VANCOUVER (miningweekly.com) – The TSX-V-listed stock of Royal Road Minerals jumped more than 25% on Wednesday following a major endorsement from miner Barrick Gold, which has signed a subscription agreement to increase its holdings to about 12.5% of the junior company's equity.
Under the terms of the deal, Barrick will buy 9.87-million ordinary shares in Royal Road Minerals in a nonbrokered private placement at a price of C$0.16 a share, or C$1.58-million.
Royal Road said it would complete a C$5-million financing before the deal closes, that will see it issue a further 21.37-million shares.
Barrick said it acquired the shares for investment purposes. The major has increasingly been leaning on forming partnerships with junior explorers as it seeks to secure future reserves to replace the ounces it produces.
As long as Barrick owns more than 10% of Royal Road, it also has the right to participate in equity financings by Royal Road in order to maintain its pro rata ownership.
Royal Road, which is closely aligned with Lydian International shareholders, advised that it would use the proceeds from the private placement to Barrick and the financing for exploration and development at the company's Colombian and Nicaraguan properties and for general corporate and working capital purposes.
The transaction is expected to close on or about February 9.