Although no companies are mining diamonds just yet, the province of Saskatchewan is introducing a new royalty system for diamond miners in preparation for that day.
Saskatchewan Energy and Resources spokesman Roy Schneider says the progress that’s been made by companies like Shore Gold (SGF-T) prompted the province to figure out a policy.
“We are cautiously optimistic that we will see a mine at some point in the near future,” Scheider says. “One of the things that helps them with their planning is that they know the financial parameters that they’ll have to deal with so this is a way of given it a little nudge in the right direction.”
Under the new regime, there will be a 1% base royalty on the value of mien production with an initial five year holiday, a stepped up royalty rate on profits to a maximum of 10% once capital investment is fully recovered, and full-cost recognition including a 100% depreciation rate of capital costs and a processing allowance.
Shore Gold’s Star-Orion project is the most advanced in the province. The company is currently working on a feasibility study.
“Shore considers the royalty system fair and compliments the government on the consultative approach that they used to develop the royalty parameters,” the company said in a statement.
The government notes that development costs will likely be high compared to other jurisdictions but says this system respects this and strikes a balance between providing a positive climate for gorwith and a fair return to the province.
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