Guide to Fundraising in the Natural Resources Sector: Company and Investor Perspectives

Guide to Fundraising in the
Natural Resources Sector:
Company and Investor Perspectives
Ashley Mangano
B.Engineering (Hons) ), B.Commerce, MBA (Oxon, LLM (Candidate)

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CONTENTS
1 Introduction......................................................................................................................................................... 3
1.1 Purpose........................................................................................................................................................ 3
1.2 Resource Companies................................................................................................................................. 3
1.3 Rationale for Fundraising......................................................................................................................... 5
2 Disclosure ............................................................................................................................................................ 8
3 Disclosure Requirements................................................................................................................................... 9
3.1 Clear, Concise, Effective ........................................................................................................................10
3.2 Investment Overview..............................................................................................................................10
3.3 Business Model ........................................................................................................................................10
3.4 Risks...........................................................................................................................................................16
3.5 Financial Information.............................................................................................................................20
3.6 Directors and Managers: Interests, Benefits and Related-Party Transactions...............................25
3.7 The Offer..................................................................................................................................................25
4 Crowd-Sourced Funding .................................................................................................................................26
4.1 Eligibility Requirements for a CSF Offer............................................................................................27
4.2 Process for Making a CSF Offer...........................................................................................................28
4.3 Corporate Governance Concessions....................................................................................................28
4.4 Disclosure Requirements........................................................................................................................29
5 Disclosure Exceptions .....................................................................................................................................30
6 Conclusion.........................................................................................................................................................32
Bibliography................................................................................................................................................................34

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1 INTRODUCTION
1.1 PURPOSE
The purpose of this paper is to outline the requirements and guidance for fundraising via the issuance of
new securities to retail investors, in the context of resource companies.
A background to resources companies is provided before moving on to a key concept surrounding the
fundraising process, disclosure. The rationale for disclosure is discussed, along with the documents used
achieve disclosure, content requirements of the most prevalent disclosure document (the prospectus),
disclosure exceptions, and the new crowd-sourced funding legislation.
1.2 RESOURCE COMPANIES
This paper considers resource companies to be entities whose main undertaking consists of the exploration
and production of petroleum or minerals. The common thread amongst these companies is that they all
create value through finding, developing and producing hydrocarbon or mineral commodities.
Resource companies have considerable differences from other industry entities in terms of activities,
business model, risk and return profiles, and capital requirements amongst other distinctions. While the
processes and technologies used in each of these extractive industries can be very different, in general these
items are similar enough to be considered in the same light for the purposes of fundraising discussions.
Broadly speaking, activities undertaken by resources companies can be broken into the following three
phases:
Exploration
This phase includes the process of finding commodities through a combination of field activities and
interpretation of the data collected from these activities. This phase is categorized by a high-risk and high-
return investment profile, an absence of revenues, and moderate capital expenditure for exploration
activities, usually funded through the issuance of new securities (equity) or cash, due to the absence of cash
flow and the lack of ability to provide debt security. Investor value creation takes the form of capital growth
and is achieved by adding units of the commodity to the project resources and reserves. Through relevant
industry standards different levels of risk are attached to each unit of commodity depending on the
geological likelihood of the commodity’s existence and commercial viability, with less geological risk
equating to more commodity value and vice-versa.
Development
This phase includes the further subsurface activities to de-risk the presence of the commodity and
construction of the infrastructure required to subsequently produce the commodity. This phase is

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characterized by medium-risk and medium-return investment profile, an absence of revenues, and high
capital expenditure for designing and constructing infrastructure (project dependent), usually funded by
project finance (debt) based on future cash flows from production and the security of certified commodity
reserves accumulated during the exploration and this development phase. Investor value creation takes the
form of capital growth and is achieved by de-risking the commodity’s presence and likelihood of the project
reaching production, including securing funding for development and reaching design and construction
milestones within designated budget and schedule targets.
Production
This phase includes the extraction and sale of the commodity reserves via the developed infrastructure.
This phase is characterized by low-risk and low-returns, large profits and low capital expenditures. Investor
value is created by revenues and profits generated from the sale of extracted commodities. Total profits
realized from this phase (after royalties, taxes, interest payments, general and administrative costs,
operational costs and the time value of money) must exceed the capital expenditure incurred during the
exploration and development phases for a project to have a positive return to its equity investors.
There are many risk factors which affect potential returns for investors, that are continuously changing
throughout the project phases from very high during initial exploration activities through to low at
production. The most critical risk is geological risk, and as such it can be useful to break risk into geological
and non-geological categories.
Geological Risk
As resources are found subsurface there is no ability to physically determine the units of the commodity
held within a certain project until that each unit is extracted and ready for sale. Instead, commodity
quantities are estimated using a variety of tools. The uncertainty attached to these quantity estimates is
deemed geological risk. This risk is fundamental to resource projects and is categorized by relevant industry
standards, JORC Code1 and Petroleum Resources and Management System2, which is included in third-
party reserves reports which is critical information for any investment decision.
The value profile is directly correlated to the geological risk profile, with value being created in the by
removing geological uncertainty through exploration, development and production activities.
1 ‘The JORC Code’.
2 Louis Yang et al, ‘Petroleum Resources Management System’.

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Figure 1: Reserves range of risk (uncertainty) throughout project phases3
Non-Geological Risk
Risk not associated with estimating units of a commodity and broadly includes macro-economic factors,
sovereign factors, company factors and project specific factors are categorized as non-geological risk.
Usually companies hold multiple projects which are at different phases in the process. Each project should
be considered separately, and an investment opinion formed based on the aggregation of these individual
reviews.
The value profile is directly correlated to the non-geological risk profile, with value being created in the by
removing non-geological uncertainty through company operational, commercial and corporate risk-
mitigating activities.
1.3 RATIONALE FOR FUNDRAISING
Most companies fundraise during their lifecycle, usually multiple times and for a variety of reasons. This
paper will focus on raising funds for company growth.
When a project in is the exploration phase, the project has no cash flow and will source all funding
externally, usually through the issuance of new securities (shares) to the public. This is common with small-
capitalisation exploration companies. As a project transitions to the development phase further funds will
be needed for development and these will usually be in the form of debt or a combination of debt and
equity. Once a company has projects that are producing and generating revenues, it is common for these
3 Nick Antill, Valuing oil and gas companies: a guide to the assessment and evaluation of assets, performance and
prospects (Woodhead Publishing, 2000) 123.

