Saskatchewan announces diamond royalty system

by eyetee | June 21, 2010 12:00 am

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There’s no diamond production in Saskatchewan just yet, but the provincial government is laying the foundation for it.

Following a pre-feasibility study by Saskatchewan-based Shore Gold Inc., Energy and Resources Minister Bill Boyd introduced a new royalty system for future diamond mining. According to the ministry, the province is home to the largest diamond-bearing kimberlite field in the world.

“We want to ensure any Saskatchewan mines are highly competitive with other mines in Canada and around the world,” Boyd said. “We believe our royalty system addresses that, and will give us one of the most competitive diamond royalty regimes in the country. Our goal is to ensure Saskatchewan continues to attract exploration spending and potential future development.”

The royalty system features:

• a one per cent base royalty on the value of mine production, with an initial five-year holiday;
• a stepped royalty rate on profits to a maximum of 10 per cent once capital investment is fully recovered; and
• full-cost recognition, including a 100 per cent depreciation rate of capital costs and a processing allowance.

The ministry says the royalty system takes mine development costs into account, which will likely be higher compared to Canada’s other mines. Boyd reiterated the economic benefit a diamond mine could bring to the province.

“This would be a major undertaking for central Saskatchewan,” he added. “There would be positive impact for many years in Prince Albert and surrounding area.”

The province developed the system in consultation with the mining industry.

Source URL: https://www.jewellerybusiness.com/news/saskatchewan-announces-diamond-royalty-system/

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