Resource Star Ltd - Binding Term Sheet Signed

RNS Number : 8257K

Red Rock Resources plc

02 August 2013

 



Red Rock Resources plc

("Red Rock" or the "Company")

Resource Star Ltd - Binding Term Sheet Signed

2 August 2013

Red Rock Resources Plc, the mining and exploration company with an iron ore project in Greenland, a producing gold mine in Colombia, and advanced gold and copper exploration in Kenya, announces the signing of a binding term sheet by its 39% owned associate Resource Star Ltd (ASX:RSL) ("RSL").

RSL today announced in Australia that it had on 1^st August 2013 entered into a binding term sheet with Searex Petroleum (BVI) Limited ("Searex") for the acquisition of an oil project in Abilene, Texas, U.S.A. 

Under the term sheet RSL will acquire from Searex a 50% shareholding in D-Bar Leasing Inc. ("D-Bar"), which holds a 100% working interest in eight oil producing leases totalling 2,732 acres together with 10 acres of freehold land and buildings, drill rigs, and other equipment.

The leases are reported to contain 96 wells, and D-Bar has recently completed reworking 4 existing wells at an average cost of USD55,000 per well. The announcement states that each re-worked well is in the 2800'-3000' depth range and is currently producing 15 BOPD.

The rework programme is planned to cover the 80 producing wells, and D-Bar plans to expand production by additional drilling and by taking up an option of further acreage.

The purchase consideration will be 65m new RSL shares and AUD 1m cash, and a further 41,000 performance shares in RSL. Each performance share converts to 10,000 new RSL shares subject to the achievement of production milestones by performance dates. RSL will in addition assume certain payment obligations of Searex.

The transaction is subject to the raising of a minimum $5m by way of high yield debenture notes, regulatory and RSL shareholder approvals, and the completion of successful due diligence by RSL.

Further details of the transaction may be found at: http://www.asx.com.au/asxpdf/20130802/pdf/42hg11p5bxmtj3.pdf

Red Rock holds 46,908,584 shares in RSL, 38.6% of the total issued shares, and is entitled to be issued a further RSL 4,803,357 shares.  

Red Rock and RSL Chairman Andrew Bell comments: "This transaction fulfils RSL's recently announced commitment to identifying new resource sectors and activities. The opportunity to enter the young and growing business of applying new techniques including fracking and reworking old wells in a producing oilfield in a secure jurisdiction was one RSL felt to be strategic and timely. In current market conditions, the most desirable transaction was one where RSL could buy into revenue-producing assets, so this deal appeared to meet all our principal requirements. For Red Rock, this transaction is beneficial because it strengthens an associate that was suffering poor performance as a result of the conditions in the uranium market, and is likely to bring increased liquidity to our RSL shareholding."

Enquiries:

Andrew Bell	020 747 9990 or 07766 474849	Red Rock Resources plc	Chairman
Sandra Spencer	020 747 9990 or 07757 660 798	Red Rock Resources plc	Press Relations
Colin Aaronson	020 7383 5100	Grant Thornton UK LLP	Nominated Adviser
Nick Emerson	01483 413500	SI Capital Limited	Broker

 

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