 is therefore to improve compliance and reduce the risk of litigation or regulatory action as a result of misleading statements.

What does the guidance cover?

The guidance in INFO 214 explains the existing reference sources that apply to forward-looking statements, and gives practical advice and examples of how to comply with the existing legal obligations. Included are discussions on:

  • The legal requirement that forward-looking statements must be based on reasonable grounds
  • How relevant industry codes, ASX Listing Rules and ASIC guidance apply to forward-looking statements
  • What is a ‘forward-looking statement’, and how is it different to ‘aspirational statements’ (which do not need to be based on reasonable grounds)
  • For reasonable grounds to be established, the JORC Code mineral resource estimates used must be based on a sufficient level of geological knowledge and confidence, and all JORC Code modifying factors must be sufficiently progressed
  • How the ‘reasonable grounds’ legal requirement applies to ore reserve and mineral resource estimations
  • How the ‘reasonable grounds’ requirement applies to the JORC Code's 'economic' modifying factor if secured funding is not in place
  • The disclosure requirements for forward-looking statements and what you can disclose if you do not have reasonable grounds for forward-looking statements
  • The requirements for updating forward-looking statements when your company's circumstances change or a project changes hands
  • ASIC focus areas when assessing forward-looking statements.

Action required

We encourage all miners to carefully review the guidance in INFO 214 before making any forward-looking statements.

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