Gold mine feasibility study disclosure in Australia: Determinants and implications

This study investigates disclosure practices for gold development companies in their feasibility studies. The information environment around feasibility studies released by developmental stage enterprises in the Australian gold mining industry is characterised by little in the way of disclosure guidance or rules. This contrasts with Canadian disclosure requirements which are highly prescriptive. Using a sample of 85 Australian gold feasibility studies, we develop a new voluntary disclosure index and consider three problems. First, we examine the association between levels of voluntary disclosure in the feasibility study and external involvement. Second, we consider whether levels of voluntary disclosure are associated with successful debt financing. Third, we analyse the relationship between levels of voluntary disclosure and a successful project outcome. Voluntary disclosure is found to be driven by the presence of an external feasibility manager and the number of external consultants named in the feasibility release. Our evidence also finds that voluntary disclosure levels are positively related to debt financing availability and project success, suggesting voluntary disclosure levels are a useful signal of project quality.

► This study develops a new voluntary disclosure index for mining companies.
► A model is developed to predict voluntary disclosure in gold feasibility studies.
► The index is useful in predicting the provision of future debt finance for gold projects.
► The index is useful in predicting project outcome.
► The results serve to validate the index in a high information asymmetry setting.