Royal Road Minerals (CVE:RYR) is contemplating a bold move into Colombia.
The gold and copper-focused exploration company, formerly known as Tigris Resources, has provisionally agreed to acquire La Golondrina, a potentially high-grade gold resource in the Nariño Province of southern Colombia, while it also has its eyes on another project in Colombia.
The company has signed a binding letter for an option to acquire La Golondrina, and added that it intends to raise C$1mln in additional funds to help finance its initial operations in Colombia.
The project comprises stacked shallow-dipping quartz-veins and vein zones with in excess of 30 historic working levels in an area covering around one square kilometer over a vertical interval of some 400 meters (m).
Gold grades are highly variable with 51 selective underground vein samples returning a mean of 12.8 grams per tonne but with a standard deviation of 13.8 grams per tonne, Royal Road said.
The project has not been subject to drilling or systematic exploration, and Royal Road’s management reckons there is an opportunity to define a significant high-grade gold resource of a million ounces or more at La Golondrina.
Royal Road Minerals has until 23 October of this year to complete due diligence on the project and enter into a definitive agreement with the sellers, RA Apraiez, to purchase the project.
On the signing of the definitive agreement, Royal Road will make a one-off payment of US$30,000 to RA, after which it will have three years to purchase the project, provided it drills a minimum of 1,500 meters on the site, pays US$50,000 to RA when it starts the drilling program, and makes cash payments of US$20,000 each year that the option is in force.
If Royal Road pulls the trigger on the purchase, RA will have the option of receiving payment in one of two forms: either it will get a 20% net profit royalty, to be paid once all capital investment to develop the mine has been recouped, or it can take a 15% net profit royalty (after capital investment costs have been recouped), plus a 1% net smelter royalty.
Not satisfied with this acquisition, Royal Road has signed a binding, non-exclusive letter of intent to conduct due diligence on the El Alacran copper gold project in the Cordoba province of Colombia.
The company will have the opportunity to secure finance and settle terms of a definitive agreement to buy the project.
El Alacran is a copper-gold skarn hosted in a marine volcano-sedimentary sequence over a 1.8km strike length, and various in-house resource estimates suggest a million ounce or more gold equivalent potential.
Topography is favorable for mining by open pit methods; and mineralization remains open along-strike and at depth.
On completion of satisfactory due diligence and execution of a definitive agreement, Royal Road will be required to make a payment of US$250,000 to the owner of the project, and provide evidence of the financial wherewithal to complete a 3000m drilling program on the property, to be kicked off with 50 days of executing the definitive agreement.
Additionally, on or before 15 October 15, Royal Road Minerals will be required to make a further payment of US$250,000 to the owner, while on or before 30 June 30 2018, it must submit all the paperwork required to secure the licenses and permits needed to develop and mine El Alacran.
On a final decision to construct the mine, Royal Road Minerals will then cough up US$15mln to secure 100% of the El Alacran project.
Royal Road revealed it plans to raise C$1mln through a placing of 10mln shares at 10 cents each.
“The La Golondrina project has clear and immediate potential to become a significant high-grade gold resource and we consider the region it is located in to be one of the most prospective and currently permittable in Colombia,” said Tim Coughlin, Royal Road Minerals’ president and chief executive officer.
Coughlin added that he and his team have extensive South American experience, so the move is not as out of the blue as it might at first seem.
“Our immediate focus of course is La Golondrina and capital raised during this investment round is destined for in-ground investment there,” Coughlin said.