Rose agrees mill disposal with Magellan Gold

Natural resources business Rose Petroleum announced on Monday that it has signed a binding stock purchase agreement with Magellan Gold Corporation to dispose of the company's mineral processing mill operation in San Dieguito de Arriba, Mexico and its associated assets, licenses and agreements.

The AIM-traded firm said that under the terms of the agreement, which were announced on 1 September, Magellan would pay a total consideration of $1.5m for the SDA Mill, payable as $1m in cash - less a $0.1m option payment already received - and $0.5m in restricted common stock in Magellan.

It said the disposal would constitute a fundamental change of business under the AIM Rules and it was therefore subject to the approval of shareholders.

The company said it had convened a general meeting on 18 September to approve the transaction, and a circular was posted to shareholders on 1 September which contained full details in respect of the disposal.

Should the proposed disposal not complete due to it not being approved by the company's shareholders, Rose said it would be required to reimburse Magellan the $0.1m option payment already received.

That payment would be payable in cash or ordinary shares at the company's discretion.

On the current schedule, the disposal was expected to complete before the end of October.

The board said the SPA included a “number of closing conditions” including, in addition to usual completion actions, the completion of due diligence, Magellan completing an audit of the SDA Mill's financial statements, and the finalisation of the Mexican corporate restructuring to facilitate the disposal.

“The signing of the SPA is a major step completed in respect of the SDA Mill disposal, and with the support of shareholders at the convened general meeting, we hope to be able to complete the transaction in the coming weeks in order to focus the company's operations on the 3D seismic shoot in the Paradox basin in Utah,” the board sadid in its statement.

“We look forward to receiving the balance of funds from Magellan for the disposal at completion, which is expected to dovetail nicely into the timing of the Paradox shoot.”