Consistent Discoveries
Royal Road Minerals Ltd (CVE:RYR) has consistently discovered gold and copper mineralisation at its Nicaraguan and Colombian Projects.
It has now reached a point in its evolution where it is starting to monetise the more advanced projects while continuing to advance the early-stage projects.
Royal Road is a project generator that leverages its team's ability to find and secure early-stage exploration projects, advance them through reconnaissance and target generation stages and then bring in a partner to assist with funding the development of the project, or sell its interest in the project to bring in additional capital.
A great example of the success the company is having with this strategy is the Luna Roja Gold Project, which was part of Royal Road's 50:50 strategic alliance with Mineros.
This project was jointly funded and advanced by the partners from early-stage exploration through to initial exploration drilling that resulted in the discovery of a large gold-bearing skarn.
Royal Road is now in the process of selling its 50%-interest in the project to its partner, Mineros, for US$22.5mln and a 1.25% net smelter royalty (NSR) on all future production.
Royal Road has the ability to repeat this success with its other more advanced projects, such as the Caribe Gold Project, where the partners have discovered a large low-grade, gold-bearing alkaline diatreme breccia with the potential for an associated porphyry intrusion at depth. Drilling to test this deeper target is currently underway.
At the Guintar-Niverengo-Margaritas (GNM) Gold Project the partners plan to recommence drilling in May 2021 to test deeper, intrusion or porphyry-related, vein or breccia bodies.
Alongside this more advanced exploration work, Royal Road is also advancing earlier-stage exploration projects from its 5,400km2 ground holding in Colombia and Nicaragua.
Royal Road is well funded following an C$11.5mln financing in August 2020 combined with US$22.5mln due to be received following the closure of the Luna Roja transaction.
The COVID-19 pandemic somewhat restricted Royal Road's ability to advance its projects last year. This year the company is well-positioned to make up for lost time with a strong balance sheet and extensive programmes planned.
Introduction
Royal Road Minerals is a gold-focused exploration company, with assets located in Nicaragua and Colombia. Royal Road can best be described as a prospect generator, leveraging its team's ability to source highly prospective early-stage projects at a low-cost, complete the initial reconnaissance-stage exploration work and then farm them out to a partner.
This partner will fund the exploration and development costs associated with advancing the project up the value chain, while Royal Road retains a significant interest in the project.
This strategy reduces Royal Road’s financial exposure and risk to any one project but ensures it benefits from any increase in value of each project within the portfolio. The strategy gives the company a level of diversification and reduced risk exposure, that conventional exploration companies, focused on one or two assets, would not have. It also allows Royal Road to leverage its team's significant exploration and discovery experience.
To execute this strategy, Royal Road has an extensive ground holding, with the largest exploration licence and licence application holding in both Nicaragua and Colombia.
The Nicaraguan projects are located in two areas, the Golden Triangle, a well-known historic mining area, in the northeast of the country, and Los Andes in the central region (Figure 1). In Colombia, Royal Road has projects in two main areas, the Northern Block and the Southern Block (Figure 1).
Figure 1 - Royal Road's Projects
Source: Royal Road Minerals
In Nicaragua, the company has a 50-50 strategic partnership with HEMCO Nicaragua, a subsidiary of Grupo Mineros, Colombia’s largest gold producer.
In Colombia, Royal Road has secured eight mine formalisation agreements with local miners within its title areas in the La Llanada Goldfield in its Southern Block of licences. As a result of this agreement, Royal Road will receive a 3% royalty on the gold produced by local miners.
Location: Nicaragua
Target: Gold
Stage: Definition Drilling
Area: 1.6 km2
Interest: 50%
Programme: Sale Underway
Figure 2 - Luna Roja Location
Source: Royal Road Minerals
Figure 3 - Luna Roja Geology
Source: Royal Road Minerals
Sale of the Luna Roja Gold Project - A Proof of Strategy
Royal Road signed a definitive agreement for the sales of its 50% interest in the Luna Roja Gold Project (Figure 2) to Mineros SA for US$22.5 million, payable in cash in March this year, and a 1.5% NSR.
