Question QUESTION: I am negotiating to sub-lease a small mining operation. I am told by some to never give Gross Royalties. It makes sense. So if I give a Net % what should that number be?
QUESTION: What % or what is the amount that mining companies, or any type of company for that matter, select for re-investing in their future??
Answer RICK,
QUESTION 1
I am told by some to never give Gross Royalties. It makes sense. So if I give a Net % what should that number be?
The royalities varies with the nature of mining
-IS IT COAL / GOLD / DIAMOND / IRON / ETC.
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IF IT IS COAL
-what is the output tonnes of coal.
IF IT IS GOLD
-what is the output kilos of gold
IF IT IS DIAMOND
-what is the carat output
IF IT IS IRON ORE
-what is the iron ore tonnes output
THE VALUE OF OUTPUT VARIES WITH THE
COMMODITIES PRICE IN THE MARKET.
HENCE, TO WORK OUT THE ROYALTY ON
NET PROFIT IS ALMOST IMPOSSIBLE,
AS IT CARRIES HIGH RISK.
In most cases, the royalty is paid on the
net ore/ coal tonnes----as a % of the total value.
THESE VARIES FROM 3% TO 6% ON THE
NET VOLUME OUTPUT.
