Rose Petroleum PLC Potential disposal of Mexican milling operations (5463Y)
06 March 2017 - 6:00PM
UK Regulatory
TIDMROSE
RNS Number : 5463Y
Rose Petroleum PLC
06 March 2017
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:
Rose Petroleum Tel: +44 (0)
plc 20 7225 4595
Matthew Idiens (CEO) Tel: +44 (0)
Chris Eadie (CFO) 20 7225 4599
---------------------- ---------------- ---------------
Jeremy Porter / James Allenby Capital Tel: +44 (0)
Reeve / Liz Kirchner Limited 20 3328 5656
James Pope / Ben Turner Pope Tel: +44 (0)20
Turner Investments 3621 4120
This information is provided by RNS
The company news service from the London Stock Exchange
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