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revenues to fund other projects at earlier phases. When a company is absent of production revenues,
exploration and development activities are usually funded by equity and debt, respectively.
At a corporate level the company will also need to fund its general and administrative costs, often referred
to as working capital. This includes executive, employee and contractor salaries, legal, financing, office and
administrative costs, and other day to day expenses. While necessary, this working capital is not a value
creation mechanism in and of itself, so when making an investment decision it is important understand
whether a company plans to use the funds for value-adding physical activities or working capital or a split
between the two.
A summary of project phases, common activities and associated funding sources is provided below:
Exploration Development Production
Phase
Specific
Activities
Geophysical surveys
Exploration drilling
Interpretation, analysis and
studies
Development drilling
Project infrastructure design
and construction
Production operations
Phase
Unspecific
Activities
General and administrative
(working capital)
(working capital)
(working capital)
Expected
Funding
Type
Equity Equity / Debt Cash
Common
Funding
Sources
Issuance of securities
Initial public offering
Private equity
Issuance of securities
Reserve-based debt /
Project finance
Issuance of bonds
Mezzanine finance
Cash flow from operations
Table 1: Resource project phases, common activities and associated funding sources
Debt v Equity
Corporate structuring is important and can significantly affect profitability. Debt is cheaper than equity
when applied appropriately however even more important is ensuring the funding mechanism, debt or
equity, is appropriate to the use of the funds and specific company situation.
Debt is characterized by a requirement for security of the investment, servicing of interest payments, and
principle repayment at maturity. It has the benefit of senior ranking, depending on the type and terms, in
the case of liquidation. Equity has none of these requirements, only a need for a risk to return profile
(investment thesis) that is deemed attractive enough for a potential investor to take up the offer.

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As identified, additional fundraising is predominantly required in the exploration and development phases,
while the project has an absence of cash flow. Applying these requirements to the characteristics identified
in each project phase, we note that exploration is absent of security and expected cash-flows which allows
for only equity funding. Development has security, reserves, and expected cash flow, production, and as
such has the capacity to be funded through debt. Ultimately, the company usually ends up with a
combination of both debt and equity.
It helps us understand when and why a resources company would look to raise funds through the issue of
new equity; which is generally for exploration and development activities or working capital requirements
when the company doesn’t have sufficient cash in the bank and cannot secure debt. If it is for any other
reason, it is important to understand the rationale and whether the injection of funds will create value,
improving your investment, or simply allow the company to continue to limp forward.
For this reason, offers for equity are often from resources exploration companies and even more prevalent
from junior (small-capitalization) explorers that lack cash in bank or cannot fund exploration activities
through cash flow from production of other projects.
Why Invest in Resource Companies?
Resources companies can have some of the highest returns on capital employed across all industries, only
now rivalled by the likes of technology startups such as Facebook, LinkedIn, Instagram, and Skype to name
a few. This is achieved through the inherently high risk-profile attached with exploring for commodities
combined with the often-severe fluctuations seen in commodity prices, creating opportunities for large
returns in short periods of time.
Examples of this are Far Limited (FAR), an Australian Stock Exchange (ASX)-listed oil and gas exploration
company, that on 8th August 2014 had shares trading at $0.03 with a market capitalization around $80
million. Shortly after this time the company made a discovery through exploration drilling in offshore
Senegal, West Africa, and on 16th October 2014 the share price jumped to $0.10 with a resultant market
capitalization of $250 million – more than three times increase in value. In June earlier that year, FAR raised
$8 million in equity to fund other exploration activities in Kenya.

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2 DISCLOSURE
The rules governing the fundraising process in Australia are legislated in the Corporations Act 2001 (Act) in
Chapter 6D – Fundraising. Section 706 of the Act states ‘An offer of securities for issue, other than a CSF
offer, needs disclosure to investors under this Part unless s708 or s708AA says otherwise’4.
Disclosure, in the context of fundraising, at its core relates to the offeror’s legislated requirement ‘to ensure
that investors in newly issued securities of a corporation, other than those who are in a strong enough
position to look after themselves, have access to information which a reasonable investor would require for
the purposes of making a decision.’5
The group deemed as being in ‘not in a strong enough position to look after themselves’ are referred to as
retail investors, identified as not professional investors or sophisticated investors as outlined in the Act.
Disclosure is made with a disclosure document, which, as defined in s9 and s705 of the Act, can take the
form of one or more of the following:
I. Prospectus: the standard full-disclosure document (see s710, 711, 713);
II. Short-form prospectus: may be used for any offer (see s712);
III. Profile statement: requiring ASIC approval, in addition to prospectus (see s714);
IV. Offer information statement: used if raising less than $10 million (see s715);
The prospectus is the principle document and forms the basis of disclosure requirements for the issuer6 7.
It is also the document required if the securities are offered on the ASX, under Listing Rule 1.1. A short-
form prospectus or profile statement can be prepared in addition to a prospectus, with approval from ASIC,
and an offer information statement can only be used when the offer for securities will raise less than $10
million.
As such, the most prevalent and definitive (in terms of information provided) disclosure document is the
prospectus8. For this reason, understanding the required content of a prospectus provides a baseline for
disclosure. Reviewing prospectus contents in the context of resource companies will highlight what items
4 Corporations Act 2001 (Ch) 706.
5 Robert Austin and Ian M Ramsay, Ford, Austin & Ramsay’s Principles of Corporations Law (LexisNexis
Butterworths, 2013) 22.010.
6 Ibid 22.260.
7 Ibid 22.010.
8 ‘Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors’ 2.

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are required to be included for an offeror of new securities, and what to look for when making an
investment decision.
To meet the disclosure requirements, the offeror must comply with the following disclosure process9:
I. Preparation of the appropriate disclosure document;
II. Lodging the disclosure document with ASIC, prior to any offer being made;
III. Accompanying any offer for issue of securities with the disclosure document; and,
IV. Issuing securities only in response to an application form which was accompanied by a disclosure
document.
As described, the purpose of a disclosure document is purely informative, to ensure retail investor are
equipped with the requisite information to make an informed investment decision. It makes a no intention
to interpret the information provided; a step of at least equal importance in the investment decision process.
3 DISCLOSURE REQUIREMENTS
The content required to be contained in the default disclosure document, a prospectus, includes ‘all the
information that investors and their professional advisers would reasonably require to make an informed
assessment… [of the offer]’10. Furthermore, as overarching principles when preparing a prospectus, the
offeror must adhere to the following sections from the Act:
I. s715A: word and present the document in a ‘clear, concise and effective’ manner;
II. s710: include the information required by the general disclosure test;
III. s711: make specific disclosure, including disclosures about interests and benefits of
persons involved in the offer; and
IV. s728(1): ensure the offer is not misleading or deceptive.
Sections 710 and 711 of the Act provide the legislative framework as to the requirements of a prospectus,
with further guidance provided by the documents below. Companies that do not comply with legislative
and regulatory requirements take legal and reputational risks.
Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors, provided by ASIC, offers
further guidance on the structure and content for a prospectus to meet the legislated requirements. The
9 Austin and Ramsay, above n 5, 22.160.
10 Corporations Act 2001 (Ch) 710(1).

