There are two simple reasons why Royal Road Minerals Ltd (TSX-V:RYR, OTC:RRDMF) is in a stronger position than most other junior mining companies.
The first is a straightforward question of cash. The company has C$14 million and, according to chief executive Tim Coughlin, that’s enough to take it through 2024 and beyond.
Given that the current markets are about as tough as anyone’s seen for 15 years, companies without cash are at best struggling, and it’s becoming clear enough now that there are plenty out there that just won’t make it at all.
So that’s point one.
Point two is a bit more nuanced.
Royal Road is in Saudi Arabia.
Now, it may seem counterintuitive to say that a company with exploration aspirations in a country which boasts a mining industry that at this stage isn’t much more than nominal, is in a strong position.
To say, therefore, that it’s in a stronger position than most other companies is surely, then, a bridge too far?
But not so fast.
Consider first of all, where Royal Road is coming from.
It’s not long since it pulled out, or at least pulled back from, a serious commitment to Colombia, where the new government turned out to be, at best, lukewarm to Royal Road’s aspirations. That in itself is a long story, but Royal Road’s ESG awards are surely strong enough testimony that it did at least make an effort.
Tim Coughlin’s central point is this: they’ve got to want you there in your country of operations.
Now, when Royal Road was becoming disenchanted with Colombia and casting its eye around for alternative paths to take, what should pop up but an investment conference designed to showcase the attractiveness of Saudi Arabia as a destination for mining companies.
In a way, then, you could say that the first overture in this new dance that Royal Road has now embarked upon was initiated by the Saudis. This is not a case of a company elbowing its way into an asset. It was quite literally invited in to take a look around.
And Royal Road and Coughlin liked what they saw.
The Saudi mining sector does exist. There’s a national champion – Ma’aden, and a few other smaller enterprises knocking around. What it doesn’t have much of, though, is expertise. Sure, the Saudis are pretty well integrated into the global economy these days, but a big part of that revolves around oil.
For a variety of understandable reasons, the Saudis want to diversify, and under the relatively new Crown Prince and Prime Minister, Mohammed bin Salman Al Saud, known as MBS, have set ambitious targets under a scheme known as Vision 2030. The conference that Royal Road attended was held under the auspices of this scheme, and the operations that Royal Road is now conducting on the ground in Saudi Arabia also fall, broadly speaking, under the same umbrella.
Not only do the Saudis welcome mining where other countries are equivocal or even downright hostile – they are also in a hurry.
So, under the provisions of any new mining company’s licence to operate in the country is a stipulation of intent to develop. This is not a jurisdiction that is setting itself up for development just so speculators from the junior market in Toronto can show up and start flipping assets around. The Saudis don’t just want people on the ground looking for things, they want to get things built.
So far, so good.
But what’s actually on offer in terms of minerals?
The short and simple answer is: copper and gold. Saudi Arabia sits on the same Arabian-Nubian shield that plays host to several major mines on the other side of the Red Sea. Within the huge and largely uninhabited land expanses of Saudi itself, there are obviously a range of different and specific geologies, and Royal Road reckons it’s already got the jump on its competitors in that regard.
“Saudi is a grassroots environment,” says Coughlin.
“The assets that they have that are in production are volcanic massive sulphides. But there is something else there in terms of deposit style.”
What that deposit style is, Coughlin is rather coy about. But in part that’s because although the licence applications are in, they’re not back yet. And, while Saudi Arabia is shaping up as a decent and sensible place to do exploration, under its new mining laws you’re not allowed to peg very much ground in one go.
So the idea is: to do mobile exploration. To identify a potential target, and then to explore it simultaneously with drones and via land vehicles, deploying various spectrometers and XRF machines, and then stake it.
“We’ll do it all in one hit,” explains Coughlin.
“Our aim is to secure ground positions that aren’t big blocks, but which are very selective.”
The company is in partnership with local conglomerate MSB Holdings, which is likely to be helpful both bureaucratically and with regards to finance. This joint venture also, incidentally, holds promising early stage copper-gold exploration prospects in north-eastern Morocco, and these will be drilled next year.
But it’s in Saudi Arabia that Coughlin sees the big prize.
It’s a rare alignment, he argues: that of company, shareholders and regulators.
“I feel like as a company, we’ve figured it out.”
And Saudi Arabia?
“It’s the Big Bang for a new mining universe.”