Royal Road Minerals Limited (CVE:RYR) (OTCMKTS:RRDMF) said Wednesday it had signed an agreement with the proprietors of an informal gold mine, La Esmerelda, to establish mining operations.
The agreement, signed through Royal Road’s Colombian subsidiary Exploraciones Northern Colombia SAS (ENC), will enable legal and responsible mining operations to resume at La Esmerelda, located in the Nariño district, Colombia within a concession contract held by AngoGold Ashanti.
Royal Road will return a specified portion of the area under the concession so that a new concession contract can be granted by Colombia’s Ministry of Mines and Energy, the company said in a statement.
READ: Royal Road Minerals hails new agreements to advance the El Gualtal gold mine project in Colombia
In exchange, ENC will receive a quarterly royalty payment equivalent to 3% of the doré extracted from La Esmeralda and has been granted exclusive rights to carry out exploration activities on the concession. ENC also has the right to acquire 70% of the La Esmeralda concession if it hits certain exploration milestones, according to Royal Road, and may be able to increase its royalty to 4% if it assists in further optimizing mine operations and increasing production.
The formalization initiative is similar to one signed with another Nariño-district operation, El Gualtal, in October 2019, according to Royal Road's CEO Tim Coughlin.
"Once again, we are immensely proud to be executing quality agreements with local stakeholders which are designed to benefit the company, the informal miners, the community, the environment and the Colombian government,” Coughlin said in a statement.
La Esmerelda hosts suphide-rich, vein-stockwork style gold mineralization that correlates with the majority of underground mines and gold mineralization veins hosted in tonalite, a specific type of rock. The project is home to promising initial drill targets, according to Royal Road.
Mining at La Esmeralda was suspended by regulatory authorities in 2016.
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