Royal Road Minerals Limited announced that it has entered into a Joint Venture Share Holder Agreement with MSB Holdings Limited with respect to establishing a new company, for the purpose of copper, gold and other metals exploration in an area of interest comprising the Kingdom of Saudi Arabia ("KSA") and any other geographical area (including but not limited to those states which are members of the Gulf Cooperation Council) as may be agreed between Royal Road and MSB (each a "Party" and together "the Parties"). In February of this year, Royal Road and MSB entered into a Strategic Alliance Agreement and Non-Binding Letter of Intent with respect to copper, gold and other metal exploration in the Kingdom of Saudi Arabia. The Strategic Alliance Agreement has led to the development of an exploration decision-support-system, the generation of priority target areas and an initial 12-month work program and budget for exploration operations in KSA. The Letter of Intent provided for a period of exclusivity, during which the parties have now agreed the terms and conditions governing a Joint Venture Share Holder Agreement for the establishment of JVCO, which is to be registered in KSA and owned equally on a 50-50 basis by the Parties. Summary terms of the Agreement, subject to regulatory approval, are as follows: Whilst each Party holds 50% of the issued shares of JVCO, the Board of JVCO shall be made up of an equal number of Directors appointed by Royal Road and MSB. If a Party's shareholding in JVCO is reduced to 30% or less of the issued shares of J VCO, that Party shall no longer be entitled to appoint any Directors to the Board. Royal Road will act as operator for the JVCO and all operations in relation to the JVCO will be conducted on the basis of an approved Program and Budget prepared by Royal Road and approved by the Board of JVCO. If a Party fails to fund its relevant proportion of the funding required pursuant to a Program and Budget as and when required, such failure shall cause its shareholding in JVCO to be diluted on a pro-rata basis. Provided that it owns more than 30% of the total issued shares in JVCO, the non-contributing Party shall have a catch-up right to restore its 50% shareholding at such time as the Board has approved a further Program and Budget which requires further funding by the Parties
Dilution to below 20% shall convert to a Net Smelter Royalty of 2% The Agreement contains customary deadlock provisions, transfer restrictions and matters reserved for shareholder approval. The exploration Program and Budget for the first 12 months shall be $2.1 million and is aimed principally at securing a competitive exploration land package in KSA.