A BC Court of Appeal tribunal has overturned a lower court ruling on royalties from the Mount Milligan gold and copper mine.
In a Jan. 13 decision, written by Justice Susan Griffin, the province’s top court allowed the appeal from royalty holder H.R.S. Resources Corporation, but rejected the cross-appeal from operator and royalty payer Thompson Creek Metals Co. Inc. (TCM).
“The (BC Supreme Court) judge erred in his treatment of the expert accounting evidence, allowing it to overwhelm the terms of the royalty agreement,” the decision said. “The reference to generally accepted accounting principles in the agreement did not incorporate the manner in which TCM reported revenues on its financial statements for a series of transactions.”
Griffin said the judge erred by concluding that TCM could lump a series of transactions into one for the sake of paying royalties and “discount to zero” the revenue from actual sales of mineral products.
Under the appeal court decision, TCM must pay H.R.S. royalties based on revenues from sales of mine products to the third-party Offtakers.
In 1986, TCM predecessor Lincoln Resources Inc. acquired the claims to Mount Milligan from Richard Haslinger Sr., the predecessor of H.R.S. Haslinger was promised a two per cent production royalty. Another TCM predecessor, Terrane Metals Corp., reached a streaming agreement in 2010 with Royal Gold, which provided US$781.5 million cash in return for TCM’s promise to refine gold for Royal Gold at the below-market fixed price of $435 per ounce.
Mount Milligan Mine is 155 kilometres northwest of Prince George. Commercial production began in 2014 and royalty payments were due in 2016.
According to Centerra Gold, which acquired TCM in 2016, there are 4.4 million ounces of gold reserves and 1.7 billion pounds of copper reserves. The open pit mine is expected to remain active until 2045.
