TIDMROSE
RNS Number : 5460I
Rose Petroleum PLC
27 November 2018
27 November 2018
Rose Petroleum plc
("Rose", the "Company" or the "Group")
Further divestiture of non-core assets through
Database Agreement on Uranium Exploration projects in U.S.A
and North Wash Vanadium project update
Rose Petroleum plc (AIM: ROSE), the AIM quoted natural resources
business, is pleased to announce that its wholly owned subsidiary,
VANE Minerals (US) LLC ("VANE"), has entered into an agreement (the
"Agreement") with enCore Energy Corporation ("ENCORE") (TSX.V:EU)
with respect to VANE's U.S.A. uranium exploration project database.
The database is comprised of geological, geophysical, aerial
photography, drilling, and evaluation data on the uranium breccia
pipe district of northern Arizona, specifically the region south of
the Colorado River where a number of discoveries have been
made.
In return for VANE providing exclusive access to VANE's uranium
project database, ENCORE will issue to VANE 3,000,000 ordinary
shares in ENCORE which have a current market valuation of
approximately US$300,000 and which represent approximately 2.1% of
the existing share capital of ENCORE. The shares will be locked-up
for an initial four month period after which Rose will be able to
dispose of them, subject to certain orderly market provisions.
The initial term of the agreement will be five-years, and ENCORE
will seek, at its own cost, to use the database to generate
exploration prospects and to subsequently develop these prospects
into commercial operations.
If any of the prospects reach the development stage, VANE will
have a one-off opportunity to participate in these projects. VANE
will be able to participate up to a maximum 25% interest in any
developed projects, at its sole discretion. The purchase price for
the VANE interest, at the development stage, will be 250% of the
pro-rata exploration costs incurred on the project to advance it to
the development stage. From the point at which VANE acquires an
equity interest in any project it will be responsible for the
development expenditure for its specific portion of its interest.
If VANE does not elect to participate in the projects in accordance
with the Agreement it will have no further rights in respect of
that particular project.
Should VANE seek to develop any of its 8 existing breccia pipe
uranium projects on which it currently controls the mineral rights,
which are currently held on care and maintenance, ENCORE will have
the opportunity to participate in these projects on the same terms
that VANE can participate in the ENCORE projects. Under the terms
of the Agreement, ENCORE will have a first right of refusal to
acquire any mineral rights on these 8 projects that VANE chooses to
dispose of during the term of the Agreement.
As part of the Agreement with ENCORE, VANE has excluded its
North Wash stratabound vanadium/uranium project in Garfield County,
Utah from the transaction as discussions with third parties are
already underway which may or may not lead to a separate
divestiture of this project.
North Wash vanadium project update
With respect to the North Wash project, as previously announced
VANE contracted an independent mining pre-scoping study in May 2012
upon VANE's completion of a two-year drilling programme. This study
was prepared to determine the mining method and development costs
in an effort to assess the general feasibility of the project. Due
to the strength of the present vanadium market, interest in the
North Wash project has significantly improved. The report covered
preliminary design engineering sufficient to gain an indicative
estimate of capital and operating costs, manpower requirements and
a preliminary development and production schedule, and now shows it
has the potential to be developed into a commercial project and the
Group is in ongoing discussions with third parties in respect of
this. Vanadium is a key component in redox/flow battery energy
storage systems.
The North Wash project, originally drilled by Cotter Corporation
in the 1970s and subsequently acquired by VANE, has 162 drill
holes, 34 of which were drilled by VANE in 2007-2008, ranging from
depths of 205 to 385 feet. The internal resource estimate
identified approximately 166,700 lbs of uranium (eU(3) O(8) ) based
on close-spaced drilling with a reasonable potential to double that
estimate based on wider-spaced drilling southwest of the main
resource. Additionally, assays on drilling core indicate a vanadium
to uranium ratio of 5:1 resulting in approximately 833,500 lbs
vanadium(V(2) O(5) ) in the main resource and the potential for a
total of 1.6M lbs V(2) O(5) including the drilling to the
southwest.
