ASX may tighten disclosure rules

The operator of the Australian Stock Exchange has flagged a series of changes to the way companies in the mining and energy sectors report the size and potential of their assets, under a review process launched yesterday.

A minefield of industry jargon confronts new investors to the mining sector and the ASX revealed concerns yesterday that some companies were inappropriately taking advantage of that situation.

Among several concerns aired, the ASX said some companies had inappropriately used "exploration targets" to court investors with data that was speculative at best.

"It was not intended to provide an opportunity for reporting preliminary, low-confidence estimates of tonnes and grade before there was sufficient data and confidence to report an inferred mineral resource," the ASX said in an issues paper.

The ASX also raised concerns that companies were luring investors with "production targets" which did not fall under the JORC code - which is the accepted industry formula for measuring mineral resources.

The ASX raised the prospect of forcing companies to explain more about their production targets, including the financial assumptions underpinning the forecasts and what proportion of the targets were reliant on further exploration.

Cultural differences and the varying standards of reporting required by different nations has also caused problems on the local bourse. The ASX indicated it was keen to see regulations for petroleum companies brought into line with the international standards created in 2007 by the Society of Petroleum Engineers.

The Minerals Council of Australia could not be reached for comment yesterday but the ASX said the moves were also aimed at efficiency - and that it was wary of unnecessarily increasing the reporting burden.

Australian Shareholders' Association spokesman Vas Kolesnikoff welcomed the push towards tougher standards, saying it was timely given the large sums of money flowing towards resources stocks at the moment.

"Disclosure has been complicated and confusing, so any effort to make disclosure of information clearer is a plus," he said.

"Greater disclosure on the stage of exploration and certainty of the resource would clearly increase the knowledge base of investors."

Comments on the issues paper are being sought by the ASX until January 27.