2 mining firms mull stock market listing

Two mining firms have expressed interest in listing their shares on the bourse to raise funds for their planned expansion, according to Philippine Stock Exchange (PSE) president Francis Lim.

Although Lim declined to identify the mining firms, he said the bourse has already held talks with the respective lawyers of the two companies regarding the planned initial public offering (IPO) of their shares.

In the doldrums for over a decade, the mining sector is slowly picking up due to a Supreme Court ruling in December that recognized the constitutionality of the 1995 Mining Act, thus allowing full foreign ownership of large-scale mining operations in the country.

The PSE earlier said it is considering waiving the three-year track record requirement for mining companies intending to offer their shares to the public as part of efforts to promote more IPOs and boost trading activity. In place of the track record requirement, the PSE is looking at adopting the so-called Joint Ore Reserves Committee (JORC) Code as an option to determine a mining company’s profitability.

The proposal to adopt the JORC Code has already been brought up last year but never took off due to a sluggish market then.

The JORC Code is utilized and accepted in Australasia (Australia, New Zealand, and neighboring islands in the South Pacific). It has been used both as an internal reporting standard by a number of major international mining companies and as a template for countries in the process of developing or revising their own reporting documents, including the United States of America, Canada, South Africa and the United Kingdom/Europe.

The purpose of the JORC Code is to provide a minimum standard for reporting of exploration results, mineral resources and ore reserves in Australasia, and to ensure that public reports on these matters contain all the information which investors and their advisers would reasonably require for the purpose of making a balanced judgment regarding the results and estimates being reported.

Lim said the exchange considerably benefited from the mining boom of the 1960’s. From a market share of 19.9 percent in 1961, the mining sector surged to 78.7 percent of the market’s trading value in seven years.

After 30 years, however, the industry suffered a long slump brought about by a series of political conflicts, economic frailties and global downtrend.

In 1993, the mining sector only contributed a mere 5.3 percent to the stock market’s value and dropped even more to 0.2 percent in 2002.