In 2012, the capital cost estimate for life of mine was US$10M
at +/- 200 short tons (ton) per day including direct mining
equipment costs, general mine surface facilities and indirect
costs. Operating costs were estimated at US$72.38/ton including
mining, crushing and sorting. Transportation costs to a mill were
estimated at US$20/ton. It was estimated that the cost to produce
one ton of mine produce was US$72/ton. Including the costs of
selective mining in the narrower parts of the resource least one
ton of waste is mined for each ton of ore resulting in a cost to
produce a ton of ore of US$144. In 2012, the contained vanadium and
uranium value per ton of ore rendered the project uneconomic, but
since then the vanadium price has risen from around US$5/lb to
currently around US$29/lb, giving a per ton value (based on the
grade of 3lbs (0.15%) U(3) O(8) and 15 lbs V(2) O(5) per ton) of
approximately US$515/ton. Milling costs are not currently
available.
Matthew Idiens, CEO, commented: "I'm delighted that we have been
able to complete this agreement with ENCORE, to utilise our
extensive database, which not only provides the Group with upfront
consideration but which will also enable Rose to retain an interest
in any projects that move forward to development should we wish to
do so.
The North Wash Vanadium project offers significant potential
value and we will continue to progress discussions with third
parties to create value for shareholders.
The joint venture Agreement with ENCORE, in addition to the
disposals of the Group's Wate project and the SDA mill in Mexico
last year, is in line with our strategy of creating value from our
non-core assets whilst focusing on our onshore North-American oil
and gas activities."
Kristopher K. Hefton, BSc Geology, Consultant to Rose Petroleum
plc, who meets the criteria of a qualified person under the AIM
Rules - Note for Mining and Oil & Gas Companies, has reviewed
and approved the technical information contained within this
announcement.
Contacts:
Tel: +44 (0)20
Rose Petroleum plc 7225 4595
Matthew Idiens (CEO) Tel: +44 (0)20
Chris Eadie (CFO) 7225 4599
Allenby Capital Limited - AIM Nominated Adviser Tel: +44 (0)20
Jeremy Porter / James Reeve / Liz Kirchner 3328 5656
Tel: +44 (0)131
Cantor Fitzgerald Europe - Financial Adviser 257 4634 Tel: +44
and Joint Broker (0)20 7894 7686
Nick Tulloch
David Porter
Turner Pope Investments - Joint Broker
Andy Thacker Tel: +44 (0)20
3621 4120
Media enquiries:
Allerton Communications Tel: +44 (0) 20 3633 1730
Peter Curtain peter.curtain@allertoncomms.co.uk
Notes to editors
Rose Petroleum plc (http://rosepetroleum.com) is a North
America-focused oil and gas company whose primary asset is
approximately 80,000 net acres in the prolific oil and gas
producing Paradox Basin in Utah, U.S.A., where it is earning into a
75% working interest. Using high-quality data gathered in a 3D
seismic survey completed in October 2017, the Company has
identified drilling locations in naturally fractured areas of the
Paradox Formation and has chosen the first well location and it is
now permitted to drill and plans to commence the drilling programme
and the first well as soon as possible, subject to rig
availability, stipulations of the leases and financing. All of
which should be achievable within the next few months.
On 22 June 2018, Rose announced a Competent Person's Report
("CPR") and Maiden Contingent Resource by Gaffney Cline &
Associates ("GCA") on the Rose acreage covered by the 3D seismic,
approximately 17,250 acres of the 80,000 acres held. The CPR
estimated a 2C Contingent Resource, net to Rose, of 9.25 MMBbl of
oil and 18.50 Bscf of gas, and an unrisked pre-tax Net Present
Value (NPV10) on the 2C Resources, net to Rose, of US$122 million.
The CPR focused solely on one single reservoir - the Cane Creek
reservoir (the "CCR" or "Clastic 21") - of the multiple prospective
reservoirs within the Paradox Formation.
The Company's established management is supported by an expert
technical team with extensive experience of the basin, where
current operations nearby have proven successful, with significant
initial production rates and low decline rates, offering strong
economics even in the present oil price environment.
The Company's strategy is to grow both organically and through
acquisition, identifying additional hydrocarbon assets,
conventional or unconventional, that would benefit from the
Company's fast-acting, entrepreneurial approach.
Rose Petroleum has been quoted on AIM since June 2004.
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END
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