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Royal Road Minerals surges as it says Barrick Gold investment is a strong endorsement

Last updated: 15:31 24 Jan 2018 EST, First published: 07:31 24 Jan 2018 EST

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Barrick's investment represents a strong endorsement of Royal Road's efforts in Colombia, it said

Mining major Barrick Gold Corp (TSE:ABX, NYSE:ABX) is set to buy a 12.5% stake in Royal Road Minerals (CVE:RYR) providing around C$1.6mln to the smaller company, the latter revealed today.

Barrick has entered a subscription agreement to acquire more than 9.8mln Royal Road shares in a private placing at 16 cents a share.

READ: Barrick Corp is Jefferies top gold pick

Royal Road has gold and copper assets in Colombia and Nicaragua and the proceeds will be used to advance these properties and for general corporate and working capital.

Shares in Royal Road surged over 22% to C$0.16 in Toronto.

In connection with the subscription, the company and Barrick also struck an investor rights agreement, which means Barrick, providing it owns at least a 10% stake in Royal Road, has the right to take part in financings to maintain its pro rata ownership in Royal Road.

"We were pleased when Barrick made its initial investment in the company and are now even more pleased that Barrick will participate in our current financing as a strategic shareholder," said Tim Coughlin, the president and chief executive of Royal Road Minerals.

"Barrick is a world-class mining company with a vision for partnering with host governments and communities to transform natural resources into sustainable benefits and mutual prosperity, underpinned by relationships built on transparency and respect. Barrick's additional investment represents a strong endorsement of our efforts in Colombia and reflects the exploration and development potential of our company."

The deal is expected to close on or about February 9 this year.

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