Seeking a Tier 1 discovery
The largest exploration title and application holder in Colombia, a well-known gold address
De-risking assets steadily via social and environmental work
What Royal Road Minerals does:
The company employs a project generator model that leverages its team’s ability to find and secure early-stage exploration projects, advance them through reconnaissance and target generation stages and then bring in a partner to assist with funding the development of the project, or sell its interest in the project to bring in additional capital.
In its corporate presentation, Royal Road says its aim is to find so-called ‘Tier 1′ gold and copper mines in areas they are most likely and also most needed.
While there is no official definition of such a deposit, the term has become part of the language of mining since titan BHP PLC (LON:BHP) vowed to invest only in “tier one” assets that were ‘large, long-life, low cost and expandable’.
To give an idea of a resource figure for such a deposit, refer perhaps to Ecuador-focused SolGold, which said late in 2018 that its Alpala resource was Tier 1 and now estimated to contain 13.1 million tonnes of copper equivalent.
For Royal Road, it is worth highlighting that in the last 15 years, more than 50 million ounces of new gold has been discovered in Colombia, a country where all major mining groups have a presence.
In Colombia, with its acquisition in a portfolio of exploration assets from mining major AngloGold Ashanti (JSE:ANG), Royal Road became the largest exploration holder of claims in the country – at around 600,000 hectares. The Anglo assets are contained within a northern block grouping and a southern block.
The Southern Block lies contiguous with Royal Road’s existing 3,500 sq km of exploration rights in Nariño Province, while the Northern Block covers the well-known Middle Cauca Belt, a region hosting over 50 million ounces of recently discovered gold resources.
How it is doing:
In March, Royal Road said it has restarted drilling at its Caribe gold project in northeastern Nicaragua, while also revealing a set of new drill results including 90 metres at 1 gram per tonne (g/t) gold.
Caribe is part of Toronto-based Royal Road’s strategic alliance with Hemco Mineros Nicaragua and is located in the highly prospective Golden Triangle region of the country.
Previous interim drilling results from Caribe, released in February, included 63 meters at 1 g/t gold in addition to 100.45 meters at 1 g/t gold.
Also in March, the company announced plans to sell its entire 50% interest in the Luna Roja Project in Nicaragua to Mineros SA.
The Luna Roja Project comprises the Monte Carmelo I and Monte Carmelo II mining concessions. It is currently jointly owned and operated by Royal Roads and Hemco-Nicaragua SA, a wholly-owned subsidiary of Mineros.
Mineros will pay a purchase price of US$22.5 million in cash on the closing of the proposed transaction, plus a 1.25% net smelter royalty on all future mineral production from the Monte Carmelo I and Monte Carmelo II mining concessions. As well, Royal Roads will invest US$7.5 million over a five-year period in exploration joint ventures carried out by it and Mineros.
What the analyst says:
Proactive Research analyst Ryan Long published an update on Royal Road Minerals on March 31, saying the company has consistently discovered gold and copper mineralisation at its Nicaraguan and Colombian Projects.
Long noted Royal Road has now reached a point in its evolution where it is starting to monetise the more advanced projects while continuing to advance the early-stage projects.
“A great example of the success the company is having with this strategy is the Luna Roja Gold Project, which was part of Royal Road’s 50:50 strategic alliance with Mineros,” he added.
“This project was jointly funded and advanced by the partners from early-stage exploration through to initial exploration drilling that resulted in the discovery of a large gold-bearing skarn.”
Long wrote that Royal Road is now in the process of selling its 50%-interest in the project to its partner, Mineros, for US$22.5 million and a 1.25% net smelter royalty (NSR) on all future production.
He also said the company has the ability to repeat this success with its other more advanced projects, such as the Caribe Gold Project, where the partners have discovered a large low-grade, gold-bearing alkaline diatreme breccia with the potential for an associated porphyry intrusion at depth. Drilling to test this deeper target is currently underway.
At the Guintar-Niverengo-Margaritas (GNM) Gold Project the partners plan to recommence drilling in May to test deeper, intrusion or porphyry-related, vein or breccia bodies.
Alongside this more advanced exploration work, Royal Road is also advancing earlier-stage exploration projects from its 5,400km2 ground holding in Colombia and Nicaragua.
- More drill results
- Potential joint ventures
- Improving gold prices
What the boss said:
Commenting on the company’s decision to sell its Luna Roja Project stake, Royal Road Minerals CEO Tim Coughlin said in a statement: “This is a model transaction, anticipated under the terms of our successful strategic alliance with Mineros and in-keeping with the ambitions of both companies”.
“Our focus moves now to the exciting Caribe gold discovery, located just 16km to the south of Luna Roja and to other promising gold and copper projects we are advancing together, throughout the highly prospective ‘Golden Triangle’ and elsewhere in Nicaragua,” Coughlin added.
Contact Sean at [email protected]
Story by ProactiveInvestors
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