North of 60 Mining News - The mining newspaper for Alaska and Canada's North

The Government of Yukon reported Nov. 5 that it has transferred a C$5.9 million royalty payment received from Minto Explorations Ltd. to the Selkirk First Nation government. It was calculated from production profits from the Minto Mine during 2009 and transferred to the Selkirk First Nation as the owner of the mineral rights.

The Yukon government administers the mineral rights at the Minto Mine under provisions of the Quartz Mining Act and the Selkirk First Nation Final Agreement.

The Selkirk First Nation is located at the village of Pelly Crossing on the Klondike Highway in central Yukon Territory. Once known as the Department of Indian Affairs Pelly Band, the Selkirk First Nation became self-governing in July 1997. Currently, the Selkirk First Nation has about 483 registered members of whom some 200 reside in other communities. It owns about 4,740 square kilometers, 1,830 square miles, of settlement land and is receiving C$16,604,860 in settlement funds over 15 years.

The high-grade copper-gold-silver Minto Mine is one of the few mines in Canada operating on lands where a First Nation government owns both surface and mineral rights, classified as Category A Settlement Land in Yukon. Mining royalties are a share of profits from a mine paid to the owner of the mineral rights for permitting and extraction of mineral resources. Royalties are paid every year in which the operating mine returns a profit.

The Minto/Selkirk First Nation Cooperation Agreement also covers environmental issues.

The mine and the Selkirk First Nation negotiated a 0.5 percent net smelter royalty on mine production, and entered into a cooperation agreement that ensures local employment and contracting opportunities for First Nation businesses, as well as training on construction, mining, and processing plant jobs. About 35 percent of the Minto Mine's work force is First Nations members, of which about half are Selkirk FN members, according to Jaime Delgado, Minto's mine manager and acting general manager. Mine services are also provided by a number of local contractors, including at least one that is owned by the Selkirk First Nation.

Second royalty payment

The 2010 royalty payment is the second of its kind to be paid to the Selkirk First Nation government since the startup of copper-gold-silver production at the Minto Mine in 2007.

In 2009, Minto Explorations, a subsidiary of Capstone Mining Corp., made its first royalty payment of C$1.5 million to the Selkirk First Nation for the 2008 royalty year, said Jesse DeVost, a spokesman for the Government of Yukon's Ministry of Energy, Mines and Resources.

In addition to the second royalty payment, the Yukon government approved Minto Explorations' plan to fund C$1.4 million for construction and operation of an early childhood development center in Pelly Crossing under the new Community Economic Development Expense Allowance.

DeVost said the allowance provision was included in new Yukon royalty regulations last spring when the government updated its royalty provisions to facilitate investment in community infrastructure by the mining industry.

Yukon is only the second jurisdiction in Canada to include this type of provision in a royalty regulation and the Minto allowance is the first use of the development expense provision.

DeVost said the allowance is classified as an expense, and it lowers the amount of royalties that a company is required to pay.