Royalty Agreement Mining

As far as the requirement of form is concerned, neither the mining regulation nor the Turkish code of obligations require that a particular form be respected for the licensing agreements (or usufruit leases). Some argue, however, that most mining fields are considered commercial enterprises and that, therefore, licensing agreements must be executed in writing4. The parties may decide to execute the agreement in clear letters or to carry out the necessary procedures with the notary. Please note that there is an additional charge to the notary when the license agreement is carried out. Profit Based RoyaltiesThese revenues are based on profits generated by mining. Typically, these royalties are based on net profits, which can make it difficult to determine the costs that can be deducted to calculate the net profit of the transaction. These are generally limited to production costs after the cost of capital has been fully recovered. Licensing agreements are not explicitly defined or defined in primary legislation (i.e.dem mining law or Turkish obligation law). However, as a derivative right, the royalty regulation defines licensing agreements as “agreements between licensees and third parties or institutions with respect to the granting of a partial right of control or through the mineral field as a whole authorized for the exploitation of mineral deposits.” However, mining legislation does not provide an overview of the terms and conditions of royalty agreements. The transfer of mining rights is subject to THE approval of menR. In the absence of such authorization, the agreement would not be in force and would effectively be considered a suspended agreement until its approval.8 If MENR refuses to grant permission, the entire contract is cancelled. As a result, the calculation of this fee may vary.

For example, the parties may agree on a single down payment for the transfer of mining rights. Examples of more frequent practices are periodic payments that depend on mining production. If the royalty is calculated on the basis of production, the payment can be determined on the basis of each unit of production and paid at an increasing, decreasing or fixed percentage. In general practice, the parties also include a specific payment clause that protects the licensee in cases where the stage of production carried out during the duration of the contract is less than that of the taker.

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