The Financial Services Board (“FSB”) is an independent institution, established by statute to oversee the South African non-banking financial services industry in the public interest, and fully funded by fees and levies imposed on this industry. The FSB has developed and maintained a strong, effective presence in the regulatory field in South Africa and internationally while working closely with its counterparts elsewhere in Africa to establish solid regulatory frameworks.
It is in this field of regulatory compliance that the SSC is developing a relationship with the FSB with the objective of promoting SAMCODE compliance by Minerals Companies across all current (and future) registered stock exchanges in South Africa.
Johannesburg Stock Exchange (JSE)
The JSE maintains two Reader’s Panels which review all Competent Persons Reports, Mineral Asset Valuation Reports and Qualified Reserve Evaluators Reports submitted to the JSE Limited. Such reports are reviewed for compliance with the JSE Listing Requirements that incorporate the relevant SAMCODES and any other code recognised by the JSE for secondary listings, if required. Members of the Reader’s Panels are appointed by the JSE, based on submissions through the SSC and are recognised experts in the commodity and deposit under consideration.
There are separate Readers Panels for Solid Minerals reporting according to SAMREC/SAMVAL and for Oil & Gas reporting according to SAMOG.
During 2017, nine Competent Persons Reports (“CPRs”) and 11 Integrated Annual Report (“IARs”) were reviewed. In general, the standard of reporting was unexceptional, including issues such as:
- Frequent misspelling of the full titles of the SAMREC and SAMVAL Codes;
- Failure to capitalise Mineral Resources and Mineral Reserves and omitting ‘Mineral’, ‘Coal’, and ‘Diamond’, referring only to Resources and Reserves;
- Evident lack of compliance with the principles of the Codes; Materiality, Transparency, Competence and Reasonableness.
- Perceived lack of meaningful peer review or editorial control of CPRs; considerable time is wasted by Readers pointing out errors of grammar or English usage incorrectly labelled maps and tables which in some cases do not add up or multiply out correctly. Many CPRs run to 300 pages and more, reading such a document is extremely time-consuming particularly when the attention of the Reader to editorial issues and inaccurate reporting are identified. Compiling a list of all the errors and mistakes and writing these up in a report also consumes an inordinate amount of a Reader’s time. The Readers’ Mandate does not call for comment on editorial matters. It was never the intention that the Readers Panel would become a complementary editorial service for the consulting industry. However due to bad experience with poorly written CPRs over time, the Readers increasingly undertook an editorial role.
More specific comments include:
- Incorrect Mining Rights boundaries on maps
- Reasonable Prospects for Eventual Economic Extraction (“RPEEE”) not well established or justified
- Poor/inaccurate Table 1 checklist
- Mineral Reserves not supported by PFS/FS or LOMP.
- Coal qualities not stated as part of the Coal Resource/Reserve
- Lack of clarity as to which CP was responsible for which section(s)
- Lack of rounding of Resource volume/tonnage and grade figures
- Inclusion of Exploration Targets within Resource statements
- Lack of understanding of what a Technical Study was
- Confusion over which valuation approaches to use
- Lack of detail in explanation of rationale behind selection of approaches, discount rates and other valuation parameters
- Comparable transactions not being comparable
Oil & Gas
During 2016/2017, no QRE documents were reviewed.