,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,New MB Chapter 18/GEM Chapter 18A Mineral Companies,Janet Chiu,Assistant Vice President,Compliance and Monitoring Department,Listing Division,HKEx,2,2,Background,11 September 2009,Consultation paper on New Listing Rules For Mineral and Exploration Companies published,11 November 2009,Consultation period ended,20 May 2010,Consultation conclusions published,3 June 10,Effective date of new Rules,3,3,Ensure investors are provided with material,relevant and reliable information relating to mineral assets,Align our rules with international standards,Broaden investor choice by allowing the listing of exploration companies with“identified resources”(i.e.at least indicated mineral resources/contingent petroleum resources),Purpose of the reform,4,4,The brand-new Main Board Chapter 18/GEM Chapter 18A set out:,additional eligibility and disclosure requirements for new listing of mineral companies,disclosure requirements for transactions involving mineral and/or petroleum assets,continuing obligations to provide update on issuers mining operations,Main Board Guidance Note 7/GEM Practice Note 4 provides a suggested risk assessment for mineral companies,Main Board Appendix 25/GEM Appendix 18 specifies the content of a competent persons report for petroleum assets,New Listing Rules for Mineral Companies,5,5,Agenda,Definition of“Mineral Company”,New listing requirements for Mineral Companies,Impact of the new Rules on listed issuers,Transaction related obligations,Continuing obligations,6,What is a mineral company?,7,7,A new applicant whose major activity is the exploration for and/or extraction of natural resources,Activity representing,25%of assets,revenue or operating expenses of the issuer group,A listed issuer that completes a major or above acquisition of mineral and/or petroleum assets,Who will become a“Mineral Company”?(1),What is referred as“major activity”?,8,8,They will not be automatically treated as Mineral Companies.,They would be treated as Mineral Companies only if they undertake major(or above)acquisitions of mineral and/or petroleum assets after the new Rules take effect.,Who will become a“Mineral Company”?(2),How about the listed issuers who are engaged in resources sector before the Rule amendments?,9,New listing requirements for,Mineral Companies,10,10,Exploration/extraction rights,MLR 18.03(1)/GLR 18A.03(1),Must have adequate rights which provides sufficient influence over the exploration for and/or extraction of natural resources,either through:,control over majority of assets;or,other rights under arrangements acceptable to the Exchange,11,11,Portfolio of reserves/resources,MLR 18.03(2)/GLR 18A.03(2),Must have discovered at least a portfolio of:,Indicated resources(for mineral companies),Contingent resources(for petroleum companies),This portfolio must be meaningful and of sufficient substance to justify the listing.,Early stage exploration assets are not eligible for listing at this time.,12,12,Working Capital,Must have sufficient working capital for 125%of present requirement for at least the next 12 months,(MLR 18.03(4)/GLR 18A.03(4),Must also provide production details,Companies in production,provide an estimate of cash operating costs,(MLR 18.03(3)and 18.06/GLR 18A.03(3)and 18A.06),Companies not yet start production,demonstrate a clear path(with indicative dates and costs)to commercial production supported by an independent Scoping Study(i.e.a preliminary evaluation of economic viability of mineral resources),(MLR 18.07/GLR 18A.07),13,13,Track record requirement,MLR 18.04/GLR 18A.04,Mineral Companies unable to satisfy the track record requirements can still apply for listing if:,its directors and senior managers,taken together,have sufficient experience relevant to the exploration and/or extraction activity that the mineral company is pursuing(individuals relied on must have at least 5 years experience),Considerations:,The companys primary activity is the exploration for and/or extraction of natural resources,Companies that are already in production will not be considered favourably unless they have development activity on hand and can demonstrate a path to commercial production,14,14,MLR 18.05-18.08/GLR 18A.05-18A.08,set out the required disclosures,including:,A Competent Persons Report on reserves and resources,A statement confirming no material changes since the effective date of the Competent Persons Report/descriptions of any material changes,Details of all prospecting,exploration,exploitation,land use and mining rights,and details of material rights to be obtained,Specific and general risks,Disclosure on social and environmental considerations,if relevant and material,For those not yet in production,plans to production with indicative dates and costs supported as least by a Scoping Study,Listing documents for new applicants,15,Impact of the new Rules on listed issuers,16