Royal Road Minerals Lines Up Equity Financing To Purchase AngloGold Ashanti Colombia Assets

Toronto, Ontario based Royal Road Minerals Limited (TSXV:RYR) has announced that it has entered into an agreement with Canadian investment advisors Pollitt & Co. Inc. as its agent in connection with a proposed private placement offering of up to 40 million ordinary shares of Royal Road, at a price of $0.20 per share (all prices listed in Canadian Dollars), for gross proceeds to Royal Road of up to $8,000,000, to be conducted on a best-efforts agency basis.

Royal Road has had discussions with a key investor which has expressed its intention to purchase approximately $5 million (assuming the offering is fully subscribed) of the shares to be issued pursuant to the offering.

The net proceeds received by Royal Road from the offering will be used to finance Royal Road’s previously announced acquisition of assets in Colombia and for working capital and general corporate purposes.

The closing of the offering is expected to take place by mid May, 2019 and is subject to the receipt of necessary regulatory approvals, including the approval of the Canadian TSX Venture Exchange. All securities issued in connection with the offering will be subject to a statutory four-month hold period.

In consideration for its services, Pollitt will receive a cash commission equal to 6.0% of the gross proceeds of the offering. As additional compensation, Royal Road will issue to Pollitt warrants to purchase a number of shares equal to 6% of the number of shares issued under the offering at a price per share equal to the issue price.

The securities offered have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws.

Transaction Update

Royal Road also announced that it intends to close its previously announced acquisition of Northern Colombia Holdings Limited from Compañía Kedahda Limited, an affiliate of AngloGold Ashanti Limited, on or before May 31, 2019, and that it will have satisfied or waived its financing condition in order to proceed with the transaction on this basis. On closing, Royal Road will acquire a title package comprised of mining concession agreements covering approximately 36,000 hectares (90,000 acres) of land, and the rights with respect to applications that have been made to acquire mining concessions over approximately 215,000 hectares (531,277 acres) of land, in prospective mineral belts in the Nariño, Cauca and Antioquia departments of Colombia.

Acquisition of Minority Interest

Royal Road also announced that it has agreed to acquire the remaining 2% minority equity interest in Minerales Camino Real S.A.S., (“RRM Colombia”), following which RRM Colombia will become a wholly owned subsidiary of Royal Road. RRM Colombia is a Colombian corporation, through which Royal Road holds various mineral exploration interests and carries on its operations in Colombia. Under the terms of the Acquisition, Royal Road will issue 1,200,000 ordinary shares as consideration for the minority equity interest. The closing of the acquisition is expected to occur concurrently with the closing of the offering, subject to obtaining information necessary regulatory approvals.

The acquisition constitutes a “related party transaction” within the meaning of TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because the minority equity interest is being acquired from Ivan Devía Manchola, Royal Road’s Chief Operating Officer. Royal Road is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction exceeds 25% of Royal Road’s market capitalization. Royal Road did not file a material change report in respect of the related party transaction at least 21 days before the closing of the acquisition, which Royal Road deems reasonable in the circumstances so as to be able to complete the acquisition concurrently with the offering and avail itself of the proceeds of the offering in an expeditious manner.