Potential disposal of Mexican milling operations
Dissemination of a regulatory announcement that contains inside information according to regulation (EU) no. 596/2014 ("MAR").
6 March 2017
Rose Petroleum plc
("Rose", the "Company" or the "Group")
Potential disposal of Mexican milling operations
Rose (AIM: ROSE), the AIM quoted natural resource business, announces that it has entered into a memorandum of understanding ("MOU") with Magellan Gold Corporation (OTCQB: MAGE) ("Magellan") for the potential disposal of the Company's mineral processing mill operation in San Dieguito de Arriba, Mexico and its associated assets, licenses and agreements (together, the "SDA Mill") for a total consideration of US$1,500,000 ("the Proposed Disposal"). The Group has operated the mill for ten years and it is currently engaged in toll milling for third party ore producers.
Under the terms of the MOU, the Company has granted Magellan a 90-day option period, for a non-refundable US$50,000 deposit, already paid, by Magellan, to purchase the SDA Mill subject to the satisfaction of a number of conditions. The MOU also provides Magellan with the option of extending this option period by a further 60 days in consideration of an additional US$100,000, which would be credited against the final purchase price should the sale proceed. The total purchase price for the SDA Mill is US$1.5 million, payable as to US$1.0 million in cash and US$500,000 in restricted common stock (shares) in Magellan.
Completion of the disposal of the SDA Mill is subject to a number of conditions, including but not limited to, the Group and Magellan entering into a separate asset purchase agreement, the completion of satisfactory due diligence by Magellan and Rose, Magellan completing a financing to acquire the SDA Mill and an audit by Magellan of the SDA Mill's financial statements at Magellan's cost. In addition, as the SDA Mill has contributed the majority of Rose's revenue in the past 12 months, any sale would be subject to the approval of shareholders of Rose at a general meeting of the Company. There can therefore be no assurance at this stage that the sale of the SDA Mill will be completed.
Should the transaction proceed, Rose will publish a Circular for Shareholders, with notice of a general meeting, setting out the full terms of the Proposed Disposal and rationale for it. If the transaction is not approved by shareholders, all funds paid to Rose by Magellan will be returned.
As previously announced, the Group is actively pursuing the recovery of IVA (value added tax) and tax totalling MX$16.5 million (circa. US$760,000) from the Mexican tax authority, Servicio de Administracion Tributaria ("SAT"). Rose has been in detailed discussions with SAT regarding the reclamation of the sums owed to Minerales VANE SA de CV, the subsidiary of Rose that owns the SDA Mill, dating back to 2013. The Company has made significant progress in this process over the past few months and are confident of a positive outcome. The proposed disposal of the SDA Mill will have no impact on the potential recovery of this IVA for the Group.
Matthew Idiens, CEO, commented: "As outlined in our Operations Update in January, we are on track to receive the permit for the 3D seismic shoot in the highly prospective Paradox Basin, Utah in H1 2017. Funds from the recovery of the Mexican IVA and from the disposal of the SDA Mill, if the sale completes, along with existing cash resources would be allocated towards the cost of that 3D shoot.
The Board feels that the current outlook for the future for US energy is extremely encouraging and the timing of the issue of the 3D permit along with the potential strengthening of the Company's balance sheet through the potential sale of the SDA Mill and recovery of the Mexican IVA, will put the Company in a stronger position to capitalise on its oil assets."
Enquiries:
|
Matthew Idiens (CEO) Chris Eadie (CFO)
|
Rose Petroleum plc |
Tel: +44 (0) 20 7225 4595 Tel: +44 (0) 20 7225 4599 |
|
Jeremy Porter / James Reeve / Liz Kirchner
|
Allenby Capital Limited
|
Tel: +44 (0) 20 3328 5656
|
|
James Pope / Ben Turner
|
Turner Pope Investments |
Tel: +44 (0)20 3621 4120 |
This information is provided by RNS
Latest directors dealings
- 1 day ago Savannah Energy
- 1 day ago Buccaneer Energy PLC
- 1 day ago Savannah Energy
- 1 day ago Carclo
- 1 day ago Schroder Japan Growth Fund