South32 is claiming a 1.5% soil sample royalty payment on the gross revenue that IGO earned from its interest in the mine from December 2014 until September 2023.

The claim to the royalties arises from a 2002 agreement, which granted exploration licences to IGO, and included the obligation to pay royalty if minerals were discovered from the soil samples, the battery metal producer said in a filing.

South32 asserts that the use of soil samples by IGO led to the discovery of gold in the areas to which IGO was granted licences in 2002, and its subsequent development of Tropicana mine renders it liable to pay the sample royalty.

IGO denied any liability to South32, adding that it has "thoroughly reviewed its obligations under the relevant agreements and maintains that the pre-conditions to the entitlement to be paid the Sample Royalty have not been satisfied".

The battery metals producer also clarified that it sold its 30% stake in Tropicana to Regis Resources Ltd in May 2021, and currently holds no stake in the project.

As part of its stake sale to Regis, IGO has an indemnity - insurance compensation for damages or loss - in its favour from Regis concerning any royalty liability to South32 from May 2021 onwards.

IGO estimates royalty claim's portion covered by Regis indemnity for period starting May 2021 until September 2023 would be up to A$40 million.

"Regis' view at the time of the (Tropicana stake) acquisition was, and remains, that no amount is due under the Royalty Agreement in respect of current operations at the Tropicana Gold Project," Regis said in a separate statement.

IGO intends to defend itself against South32's claims, while Regis intends to take "appropriate action" to protect its position, the companies said.

South32 declined to comment further on IGO's statement.

($1 = 1.5230 Australian dollars)

(Reporting by Sameer Manekar in Bengaluru; additional reporting by Aaditya Govind Rao; Editing by Savio D'Souza and Sherry Jacob-Phillips)