If the cost of already contracted debt for a small gold miner with a highly volatile share price is more than 10%, how can a 5% project discount rate be justified (or accepted by regulators) as anything other than juicing up valuations to attract investors? Blackham Resources is one of the latest companies to flout the JORC Code requirements relating to the economic analysis underpinning mineral reserve estimates. The JORC Code explicitly requires companies to show NPV ranges and sensitivities to significant assumptions and inputs into economic models. The Code also requires companies to disclose the source and confidence of their economic inputs including the discount rate used for valuation purposes. Blackham’s designated competent person has ignored these requirements. A competent person acting under the Code who fails to meet the Code’s requirements puts himself at risk of disciplinary action by his regulating professional association. Blackham has joined other companies in effectively treating regulators with contempt rather than provide the information the revamped 2012 Code had thought necessary for effective investment decision-making and the protection of individual investors.
Wow, I had no idea there were ASX companies showing such blatant disregard for JORC standards. I'll certainly be taking a closer look for these issues in future.