Atico Mining Corporation (TSX.V: ATY | OTCQX: ATCMF) announced today it has entered into an agreement (the “Agreement”) with the National Mining Agency (“NMA”) in Colombia related to the ongoing royalty dispute covering the El Roble property. While the company has maintained that it has been in good standing with the requirements for a new title, with this agreement the company has formally been brought into good standing by the NMA.
As a part of the Agreement, the NMA and the company have also agreed to settle the dispute via binding arbitration at the Center for Arbitration and Conciliation of the Bogota Chamber of Commerce for the purposes of seeking an expedited resolution to the ongoing claim, which is currently being resolved in Colombian courts where the proceedings can last several years. In contrast, the arbitration rules state the final decision by the tribunal takes approximately six to twelve months from the commencement of the arbitration process. To the extent that a final ruling is made in favor of the company, the Payment Plan will cease, and any amounts already paid will be offset against future royalty obligations. As advised by its Colombian legal counsel, the company continues to believe that it has a strong case for a positive outcome in an upcoming arbitration.
The agreement calls for the company to enter into a five-year payment plan, payable in biannual instalments for a total amount of approximately US$21.9 million plus interest at a 6% annual rate. The Company will make an initial upfront payment of US$1 million, followed by US$3.2 million in year 1, US$3.3 million in year 2, US$3.4 million in year 3, US$5.8 million in year 4 and US$9.7 million in year 5. The total amount payable represents all outstanding royalty payments which the NMA has claimed through to the end of December 2021. The parties have agreed to this interim arrangement until a final arbitration decision is made.
For this arrangement to comply with Colombian law, a secured guarantee equal to the value of the agreed payment plan is required. The Company intends to provide the required guarantee by granting security over 9,700 wet metric tons of concentrate. The security and the guarantee will be released proportionally as payments are made in accordance with the payment schedule. The security may be substituted for another type at a later date.
The company says it continues to work towards renewing the title to the El Roble property claims which are set to expire on January 23, 2022. If the company is unable to obtain the new title on time, it will continue operating after the expiration date while the process for the new title continues, as pronounced by the NMA in response to a formal query made by the company. Although the process for the new title is progressing favorably, there is no assurance at this stage that the company will obtain a new title.