Rose Petroleum grants extension over possible disposal

Natural resources business Rose Petroleum updated the market on Thursday, on the potential disposal of the company's mineral processing mill operation in San Dieguito de Arriba, Nayarit, Mexico and its associated assets, licenses and agreements to Magellan Gold Corporation, as it initially announced on 6 March.

The AIM-traded firm said it had been paid a further $0.1m for Magellan to secure a 60 day extension of its option to acquire the SDA Mill.

Under the terms of the memorandum of understanding between Rose and Magellan, Rose granted Magellan a 90-day option period, for a non-refundable $0.05m deposit, to purchase the SDA Mill, subject to the satisfaction of a number of conditions.

The MoU also provided Magellan with the right to extend that option period by a further 60 days in consideration of an additional $0.1m, which would be credited against the final purchase price should the sale proceed.

Rose said the total purchase price for the SDA Mill was $1.5m, payable as $1m in cash and $0.5m in restricted common stock in Magellan.

Magellan confirmed it had now taken up its right to extend the option period for a further 60 days, which led to Rose receiving the corresponding non-refundable payment of $0.1m.

“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,” Rose’s board explained in its update.

“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 go ahead, Rose said it would publish a circular for shareholders, with notice of a general meeting, setting out the full terms of the proposed Disposal and rationale for it.