RE: El Limon/Colombia23 Jun 2022 14:39
Ok Soma/Para Resources
1. In the past Para paid the royalties quarterly in arrears. So if production is restarted in Q1 23 we could expect some royalty Mayish time 23 possibly June 23. How much will depend on when the plant is restarted and throughput.
2. Royalties should be quarterly thereafter.
3. When we did the deal the royalty was on the El Limon mine output which was processed through the El Limon plant. Para started processing local output from artisanals through the El Limon plant in addition to the product from the EL Limon.
4. RRR had a dispute with Para and it was resolved that the royalty was on the output from the El Limon mine and any other product put through the plant. https://www.investegate.co.uk/red-rock-resources--rrr-/rns/columbia-update/201701230707308143U/
5. The final position was and is, the royalty is due on the output from El Limon and any output from the plant.
6. This is the RNS on the settlement https://www.lse.co.uk/rns/RRR/colombia-update-1c01yulu4p686mt.html
7. This was the original royalty but it was changed. Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM. A 7% commission is payable to Ariel Partners on the transaction.
8. Currently the royalty is 3% on the first $2mil and then 0.5% on another $1mil. "Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly and as of 30 June 2017 USD31,841 of the USD2,000,000 has been paid to the Company. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM."
9. https://www.somagoldcorp.com/projects
10. So once up and running El Limon should process 200/400 tpd at a grade of about 12 g/t so we would be expecting in the range 84 oz/d day to 168 oz/day. On a full quarter at current prices that would be about $90k/$180k on a full quarter.
So it doesn't shoot the lights out but takes care of a fair bit of the cash burn. As with most of these things it is about marginality. At $90k a quarter it would take about 5.5 years for the first $2mil to be paid.
DYOR
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