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guidance provided is general rather than prescriptive as the Act places responsibility on the offeror to
comply with disclosure requirements. This guidance is summarised in the seven points below:
3.1 Clear, Concise, Effective
Does the prospectus help retail investors make informed investment decisions?
The disclosure document must be both worded (choice of language) and presented (choice of
communication tools) in a ‘clear, concise and effective’ manner. The intention is to both ensure the required
information is effectively conveyed to the investing public, and improve comprehensibility and readability
of disclosure documents.
This requirement can be met by ensuring the prospectus adheres to the following guidelines11:
I. Highlights key information;
II. Uses plain language, specifically12:
i. Uses: active voice, direct language, the positive and avoids double negatives, verbs rather
than nouns, industry accepted terms;
ii. Avoids: overuse of definitions, jargon, short sentences, disclaimers, boilerplate text;
III. Is as short as possible;
IV. Explains complex information, including any technical terms;
V. Is logically ordered and easy to navigate;
3.2 Investment Overview
Has key information been highlighted for retail investors?
This is an executive summary of the disclosure document, providing an concise overview in order to assist
retail investors make an informed decision. It ensures critical information is front and center, and not buried
in the details where it may be overlooked. It should contain a brief overview of all the subsequent elements
of the disclosure document, including: business model, risks, financial information, directors and key
management, interests and related party transactions, the offer, and use of funds.
3.3 Business Model
How will the company make money and generate income or capital growth for investors?
11 ‘Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors’, above n 8, 24.
12 Ibid 3.

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This section details the value creation process specific to the company offering securities. Table 6 of
Regulatory Guide 228 highlights the common components of a business model as:
I. Nature of the business
II. Significant dependencies
III. Strategy and plans
IV. Corporate structure
V. Finance
VI. Competition
VII. Capital management policy
The prospectus should provide a substantive analysis of the business, detailing how the business model
works and components relate to each other, key assumptions, key risks, and the company’s ability to
generate revenue or capital growth and subsequently investment returns. It should not be simply a
description.13
The business models used in the resources sector can differ from other business models, and in some ways,
be quite unique. Unfortunately, this different and unique business model is generally skimmed over in
prospectuses’, rather than expanded upon. It is not uncommon for this section to be short and peppered
with generic terms such as ‘vision’, ‘strategy’, ‘world-class’, ‘monetising’, ‘value accretive acquisitions’, ‘high-
quality assets’, ‘attractive pricing’, ‘secure core proven assets’, and ‘enhance asset value’, that provide little
genuine understanding into the business model and value creation mechanisms specific to the business.
The 2016 Australis Oil & Gas prospectus, section 3.3, provides a good example of the generic business
model statement applicable to, and in some form used by, most natural resources companies:
“The [company] aims to provide shareholders with a portfolio of assets that will have a range of risk and reward attributes
with an underlying base value, whilst ensuring exposure to exploration and appraisal upside as well as upside exposure to any
increase in the [commodity price]”.
Business Model, Risk and Value Creation in the Resources Sector
The business model inherent to all resource companies is one of de-risking quantities of commodities and
improving their likelihood to be sold for profit. This occurs through the process of exploration,
development and production. Value can be created through other strategic and business factors; however,
these are not the primary source of value and are not considered in this paper.
13 Ibid 228.55.

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The value creation process can be expanded upon by following the process from start to finish for a
commodity. In this case, a barrel of oil, but it could be an ounce of gold, cubic foot of natural gas, or any
other commodity and its industry unit of measure. The outline below is extremely simplified, including the
operation of PRMS classification code, to provide a general framework for the purposes of this paper. It
contains many assumptions, a string of successful activities which is rarely the case, and compression of the
steps and work involved.
With those caveats out of the way, we start at the beginning of the process:
I. Assume an unlicensed area without historical commodity production, reserves or resources and by
all accounts is absent of oil. With no commodities deemed to be present, the value of the
commodities in the area is zero.
II. Based on a regional geological concept, a company concludes that the area may contain oil and
acquires an exploration license over the area. There is belief that the area may contain oil, but
nothing is certified or proven yet.
III. The company raises capital through issue of new securities (equity) to perform exploration
activities, a seismic survey and drilling of an exploration well. The seismic survey indicates the
existence of an oil trap, and the drilling proves reservoir, seal and the presence of flowing oil. A
discovery has been made! Through the relevant industry code, Petroleum Resources Management
System (PRMS), the company can now confirm a resource of one billion barrels as the best
estimate. Value has been created (capital gain, not revenue) because oil has been found, likely
evidenced in the company’s share price if listed, but a large amount of geological and non-
geological risk remains before the oil can be sold for revenue.
IV. The company continues exploration drilling in the same area to reduce the geological uncertainty
of the one billion barrels of resources (referred to as appraisal wells). The well is drilled, and
successful intercepts more oil. The one billion barrels is geologically de-risked and moves from
‘resources’ status to ‘reserves, probable’. Another appraisal well is drilled, which is successful, and
the 1 billion barrels moves from ‘reserves, probable’ to ‘reserves, proved’. Value has been created
through reducing geological risk.
V. With the one billion barrels of oil now being relatively geologically certain (PRMS, more than 90%
likelihood of being present and producible), the company secures project finance, based on the
securing of the one billion barrels of proved reserves and expected cash flows from production, to
drill development wells and build the infrastructure required to produce and sell the oil. Value has
been created through reducing geological risk (development wells) and non-geological risk (project
financing and infrastructure completion).
VI. The development wells are drilled, successfully, and the infrastructure is built on budget and on
schedule. The project is ready to produce is first barrel of oil. Value has been created through
reducing non-geological risk.

