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Rock Energy Resources to Acquire Remaining 51% of Red Arrow Mine
Posted February 2, 2012
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HOUSTON--(BUSINESS WIRE)--Rock Energy Resources, Inc. (Pink Sheets:RCKE) announced today that it has signed a Letter of Intent with Red Arrow Gold Corporation to acquire the remaining 51% of its interest in the Red Arrow Mine located in Montezuma County, Colorado. On December 20, 2011, Rock Energy announced it had acquired a 49% interest in the Mine with its purchase of 100% of the stock in American Patriot Gold ("APG"). The Letter of Intent provides for a closing date of not later than May 2, 2012.
Assets and Intellectual Capital to be Acquired:
At the conclusion of the Asset Purchase, Rock Energy will own:
• 100% of the Red Arrow Mine;
• 100% of all surface facilities and existing infrastructures
• 100% of 18 patented claims on the existing mine;
• 100% of an additional 300 acres of surface and minerals on the adjacent Hogback Ridge Dome (to be evaluated with survey and core data over the next 60 days to ascertain the level of 43-101 reserves);
• 100% of all timber rights on all the properties;
• 100% of all Ore and Concentrate Inventory ; and
• 100% of all Permits and Permit Applications
In addition, at closing of the Asset Purchase:
• Craig Liukko, currently the President of Red Arrow Gold Corp will assume the duties of President and Chief Operating Officer of Rock Energy; and
• All employees of RAGC will become employees of American Patriot Gold.
Consideration to be Paid:
As consideration for the acquisition of these assets, Rock Energy will pay at closing of the Asset Purchase:
• 40 million restricted common shares of the Company;
• Pay $3.5 million of cash to RAGC;
• Execute and deliver to RAGC a Rock Energy subordinated and unsecured $6.5 million Promissory Note with an interest rate of 5%, payable in equal monthly installments of $200,000 until fully paid;
• Grant 2 million Rock Energy stock options to the employees of RAGC as designated by Mr. Liukko; and
• Grant to RAGC a 5.0% Net Smelter Interest in the existing mine and future development areas.
Estimated Pro Forma Effects of Closing the Asset Purchase:
At Closing of the Asset Purchase, the estimated projections on Rock Energy's balance sheet and projected effects on Rock Energy's financial condition will include the following:
1. 227.5 million shares outstanding.
2. Estimated Projected Future Net Revenues based on a $1500 per ounce gold price.
3. Estimated Projected Future Cash Flows based upon current operating costs of $500 per ounce.
4. Financial Projected results do not include the potential impact from recoveries of possible reserves of silver and platinum, the quantities of which are unknown at this time.
Existing Known Potential Reserves of 400,000 ounces of gold:
Future Potential Net Revenues: $600 million/ $2.63 per share
Future Potential Net Operating Cash Flows: $400 million/ $1.75 per share
Third Party Projected Estimated Low Case of Reserves, post 43-101 evaluation, based upon 1.5 million ounces of gold:
Future Potential Net Revenues: $2,250 million/ $9.89 per share
Future Potential Net Operating Cash Flows: $1,500 million/ $6.59 per share
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Rock Energy Resources, Inc.
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