Sandfire to oppose DeGrussa royalty rate
PERTH (miningweekly.com) - Copper miner Sandfire Resources was planning to fight a proposed royalty rate of 7% on its flagship DeGrussa copper/gold mine, in Western Australia.
The miner said this week that it had accepted an invitation from the Western Australian Minister of Mines and Petroleum to make a submission regarding the royalty rate, which should apply to the direct shipping ore (DSO) product produced at DeGrussa.
Current regulations state that a royalty rate of 2.5% would be applied to copper sold in metallic form, and a royalty rate of 5% would apply to copper sold as concentrate.
Sandfire has submitted that a royalty rate of 5% should apply to the DeGrussa DSO, which would see the company’s royalties totalling some A$12-million for the six months to December, and a further A$2-million for the last of the DSO sales in the first half of 2012.
However, The Department of Mines and Petroleum advised the company that a royalty rate of 7.5% had been applied to the DSO product, which meant that Sandfire would have to pay A$7-million more in royalties.
The Department of Mines and Petroleum has issued Sandfire with a notice claiming under-payment of royalties on the DSO, and has advised the company that the Minister ultimately had the right to forfeit the mining lease for nonpayment of royalties.
Sandfire MD Karl Simich said the company would make its submission on the matter on February 4, and added that the company was willing and able to pay its full royalty liability, once it has been appropriately determined.
“We are pleased that the Minister has invited us to make a submission,” Simich added.
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