LONDON (Alliance News) - Red Rock Resources PLC on Monday said it has received the first gold royalty payment from Colombia Mining Ltd, alongside the final instalment following the sale of its interest in the El Limon mine earlier this year.
Red Rock agreed to sell the mine back in April and the deal was completed in May, offloading the asset for USD5 million to Colombia Milling Ltd, which included USD3 million in future royalty payments.
On Monday, Red Rock said USD6,135 has now been paid as the first gold royalty payment, covering the two months to the end of June. Colombia Milling also made the final consideration payment for the asset of USD225,000, the company said.
"We have in the last month received initial payments of both oil production revenue share at Shoats Creek and gold royalties from Colombia Milling Ltd. These are significant milestones for us. To these income flows, which we expect to increase significantly once full operation is achieved, we anticipate in due course the addition of a third income stream from dividends on our interest in manganese producer Jupiter Mines Ltd," said Chairman Andrew Bell.
Alongside the consideration for the sale, Red Rock was awarded a USD1.0 million promissory note from Colombia Milling. Red Rock previously served notice of its intention to convert the note into equity in the firm, but faced a dispute with Colombia Milling.
"Colombia Milling Ltd has challenged Red Rock's right to convert but following a meeting of the parties on 30th August has indicated to us that it expects to make an offer of early repayment of the note. Depending on the terms on offer, Red Rock may not, therefore, need to initiate the arbitration process," said Bell.
Red Rock shares were trading up 3.1% to 0.412 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Red Rock Resources (RRR)