Not only does this deal strengthen Royal Road's treasury with no additional dilution to shareholders, but it also acts as a proof of concept for the company's prospect generator strategy.
Background
Royal Road and Mineros formed a strategic alliance in September 2017 to jointly fund and advance 35 prospects in Nicaragua, one of which was Luna Roja.
The partnership first explored the Luna Roja Project in September 2018. The initial rock-chip channel sampling programme defined anomalous gold grades from 50 locations.
A follow up grid-based deep auger soil geochemical programme, announced 12 March 2019, identified a coherent gold anomaly covering an area of 1,500 metres (m) by 500 m.
Following the definition of this large gold-in-soil anomaly, a 17-hole (2,472 m) scout drilling programme was undertaken, which defined large near-surface intercepts of moderate-grade gold mineralisation and smaller intercepts of high-grade gold mineralisation (announced 4 September and 2 October 2019). Significant results from this programme include:
- 49 m at a grade of 2.80 grams per tonne (g/t) gold (Au) from 36.05 m (LR-DDH-003)
- 49 m at a grade of 2.39 g/t Au from 24 m (LR-DDH-012); 23 m at a grade of 2.11 g/t Au from 145.05 m (LR-DDH-005)
- 18 m at a grade of 2.65 g/t Au from 65 m (LR-DDH-008)
- 3 m at a grade of 7.38 g/t Au from 10. 05 m (LR-DDH-004)
A follow up 3,000m diamond drill programme commenced in May 2020. This programme focused on extending known gold mineralisation and testing deeper ground microgravity targets (Figure 3). Significant results from this programme include:
- 65 m at a grade of 6.9 g/t Au, including 41 m at a grade of 10.0 g/t Au (LR-DDH-22)
- 95 m at a grade of 1.5 g/t Au, including 45 m at 3.0 g/t Au (LR-DDH-30)
- 30 m at a grade of 1.2 g/t Au and 22 m at a grade of 1.1 g/t Au (LR-DDH-19)
- 18m at a grade of 1.1 g/t Au (LR-DDH-29)
- 12 m at a grade of 2.7 g/t Au (LR-DDH-23)
These exciting results were significant enough for Mineros to acquire Royal Road's 50% interest in the project, for US$22.5mln and a 1.25% net smelter royalty on all future production. Also, Royal Road will invest a minimum of US$7.5mln in other projects that are part of the strategic alliance over a five-year period.
The completion of the proposed transaction is due to close by 21 May 2021.
Location: Nicaragua
Target: Gold
Stage: Definition Drilling
Area: 30.0 km2
Interest: 50%
Programme: Drilling underway
Figure 4 - Caribie Location
Source: Royal Road Minerals
Figure 5 - Cross Section
Source: Royal Road Minerals
Caribe Gold Project
The Caribe Gold Project is also part of Royal Road's strategic alliance with Mineros. It is located in Nicaragua’s Golden Triangle, within the same group of concessions as the Luna Roja Project (Figure 4).
At Caribe, the partners have discovered a large 1.2 kilometre (km) long, low-grade, gold-bearing alkaline diatreme breccia. The exploration team believes there is also the potential for an associated porphyry intrusion at depth.
Geology
The gold mineralisation at Caribe is associated with anomalous copper and molybdenum. The mineralisation is hosted within both a multi-phase, broadly trachytic polymictic breccia body and a series of porphyritic monzonite intrusions that appear to be steeply dipping dykes (Figure 5). Alteration is predominantly sericite-illite-pyrite overprinted by silica, with a late pervasive hematite.
Previous Work
The Caribe porphyry target was a blind discovery, with no evidence of previous mining or exploration in the area or any evidence of mineralisation at the surface due to extensive laterite cover.
The target was first identified following a programme of reconnaissance mapping of airborne geophysical anomalies in February 2018.
A follow-up ground magnetic survey and deep auger soil sampling programme identified a coincident area of magnetic lows (Figure 2) and a gold-in-soils anomaly, which had a strike length of 1.2 km (announced 15 May 2018 and 17 June 2018).
