Rio2 grabs 15% of fellow Canadian explorer Royal Road in block trade

Rio2 Limited has created quite a stir in the Canadian mining space after buying nearly 40 million shares in fellow listed Royal Road Minerals, giving it a 15 per cent slice of the junior explorer and substantial shareholder status. 

Rio2 shelled out C$4.58 million (A$5 million) in an on-market raid on Canada’s TSX Venture Exchange, snapping up an entire institutional parcel at just 11.5 cents a share. Other institutional buyers joined the trade, but Rio2’s holding makes it the standout new heavyweight on Royal Road’s register.

Management says the junior counterpart’s ground is brimming with geological promise and offers Rio2 optionality through a pipeline of blue-sky exploration ground in multiple jurisdictions.

By grabbing this shareholding, the company has been able to tap into fresh exploration opportunities without taking the foot off the pedal at its flagship Fenix Gold mine in Chile, where expansion plans remain a firm priority.

The transaction also marks an important reunion of two long-time industry operators - Rio2’s Alex Black and Royal Road’s Tim Coughlin.

Rio2 Limited executive chairman Alex Black said: “I have known Tim Coughlin for over 20 years, and, in my opinion, Tim is one of the best generative geologists on the planet. Tim was a first mover in Colombia 25 years ago and recently a first mover in Saudi Arabia.”

Coughlin was equally bullish, calling Rio2 a “bold and dynamic company” with a knack for execution. “This comes at an opportune time and creates a strong platform for mutual growth,” he said.

Along with the share purchase, Rio2 has also inked an investor rights agreement with Royal Road. The deal means that so long as Rio2 keeps at least a 9.5 per cent interest, the company can maintain its holding in any future equity raises, increase its position up to 15 per cent post-financing and nominate a director to Royal Road’s board.

That boardroom access now gives Rio2 a front row seat as Royal Road pushes ahead with its hunt for elephant-sized copper-gold systems in Colombia, Saudi Arabia and Morocco.

For Royal Road, Rio2’s arrival signals access to fresh capital. It is also a powerful vote of confidence from a proven mine-builder with serious runs on the board. With Rio2’s firepower and credibility now in its corner, Royal Road may be able to lean on heavyweight backing as it looks to turn discoveries into real, bankable resources.

Rio2’s main focus, meanwhile, remains on its whopping 4.8-million-ounce flagship Fenix Gold project in Chile’s Atacama Desert - tipped to become one of the largest heap-leach gold mines in the Americas when it starts operations next year.

Using a simple, low-cost heap-leach process and trucked water, the mine will kick off with a bumper 12-year stretch delivering 91,000 ounces a year at 0.54 grams per tonne (g/t), before settling into a 17-year average of 82,000 ounces annually at 0.48g/t.

Last week Rio2 commissioned two local desalinated water suppliers to study piping water straight to site - a potential game-changer in the world’s driest desert. 

Cracking the Atacama’s water code could smash a major bottleneck and unlock the path to tripling output at Fenix Gold to a staggering 300,000 ounces a year.

In a market where majors are circling for new ounces and investors are starved of fresh gold stories, this link-up ticks plenty of boxes. Rio2 gets exposure to discovery potential in Colombia and the Middle East, while Royal Road wins an influential backer to help shepherd its projects forward.

It’s a classic win-win in the resource sector - one part optionality, one part credibility and a big dose of ambition.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au