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VII. Oil is produced from the field and upon sale creates revenue for the company. Value is created
though the final reduction of geological and non-geological risk and the subsequent generation of
revenues.
VIII. This continues until the last of the one billion barrels is produced and sold. Project
decommissioning takes places and the lifecycle of an oil project is complete, and all value has been
realized.
This business model and value creation process is summarised below in Figure 2, highlighting the general
relationship between project phase, resources and reserves category, risk, and value.
Project Phase Exploration Development Production
JORC
Category
Resources Reserves
Production
Inferred Measured Probable Proved
PRMS
Category
---
Resources Reserves
Resources Possible (3P) Probable (2P) Proved (1P)
Geological
Risk Factor
Risked Value 0% 0 - 10% 10 - 50% 50 – 90% 90 - 100% 100%
Non-
Geological
Risk Factor
(Assumed)
Total
Risked
Value
(% of Value of
One Produced
Unit of
Commodity)
0% 0 – 0.5% 0.5 – 15% 15 – 60% 60 - 100% 100%
Figure 2: The general relationship between project phase, resources and reserves category, risk, and value.
100% 90% 50% 10%
0%
Value
(% of Value of One
Produced Unit of
Commodity)
100%
0%
Risk
(%)
100%
0%
100% 95% 70% 30%
0%

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Financial Arrangements
How will the company be financed on an ongoing basis?
If the company is reliant on debt financing, the disclosure document should contain the following
information14:
I. Debt levels and financial stability ratios15;
II. Terms and conditions: convertible note details, maturity, interest rate, market capitalization clauses;
III. Ability to service interest payable;
IV. Current, or likelihood of, significant breaches of loan covenants or debt obligations;
V. Any material breaches that have occurred in the previous two years;
VI. Whether refinancing is needed within 12 months and, if so, the likelihood of that occurring;
As discussed previously, in the resources sector the project phase will largely dictate how the company is
funded moving forward with either equity, debt or internal cashflow. It is reasonable for offerors to
continue to raise capital through the issuance of new securities to fund exploration companies.
Important Contracts
What are the key contracts critical to revenue generation or pose risk?
The prospectus should contain key contracts and their associated terms and features, this includes16:
I. Contracts critical to general revenues or capital growth for investors, or to meet company
objectives; and
II. Contracts that contain significant obligations or restrictions on the company’s objectives.
These contracts can include license agreement(s), joint-venture arrangements, farm-in and farm-out
contracts, service and equipment contracts, offtake agreements, commodity sale contracts and more. All
key terms need to be disclosed in the prospectus for investors to understand risk and revenue generation
potential that is key to the business model.
Key terms that should be disclosed are:
I. How the contract is relevant to value creation or objective completion;
14 Ibid 62.
15 Ibid 113–118.
16 Ibid 63.

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II. Key terms, such as length and expiry date, ability of parties to terminate, renewal conditions, key
covenants, and any other terms that might affect a retail investor’s investment decision;
III. Status of the arrangement;
IV. When the contract needs to be renewed, and if less than 12 months include:
i. Prospects of renewal or possible alternatives and implications if cannot be renewed; and
ii. If there are no reasonable grounds for comment, explain why.
V. JV’s, identify JV parties, financial capacity to carry out their obligations under the JV arrangement;
and
VI. Whether the contract is with a related party.
Corporate Structure
The prospectus should explain the corporate structure if relevant to the investment decisions, which can
include highlighting17:
I. the reason for the chosen corporate structure;
II. the nature of cash flow within the group structure, including dependencies on dividend income or
management fees from subsidiaries;
III. external management arrangements; or
IV. key assets, liabilities or obligations, detailing whether these are held directly or by another entity in
the group.
Explanation of the Industry
A prospectus should include an explanation of the industry in which the company operates, but only to the
extent that it affects the business model and the investor’s investment decision.
This might involve providing disclosure on the following factors and explaining how they are relevant to
your business model, including18:
I. industry maturity and size;
II. key suppliers and customers;
III. market share, key competitors and barriers to entry;
IV. the regulatory framework in which the company operates;
V. any external threats or risks; and
VI. any external opportunities.
17 Ibid 66.
18 Ibid 68.

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Capital Management Policy
This section refers to the company’s intended use of surplus funds, should there be reasonable grounds to
assume this will be a likely outcome. Will the funds be re-invested in the company or paid out via dividends
to shareholders? If the latter is the case, a summary of the intended dividend policy should be included.
3.4 Risks
What are the risks associated with the business model, the security and the offer?
Risk is expected and present in every business, but the risks included in the prospectus should be specific
to the company rather than general risk. The following guidance is provided on what risks should be
identified in the prospectus19, including:
I. Events that have a reasonable likelihood of occurring;
II. Are difficult to mitigate; and
III. If they did occur, would have a very significant effect on the company’s financial position and the
value of the shareholder’s investment; and
IV. In addition to key risks, low probability risks that would have a significant effect should generally
also be disclosed.
Risks meeting these requirements, specific to the resources sector, are presented in many ways and can be
broadly placed into four risk-categories: macro, company, country, and project. The prospectus should
acknowledge the presence of these risks and discuss how the company aims to mitigate or minimise
exposure to the risks. A general list of common resource company risks is as follows:
Macro-Risk Factors
Commodity Price
The price of the commodity to be produced, largely based on global supply
and demand but also financial and speculative factors, is an overarching
determinate of project and company valuation. It is often represented by the
forward-price curve, which, as a forward-looking statement, must be
considered in the context of reasonable basis guidance.
19 Ibid 75.

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The price used in internal valuations can vary according to many factors
including company sentiment and position – valuation is based on many
strategic factors not just pure financial and economic valuation. Scenarios are
often used to highlight various commodity prices and the effect on the
business.
Macroeconomic Risk
Inflation, foreign exchange, interest rates and, very broadly, supply and
demand or relevant inputs and outputs. Movements in foreign currencies
may have a positive or negative influence on the Australian dollar equivalent
of expenditures and revenues.
A company may implement hedging strategies to mitigate.
Share Market
The overall share market may have a positive or negative influence on the
investment, due to macro-economic conditions and shareholder sentiment
Speculative
Junior natural resource companies often contain significant amounts of risk.
Generally, investors should view investment in junior resource companies as
highly speculative and this should be clearly stated in the prospectus.
Company Risk Factors
Board of Directors and
Management Team
This is a general statement that captures many of the risk in this section,
highlighting that even the best project can be undermined by a poor
management team through corporate, commercial or operational
mismanagement. Successful track record specific to the goals of the company
is the best way to mitigate this risk
Directors and consultants may leave the company which could materially
affect the company’s business, operating results and financial condition.
Limited operating history of early-stage ventures means the company (and
investment) must be considered in light of risks, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly the extractive industries which have a high level of inherent
uncertainty.
Funding
The company may need to raise debt and/or equity to fund projects and
business activities. The ability to do this is influenced by numerous factors
including but not limited to, economic, legal and political conditions and
investor’s and financiers’ investment and credit policies. If the company

