Sunday, July 14, 2024

Saudi-backed copper-gold exploration moves Royal Road into Morocco

Royal Road Minerals (TSXV: RYR), a Jersey-based explorer with projects in South America, is expanding into a copper-gold project in Morocco with an option to buy Izughar Resources for nearly $3.4 million.

The deal will be done through a 50-50 partnership with Saudi Arabia’s MSB Holdings, Royal Road said in a release on Tuesday. The partner, which has units ranging from construction to cybersecurity, is led by Tareq Telemesani, a Saudi property developer. He headed Jeddah Development & Urban Regeneration, Knowledge Economic City and once worked for state oil company Aramco.

The deal marks another way for Saudi Arabia to pivot to green metals, following a government strategy launched last decade to invest its oil dividends in so-called future minerals. It holds an annual conference on the effort, which last January saw the government sign deals with Ivanhoe Electric (TSX: IE; NYSE-AM: IE), Barrick Gold (TSX: ABX; NYSE: GOLD), Eurasian Resources Group, Nokia, Shell and Bechtel.

The joint venture is focused on the early stage 680 sq km Alouana copper-gold project in eastern Morocco. Royal Road’s staged payments to Izughar are dependent on the achievement of certain exploration and development targets. If these are met, the Moroccan company would retain 10% of the project, which would eventually become a 2% net smelter return royalty.

“Morocco has excellent geology for copper deposits and is a mining friendly jurisdiction that is looking to triple industry revenues by 2025,” said Tim Coughlin, president and CEO of Royal Road, in an emailed response from Saudi Arabia. “Our partner MSB is involved in construction and other projects in Morocco, so it makes sense for us to work together.”

The northwest African country wants to more than double 2020 revenue from non-phosphate mining to greater than $1.7 billion by 2030, according to a government plan. Morocco is the world’s largest phosphate producer.
Royal Road’s shares rose C1¢ to C10¢ each in Toronto on Tuesday, valuing the company at C$26.4 million. They’ve traded in a 52-week range of C9¢ to C17¢.

The joint venture, Royal Road Arabia, plans to spend $150,000 on further rock chip and channel rock chip sampling, as well as ground magnetics and radiometrics, with a view to drilling in early 2024. The initial focus will be on drill testing the grade and bulk potential, it said.

“Alouana is a very typical thermal aureole copper and gold system formed above and adjacent to a granitic intrusion,” Coughlin said in the release. “This style of deposit hosts some of the largest copper and gold resources in the world and is a target style of key interest.”

Alouana hasn’t been drill tested, but Izughar collected 92 grab rock chip samples. These assayed up to 21% copper (minimum 0.001% and average 1.3%), gold up to 5.9 grams per tonne (minimum 0.01 and average 0.17 grams per tonne). Silver has been recovered up to 493.8 parts per million (minimum 0.53 and average 22.28 ppm) and tungsten up to 0.36% (minimum 30 ppm and average 365 ppm).

The joint venture has completed soil geochemical sampling and geological mapping throughout Alouana. A total of 1,718 soil samples were collected on 100 metre lines and at 50 metre intervals. The results mapped out an approximately 2km long ridge-top zone, showing the steeply dipping mineralised vein, breccia and porphyry bodies, the company said.

Alouana, in the Moroccan provinces of Taourirt and Guercif, was mined on a small scale at the beginning of the last century. Some 35 small-scale copper, gold and silver workings have been identified within the Izughar licence areas, Royal Road said.

The project has a shallow-dipping, stratiform style of copper and gold mineralisation with steep-dipping mineralised fractures that may indicate a large near-surface mineable deposit,” said Coughlin.

Geologically, Alouana is located in Morocco’s Eastern Meseta Terrane and comprises an erosional window of Paleozoic metamorphic and intrusive igneous rocks from within surrounding and overlying Mesozoic and Tertiary sedimentary strata, the company said.

The host rocks for the copper, gold and polymetallic mineralisation at Alouana are mainly Devonian shales intruded by a Permian granite and associated porphyry dykes, it said. The granite underlies and has contact metasomatised the schistose sequence. Copper mineralisation is characterised by chalcocite, chalcopyrite and the oxide assemblages of azurite and malachite.

Royal Road is also exploring in Saudi Arabia, where it’s submitting licence applications for early stage assets, Coughlin said by email. It’s also active in Argentina and Colombia.

The Güintar and Margaritas concessions in Colombia were acquired in 2019 and were drilled by AngloGold Ashanti (NYSE: AU; JSE: ANG). Royal Road started drilling in 2021. Highlights included drill hole GUI-DD-012, which intersected 303.7 metres of 1 gram per tonne gold equivalent and 0.8% copper equivalent, including 62 metres of 2.1 grams gold, 12.4 grams silver and 0.62% copper.

“We have many other assets in the country that we are looking to sell for cash and royalties,” said Coughlin. “There are a number of deals we are working on with local partners.”

In Argentina, the company holds the Santo Domingo district in San Juan Province, 150km east of San Juan City at an elevation of about 1,200 metres. The 250 square kilometre area contains the El Arriero, Divisiora and Alunita copper-gold targets where the company has completed some exploration drilling.

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