Mineral resources are the most important asset of a mining company and form the basis of its economic value. The communication of mineral resource estimates is essential for investors to make informed decisions. International reporting standards have been developed to improve the governance of mineral resources and to ensure that the information is communicated in such a way that it could be understood by interested stakeholders. In spite of this, many users still do not fully understand its potential impact on shareholder value and investor confidence. The basis of this study was to explore the relationship between mineral resource reporting, shareholder value and investor confidence.
This study was exploratory in nature and followed a quantitative research design. It was conducted on data from mining companies listed in Australia, Canada, England and South Africa. The time period selected was after the perceived end of the global financial crisis. Multiple linear regression and independent t-test analyses were employed to explore the relationship between mineral resource reporting, shareholder value and investor confidence.
This study found a significant relationship between mineral resource reporting and shareholder value for gold, non-gold and small-cap companies. The results further revealed a significant relationship between mineral resource reporting and investor confidence for large-cap companies. It further confirmed that mineral resource reporting is value relevant and found that the information contained therein is not consistently interpreted when compared to published research. Several new interpretations of mineral resource reporting information were identified as being statistically significant.