Page 4-7 4.3 Royalties
In exchange for surface access/surface rights, GNI pays royalties to the landowners (a local family of farmers). The royalty agreement was originally executed on July 21, 1988, under Stratmin and subsequently amended on February 5, 1991, December 11, 2003, and May 14, 2012. SLR was able to review the two most recent amendments of the agreement.
In summary, the agreement states that GNI must pay the owners of the surface rights a royalty for each metric tonne of ore extracted and processed within the boundaries of mining lease BM- 788 (currently estimated by SLR to be a combined $0.48/t). The May 14, 2012, amendment makes clear that any ore extracted outside the BM-788 mining lease and processed within said mining lease is also subject to the per metric tonne royalty.
The royalty is paid monthly and reconciled quarterly alongside quarterly reporting submitted by GNI to the Qubec Ministry of Natural Resources, Wildlife, and Parks (Ministre des Forts, de la Faune et des Parcs, or MFFP). Monthly payments are based on the number of truck loads dumped at the Mine crusher, assuming a haul truck tonnage factor of 35 tonnes per haul truck.
The per metric tonne royalty amount is adjusted annually on January 1, based on the monthly Consumer Price Index published by Statistics Canada.
The agreement includes an indemnity amount payable to the landowners per tree felled to exploit the land for the purposes of mineral extraction within the mining lease. The amount is minor and SLR has assumed that this obligation is zero.
The agreement is valid until MERN confirms that the site is restored according to the approved rehabilitation (closure) plan.
On November 29, 2023, NGC announced an amended royalty agreement (the “Amended Royalty Agreement”), where NGC sold an additional royalty on gross sales revenue (“GRR”) from LDI to Sprott for US$2 million, in addition to the nine percent GRR from LDI previously sold to Sprott for US$4 million in April 2022. The additional GRR is for 4% of graphite concentrate sales revenue from LDI up until it has been paid on sales of 45,000 tonnes of graphite concentrate, after which it will be reduced to 0.25% for the remaining LOM at LDI.