Northern News Services

Yellowknife (Oct 09/02) - If Ekati's sales were stopped, the federal government would stand to lose its share of gem-related royalties.

From 1994 to 1999, the federal government averaged $2.5 million per year on NWT mining royalties.

The royalties dropped to $900,000 per year after Nunavut split -- that was despite the addition of Ekati diamond mine during that time.

"The company is allowed to write-off its expenses," explained the Department of Northern and Indian Affairs' Doug Paget.

Before a company is charged the full royalties amount, it is allowed to "write down" its construction costs.

It is spared for about five years or until the mine starts to pay for itself.

"We don't expect that Diavik will pay anything for three, four or five years," he said.

Over time the royalties will be substantial though.

"Over the next 10 years, keeping in mind that Diavik will not be paying much, the royalties will be over $100 million per year," said Paget noting that during the same period the NWT will collect less than that in corporate income tax -- about $75 million dollars.