Saudi Arabia has launched a $182 million mineral exploration incentive program as part of its strategy to diversify the economy beyond oil.
The initiative aims to de-risk investments in exploration, encouraging new commodities, greenfield projects, and junior miners like Royal Road Minerals Ltd (TSX-V:RYR, OTC:RRDMF), a North American-listed British company that was recently awarded preferred bidder status for Jabal Sahabiyah Exploration License.
The move aligns with Saudi Arabia's Vision 2030 economic transformation plan to reduce dependence on hydrocarbons and enhance non-oil GDP. According to Reuters, the Gulf state has revised estimates for untapped mineral resources to $2.5 trillion, up from $1.3 trillion in 2016, indicating potential for further discoveries.
The Kingdom is focusing on expanding its mining sector and exploring vast reserves of phosphate, gold, copper, and bauxite.
That’s enough for Royal Road. The company strategically shifted its focus to Saudi Arabia after facing challenges in Colombia, where the government showed lukewarm support.
The Jabal Sahabiyah Exploration License is approximately 284 square kilometres in area and was discovered in the late 1970s.
The potential mining site is in a promising area called the Nabitah-Tathlith belt. It contains rocks with copper, zinc, and lead, along with areas where gold is found in veins. These rocks are part of a specific type known as greenschist and amphibolite facies meta-sedimentary and granitoid rocks.
According to Royal Road CEO Tim Coughlin, the tender process is competitive and based on merit, but the Saudi government is looking for more from potential investors.
“The cardinal virtues that are most highly valued are technical, of course, and your ability to finance the exploration effort,” Coughlin told Proactive, adding: “ESG track record also scores pretty highly.”
Royal Road Minerals plans to deploy reconnaissance vehicles equipped with advanced technology to expedite the exploration process. Future exploration efforts will encompass the entire shield, aiming for a comprehensive understanding of Saudi Arabia's geological potential.
The company has committed to investing $5.5 million over the initial five-year term, focusing on surface structural geology, geophysics, and drill target development.
Royal Road’s plan in 2024 is simply to gain a better understanding of the surface expression of mineralization. “Interestingly, the rocks in Saudi Arabia are quite deformed, meaning they've been folded multiple times,” Coughlin said.
“This requires significant work to resolve the surface structural geology. Geophysics will aid in projecting depth and identifying potential drilling targets. The goal for this year is to have drill targets by 4Q."
Saudi Arabia plans to award over 30 mining exploration licenses to international investors this year, potentially offering exploration areas exceeding 2,000 square kilometers for each license.
--Updated with correction: Royal Roads is a British company--