Fourteen years ago, in a Northern Miner article titled “Vendors, operators battle over NPI royalties” (T.N.M., July 29/91), Virginia Heffernan wrote on the dispute between the net-profit-interest (NPI) royalty-holders at the Holt-McDermott mine and American Barrick Resources, the operator. Heffernan stated: “This type of royalty, though popular among operators, has been the source of heated disputes between many a vendor and producer,” and went on to quote a story from The Northern Miner Magazine (June 1987) on NPI disputes by lawyer Karl Harries, who said “it is, however, open to abuse by a disreputable operator.”
In 2005, the dispute goes on.
I am a holder of a net profit interest royalty in Newmont’s Holloway mine, and Newmont has informed me that, as far as NPI royalty holders are concerned, the mine will never show a profit.
The Holloway mine opened in October 1996 as a much-lauded joint venture and is slated to operate until 2008. The mine is expected to produce about 1 million ounces of gold in total.
By publishing this letter, you will be doing a service to future prospectors and vendors of mining properties. They are warned never to accept a net profit interest, no matter how good the offer appears. I’m sure the prospector who discovered and staked these claims in the 1920s, J. Russell Cryderman, is turning over in his grave.
Don Cahill,
St. Catharines, Ont.
Editor’s note: It’s worth mentioning that Franco-Nevada Mining, which merged with Newmont Mining in 2002, got its big break several decades ago by negotiating both a 4% NSR and a 5% NPI at American Barrick’s rich Goldstrike property in Nevada.
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