DBS: Increase in mining royalties: US$17 million expected from IAMGOLD Essakane

2023-11-13 07:40:41

• Increase in mining royalties: US$17 million expected from IAMGOLD Essakane

On October 27, 2023, the Burkinabe government issued a decree which increased the royalty rate on spot transactions above $1,500 per ounce. A decision that would have an impact on IAMGOLD Corp. (IMG.TO) and Endeavor Mining plc (EDV.TO)., according to the National Bank of Canada, in a press release published on October 31, 2023, on the stock exchange. Royalty rates will reportedly increase to 7% if spot gold prices rise above US$2,000 per ounce. The minimum royalty rate was set at 6% for prices above USD 1,500 per ounce, up from 5% previously, and at 6.5% if prices reach between USD 1,700 and USD 2,000 per ounce.

The bank said the change would impact IAMGOLD, whose Essakane mine represents 10.2% of the company’s mining asset value.

The National Bank estimated that the royalty changes would result in an increase in royalty payments of US$17 million in 2024. Meanwhile, the bank said the impact on Endeavor, owner of the Houndé and Mana mines in Burkina Faso, was “relatively weak”.

The bank added that the company was satisfied with the dialogue and consultation throughout the process.

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