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Royal Road signs another strategic alliance with Mineros

Royal Road Minerals and Mineros enter a definitive strategic alliance agreement for the Guintar-Niverengo-Margaritas Gold Project, located in Antioquia District, Colombia.

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Royal Road Minerals Ltd (CVE:RYR) has entered into a definitive strategic alliance agreement with Mineros, Colombia’s largest gold producer to jointly develop the Guintar and Niverengo concessions and its Margaritas title application.

This is not the first partnership between the two companies. In Nicaragua, the two companies operate a 50-50 strategic partnership on Hemco’s Golden Triangle concessions, covering 200,000 hectares, and Royal Road’s Los Andes and Piedra Iman concessions.

The Guintar-Niverengo-Margaritas Gold Project is located in the Anza District, around 50 km to the west of Medellin, and covers an area of 3,280 ha in the Middle Cauca Belt (Figure 1).

Figure 1


Source: Royal Road Minerals

We recently visited the Guintar-Niverengo-Margaritas Gold Project, and a report and video from that site visit can be viewed on the Proactive web site (click on the links).

The project’s geology is dominated by deep marine metasediments, and mafic and ultramafic marine volcanic rocks of Cretaceous age (Figure 2). These rocks have been intruded by dioritic to dacitic stocks of Upper Miocence to Pliocene age.

Figure 2

Project's geology

Source: Royal Road Minerals

The intrusion has resulted in the metasomatism of the sedimentary-volcanic sequence, which is cross-cut by gold-bearing and east-west trending veins, that are dominantly carbonate, with less quartz, pyrrhotite, pyrite, chalcopyrite and sphalerite.

There are around 50 adits from artisanal mining within the concession area, most of which have yet to be fully explored or sampled. Royal Road has mapped the vein system over a total area of 6 km2. During our site visit we went into one of these adits (Figure 3), which can also be seen in our site visit video.

Figure 3

Source: Royal Road Minerals

Previous drilling at the project returned results including: 36 m at a grade of 1.2 grams per tonne (g/t) gold (Au) from surface (NIV-DD-003); 28 m at a grade of 0.9 g/t Au (GUI-DD-009); 12 m at a grade of 1.8 g/t Au (GUI-DD-006); 10 m at a grade of 1.6 g/t Au and 88 m at a grade of 0.9 g/t Au (NIV-DD-004) and 8 m at a grade of 2.5 g/t Au, confirming the presence of significant gold-bearing system.

Under the terms of the agreement Mineros will pay to Royal Road US$1mln on the execution of the agreement, which will add to the company’s existing robust cash position of C$2.6mln.

Mineros then has the option to acquire a 25%-interest in the project by providing Royal Road with a further US$1mln to be spent on exploration at the project. Mineros would then have a second option to acquire an additional 25%-interest by providing Royal Road with an additional US$1.5mln for exploration at the project.

Once Mineros has acquired a 25% interest in the project, it can elect to cause all titles and the rights to title applications for the project area to be transferred to a newly formed special purpose company, initially to be owned 75% by Royal Road and 25% by Mineros.

Once Mineros has acquired a 50% interest in the project, the titles and the rights to title applications will be transferred to a project company, owned 50% by Royal Road and 50% by Mineros, with both parties co-funding the company or diluting under a standard formula.

The board of the project company will be comprised of directors who represent both parties and the number of directors will reflect each party’s interest in the project, provided neither party’s interest reduces below 25%. If either party’s interest is diluted to below 15%, it will convert to a 1.5% net smelter royalty. Royal Road will continue to act as operator of the project for so long as it maintains a 50%  interest in the project.

The deal, if executed, will see cash come into Royal Road and the Guintar-Niverengo-Margaritas Gold Project significantly advanced at no cost to Royal Road in the near-term. You can read out recent research note on Royal Road Minerals here.

Quick facts: Royal Road Minerals Ltd

Price: 0.37 CAD

Market: TSX-V
Market Cap: $96.66 m

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