TSX-listed Altius Minerals and Nasdaq-listed Royal Gold have entered into an agreement with Vale Canada to settle litigation related to the calculation of the royalty in respect of all concentrates produced from the Voisey’s Bay mine, in Newfoundland and Labrador.

The Voisey’s Bay 3% net smelter return royalty is directly owned by the Labrador Nickel Royalty partnership, of which Altius is a 10% owner and a subsidiary of Royal Gold is a 90% owner.

The parties agreed to a new method for calculating the royalty regarding concentrates processed at Vale’s Long Harbour processing plant, which will be effective for all Voisey’s Bay mine production after April 1 this year.

Altius expects the 3% royalty rate will apply to about 50% of the gross metal value in the concentrates at existing nickel, copper and cobalt prices, after accounting for acceptable processing and marketing-related charges and metal recoveries.

As those metal prices rise or fall, the percentage of gross metal value in the concentrates applicable to the royalty would correspondingly increase or decrease.

“We are pleased to have reached this settlement, which results in the continuation of royalty payments and provides clarity on how these will be calculated throughout the future of operations at the world-class Voisey’s Bay nickel/copper/cobalt mine.

“The new calculation methodology maintains the estimated future value of the royalty within a range that is consistent with estimates and assumptions we would have made before the dispute issues emerged,” said Altius president and CEO Brian Dalton.

Royal Gold president and CEO Tony Jensen commented the company is pleased to have found common ground with Vale to resolve the Voisey’s Bay mine royalty calculation concerns.

“This settlement resolves all claims by agreeing on a prospective calculation and secures our participation in the underground mine life extension. The Voisey’s Bay royalty has only paid the Labrador Nickel Royalty partnership about $1-million since the first calendar quarter of 2016, but we now expect a steady quarterly flow of revenue from this world class mine once again.”

Jensen added the next payment of about $2.2-million, relating to second calendar quarter production, is expected to be received in October. The third calendar quarter royalty payment, and the royalty payment for each quarter thereafter, is due 45 days after quarter end.

The Long Harbour processing plant is designed to produce 50 000 t/y of finished nickel, once it ramps up to full production. The plant is currently producing at a yearly rate of about 35 600 t. In the next few years, Voisey’s Bay concentrate will provide 100% of the feed to the processing plant, but, over time, other sources of concentrate will be added.

On June 11, Vale announced it will start a $1.7-billion development of an underground mine and associated facilities, which is expected to extend the Voisey’s Bay mine life until 2034.

Vale expects the underground mine to begin production in 2021 and to ramp up over four years, while the current openpit mining in the Ovoid deposit is expected to continue until 2022.

Vale estimates Voisey’s Bay mineral reserves at 32.4-million tonnes, with a nickel grade of 2.13%, a copper grade of 0.96%, and a cobalt grade of 0.13%.