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Tuesday 7 August 2018

18-228MR Gold Mountain pays penalty and accepts conditions following its alleged continuous disclosure breach

ASX-listed company Gold Mountain Limited (Gold Mountain) has paid a penalty of $33,000 after ASIC issued an infringement notice for an alleged failure by Gold Mountain to comply with its continuous disclosure obligations. 

ASIC has also restricted Gold Mountain from eligibility to issue a reduced-content prospectus until 20 July 2019. The decision means Gold Mountain will not be able to rely on reduced-disclosure rules, but instead must issue a full prospectus if it wishes to raise funds from retail investors. 

The penalty and restrictions followed an investigation into matters arising from an announcement on 7 August 2017 by Gold Mountain to ASX. In that announcement Gold Mountain acknowledged and retracted public statements made on 27 July 2017 that did not comply with the JORC Code.

Compliance with the standards set out in the JORC Code is integral to a mining company’s meeting its reporting and disclosure obligations and ensuring that public reports have a reasonable basis. 

The 27 July 2017 statements implied that Gold Mountain had established to the standard of reliability required by the JORC Code that:

  1. The mineralisation of their target drilling zone would be 281,350 ounces of gold;
  2. The gold in that target zone was capable of eventual economic extraction; and
  3. There was a reasonable basis for calculating $337 million in future revenues.

Those statements were not compliant with the code, as they were not based on the work of a suitably qualified and experienced person. 

ASIC alleges that Gold Mountain should have made the retraction on 27 July 2017. 

ASIC Commissioner Cathie Armour said, ‘Listed companies must immediately notify the ASX of information that a reasonable person would expect to have a material effect on the price or value of the company's securities. This obligation also applies to correcting misinformation of which the company is aware and publicly available.’ 


Gold Mountain’s principal activities are the acquisition, exploration and development of prospective areas for gold and other resources and minerals.

Mining entities are subject to additional reporting and disclosure requirements set by the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves Code 2012 (known as the JORC Code). The code provides an internationally recognised standard to help assess and compare forward-looking statements such as production targets and revenue forecasts, made by different companies. 

Infringement Notice

Details of the infringement notice will be published in the ASIC Gazette.

Section 674(2) of the Corporations Act and ASX Listing Rule 3.1 details listed companies’ continuous disclosure obligations. For listed mining entities, the requirements of the JORC Code are incorporated through ASX Listing Rule 5.6. 

The Corporations Act provides that compliance with infringement notices is not an admission of guilt or liability. 

Gold Mountain is not, by reason of its compliance with the notice, regarded as having contravened section 674(2) of the Corporations Act. 

Reduced content prospectuses

Under the law, a listed company can offer securities using a reduced content prospectus containing information relating only to the particular offer itself.

ASIC has the power to prevent a company from relying on these rules if it is satisfied that the company has breached its continuous disclosure obligations. 

On this basis ASIC made a determination under section 713(6) of the Corporations Act, excluding Gold Mountain from relying on section 713 of the Act for 12 months, until 20 July 2019.

Last updated: 02/01/2019 04:38