Royal Road Minerals Limited (CVE:RYR) (OTCMKTS:RRDMF) (FRA:RLU) announced that it has entered into a binding Letter of Intent (LOI) to sell its entire 50% stake in the Luna Roja gold project in Nicaragua to Mineros S.A.
Royal Road Minerals is expected to receive US$22.5 million in cash payable on closing, for its 50% interest in the project, plus a 1.25% net smelter royalty on all future mineral production from the Monte Carmelo I and Monte Carmelo II mining concessions.
“This is a model transaction, anticipated under the terms of our successful strategic alliance with Mineros and in-keeping with the ambitions of both companies,” said Royal Road Minerals CEO Tim Coughlin in a statement.
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He added: “Our focus moves now to the exciting Caribe gold discovery, located just 16km to the south of Luna Roja and to other promising gold and copper projects we are advancing together, throughout the highly prospective 'Golden Triangle' and elsewhere in Nicaragua.”
The Luna Roja project, comprising the Monte Carmelo I and Monte Carmelo II mining concessions, is currently jointly owned and operated by Royal Road Minerals and Hemco -Nicaragua,S.A., a wholly-owned subsidiary of Mineros, which is part of a Strategic Alliance Agreement signed by the two companies in 2017.
As part of the LOI, Royal Road Minerals will invest no less than US$7.5 million over a five-year period in exploration operations on the Strategic Alliance properties in Nicaragua.
Drill results released in September from Luna Roja included 95 metres (m) of 1.5 grams per tonne (g/t) gold, including 45m at 3 g/t.
The company noted that the Letter Agreement may be terminated by either party if a definitive agreement has not been entered into by February 28, 2021.
It added that its Strategic Alliance Agreement in Nicaragua will continue following the closing of the Luna Roja transaction with respect to Royal Road’s other projects in the country, including Caribe.
Contact Sean at sean@proactiveinvestors.com