The partners have now completed 2,736 m (20 holes) of drilling in two programmes. While these drill programmes identified very large intercepts of low-grade gold mineralisation over a 1.2 km strike length, many holes did not reach their planned objective due to the drilling rods becoming stuck in zones of strong clay alteration. Significant results from these programmes include:
- 100.45 m at a grade of 1.0 g/t Au to end of hole and bogged and abandoned above objective (CB-DDH-016)
- 90 m at a grade of 1.0 g/t Au bogged and abandoned above objective (CB-DDH-017)
- 74 m at a grade of 0.9 g/t Au and 14 m at 1.0 g/t Au (CB-DDH-006)
- 63 m at a grade of 1.0 g/t Au bogged and abandoned above objective (CB-DDH-015)
- 45 m at a grade of 1.0 g/t Au and 35 m at a grade of 1.1 g/t Au bogged and abandoned above objective (CB-DDH-009)
- 35 m at a grade of 1.0 and 10 m at a grade of 1.0 g/t Au (bogged and abandoned above objective (CB-DDH-019)
2021 Exploration Programme
Royal Road and Mineros have mobilised a more powerful rig to drill deeper and have a rotary air blast drill rig to test the aerial extent of mineralisation. Drilling has now recommenced and results are expected in H221.
Location: Nicaragua
Target: Copper-Gold
Stage: Exploration Drilling
Area: 185 km2
Interest: 50%
Programme: Assay Results Pending
Figure 6 - Los Andes Location
Source: Royal Road Minerals
Figure 7 - Los Andes Geology
Source: Royal Road Minerals
Los Andes Copper-Gold Project
The Los Andes Copper-Gold Project is located to the southwest of Caribe in the
Department of Boaco (Figure 6), around 90 km from Managua.
Los Andes is also part of Royal Road's strategic alliance with Mineros.
Geology
The host rocks that make up the Los Andes Project, are dominantly calc-alkaline volcanic of the Coyol Group (Figure 7), with two porphyritic intrusions. Mineralisation is associated with a 4 km circumference ring structure, interpreted to be a caldera, with associated hydrothermal alteration covering an area of 6 km.
Previous Work
Caza Gold previously explored the project between 2014 and 2015. Caza undertook several drilling campaigns focused on identifying near-surface high-sulphidation gold mineralisation.
The drill results returned anomalous levels of copper, gold and silver but nothing of economic significance.
Royal Road re-interpreted the historic data and implemented a soil sampling programme, the results of which supported the model for a concealed porphyry deposit with a focus on a magnetic anomaly at the southern end of the caldera, known as the Carrao Prospect.
Three historic drill holes that were drilled in the Carrao prospect intersected anomalous copper mineralisation, with hole QZP-003 intersecting 150 m of massive pyrite, which is interpreted by Royal Road to be the upper part of a copper-gold porphyry system.
2021 Exploration Programme
Royal Road completed a detailed lithocap geochemical and mineralogical study to define a possible porphyry-centre earlier in 2020 and commenced a four-hole exploratory drill programme in December 2020. Assay results from this drill programme are currently awaited, but visual inspection of the holes has indicated the first recorded chalcopyrite intersections at the project.
Location: Colombia
Target: Gold
Stage: Definition Drilling
Area: 32.5 km2
Interest: 50%
Programme: Drilling May-21
Figure 8 - GNM Location
Source: Royal Road Minerals
Figure 9 - Targets at GNM
Source: Royal Road Minerals
Guintar-Niverengo-Margaritas Gold Project
The Guintar-Niverengo-Margaritas (GNM) Gold Project is Royal Road's most advanced project in Columbia. It is located in the Anza District, around 50 km to the west of Medellin (Figure 8), and covers an area of 3,280 ha in the Middle Cauca Belt. The GNM Project is part of another strategic agreement with Mineros that will see Mineros earn a 50% interest in the project by spending US$2.5mln on exploration.
