LCL’s Colombian Divestment: What Risks Lie Ahead for Royalty Income?

Strategic Divestment of Colombian Projects

LCL Resources (ASX – LCL) has taken a significant step in reshaping its portfolio by executing an amended Option Agreement with Tiger Gold Corporation for the divestment of its Colombian assets, including the Quinchia and Andes Gold Projects. The deal, approved overwhelmingly by shareholders at the June 2025 Annual General Meeting, secures a total consideration of A$14 million in cash alongside a 1% Net Smelter Royalty (NSR) payable upon completion of all payments.

This transaction marks a pivotal moment for LCL, as Tiger Gold Corporation has already made the initial A$1 million payment and assumed operational management and ongoing costs for the Colombian projects. The staged payment structure includes A$7.5 million within 12 months and a further A$6.5 million upon first gold production, reflecting confidence in the assets’ future potential under new stewardship.

Exploration Momentum in Papua New Guinea

While transitioning its Colombian interests, LCL has maintained a strong focus on advancing exploration in Papua New Guinea (PNG). The June quarter saw the completion of a geochemical program at the Ubei epithermal vein target, validating Induced Polarisation (IP) geophysical anomalies and identifying promising drill pad locations. Surface rock chip samples revealed high-grade copper and gold mineralisation, suggesting a mineralised corridor potentially up to 60 meters wide, comparable in style to the prolific Kainantu gold-copper mine operated by K92 Mining.

At the Dada Au-Cu porphyry prospect, trenching and pit sampling extended the known mineralised footprint, confirming a robust porphyry-style stockwork system with encouraging gold and copper grades. Notably, trench 8 returned 19 meters at 0.43 g/t gold and 0.16% copper, while pit samples yielded values up to 1.55 g/t gold. These results underscore the prospect’s potential for hosting a significant mineralised intrusive body yet to be drilled.

Operational and Financial Overview

During the quarter, LCL reported cash holdings of A$2.4 million, reflecting prudent management amid ongoing exploration and corporate activities. Exploration expenditure totaled approximately A$379,000, primarily directed towards PNG field programs. Corporate costs were elevated due to legal and administrative expenses related to the Option Agreement and shareholder meeting.

In Colombia, exploration activities were paused as project management transitioned to Tiger Gold Corporation, with LCL focusing on community engagement and regulatory compliance to ensure a smooth handover. The company continues to monitor evolving regulatory challenges in Colombia, including mining tenure uncertainties arising from national cadastre system changes and land rights decrees.

Looking Ahead

LCL Resources is poised to benefit from the staged payments and royalty income from its Colombian divestment while advancing high-potential exploration targets in PNG. The identification of drill-ready targets at Ubei and the expanding mineralised footprint at Dada set the stage for upcoming drilling campaigns that could significantly enhance the company’s resource base and valuation.