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2.5¢ kalium lakes limited

My point was the royalties were always going to be higher than...

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sevo

7,080 Posts.

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30/11/21

19:57

Post #: 57975681
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Originally posted by Freeman02: ↑

"Fair return for the state". Decreasing rental rates and increasing royalty rates has given WA a higher return than original mining lease rates.

Kalium owns 1800km2 of mining leases = 180,000 hectares. Original mining lease rate was $18.70 per hectare. This equates to $3,366,000 Kalium would have paid to WA every year. The rate was reduced to $4.34 and thus Kalium pays $835,000 a year. Hence WA foregoed $2,530,800 of revenue.

Now with 5 per cent royalties, Kalium's profit margins have decreased by $40. 120,000 x 40 = $4,800,000 to WA each year during production and even more when production capacity expands in the future. WA have profited around $2.3 million more. If your point was to say the WA Government justified its hike in royalties to compensate for SOP companies enjoying some of the "lowest" rental rates in the mining sector, the benefits of such decision have all accrued to the Government.

Arguably, a 0.73 cent royalty was a unfair return to the state in the first place, but a 5 per cent royalty I think is overdoing it. At this point hopefully continuined talks with WA can bring it down to 2.5-3.75 per cent. That would be more reasonable

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My point was the royalties were always going to be higher than 73 cents once the rents were reduced.

KLL Price at posting: 17.5¢ Sentiment: None Disclosure: Not Held
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