In addresses to the Denver Gold Forum in the US, the world’s biggest meeting of gold producers and investors, WA gold miners will have to share the news of the sudden and surprise demand by the Government to increase the gold royalty by 50 per cent.
The Chamber of Minerals and Energy of Western Australia (CME) Chief Executive Officer Reg Howard-Smith said instead of the industry being able to highlight the quality of its West Australian assets and the benefits of access to a highly skilled local workforce, attention at the Forum was likely to focus on the negative impact of the increased gold royalty .
“At a time when the global gold sector is facing rising operating costs, the last thing companies, their staff and investors need is a crippling increase in the royalty regime,” Mr Howard-Smith said.
“Treasurer Ben Wyatt’s decision to raise the WA gold royalty from 2.5% to 3.75% will scare off investors, force companies to defer investment decisions and ultimately lead to mines closing and job losses.
“The net result is a weaker Western Australian gold sector, and that is bad news for all of us.
“There is a very real prospect international investors will decide to ignore Western Australia for future investment and pursue gold opportunities elsewhere.”
Members of the West Australian gold industry will be at four-day event in Denver, which began yesterday and allows gold producers to promote their projects and investment opportunities to the world’s most influential investors.
Managing Director of Ramelius Resources, Mark Zeptner, said the proposed 50 per cent increase in royalty rate would have a dramatic impact on the company’s operations.
“We have more than 250 workers who rely on our operations for their family’s livelihood,” he said.
“In the last financial year, our company made a net profit before tax of $25 million. The 50 per cent increase in royalty will take more than 10 per cent or $2.6 million in profit which is clearly a very significant impact.”
Mr Zeptner said the dramatic increase in royalty would also jeopardise the financial viability of some projects.
“When you include third party royalties, our Vivien project in Leinster will now pay 10.25 per cent and our soon to be acquired Edna May project will be hit with 5.75 per cent in total royalties.
“Such high royalty rates will weigh on the viability of these projects.”
The list of presenting companies with mines in Western Australia includes Newmont Mining, Barrick Gold, Newcrest Mining, Gold Fields, AngloGold Ashanti, Northern Star Resources, Evolution Mining, Superior Gold, Blackham Resources, Westgold Resources, Ramelius Resources, Gold Road Resources, Saracen Mineral Holdings, St Barbara, Regis Resources, Independence Group and Doray Minerals.