The project contains extensive areas of artisanal workings with over 50 known historic underground adits developed on steeply-dipping, east-west oriented gold mineralised vein structures in the Guintar Target area alone.
Geology
The project is dominated by deep marine metasediments and mafic and ultramafic marine volcanic rocks of the Cretaceous age. These rocks have been intruded by dioritic to dacitic stocks of Upper Miocene to Pliocene age. The intrusion has resulted in the metasomatism of the sedimentary-volcanic sequence.
At the Niverengo Target (Figure 9) gold mineralisation is related to garnet, pyroxene skarn alteration and pyrrhotite vein and breccia bodies. While at the Guintar Target, which is west of Niverengo, is characterised by thin east-west oriented and steeply dipping quartz-sulfide (pyrrhotite, pyrite, marcasite) veinlets host gold mineralisation. The Margaritas Target is south of Guintar and Niverengo and is characterised by hydrothermal breccias carrying significant gold and silver mineralisation.
Previous Work
The GNM Project was previously operated by AngloGold Ashanti, who explored the area between 2015 and 2017. AngloGold Ashanti undertook extensive rock chip and soil sampling programmes alongside magnetic and induced polarisation surveys.
This work culminated in two scout drill programmes, with 4,184 m (10 holes) completed at the Guintar Target and 1,479 m (6 holes) completed at the Niverengo Target. Significant results from these programmes include:
- 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)
- 36 m at a grade of 1.2 g/t Au (NIV-DD-003)
- 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)
Royal Road and Mineros undertook a 1,179m (10 holes) follow-up drill programme at the Niverengo Target in Q320. This drilling intersected skarn-style gold mineralisation within folded calc-silicate sedimentary rocks and crosscutting pyrrhotite bearing veins and breccia bodies. Significant results from this programme include:
- 14 m at a grade of 4.1 g/t Au eq (NIV-DDH-007)
- 10.8 m at a grade of 3.4 g/t Au eq (NIV-DDH-015)
- 10 m at a grade of 2.3 g/t Au eq (NIV-DDH-008)
- 18 m at a grade of 1.9 g/t Au eq and 21.5 m at a grade of 1.3 g/t Au eq (NIV-DDH-010)
2021 Exploration Programme
Recent multi-element geochemical vector studies on the Niverengo Target suggest that it is laterally and vertically distal from the primary gold source. As a result, the partners plan to focus the next phase of drilling targeting deeper, intrusion or porphyry-related, vein or breccia bodies to the west at the Guintar Target and elsewhere throughout the project. Drilling is expected to recommence in May 2021. Final results from a soil sampling programme across the Margaritas gold-breccia are pending.
Location: Colombia
Target: Copper & Gold
Stage: Reconnaissance
Area: 5,700.0 km2
Interest: 100%
Programme: Target Assessment and Reconnaissance exploration ongoing
Figure 10 - Colombia Pipeline
Source: Royal Road Minerals
Colombian Pipeline
In Colombia, Royal Road have licences and licence applications that cover an area of 5,700km2 and contain over 80 known occurrences of copper and gold mineralisation (Figure 10).
The Northern Block licences are part of the Middle Cauca Belt, in which over 50mln ounces (oz) of gold have been discovered in the last 15 years. The Southern Block is one of the most prospective and under-explored regions of the Andes. It contains two known porphyry copper-gold belts and Royal Road has the entire high-grade gold district within its ground holding.
Location: Nicaragua
Target: Copper & Gold
Stage: Reconnaissance
Area: 1,700.0 km2
Interest: 50%
Programme: Target Assessment and Reconnaissance exploration ongoing
Figure 11 - Nicaraguan Pipeline
Source: Royal Road Minerals
Nicaraguan Pipeline
In Nicaragua, Royal Road have licences and licence applications that cover an area of 1,700km2 and contain over 40 identified copper and gold prospects (Figure 11).
These licences are located within the Golden Triangle of Nicaragua, an area that has produced over 8moz of gold from epithermal veins, skarns, and porphyry deposits since 19000.