Atico settles royalty dispute in Colombia
Atico Mining Corp. [ATY-TSXV, ATCMF-OTCQX] shares rallied Wednesday after the company said it has settled a dispute with the Colombian government over royalty payments related to its flagship El Roble copper-gold mine.
The company said it continues to work towards renewing the title to the El Roble property claims that are set to expire on January 23, 2022. If it is unable to obtain the new title on time, Atico said it will continue to operate after the expiration date while the process for title renewal continues.
Atico shares advanced on the news, rising 6.7% or $0.025 to 39.5 cents on volume of 135,370. The shares are currently trading in a 52-week range of 78 cents and 36.5 cents.
The 90%-owned El Roble mine is a high grade, underground copper and gold mine with nominal processing plant capacity of 1,000 tonnes per day, located in the Department of Choco in Columbia. Its commercial product is a copper-gold concentrate.
The company said the agreement with the National Mining Agency (NMA) in Colombia calls for the company to enter into a five-year payment plan, payable in biannual installments for a total amount of US$21.9 million, plus interest at a 6.0% annual rate. The total amount represents all outstanding royalty payments which the NMA has claimed through to the end of December, 2021, Atico said.
The parties have agreed to this interim arrangement until a final arbitration decision is made at the Center for Abitration and Conciliation at the Bogota Chamber of Commerce for the purposes of seeking an expedited resolution to the continuing claim, which is currently being resolved in the Colombian courts.
“As advised by its Colombian legal counsel, the company continues to believe that it has a strong case for a positive outcome in a coming arbitration,” Atico said in a press release.
The El Roble mine produced 4.43 million pounds of copper and 2,952 ounces of gold concentrate in the third quarter of 2021, a decrease of 20% for copper and an increase of 19% for gold compared to the third quarter of 2020.
The decrease in copper production was mainly driven by a lower head grade that was already anticipated in the mine plan for the quarter.
El Roble hosts proven and probable reserves of 1.00 million tonnes of grade 3.02% copper and 1.76 g/t gold, at a cut-grade of 1.3% copper equivalent and an effective date of September 30, 2020.
With a deposit open at depth and along strike, the 6,355-hectare project supports management’s objective of scaling-up production using newly discovered high-grade resources and El Roble’s existing infrastructure.
The company has said property wide-exploration has defined a productive contact and enclosing package of host rocks that extend 10 kilometres across the property. The entire strike length is marked by volcanogenic massive sulphide (VMS) indicators which have aided in identifying 15 prospective exploration targets for VMS mineralization within the land package.