South32 sues IGO over Tropicana gold mine royalty claim
Australian diversified miner South32 has sued battery metal producer IGO for royalty payments worth A$122.1-million ($80.17-million) related to the Tropicana gold mine operations, the companies said on Thursday.
South32 is claiming a 1.5% soil sample royalty payment on the gross revenue that IGO earned from its interest in the mine from December 2014 until September 2023.
The claim to the royalties arises from a 2002 agreement, which granted exploration licences to IGO, and included the obligation to pay royalty if minerals were discovered from the soil samples, the battery metal producer said in a filing.
South32 asserts that the use of soil samples by IGO led to the discovery of gold in the areas to which IGO was granted licences in 2002, and its subsequent development of Tropicana mine renders it liable to pay the sample royalty.
IGO denied any liability to South32, adding that it has "thoroughly reviewed its obligations under the relevant agreements and maintains that the pre-conditions to the entitlement to be paid the Sample Royalty have not been satisfied".
The battery metals producer also clarified that it sold its 30% stake in Tropicana to Regis Resources and currently holds no stake in the project.
As part of its stake sale to Regis, IGO has an indemnity - insurance compensation for damages or loss - in its favour from Regis concerning any royalty liability to South32 from May 2021 onwards.
IGO estimates royalty claim's portion covered by Regis indemnity for period starting May 2021 until September 2023 would be up to A$40-million.
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