Rose Petroleum Plc (AIM: ROSE), the AIM quoted natural resources business, is pleased to provide an update on the potential disposal of the Company’s mineral processing mill operation in San Dieguito de Arriba, State of Nayarit, Mexico and its associated assets, licenses and agreements (together, the “SDA Mill”) to Magellan Gold Corporation (OTCQB: MAGE) (“Magellan”), as initially announced on 6 March 2017.
On 1 August 2017, Rose announced that it had agreed an extension to Magellan’s option period, to enable Magellan to deliver executed irrevocable bridge loan commitments representing not less than $900,000 in cash required to fund the transaction, until 15 August 2017. Also under the terms of the option extension, Magellan was required to reimburse Rose for the employee and maintenance costs of the SDA mill of approximately US$25,000 per month for August and September.
The Company is pleased confirm that it has received from Magellan both the irrevocable commitment letters totalling US$900,000 to fund the purchase and the first US$25,000 cash payment relating to the August 2017 running costs of the mill. The second payment is due on or before 1 September 2017.
Rose and Magellan are now pushing forward to complete the transaction. Closing of the transaction is still subject to the satisfaction of a number of conditions, including but not limited to, approval by Rose’s shareholders, the Group and Magellan entering into a separate asset purchase agreement and both parties completing their respective due diligence.
The total purchase price for the SDA Mill is agreed under the Memorandum of Understanding between Rose and Magellan as US$1.5 million, payable as US$1.0 million in cash and US$500,000 in restricted common stock (shares) in Magellan (less the US$100,000 option payment already received).
Should the transaction not complete due to it not being approved by the Company’s shareholders, Rose will be required to reimburse Magellan the US$100,000 option payment already received. This payment would be payable in cash or shares at the Company’s discretion.
Milling activity at the SDA mill remains on hold pending the completion of this transaction.
Matthew Idiens, CEO commented: “We are pleased with the progress being made on the disposal of the SDA Mill and, subject to signing of the Sale and Purchase Agreement and satisfactory completion of due diligence, we expect to be in a position to convene the general meeting to seek shareholder approval to complete the disposal in the coming weeks. We will keep the market updated on the process.”
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