Resources company Equinox Minerals Ltd
(ASX:EQN) says it has paid Phelps Dodge Mining US$12.8 million to extinguish the right by Phelps to receive a one per cent net smelter return royalty from its Lumwana copper project.
Between August 1999 and June 2003 Equinox earned a 51 per cent interest in Lumwana as a result of funding a bankable feasibility study.
The company says under the purchase and sale agreement it then acquired the remaining 49 per cent interest in Lumwana.
The agreement provided that Phelps retain a right to a one per cent net smelter royalty that could be terminated by Equinox under certain conditions.
CEO Craig Williams says given the development and operating phase that Lumwana mine is now at, and looking at the inherent value of these wholly owned mining assets judged today compared to their value in 2004, the company believes this is a very good deal for Equinox and its stakeholders.
After four years of losses Equinox Minerals posted a US$172.6 million profit in 2008.
