Nunavut org set to benefit from lease, royalties agreements with Agnico Eagle
NTI signs first-ever production lease deal for its sub-surface Inuit-owned lands
Nunavut Tunngavik has signed its first-ever mineral production lease, allowing Agnico Eagle Mines to extract gold from Inuit-owned land near the Meadowbank mine in exchange for annual fees and royalties paid to NTI.
The production lease will cover AEM’s 144-hectare Vault deposit, an open-pit operation about nine kilometres northeast of Meadowbank’s processing plant which is roughly 110 kms north of Baker Lake.
“The production lease, which allows for commercial production, is the first that NTI has entered into with any company,” an NTI release said April 9
NTI president Cathy Towtongie said in the release that the agreement reflects a “clear commitment” set out in the organization’s December 1997 mining policy: “to support the development of mineral resources in Nunavut if there are significant long-term social and economic benefits for Inuit, and if it is consistent with protecting the eco-systemic integrity of Nunavut.”
According to an NTI mining policy brochure, a company must pay $100 per hectare for a production lease, at a minimum of $10,000. The lease has an initial term of 10 years that may be renewed for two additional five-year terms.
“Upon delivery of a feasibility study or start of production, the lease will be renewed for a further 21 years with the possibility of additional renewals,” the brochure says.
NTI can also earn royalties under the production lease: minerals produced are subject to a royalty of 12 per cent of net profits.
And companies can’t whittle those profit calculations down by counting losses in other areas.
“Available deductions against revenue are capped at 85 per cent of the gross revenue each year,” the brochure says, “thus assuring a minimum annual royalty to NTI of 1.8 per cent of the gross revenue.”
According to information gleaned from the Agnico Eagle website, the Vault deposit contains proven and probable reserves amounting to 855,000 ounces of gold. Gold this week has been trading at just over $1,300 per ounce.
But NTI stands to earn even more from Agnico Eagle.
On top of that first-ever production lease, NTI and AEM have signed 15 mineral exploration agreements which cover 110,241 hectares of Inuit-owned lands in the Kivalliq region.
Exploration agreements give a company exclusive mineral exploration rights to prescribed parcels of land. These agreements last for a maximum of 20 years.
Annual fees begin at $1 per hectare for the first year and rise to a maximum of $4 per hectare in later years. The NTI brochure states further that “annual work requirements” for exploration agreements begin at $4 per hectare, “and rise over time.”
The Vault project is expected to become the main mining operation for Meadowbank by 2015. The news release says Agnico Eagle has invested about US $41 million US to develop the open-pit deposit.