- Sale agreement signed with Colombia Milling Limited April 2015
- Initial sale proceeds USD$5million; three tranches with initial tranche of USD$450k upon closing 30th April
- USD$1million Promissory note and royalty stream begins in 9 months
- Four Points Mining SAS (“FPM”) owns mining licence
- Red Rock invested in FPM in 2010
- Prime location 6km south of Zaragoza on the Frontino Gold Belt
Located in northern Colombia, in the region of Antioquia, between Zaragoza and Segovia, along the Frontino Gold Belt, one of Colombia’s premier gold districts.
- El Limon
Red Rock Resources’ interest and sale process
Red Rock owns 50.002% of local operator Four Points Mining (“FPM”), which owns the mining licences to the El Limon mine. On 14 April 2015, Red Rock executed a sale agreement with Colombia Milling Limited (“CML”) a private company registered in Belize. CML is the nominee of Nicaragua Milling Company ("NML"), with which Red Rock signed a Letter of Intent on 12 May 2014. CML is represented by James Randall Martin, an experienced mining executive who was the CEO of Colombia Goldfields Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco.
Under the Sale Agreement, the Company sells, and CML buys, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in FPM, and (b) its loans to FPM, for a total consideration of USD5million. CML will also purchase an 11.2% stake from a minority shareholder in the business. Payment of USD5 million will occur in tranches; the initial payment of USD100K, was previously made in respect of CML's due diligence review. The remaining payments have been divided into three tranches; the first tranche of USD450k is to be paid upon completion of sale agreement on the 30th of April 2015. The second tranche of USD225K will be payable 9 months from Completion. The third tranche of USD225K will be payable 15 months from Completion. A further payment of USD1 million will be satisfied by the issuance by CML to Red Rock at Completion of a three year convertible 5% promissory note, secured on the acquired shares in AGM and providing that during its currency the CML will procure that AGM does not alienate or dispose of its interest in FPM.
The El Limon mine has been in periodic production for over 60 years, with extraction on seven levels down to over 350m, and a new eighth level opened by Red Rock. Mining operations were restarted in 2011 after a ten year hiatus due to instability in the region.
CML’s intention is to inject capital into the plant and equipment at El Limon and to then begin producing from a mix of ore mined locally and ore purchased from local and regional producers. Colombia’s legislative changes on the use of mercury in gold production is expected to create significant demand for toll-charge processing as can be provided at El Limon via its Carbon in Leach plant and facilities.