Sabina, KIA reach royalty-sharing, land use deals
Money starts to flow into a Kitikmeot Inuit Association trust
CAMBRIDGE BAY — The Kitikmeot Inuit Association got a welcome shot in the arm with today’s announcement that Sabina Gold & Silver Corp. will give the organization $1.4 million to kick off a new trust fund for Inuit in the Kitikmeot region.
Sabina and the KIA announced Oct. 4 that they have entered into a Memorandum of Understanding to create a development trust.
To kick off the trust, Sabina will pay about $1.4 million to an existing KIA fund that supports development and community initiatives in the Kitikmeot.
The trust will provide “short and long term benefits to the Inuit of the Kitikmeot region,” where Sabina’s Nunavut properties are located.
The trust money will go to KIA development projects, training and education as well as to “infrastructure projects that will serve to support sustainable economic development in a currently struggling region.”
“The development of the trust is indicative of our investment in the people and sustainability of the Kitikmeot,” said Sabina chief executive officer and president Tony Walsh in an Oct. 4 news release.
“We view this trust as a vehicle to cultivate long term relationships, train our future employees and support infrastructure needs and growth. We realize a need to start now to prepare for our future as a mid-tier gold producer and establish win-win relationships to prosper. We are proud to be one of the first companies in Nunavut to create such a trust.”
When it’s finalized, the trust will:
• receive three per cent of Sabina’s net proceeds from the silver royalty retained by Sabina on the Hackett River and Wishbone properties sold to Xstrata Canada Corp.;
• be run by a maximum of six trustees of which a majority would be KIA appointees with at least one Sabina appointee;
• see money contributed to the trust allocated by the trustees “to initiatives that provide benefits to the Kitikmeot region.” A portion of the trust money would be retained for allocation after mine or project closure; and,
• possibly receive payments in the form of shares ;
Sabina and the KIA also agreed that it would be mutually beneficial to enter into long-term Inuit land use agreements for the Back River and Sabina’s remaining Wishbone properties.
Key provisions of a separate MOU include an initial seven-year term for exploration activities with a provision to extend that for an additional two years.
Sabina announced in June that it planned to sell its 100-per-cent owned silver-rich Hackett River property and other claims to Xstrata.
Hackett River is considered to be one of the largest undeveloped silver deposits in the world.
Sabina retains significant silver royalty on these properties going to Xstrata, the world’s largest zinc producer, which enters the silver market with its acquisition of Sabina’s properties.
Sabina receives a silver production royalty equal to 22.5 per cent of the first 190 million ounces of silver produced at Hackett River and other properties and 12.5 cent of silver from these properties afterwards.
Under the terms of the agreement with Sabina, Xstrata pays $50 million in cash for the properties, which are located 75 kilometres southwest of Bathurst Inlet.
Now that the two MOUs for the land-use and royalty sharing have been signed, Sabina and Xstrata can finish off the sale of the properties.
And the KIA will enter into discussions with Xstrata on an Inuit Impact and Benefits Agreement, KIA president Charlie Evalik said in a recent interview.
Sabina now plans to focus its energies on the Back River gold project as well as its remaining gold-rich Wishbone claims, southeast of Hackett River.