Under the terms of the memorandum of understanding, Magellan has 90-days to decide whether it will go ahead with the purchase and has put down a US$50,000 non-refundable deposit. It has the option of extending the period by a further two months for an additional US$100,000.
The US firm would acquire the San Dieguito de Arriba operation by handing over US$1mln in cash and US$500,000 in shares.
In an update on its bid to reclaim US$760,000 in value added tax from the Mexican authorities, Rose said it is now in “detailed discussions”.
“The company has made significant progress in this process over the past few months and are confident of a positive outcome,” it added.
The cash from the sale of the mill combined with any refund would strengthen significantly Rose’s financial position as it waits for its permits to shoot a 3D seismic survey over its oil and gas acreage in Utah’s Paradox Basin. It still expects to receive the green light in the first half of this year.
“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,” said chief executive Matthew Idiens.
Story by ProactiveInvestors