On 1 October 2012, the European Securities and Markets Authority (ESMA) published a consultation paper proposing amendments to its recommendations (Recommendations) on the consistent implementation of the European Commission’s Regulation on Prospectuses as they impact on mineral companies.

ESMA updated the Recommendations for mineral companies in March 2011 (see our April 2011 E-Bulletin article: ESMA issues updated guidance on prospectuses for mining and oil & gas companies). This latest consultation follows the publication of an open letter from ESMA on its Recommendations for mineral companies on 6 January 2012 (see our February 2012 E-Bulletin article: ESMA comments on its recommendations for mineral companies).

The main areas covered by the consultation paper include:

  • Material mineral projects – the Recommendations apply to companies with material mineral projects. The consultation paper proposes changes to the way “materiality” should be assessed for these purposes. The existing statement that materiality “should be assessed having regard to all the company’s mineral projects relative to the issuer and its group taken as a whole” is retained. In addition, it is proposed that materiality should be assessed from the investor point of view: projects will be material where evaluation of the resources (and, where applicable, the reserves and/or exploration results) the projects seek to exploit is necessary to enable investors to make an informed assessment of the prospects of the issuer. There is to be a rebuttable presumption that evaluation of mineral projects is necessary for an informed assessment of the prospects of the issuer where the projects seek to extract minerals for their re-sale value as commodities or where minerals are extracted to supply (without re-sale to third parties) an input into an industrial production process and there exists uncertainty as to either the existence of the resources in the quantities required or the technical feasibility of their recovery.
  • When a competent person’s report (CPR) is needed – ESMA is proposing to amend the existing recommendation to provide that an issue of non-equity securities (other than depositary receipts over shares) will not require a CPR. The existing exemptions on the requirement to include a CPR where companies are already listed are also being amended.
  • Mining reporting standards – it is proposed that the existing mining reporting standards be extended to include the Russian NAEN Code.  

The consultation closes on 21 December 2012 and ESMA expects to publish its revised recommendations in Q2 2013.

View the Consultation Paper (32 page pdf).