(IDEX Online) – The government of Greenland has awarded True North Gems Inc. an exclusive 30-year mining license for the Aappaluttoq ruby deposit in Greenland.

 

“Today marks the culmination of our exploration, delineation and major permitting activity. Since 2004 we have worked hard to plan a sustainable mining operation that showcases the economic opportunities for our shareholders and the people of Greenland,” said Nicholas Houghton, President and Chief Executive Officer.

 

“This also heralds the beginning of our transformation from an exploration company to a producer. It will enable us to showcase and deliver a new supply of rubies and pink sapphires to the worldwide gemstone industry.”

 

The Aappaluttoq ruby deposit will be an open pit development, and over its initial nine-year mine life it will directly create up to 80 new jobs in Greenland; these will range from mining operations at the Aappaluttoq site to gemstone grading in the Nuuk Processing Facility. The project will also act as a stimulus for other investment in both secondary and supporting industries.

 

Significant geological exploration and engineering has taken place over the last decade, with True North working with local communities and using local support companies. The approximate $23 million investment by LNS-Greenland announced last August forms a strategic partnership that significantly reduces the company’s financial requirements in exchange for 20 percent of the project.

 

Final technical work was subsequently completed, and the company entered the formal Exploitation Permitting process in mid-2011, successfully completing public hearings in the fall of 2013.

 

The granting of the mining license is the catalyst for future development, the firm said. The company has been engaged in initial Impact Benefit Agreement (IBA) negotiations and continues to finalize the mine environmental monitoring and subsequent closure plan.

 

Under the mining license, which will become officially effective on March 10, True North has agreed to pay a gross revenue royalty to the government of Greenland of 5.5 percent on all sales of rubies and pink sapphires exploited from the Aappaluttoq ruby deposit. The gross royalty will be payable in each calendar year when the total aggregate paid by True North in corporate taxes, withholding taxes and “surplus royalty” are less than the calculated gross royalty in that calendar year, such that the government receives a minimum amount.

 

The surplus royalty is calculated at a rate of 15 percent on earnings before financial items and tax on any profit in any calendar year to the extent the annual profit exceeds the profit margin percentage of 40 percent.

The new fiscal agreement will have no adverse impact on the net present value of the project.