RE: RE: RE: NPV implications of recent newsThanks for pointing that out JM. I blame Wiki for the confusion, as I find their definition somewhat ambiguous:-
https://en.wikipedia.org/wiki/Net_smelter_return
https://wiki.answers.com/Q/How_is_net_smelter_royalty_determined
This link validates what you are saying:-
https://www.pincock.com/perspectives/Issue63-Royalties.pdf
"NSR royalty is based on the gross revenue received by the mine less costs incurred subsequent to concentrating, which includes smelting, refining, marketing, transportation, and insurance. Usually no provision is made for deducting direct mine operating costs. The NSR royalty is simple and straight forward
to administer."
"Based on previous work conducted by the author, one can equate the economic tradeoffs between NSR royalties and net proceeds royalties. The results of this work indicate that, based on after-tax net present value analysis, one percentage point of NSR is equivalent to 3.5 percentage points of net proceeds royalty. Results further indicate that the equivalency is consistent regardless of size or type of mine. If the landowner desires to indulge in the higher-risk potential of the project yet maintain the simplicity of the NSR royalty, one could do so by applying the equivalency guideline."