A publicly traded mining and natural resources company held a net smelter royalty interest in a producing gold mine located in the western U.S. The mine owner/operator stopped making required royalty payments and disputed whether any royalties were owed. The mine owner/operator subsequently entered insolvency proceedings in Canada and related Chapter 15 proceedings in Arizona Federal Bankruptcy Court. The mine was acquired through the bankruptcy process by another Canada-based mining company, which disputed the royalty obligations and refused to make royalty payments.
The law firm representing the royalty holder retained MCA to evaluate and determine the applicable royalty agreements, analyze mine production and sales information, calculate royalties that should have been paid, and assess any disputed amounts. MCA also prepared a financial report summarizing its findings and conclusions.
The engagement required a combination of contractual business terms assessment, financial analysis, and forensic accounting skills, as well as solvency analysis and lowest intermediate balance analysis. MCA’s work facilitated successful deposition outcomes leading to a favorable resolution for the royalty owner.
Navigating Complexity to Provide Expert Litigation Support
In addition to disagreements over royalty calculations, a primary challenge was obtaining complete and reliable information. MCA addressed these challenges by:
- Reconciling available production, sales, and payment records
- Independently analyzing the royalty agreement
- Calculating the royalties MCA believed were owed based on the available evidence
- Reviewing and cross-checking information from multiple sources
MCA exceeded the client’s expectations by providing a clear, well-supported analysis demonstrating that sufficient funds were available to satisfy their client’s royalty claims in full under the circumstances. Through its review of the royalty agreements, bankruptcy pleadings, mine operations, and available financial information, MCA developed evidence that strengthened the royalty holder’s position and helped counsel effectively challenge the positions advanced by the opposing parties. As a result, MCA not only quantified the amounts at issue but also provided strategic financial analysis helping achieve a favorable outcome.
Experience working in litigation and bankruptcy-related matters provides a major advantage in organizing complex information and communicating findings in a clear and defensible manner. Contact MCA Financial Group to learn how our professionals combine strategic financial analysis with courtroom-tested credibility.
