Morien Resources Corp. announced that Kameron Collieries ULC – an affiliate of The Cline Group LLC and owner/operator of the Donkin coal mine in Cape Breton, Nova Scotia (USA) – has successfully arranged a coal offtake agreement with local power utility, Nova Scotia Power Inc., to supply a portion of Donkin coal production to Nova Scotia Power’s nearby Lingan Generating Station for the next several years. All other details regarding the agreement remain confidential.
Morien’s Donkin royalty
Morien owns a gross production royalty of 2% on the first 500 000 t of coal sales per calendar quarter and 4% on any coal sales from quarterly tonnage above 500 000 t (royalty). The royalty is payable to Morien on a quarterly basis over the anticipated 30 plus year mine life.
Production at Donkin commenced in 2Q17 and is expected to rise to the permitted production rate of 2.75 million sales tpy over a three to four year period. The majority of Donkin production is currently exported into the seaborne thermal and metallurgical coal markets. Using a broad range of coal pricing (CAN$55 - CAN$115/t), annual royalty payments could be in the order of CAN$4 million -CAN$8 million at full production. These values are only estimates based on 2Q18 assumptions made by Morien management, and would be achieved only when Donkin reaches permitted production levels. Actual results and royalties received, if any, may vary from those considered by Morien management. As a public company, Morien incurs general and administrative expenses which are necessary for the collection of the aforementioned royalties.
Read the article online at: https://www.worldcoal.com/coal/02082018/donkin-coal-mine-update/