Red Rock Resources plc Columbia Update (8143U)
23 January 2017 - 6:07PM
UK Regulatory
TIDMRRR
RNS Number : 8143U
Red Rock Resources plc
23 January 2017
Red Rock Resources plc
("Red Rock" or the "Company")
Colombia Update
23 January 2017
Further to the announcement of 5 September 2016, Red Rock
announces an update in relation to the sale of certain assets
including the Company's wholly owned subsidiary American Gold Mines
Ltd ("AGM"), the 50.1% shareholder of the El Limon gold mine,
Colombia ("Sale").
Highlights:
-- Red Rock gave Promissory Note Conversion Notice to Colombia Milling Limited ("CML")
-- CML has not acknowledged Promissory Note Conversion Rights
-- Further Dispute exists in relation to Red Rock's Net Smelter Return Royalty ("Royalty")
-- Red Rock has now submitted a Request for Arbitration to the
International Chamber of Commerce ("ICC")
-- Red Rock seeks Reliefs including Damages, Declaration of
Anticipatory Breach and Realization of Security over AGM Shares
Summary:
In relation to the US$1,000,000 Promissory Note from CML held by
Red Rock (the "Note"), Red Rock has given notice that it wished to
exercise its right of conversion of the Note into shares in Para
Resources Inc ("PRI") (CVE:PBR) listed in Canada.
Further, CML/PRI have stated an intention to pay Red Rock's
Royalty on gold produced only from gold produced from underground
at El Limon and not including gold produced from the mine's
processing plant that is derived from material sourced outside the
license boundaries. Red Rock is seeking to ensure that the Royalty
covers all ores processed by the gold processing plant included in
the Sale of the El Limon mine and located at the mine, as
originally intended by the parties.
Neither CML nor PRI have acknowledged the existence of and
exercise of Red Rock's right of conversion of the Note, and CML/PRI
have denied the correctness of the Company's interpretation of the
Royalty formula. Red Rock has therefore submitted a Request for
Arbitration to the ICC in order to resolve these issues.
Red Rock seeks reliefs including a declaration of anticipatory
breach, the realization of its security over the AGM shares by
re-registering them into its own name, damages of between CAD3.4m
and CAD4.5m, and interest. As in any proceedings, the making of a
claim carries no certainty of a successful outcome, and in the
event of success the value claimed may not be the value
awarded.
Further updates will be provided in due course.
Red Rock Chairman Andrew Bell comments: "As stated at our AGM in
December, the Company intends to pursue its rights in relation to
the sale of its gold assets at El Limon in Colombia. The sale
agreement signed by CML was intentionally structured in such a way
as to allow the new owners to defer a significant amount of the
consideration in the form of a Promissory Note and net smelter
return royalties, while they immediately invested these savings in
the underground mine and in improved gold production capabilities
at the plant. Were CML to succeed in its stated intention to put
them into a public vehicle, Red Rock was to share the benefit from
this early liquidity event through a right to convert the Note into
shares into the listed entity.
CML has completed the plant upgrades taking advantage of the
deferred consideration, and PRI, a listed entity in Canada and
investor in CML, has acquired the entirety of the assets sold by
Red Rock. CML and PRI are now refusing to adhere to the clause that
would allow conversion of the Note into listed shares while
simultaneously interpreting the royalty in a way that would stretch
the timeline of payments.
This is unacceptable to Red Rock and the Company is now pursuing
arbitration on these issues through the ICC in Paris to protect its
rights and to obtain for our shareholders the full value of the
agreements.
We look forward to an early resolution of these matters and will
provide more information as it becomes available."
For further information, please contact:
Andrew Bell 0207 747 9990 Chairman Red Rock Resources Plc
Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0129 351 7744 Broker Dowgate Capital
Stockbrokers Ltd
This information is provided by RNS
The company news service from the London Stock Exchange
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January 23, 2017 02:07 ET (07:07 GMT)