Agreement on new royalty calculation structure for Argyle Diamonds' stockpile

18/12/97

The State Government and Argyle Diamonds have agreed on a new royalty calculation structure for stockpiled diamonds from the company's Kimberley mine site.

Western Australian Resources Development Minister Colin Barnett said the new calculation had also allowed the Government and Argyle Diamonds to conclude negotiations on outstanding royalty payments.

The negotiations related to a complex method of calculating royalty payments on stockpiled diamonds under the 1981 State Agreement for the Argyle Diamond mine. Negotiations related to the calculation of the notional value of unsold diamonds held in stock by Argyle Diamonds.

Based on the calculation method in the State Agreement, a potential $12 million in royalties was owed to the State Government. The company and the Government have now agreed that it was inappropriate to apply the royalty calculation structure to the stockpiled diamonds and a new calculation method has been agreed.

"As a result, Argyle Diamonds has agreed to pay more than $4 million in outstanding royalties, and approximately $750,000 in interest, to the State Government," Mr Barnett said.

"While the amount outstanding was only a small proportion of the total royalties paid by Argyle, it has given us an opportunity to revise the calculation method used on stockpiled diamonds. The new calculation method more accurately represents the value of diamonds in stockpile.

"I am pleased that the State Government and Argyle have been able to resolve this matter to our joint satisfaction."

Since operations began at the Argyle Diamond mine in 1982, more than $300 million worth of royalties have been paid. Last year, the company paid $35 million in royalties.

Media contact: Justine Whittome (08) 9222 9699