RRL has noted that the previous owner of Tropicana, IGO (IGO AU) has been served with a royalty claim on historic and future production at Tropicana by South32 (S32 AU). The claim will be heard in the Supreme Court of Western Australia, hence the timeframe to any resolution is uncertain. We note that should S32 be successful, we estimate the increased royalty would drive 11-16% cuts to our FY24-FY26 earnings estimates for RRL and lower our valuation by 9%. At this stage our estimates remain unchanged, and we retain our HOLD rating and A$2.30 price target on RRL.
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