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cannot fund itself, or raise funds externally, in the future, it may have a
negative impact on the project and business.
Licenses have work and expenditure commitments, and other contractual
agreements (service providers, financiers and others) have terms and
conditions attached to payment obligations. A failure to meet these
obligations may result in licenses being transferred to another party or
cancelled.
Dilution
If the company makes acquisitions in the future as part of a growth or strategic
plan, there is no guarantee their will be a positive return for shareholders and
may result in the use of cash resources or the issuance of new equity securities,
which may involve substantial dilution to shareholders.
Future company requirements may give rise to the requirement to raise further
funds. Due to certain circumstances this fundraising may result in significant
dilution of existing shareholders ownership.
Third-Parties and
Counterparties
Contractual disputes can arise from commercial agreements, where the
counterparty may not be able to meet their obligations under those
agreements or terminate an agreement early.
Companies are required to engage a number of third parties, including
suppliers, contractors and clients. Financial failure or contractual non-
compliance on the part of a third party may have a material impact on the
company.
Investment
Liquidity in securities may not allow for on-sale of purchased securities or the
company’s offer may not raise minimum subscription
Country Risk Factors
Legislation
Including government laws, regulations, policies including fiscal regime and
commodity licensing system.
Infrastructure and
Services
Unable to access exploration and development services and infrastructure in
a timely manner
Approvals
Unable to exploit successful discoveries as licenses and approvals are required
from relevant authorities at their satisfaction or discretion and these may not
be provided.

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The cost and time durations attached with companying with environmental
laws and regulations may prevent to company from being able to develop
potentially economically viable resources.
Industrial Disputes May occur, preventing the project from progressing.
Repatriation of Funds
Exploration and production success may lead to excess cash flow which
cannot be taken out of the operating country back into Australia.
Project Risk Factors
Geological
A third-party report, adhering to the relevant industry code, will detail the
volume of commodities allocated to each license and the level of geological
risk attached to each unit of commodity allocated.
Resource and reserves estimates which were made at a certain point in time
may alter significantly when new information or techniques become available.
By their nature these estimates are imprecise and depend on interpretations,
which may prove to be inaccurate. This may affect not only the estimates size
but also commercial viability to produce.
Title / License
Commodity licenses often contain work and expenditure commitments, and
are subject to periodic review and renewal and there is no guarantee future
licenses will be approved or renewed.
This may include compulsory increase in work and expenditure commitments,
relinquishment of areas within existing licenses or imposition of new
conditions or the inability to meet conditions may adversely affect the
operation, financial position and/or company performance.
Operations
Including blowouts, mechanical failures, explosions, drilling and production
risks amongst the many operational risks which are specific to each project
and project phase.
Access
An absence of native title issues and access to land covered by licenses cannot
be guaranteed, as companies require the consent of landholders or other
persons or groups with an interest in the real property encompassed by the
license.
Compensation may be required to be paid, which may not be included in
budget forecasts in the prospectus.

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3.5 Financial Information
What is the company’s financial position, performance and prospects?
The purpose of the information in this section is to provide the investor to information on the historical,
current circumstances, and future financial prospects of the company. The following information is
required to be included in a prospectus:
I. Consolidated audited balance sheet or financial position for the most recent financial year, or half
depending on the date of the prospectus;
II. Audited financial reports for at least the three most recent financial years, including:
i. Consolidated income statement;
ii. Consolidated cash-flow statement;
iii. All material events that have occurred since the most recent financial statement; and
iv. Warning that past performance is not a guide to future performance.
If the company has not operated for more than one year (i.e. start-up), then most recent audited financial
position and a pro-forma statement of financial position should be provided20.
Prospective Financial Information
Disclosure requirements for forward-looking statements and other prospective information is difficult to
test, largely because determining reasonable grounds is an objective test that depends on the facts of each
case. Finding the balance between meeting legislated disclosure obligations while concurrently adhering to
the legislated reasonable grounds obligations is the challenge when considering forward-looking statements.
In the resource sector, forward-looking statements and prospective information take on a unique meaning
and can refer to units of commodity held in resources and reserves, production forecasts and the financial
forecasts derived from them, and net present value calculations associated with projects.
Section 710 of the Act requires a prospectus to contain all information that would enable investors to make
an informed assessment of the issuer’s prospects. A general test as to whether information must be
disclosed can be based on:
I. Is it relevant to its audience? And,
II. Is it reliable with a reasonable basis?
20 Ibid 99.

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Reasonable Grounds
To demonstrate reasonable grounds for including prospective information, which is required to ensure a
statement isn’t misleading21, an offeror must be able to show some facts or circumstances that22:
I. existed at the time of disclosure;
II. were relied on by the offeror;
III. are objectively reasonable; and
IV. support the information.
If reasonable grounds cannot be established, the use of cautionary statements, qualifications or disclaimers
are not sufficient to prevent the statement from being misleading23.
Independent Expert’s Report
Reasonable grounds can be established by reliance on an industry expert report24 and industry codes25,
which are the dominant methodologies used in the resource sector. For reasonable grounds to be held, the
expert’s report must:
I. be included or referenced into the disclosure document containing the prospective information;
II. state underlying assumptions; and
III. positively state that the forward-looking statements and its assumptions are reasonable and that
the expert does not disclaim liability from the statement.
The independent industry expert must have the credentials to give an opinion on the issue of whether
reasonable grounds exist for the prospective information and the facts relied upon by the must be verified
and verifiable26.
Industry Codes
While the obligation to have reasonable grounds for forward-looking statements are legislated and separate
to any industry code, the fact that units of commodity held in resources and reserves, production forecasts
21 Ibid 22.330.
22 ‘Regulatory Guide 170: Prospective Financial Information’ 24.
23 ASC v McLeod [2000] WASCA [32]-[39].
24 ‘Regulatory Guide 170: Prospective Financial Information’, above n 22, 30.
25 ‘INFO 214: Mining and Resources - Forward-Looking Statements’ 2.

