Mineros S.A. & Royal Road Minerals Announce Colombia Gold Mining Joint Venture
Royal Road Minerals Limited (TSXV:RYR) announced today that it has entered into a Letter of Intent with Mineros S.A. (BVC: MINEROS) in relation to the company’s Guintar and Niverengo concessions and its Margaritas title application (The “GNM Project) in Antioquia, Colombia. Mineros is a Colombian public company engaged in the business of gold mining and listed on the Colombian Stock Exchange Bolsa de Valores de Colombia (BVC). Royal Road currently operates in Nicaragua under a separate exploration strategic alliance formed in September 2017 with Mineros subsidiary, Hemco Nicaragua S.A.
Pursuant to the LOI, the parties intend to negotiate and enter into a definitive agreement as soon as practicable, but in any case before January 30, 2020. The LOI provides that the definitive agreement would contain the following basic terms:
- Mineros would pay to Royal Road the sum of $1 million USD on execution of the Definitive Agreement
- Mineros and Royal Road would agree to an initial exploration program and budget for the exploration of the GNM Project
- Mineros would fund all exploration costs up to a total of USD $2.5 million
- After spending at-least USD $1 million, Mineros would have the option to acquire 25% of the GNM Project and to transfer titles and title applications to a new special purpose company, initially to be owned as to 75% by Royal Road and as to 25% by Mineros
- After spending at least $2.5 million USD, Mineros would acquire 50% of the Project Company and the parties would operate the Project Company on a joint venture basis
- The parties would thereafter jointly fund the operations of the Project Company and the parties’ respective interests would be subject to dilution under a standard formula, provided that if any party dilutes to 30%, it would have a one-time right to contribute any funding shortfall and restore its pre-dilution ownership interest
- If a party’s interest is diluted to below 15%, such interest would convert to 1.5% net smelter royalty
- The company would be the operator of the exploration of the GNM Project for so long as it maintains not less than a 50% ownership interest in the GNM Project
“We are pleased to expand our close relationship with Mineros and to have the opportunity to replicate our successful partnership in Nicaragua” said Tim Coughlin, Royal Road’s President and CEO. “Exploration work at the GNM Project will focus primarily on drill testing the recently permitted Niverengo and Guintar projects with a view to defining an initial inferred resource in the second half of 2020. We will also be pushing to ensure the rapid conversion of the exciting Margaritas application area to a concession contract so that scout drilling may commence there as soon as possible”
Photo courtesy Royal Road Minerals
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