Mining Royalty Calculator

This calculator applies your Royalty Rate to one of three different royalty bases depending on Royalty Type, since gross revenue, net smelter return (NSR), and net profits royalties are structured very differently in real mining agreements. Gross Revenue royalty -- the calculator's default -- applies the rate directly to production times metal price, with no deductions at all. NSR applies the rate after first subtracting Smelter Deductions (a percentage covering smelting and refining costs) from gross revenue, so it only matters when Royalty Type is set to Net Smelter Return; it has no effect on a gross revenue or net profits calculation. Net Profits royalty is the structure that tracks the operation's economics most closely: it subtracts Operating Cost per ounce from gross revenue first, floors that net figure at zero so a loss-making period never produces a negative royalty, and only then applies the rate -- meaning Operating Cost per ounce only matters in this one mode, exactly the mirror of how Smelter Deductions only matters for NSR.

Which of the three is cheapest for the operator at a given rate depends on the numbers, not on the structure alone: Net Profits always costs less than Gross Revenue, but it costs MORE than NSR whenever operating cost per ounce is smaller than the smelter deduction expressed in dollars (metal price times the deduction percentage) -- a low-cost, high-price operation can pay more under a net-profits royalty than under an NSR of the same headline rate. One consequence of the zero floor is worth planning around: in Net Profits mode, any period where Metal Price is at or below Operating Cost per ounce produces a royalty of exactly zero no matter how many ounces you pour, so production and price stop moving the royalty at all until the operation is back above break-even. Gross Revenue itself is always production times metal price regardless of which royalty type is selected; only the royalty BASE, not the revenue figure itself, changes between the three structures. Effective Rate exists to make the three structures directly comparable: it is the royalty expressed as a percentage of GROSS revenue, whatever base it was actually applied to, and equals your entered Royalty Rate only under a Gross Revenue royalty -- at the defaults, a 5% net-profits royalty is an effective 1.84% of gross.