On 6 January 2012, the European Securities and Markets Authority (ESMA) published an open letter on the interpretation of its recommendations on the consistent implementation of the European Commission’s Regulation on Prospectuses (Recommendations) as they impact upon mineral companies. ESMA updated the Recommendations for mineral companies in March 2011 (see our April 2011 E-Bulletin article: ESMA issues updated guidance on prospectuses for mining and oil & gas companies).

The ESMA open letter notes that the materiality concept laid down by the Recommendations may not be precise enough and this may have led to different interpretations among Member States. It appears that these comments may have been triggered by the interpretation of the Recommendations in relation to cement companies.

ESMA confirms that cement companies should not be subject to the obligations detailed in paragraphs 132 and 133 of the Recommendations until a final interpretation on the materiality concept has been elaborated and approved, which should happen later this year.

EMSA also stated that, “if a company is excluded from the materiality concept assessment, it should include as a risk factor, if applicable, the fact that the current level of resources and reserves could create a risk to the company.”

View the ESMA letter (6 page pdf).

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