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and the financial forecasts derived from them, or net present value calculations associated with projects,
are determined by industry codes means they must be considered.
The resources sector in Australia considers three industry codes, each relating to different industry
segments. They are27:
JORC Code: Mining Industry Standards
The JORC Code provides directors, shareholders, investors and their professional advisers with an
internationally accepted standard to help assess and compare disclosure by different companies that is often
highly technical. Disclosure under the JORC Code is governed by the principles of transparency, materiality
and competence.
Petroleum Resources Management System (PRMS): Oil and Gas Industry Standards
The petroleum resources management system provides a consistent approach to estimating petroleum
quantities, evaluating development projects, and presenting results within a comprehensive classification
framework.
All commodity resources and reserves estimates must follow either the JORC code for minerals or PRMS
for oil and gas, which in turn must be included in an independent expert’s report to meet the reasonable
grounds requirements for prospective information and forward-looking statements.
VALMIN Code: Valuation Industry Standards
The preface to the VALMIN Code provides a set of fundamental principles (competence, materiality and
transparency), mandatory requirements and supporting recommendations accepted as representing good
professional practice to assist in the preparation of relevant public reports on any technical assessment or
valuation of mineral assets.
All the codes have requirements for the projects to be economically feasible before certification, however
existing funding for the project itself is not necessarily required to show reasonable grounds for prospective
information or forward-looking statements, such as production targets. But when production targets are
disclosed, or forecast financial information or income-based valuation based on a production target, the
offeror needs to be careful not to mislead investors about the company’s financial capacity to deliver those
results.
If further financing will be required to achieve the stated outcomes, this should be clearly disclosed, together
with an estimate of the amount needed. It is also appropriate to warn investors if this requirement for
further finance is likely to result in a dilution of the value of their existing shares, if this is the case.
27 Ivy Chen, ‘Resources and Reserve Reporting: ASIC Perspective’ (6 May 2014) 4.

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Even with these guidelines provided by ASIC and industry codes, the implementation still requires a
significant amount of interpretation. Through the various guidance documents, the following rules have
been established for direct use in disclosure documents:
I. Prospective financial information is generally acceptable if it projects no more than two years28;
II. Certified reserves (proved and probable categories) based on the ‘economically viable’
requirements in both JORC and PRMS29 provide a reasonable basis for production targets and
valuations, including discounted cash flow or net present value calculations, even though they
forecast out more than two years30;
III. Certified resources or exploration targets based solely or partly on 'historical estimates' or 'foreign
estimates' do not provide a reasonable basis for production targets or valuations because this
information is too conceptual, speculative and unreliable31 32.
i. As such, the portion of scoping studies which include production targets, forecast financial
information and income-based valuations cannot be included as the information is not based
on JORC certified reserve estimates33;
IV. The offeror can include aspirational statements, which should be limited to high-level vision
statements that do not refer, directly or by implication, to a production target or forecast financial
information34.
Financial Ratios
These can be useful to give retail investors a quick snapshot of the company’s financial position and
prospects, and are generally categorized as:
I. Financial stability
II. Market performance and pricing
III. Profitability
In the natural resources sector, these ratios can take on different meanings and other ratio take on
importance. ASIC encourages use of ratios to assist retail investors. Ratios that can be applied are those
29 ‘INFO 214: Mining and Resources - Forward-Looking Statements’, above n 25, 6.
30 ‘Regulatory Guide 111: Content of Expert Reports’ 98.
32 Chen, above n 27, 7.
34 Ibid 10.

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used in the industry, by brokers and analysts, that the company uses for targets or internal management
purposes, explain or benchmark performance over time, ratios included in loan covenants, explain financial
position35.
The disclosure document is required to explain how the ratios are calculated and the assumptions used36.
The document should also explain what the ratio means and define any financial terms used37.
There is a relatively standard set of financial ratios used to measure a company’s health and comparative
performance as well as in valuing a company. These broadly include:
Category Standard Ratios Resource Sector Ratio38
Liquidity
• Current Ratio
• Quick Ratio
• Cash Ratio
• Same
Operational
Performance
• Fixed-Asset Turnover
• Sales/Revenue Per Employee
• Operating Cycle
• Daily Production
• Reserves Replacement
• Production / Reserves (Reserves
Life)
• Operating Netback
Profitability
• Profit Margin Analysis
• Effective Tax Rate
• Return on Assets
• Return on Equity
• Return on Capital Employed
• Earnings / Unit of Commodity
• Cash / Unit of Commodity
• Market Cap. / Proved Reserves
• Enterprise Value / Reserves
• Enterprise Value / EBITDA
• Price / Cash Flow
Cash Flow
• Operating Cash Flow / Sales
• Free Cash Flow / Operating Cash
• Cash Flow Coverage
• Dividend Payout
• Same
Debt
• Debt/Equity
• Debt Ratio
• Same
35 ‘Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors’, above n 8, 115.
36 Ibid 116.
37 Ibid 118–119.
38 Alfonso Colombano and Alberto Colombano, Oil & Gas Company Analysis: Upstream, Midstream & Downstream
(2015) 59.

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• Capitalization
• Interest Coverage
• Cash Flow / Debt
Table 2: Common financial ratios used for company analysis.
3.6 Directors and Managers: Interests, Benefits and Related-Party Transactions
Does the executive and management team have the appropriate expertise and who will benefit?
The prospectus should explain who the key management are company directors are, and their appropriate
expertise and background. It should also explain the interests of people involved in the offer, including and
benefits they might receive, any related-party transactions, and especially how these might conflict with the
interests of investors.
3.7 The Offer
What is the effect, and terms and conditions of the offer?
Key Terms
The key terms specific to the offer include:
I. the consideration (price) payable for each security;
II. the offer period, including the prospectus date, any exposure period, and the expiry date;
III. the rights and liabilities attached to the security being offered;
IV. the type of security being offered;
V. whether the offer is for the issue of new securities or the sale of existing securities;
VI. any minimum or maximum subscription amounts;
VII. your allocation policy;
VIII. whether the securities will be listed;
IX. any underwriting arrangements;
X. the capital structure and any escrow arrangements;
XI. whether any ASIC relief or waivers from the listing rules of the relevant financial market have been
obtained or are being relied on; and
XII. any significant taxation implications.

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Proposed Use of Funds39
The use of raised funds is an important consideration for investors as it is often relevant to the company
prospects. Ideally, the funds used are for growth capital – that is, money used to growth the business and
provide investment returns, as opposed to other rationale for raising capital such as repaying debt,
management payouts or funding ongoing working capital due to a lack of value adding activity leading to
an erosion of cash in bank.
As discussed, resource companies have certain activities specific to each phase that have the potential to
create value. These activities are highlighted below in Table 2 as ‘Phase Specific Activities’. If the majority
of funds raised are to be used for other activities, such as working capital or unspecific acquisitions, the
investor should consider how the company will create value to provide returns, in the context of the
described business model.
Exploration Development Production
Phase
Specific
Activities
Geophysical surveys
Exploration drilling
Interpretation, analysis and
studies
Development drilling
Project infrastructure design
and construction
Production operations
Phase
Unspecific
Activities
(working capital)
(working capital)
(working capital)
Expected
Funding
Type
Equity Equity / Debt Cash
Table 3: Use of funds, resource companies
4 CROWD-SOURCED FUNDING
New legislation enabling crowd-sourced funding was introduced in Australia on 28 March 2017. The
legislation, titled ‘Corporations Amendment (Crowd-sourced Funding) Act 2017, is intended to ‘provide
finance for innovative business ideas and additional investment opportunities for retail investors, while
ensuring investors continue to have sufficient information to make an informed investment decision’40.
39 ‘Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors’, above n 8, 147–148.
40 ‘Corporations Amendment (Crowd-Sourced Funding) Bill 2016, Explanatory Memorandum’ 3.

