Royal Road Minerals Limited said it has entered into two binding Heads of Agreements over properties located near its Guintär copper and gold project in Colombia.
In a statement, the company said the agreements involve a mining concession contract owned by titleholders as well as an application for a mining concession contract owned by an individual applicant and its nominees (applicants).
"These local alliances are in line with the Company's strategy of substantial community collaboration," said Raul Farfan, Royal Road's executive director of sustainability in a statement. "Our custody over such local mineral developments will ensure the application of world's best practices in respect of the environment and surrounding communities".
READ: Royal Road Minerals announces results from first three drill holes at Guintär copper-gold project in Colombia
Royal Road said the agreements include an initial payment (option payment) in the case of the concession contract of US$150,000 and in the case of the application for US$100,000 -- which provides the company with the exclusive right to earn an 80% interest in the concession contract and in the application.
A subsequent payment in the case of the concession contract of a further US$100,000 will be made once certain regulatory approvals are attained. And, in the case of the application, a further US$150,000 payment will be made on the conversion of the application to a concession contract.
The Heads of Agreements contains other basic terms:
- In the case of the concession contract, Royal Road will be responsible for all properly incurred obligations, liabilities, expenses, and regulatory costs related to regulatory approvals up to a capped limit of US$500,000
- At any point following the option payment, Royal Road may exercise its option to acquire an 80% interest in the concession contract by making a one-time payment of US$2.25 million and in the application by making a one-time payment of US$1.125 million.
- In both cases, the 20% interest retained by the titleholders and the applicants, respectively, will be free carried until a successful feasibility study is delivered in connection with or incorporating the relevant property, at which point this interest will be converted to a 2% net smelter returns royalty in relation to metals extracted from the underlying properties.
- Royal Road may purchase the properties for US$20 million in the case of the concession contract and US$10 million in the case of the application.
- Royal Road shall have a right of first refusal on any sale of either of the 20% interests up until the point of conversion to a net smelter royalty.
Contact the author: patrick@proactiveinvestors.com
Follow him on Twitter @PatrickMGraham