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Coal Royalty Agreement

Coal sold for export from the DEF mine is subject to a gross value royalty decision. As part of this decision, the Commissioner determined that the gross value per tonne was 175 $US. In most jurisdictions, license fees are not interested in real estate, although some jurisdictions allow the holder to register proof of participation in a license against mining title or cadastre. A royalty is usually set by a contract between the licensee and the owner of the property. In some jurisdictions, royalties are set by mining legislation or the mining code and are granted to the government of that country or another relevant body. As a general rule, a licensee has no responsibility or obligation to provide additional funds for any purpose, including operating or capital costs or environmental or recovery commitments (but not limited). The unique characteristics of a royalty allow governments to gain a commercial advantage in the upward trend of the mining project or to grant landowners an increase in development or operating costs. During a refund period, XYZ sells a total of 5,000 tonnes of coal to an independent party, GHI Pty Ltd (GHI), for AUD 110 per tonne. A decision on gross licence fees does not apply to these sales. Although royalties are often used in the mining industry, there is no standard form structure that should accept a royalty. The mechanisms of a fee must be defined in an agreement between the parties and the wording of such provisions is very different. Even if royalties are set by mining law, additional rules are often needed to properly explain how they are calculated in practice.

However, it is possible to divide royalties into four general headings: Net Smelter Return (NSR) or gross income royalties A common option for precious metals, RNS or gross receipt royalties are based on the production value or the net proceeds received from a shack or refinery or a buyer. Under the terms of the licence agreement, revenues collected by the shack, refinery or purchaser may be subject to deduction rights for insurance, transportation, refining and smelting costs; sampling and examination; or marketing. An NSR royalty provides the licensee with a cash flow free of operating or capital costs and environmental commitments. As a result, rates are generally lower than those of profit-based royalties. During a period of return, XYZ Pty Ltd enters into the following transactions concerning the coal extracted from its operation. To protect against the risk of insolvency or change of ownership of assets, a licensee may insist on the guarantee. The extent of the security package depends on the date of the investment and the ability of other creditors to have a security right in the major mining facilities. In order for the guarantee to protect the licensee in the event of the mine operator`s bankruptcy, the licensee and the mining operator must agree on a lump sum of damages.

The licensee may use it in connection with the mining operator`s insolvency proceedings, but may not protect against the risk that the mining operator, which is typically structured as a special purpose vehicle, will transfer the mining assets in breach of obligations not to do so. This would leave the licensee with a right against a low-fortune company. Licensees may therefore require a registered guarantee for certain assets or, if available, a solvent guarantee. . . .

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