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The scheme allows for up to $5 million to be raised from retail investors in Australia, by way of a maximum
investment of $10,000 per individual investor, with the provision of a new, reduced-scope disclosure
document, the crowd-source funding (CSF) offer document. The rationale for a diluted CSF offer
document is to reduce the costs of raising funds and administrative burden on the offeror. The CSF offeror
also benefits from reduced public company administration requirements, allowing companies to, again,
reduce costs and administrative burden.
4.1 ELIGIBILITY REQUIREMENTS FOR A CSF OFFER
In order to access the CSF regime to fundraise, the offering entity must meet the eligibility requirements,
which are as follows:
I. The offering entity must be public company, limited by shares, with principle place of business and
majority of directors in Australia;
II. The offering entity must satisfy the gross assets and turnover caps, which are:
i. Gross assets less than $25 million at time of CSF; and
ii. Annual revenue of less than $25 million at time of CSF.
III. The securities offered must be fully-paid ordinary shares;
IV. The offer must comply with the following issuer and offer caps:
i. Total amount raised must be less than $5 million in any 12-month period;
ii. This includes all amounts raised from small-scale personal offers and offers made by AFSL
holders, as these offers are to retail investors;
iii. This excludes all other types of non-disclosure raises, including sophisticated and
professional investors, as these offers are not to retail investors;
iv. The timing of inclusions or exclusions is based on when the offer was made, not when
funds were received.
V. Neither company nor any related party is a listed corporation;
VI. Neither the company nor any related party has a substantial purpose of investing in securities or
interests in other entities or managed investment schemes.
A company that has previously made an offer requiring disclosure is not excluded from making a CSF offer.
Similarly, a company making a CSF offer can also offer shares to investors for whom disclosure is not
required, for example via a private placement, in parallel with the CSF offer. If a company is not eligible
for a CSF offer, the company must provide a disclosure document unless an exemption in s708 of the Act
applies.

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4.2 PROCESS FOR MAKING A CSF OFFER
I. A CSF offer must be made in accordance with the CSF regime, in that:
i. The CSF offer must be made by a CSF eligible company publishing a CSF offer
document on the platform of a single CSF intermediary;
ii. Offer must be contained in, or published with, the CSF offer document;
iii. Applications and money must be handled by the intermediary ;
iv. Only one offer may be published at a time.
II. Any new CSF offer document must be prepared for CSF offers;
III. The offering entity must obtain consents of persons associated with offer documents prior to
its publication;
IV. The rules determining when a CSF offer is 'open' and 'closed' must be satisfied before an offer
can be 'complete', including:
i. The offer is open from when it is first published on the platform of the responsible
intermediary;
ii. The offer is closed by written notice from the intermediary on the offer platform that
the offer is closed, at the earliest of:
a. 3 months after the CSF offer is made;
b. When the offer document states the offer will close;
c. When the intermediary considers the offer to be fully closed;
d. When the company withdraws the offer; and
e. When the 'gatekeeping' obligations require the intermediary to remove the offer
document from its platform.
4.3 CORPORATE GOVERNANCE CONCESSIONS
A company that is registered as, or converts to, a public company limited by shares will be eligible for
corporate governance and reporting concessions. In order to qualify for the concessions, the offering
entity must:
I. Be eligible at end of each financial year; and
II. Successfully complete a CSF offer within 12 months of registration or conversion and have not
taken any fundraising offers requiring disclosure.
These concessions apply for up to five years from date of registration or conversion to public company,
and include:
I. Exemption from requirement to hold an Annual General Meeting (AGM) under usual rules;
II. The option to only provide financial reports to shareholders online; and

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III. If the offering entity has raised less than $1 million from all CSF offers, the offering entity is not
required to appoint auditor or have audited financial reports.
4.4 DISCLOSURE REQUIREMENTS
The CSF offer document is a reduced-scope version of the prospectus document, of which a template has
been provided by ASIC, the ‘CSF Offer Template’. A brief comparison between the prospectus disclosure
document requirements and the CSF offer document requirements is shown below:
Information Prospectus
CSF Offer
Document
Items Included in CSF Offer Document
Risk Warnings No Yes • General risk warning about CSF
Investment
Overview
Yes Partial • Company details
Business Model Yes Partial • Business description, model, strategy
Risks Yes Yes • Same as prospectus
Financial
Information
Yes Partial • Unaudited financial statements for previous
year, unless the company has not been
operating for 12-months
• Capital Structure
Management,
Interest and Related-
Party Transactions
Yes Partial • Identity and role
• Skills and experience
• Previous legal or disciplinary action
The Offer Yes Partial • Rights associated with shares on offer
• Offer period, minimum and maximum
subscription amounts under the offer
• Use of funds
Investor Rights No Yes • Cooling-off period
• Effect of reporting and corporate governance
concessions
• Effect of the communication facility on the
CSF intermediary’s platform
Table 4: CSF offer document content requirements.

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While the CSF offer document contains significantly less detail than a prospectus disclosure document, it
is still required to adhere to the general disclosure document requirements legislated in Chapter 6D of the
Act. This includes minimum information required, section 738J(2), ‘clear, concise and effective’
requirements, section 738K, and not be misleading or deceptive, section 738U.
ASIC guidance does not specifically give guidance on for resource companies, however it may be reasonable
to assume the same core tenants regarding forward-looking statement (requirement for reasonable basis,
industry codes and independent reports) are required in the CSF offer document.
However, given the reduced scope of a CSF offer document is intended to reduce the compliance costs
and administrative burden for early-stage companies, and the overall costs associated with fundraising, it
will be interesting to see how the role of expert’s reports and adherence to industry standards is
implemented in practice, given the costs of producing these documents can be large.
The role of crowd sourced funding has the potential to generate innovation, business activity and
subsequently economic growth. The trade-off is the risk that comes with investing in early stage companies,
which is taken by retail investors in this case and is somewhat mitigated through disclosure requirements
and minimized with the $10,000 investment cap. From a resource sector perspective, the resources and
reserves information and independent expert reports form the core of the requisite information to make
an informed investment decision – without these being firmly required, how the regime is adopted and
utilized by the industry in practice will be a space to watch.
5 DISCLOSURE EXCEPTIONS
While the general rule is that all offerings of new securities require an appropriate disclosure document,
there are some exceptions. These exceptions generally rely on:
I. The offer is not to a retail investor, and thus deemed financially and investment literate enough to
make an informed decision without regulation, or
II. The offer is guided by a personal and trusted relationship with someone that is deemed informed
and financially literate, or
III. The offer is of a small scale such that compilation of a disclosure document would be cost
prohibitive to the offeror and stymie entrepreneurship and innovation
These exceptions include:

