Wednesday, 16 January 2013 09:44
Sandfire Resources is making a submission to the Western Australian Minister for Mines and Petroleum in a bid to reduce its royalties from direct shipping ore sold from its DeGrussa copper-gold mine.
The regulations state that a royalty rate of 2.5 per cent will be applied to copper sold in metallic form and a royalty rate of 5 per cent will be applied to copper sold as concentrate but the company has been informed it will pay 7.5 per cent for its DSO.
Sandfire believes it should pay 5 per cent apply to its DSO which has been sold as concentrate.
Based on this rate, Sandfire expects to pay DSO royalties totalling around $12 million for the last half of 2012 and around a further $2 million for the last of the DSO sales in the first half of this year. A 7.5 per cent rate would cost the company an extra $7.5 million.
The Department of Mines has issued Sandfire with a notice claiming under-payment of royalties on the DSO and warned the company the minister ultimately has the right to forfeit the mining lease for non-payment of royalties but Sandfire is allowed to make a submission to argue its case.
Sandfire managing director Karl Simich said the company is 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,” Mr Simich said.
“We look forward to pursuing it through the proper channels in order to arrive at the correct conclusion.”
A royalty rate of 5 per cent will apply to concentrate produced from the DeGrussa concentrator, which will account for the vast majority of the project’s production over the mine life.
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