True North Gems Inc. (CVE:TGX), which explores and develops North American colored gemstone deposits, advanced to the highest in more than three years after winning an exclusive 30-Year mining licence for the Aappaluttoq ruby deposit in Greenland.
True North jumped 29 percent to 15.5 Canadian cents at 12:51 p.m. after reaching 16 Canadian cents, the highest intraday level since December 2010.
Under the exploitation licence, True North has agreed to pay a gross revenue royalty to the government of Greenland of 5.5 percent on all sales of rubies and pink sapphires exploited from the Aappaluttoq ruby deposit, according to a statement from the Vancouver, British Colombia-based company.
The gross royalty will be payable in each calendar year when the total aggregate paid by True North in corporate taxes, withholding taxes and "surplus royalty" are less than the calculated gross royalty in that calendar year, such that the government receives a minimum amount.
The surplus royalty is calculated at a rate of 15 percent on earnings before financial items and tax on any profit in any calendar year to the extent the annual profit exceeds the profit margin percentage of 40 percent.
The exploitation licence will become officially effective on March 10.
"This also heralds the beginning of our transformation from an exploration company to a producer," Chief Executive Officer Nicholas Houghton said in the statement. "It will enable us to showcase and deliver a new supply of rubies and pink sapphires to the worldwide gemstone industry."