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Small-Scale Offerings41
This is a personal offering of a body’s securities to both not more than 20 investors in any 12-month period,
and for an amount raised of not more than $2 million in any 12-month period.
The understood rationale for this exclusion is the personal nature of the transaction, with an emphasis on
‘personal offering’. The 20 investor and $2 million ceiling aims to keep the offer of a personal nature, and
s708(2) furthers this with limitations on who can be made this type of offer and how. The understood
rationale for this is to reduce administrative and cost burden of providing disclosure documentation while
relying on personal reputation and trust to guide the process in a fair and reasonable manner.
Sophisticated Investors42
This is an offer of securities where:
I. The minimum total amount paid or payable for the offered securities is at least $500,000 or;
II. The person taking up the offer has obtained a qualified accountant’s certificate stating they have
at least $2.5 million in assets or gross income of $250,000 for each of the last two financial years;
The understood rationale for this exclusion is that persons making this size of investment, or with the
described wealth metrics, is financially literate enough to make the relevant enquiries required to assess the
offer.
Professional Investors43
This is an offer of securities where the person:
I. Controls gross assets of at least $10 million, or;
II. Is a financial services licensee, or;
III. Meets other criteria of section 9 of the Corporations Act 2001 definition of professional investor;
The understood rationale for this exclusion is that persons controlling this value of assets, or has met the
criteria to obtain an Australian financial service license, is financially literate enough to make the relevant
enquiries required to assess the offer.
Existing Shareholders and Associated Persons44
This is an offer of securities where the person:
41 Ibid s708(1).
42 Ibid s708(8)-(10).
43 Ibid s708(11).
44 Ibid s708(12)-(14A).

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I. Is a senior manager of the body, or their spouse parent, child, brother or sister, or;
II. The body corporate is controlled by a person listed above, or;
III. The offer is to an existing shareholder through a bonus share plan or dividend reinvestment plan;
The understood rationale for this exclusion is that these persons are already involved with the issuing body
and will already be informed with company details, already hold securities with the body, or the securities
are being issued to align incentives with the body and employees as part of the employee’s remuneration.
Other
No Consideration45
The understood rationale for this exclusion is that an issue of shares for no consideration has little to no
financial risk exposure to retail investors.
Takeovers46
When the offer is made as part of another transaction that involves regulated disclosure and/or other
measures to provide protection for investors, including under a takeover bid or scheme.
Debentures47
When the offer is made by certain bodies, such as banks (for debentures only), exempt state bodies or
public authorities.
Rights Issues48
When an offer is made to existing investors and by an entity meeting continuous disclosure requirements,
the offeror can simply issue a cleansing statement confirming no material events have occurred without
issuing a disclosure document.
6 CONCLUSION
The legislative and regulatory regime for fundraising via the issuance of new securities in Australia provides
an array of options for resource companies of all sizes and stages. The general path forward for an equity
offer to retail investors is through the compilation and release of a disclosure document, in most cases a
45 Ibid s708(15)-(16).
46 Ibid s708(17)-(18).
47 Ibid s708(19)-(20).
48 Ibid S708AA.

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prospectus, which is regulated by ASIC with the main intention of ensuring retail investors receive all the
necessary information required to make a fully informed investment decision.
The disclosure requirements differ appropriately and according to the quantum of funds raised and which
investment group the funds are raised from, and the addition of CSF in the Australia fundraising landscape
affords significant promise for early stage and innovate companies including resources companies.
A brief summary of the fundraising and disclosure options is tabled below:
Disclosure Required Exceptions to Disclosure Rules
Standard CSF Small Scale Sophisticated
Investors
Via AFSL Professional
Investors
Eligibility
Rules: No
Yes & need
fundraising
platform
2:20:12
Offer
>$500,000 or
means test
No
Manages
>$10m
Fundraising
Cap:
None $5,000,000 $2,000,000 None None None
Minimum
Investment
None - - - - $500,000
Maximum
Investment
None $10,000 None None None None
Disclosure
Document:
Prospectus
CSF Offer
Doc.
No No No No
Table 5: Summary of fundraising options and disclosure requirements
From a resource industry perspective, the core investment information is contained in resources and
reserves estimates, and the requirements around standardizing this information using industry codes and
independent expert reports to form reasonable grounds is thorough and robust.
Likewise, forward-looking statements have been clarified through guidance from ASIC and clarity given on
only presenting financial forecasts that have been based on certified proved and probable reserves. The
legislation and subsequent regulatory guidance has done well to ensure the required useful information is
clearly presented to retail investors.
However, as with all investments, having the relevant information available is only the first step in the
investment decision. Analysis and interpretation is the second critical step in the investment decision.
Resources and reserves estimates can be included, risks identified, and use-of-funds information provided,
however to make a full assessment of a natural resources project much more information is required than
is generally included in the final disclosure document.

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BIBLIOGRAPHY
Austin, Robert and Ian M Ramsay, Ford, Austin & Ramsay’s Principles of Corporations Law (LexisNexis
Butterworths, 2013)
Chen, Ivy, ‘Resources and Reserve Reporting: ASIC Perspective’ (6 May 2014)
Colombano, Alfonso and Alberto Colombano, Oil & Gas Company Analysis: Upstream, Midstream &
Downstream (2015)
Nick Antill, Valuing oil and gas companies: a guide to the assessment and evaluation of assets, performance and prospects
(Woodhead Publishing, 2000)
ASC v McLeod [2000] WASCA
Corporations Act 2001 (Ch)
‘Corporations Amendment (Crowd-Sourced Funding) Bill 2016, Explanatory Memorandum’
‘INFO 214: Mining and Resources - Forward-Looking Statements’
‘Regulatory Guide 111: Content of Expert Reports’
‘Regulatory Guide 170: Prospective Financial Information’
‘Regulatory Guide 228: Prospectuses: Effective Disclosure for Retail Investors’
‘The JORC Code’
Yang, Louis et al, ‘Petroleum Resources Management System’

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