Canadian junior mining companies operate all around the world and in diverse communities. Being good guests in a foreign country is critical to a company operating abroad and achieving its goals. How a company operates will have a big impact on any work down the road and should be an important consideration for investors. In an industry often perceived as invasive and disruptive, obtaining social license is a crucial foundation to gaining local credibility -- yet its achievements are rarely recognized and valued by financial markets.
Royal Road Minerals’ (TSX-V: RYR) exploration team realizes this under appreciated aspect of mine development having taken a mine from discovery to development. Developing the community can ensure long term success in a region. The company at its Golondrina high-grade gold project provides an excellent example of how to lay the foundations for a social license by building tangible benefits to its host community in Colombia.
According to the Fraser Institute’s Mining Facts, a social license refers to the level of acceptance or approval by local communities and stakeholders of mining companies and their operations. The concept is new and is based on the idea that mining companies need not only government permission but also social permission to conduct their activities. Social license is an essential part of operating within democratic jurisdictions, without popular support it is unlikely that agencies from elected governments will readily grant operational permits or licences. However, the need for and ultimate success of achieving a social license relies to a large extent on functioning government and institutions. Many mining companies consider gaining a social license as an appropriate business expense that contributes to successful operations in foreign countries. Guidelines and initiatives to build and maintain social licenses have been developed in Canada and internationally.
Royal Road Minerals’ team discovered the 5Moz Amulsar gold deposit in Armenia and founded Lydian International (TSX: LYD). The team worked closely with specialists from the International Finance Corporation, the World Bank's equity investment arm, and the European Bank for Reconstruction and Development and took that project from discovery and through the important and high-risk license transition and permitting phase, to mine development.
Royal Road CEO Tim Coughlin says community support was crucial during every phase of the Amulsar Gold project. “We could not have achieved all of that without the community support we had attained through various award-winning social programs we implemented around the Amulsar project.” During this time, they also implemented successful social and environmental programs in other complicated jurisdictions such as post-conflict Kosovo and more recently amongst Kurdish communities in Southeast Turkey..
Once Royal Road identifies a gold project and is satisfied the environmental implications of mining are not disruptive and will be beneficial to the region, the company begin social baseline work. That involves identifying the community’s major concerns, implementing programs to address these and ensuring their exploration programs are as non-intrusive and inclusive as possible.
The team at Royal Road is continuing this tradition of building social license in Colombia at its Golondrina high grade gold project. At Golondrina, the community’s major concern was fresh drinking water. The company’s response was to draw on solutions developed for the Atacama desert in Chile and install the first cloud harvesting pilot plant in the region. Although the region in southern Colombia is not as dry as the Atacama desert, there are extended dry periods and difficulties in accessing clean water.
For example, there has been no significant rainfall in the region for the months of June and July this year and natural springs are drying up. Almost every afternoon however, mists rise from the Pacific Forest to the west and cascade in great volumes over mountain passes to the east. The cloud harvesting meshes capture these mists and condense clean water direct from the air. A mesh measuring just 16 square meters can in one day, capture up to 500 liters of crystal clear, uncontaminated fresh drinking water for the communities.
The company’s cloud capture program at La Golondrina has now been extended to four mesh installations which will condense valley mists and supply between 2000 and 3000 liters of clean drinking water per day to the local community. This is a simple, cheap, yet effective program which has attracted some significant interest throughout the region and in Colombia as a whole. This interest has highlighted the great skill and commendable creativity of the company’s social and environmental team. It has attracted the attention of local and regional authorities and the hope is that this the the start of something significant and highly beneficial for southern Colombia.
Geophysical ground truthing and modeling is complete, initial drill holes have been located and site preparation is underway. Drill holes will intersect known stacked horizontal high-grade vein systems and drill down through these into magnetic anomalies that are interpreted to correspond to other vein systems with magnetic pyrrhotite which is the main sulphide phase occurring in the veins. The company hopes to have drill results in September.
Companies that do not operate without the consent of the community will often face serious opposition to develop further down the line. Consulting the community is often a consideration investors do not consider when looking for investment opportunities especially in Latin America that have the legal tradition of Consulta Previa. This is the law of prior consultation gives communities the power to approve or end projects operating in their jurisdictions. Governments will rarely intervene to expropriate lands on the behalf of miners. Investors should look at whether a company is consulting with the community because if a company ignores this and makes a discovery, they will have a difficult road to pursue further work. Furthermore, projects like Royal Road’s cloud capture program demonstrate the tangible benefits that mineral exploration can bring to a region. This company can serve as a good example for the mineral exploration industry.
Royal Road Minerals (RYR-V)
Market cap: ~$9 million
About Royal Road Minerals:
Royal Road Minerals is a gold-focused exploration and development company. The Company's current area of interest is the highly prospective La Llanada gold district of southern Colombia. The Company has an option to earn 100% of the La Golondrina high-grade gold mine and the neighboring La Redencion gold mine. The company trades on the TSXV under the trading symbol "RYR".
More information can be found on Royal Road Minerals web site at www.royalroadminerals.com
Disclosure: The above article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. All facts are to be verified by the reader. Either the author, CEO.CA or its consultants may from time to time hold or transact in the securities mentioned. Royal Road Minerals is a CEO.CA advertiser. The above article may contain certain information that constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate” and other similar words, or statements that certain events or conditions “may” or “will” occur and include statements regarding the Offering and the use of proceeds therefrom. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the hiring and retention of directors and officers, exploration and development of mineral properties, mine site planning and development, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, permitting and licensing and other factors described above and in Royal Road Minerals’ most recent annual information form under the heading “Risk Factors”, which has been filed electronically by means of the Canadian Securities Administrators’ website located at www.sedar.com. The Company disclaims any obligation to update or revise any forward-looking statements if circumstances or management’s estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.