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Altius and Vale Canada reach settlement over Voisey Bay royalties dispute

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Global Mining Review,

Altius Minerals Corp. has announced that it and Royal Gold Inc. have entered into an agreement with Vale Canada Ltd and certain of its subsidiaries to comprehensively settle litigation related to calculation of the royalty in respect of all concentrates produced from the Voisey’s Bay mine in Newfoundland and Labrador, Canada.

The Voisey’s Bay 3% net smelter return royalty is directly owned by the Labrador Nickel Royalty Limited Partnership (LNRLP), of which Altius is a 10% owner. The remaining 90% interest in LNRLP is owned by a subsidiary of Royal Gold.

The parties agreed to a new method for calculating the royalty in respect of concentrates processed prospectively at Vale’s Long Harbour Processing Plant (LHPP), which will be effective for all Voisey’s Bay mine production after 1 April 2018. The specific terms of the settlement are confidential, but Altius expects the 3% royalty rate will apply to approximately 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.

Brian Dalton, Altius President and CEO, commented: “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.”

LHPP is designed to produce 50 000 tpy of finished nickel once it ramps up to full production. On 11 June 2018, Vale announced it will commence a CAN$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 open pit mining in the Ovoid deposit is expected to continue until 2022. Vale estimates Voisey's Bay mineral reserves at 32.4 million t with a nickel grade of 2.13%, a copper grade of 0.96%, and a cobalt grade of 0.13% as of 31 December 2017.

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Copper mining news Nickel mining news Canadian mining news