Magellan Gold Corporation (OTCQB: MAGE) ("Magellan" or "theCompany") is pleased to announce that its purchase of the SDA Mill, Nayarit State, Mexico, from Rose Petroleum plc (AIM: ROSE) is nearing conclusion. The final major item for closing to occur, restructuring of Mexican ownership of the SDA Mill, is in progress and is expected to be concluded in November 2017. Other important closing items already in place include the necessary funding and Rose's shareholder approval.
Magellan is especially pleased to announce that effective for the month of November 2017, operations of the SDA Mill have re-commenced under an interim milling agreement between the Company and Rose and its Mexican operating subsidiary. The processing plant currently is treating third-party ore on a toll basis at the rate of 100 tons per day. Magellan has funded costs of the interim operations under an approved budget and will be entitled to proceeds therefrom.
"Acquisition of the SDA Mill will transform Magellan into a production company and will be an exciting development for our shareholders," stated CEO Pierce Carson. "With production started already under the interim processing agreement, we have begun to execute on our strategy to resume processing operations, build production and increase cash flow."
Total consideration for the purchase of the SDA Mill is US$1.5 million, consisting of $1.0 million in cash and $500,000 in Magellan stock, of which $100,000 in cash already has been paid. As announced August 16, 2017, Magellan has arranged $900,000 in irrevocable bridge loans in support of the mill purchase. The bridge loans are sufficient to complete the cash component of the purchase price.
Although the parties anticipate closing to occur in November 2017, there can be no assurance that the purchase of the mill will be concluded.
The SDA Mill is a fully operational flotation plant that also includes a precious metals leach circuit and associated assets, licenses and agreements. The mill has the capacity to process ore at a rate of up to 200 tons per day. The mill has a ten-year operating history. Historically, its operation has been based on sales of flotation concentrates to smelters, and payment for precious metals content. Until November 2017, milling activity was on hold pending the completion of the purchase transaction.