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AMENDMENT NO. 1 TO MEMORANDUM OF UNDERSTANDING

 

THIS AMENDMENT NO. 1 TO MEMORANDUM OF UNDERSTANDING (this “ Amendment ”) is made and entered into as of the 31 day of July, 2017 by and among MAGELLAN GOLD CORPORATION, a Nevada corporation or a wholly-owned entity to be formed and organized for the purpose of being the party to the MOU as defined below (" Magellan "), and ROSE PETROLEUM, plc and its wholly-owned subsidiary MINERALES VANE S.A. de C.V. (“ VANE ”) (collectively “ Rose ”).  Magellan and Rose may each be referred to as a “ Party ” and together the “ Parties .

 

W I T N E S S E T H:

 

WHEREAS , Magellan and Rose entered into a Memorandum of Understanding dated March 3, 2017 (the “ MOU ”); and

 

WHEREAS , Magellan and Rose desire to modify and amend the MOU in the manner set forth below;

 

NOW, THEREFORE , for and in consideration of the foregoing premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Magellan and Rose agree that the MOU shall be modified and amended in the following respects.

 

Unless otherwise defined herein, all capitalized terms shall have the meaning set forth in the MOU.

 

1. Rose and Magellan agree that Section 4 of the MOU is hereby deleted and  

replaced in its entirety by the following:

 

“4. Purchase Price .   The Purchase Price for the Assets shall be US$1.5 million (“ Purchase Price” ), payable $1.0 million in cash and $500,000 in restricted shares of Magellan common stock valued at the lower of (i) the 30 day VWAP immediately preceding the Closing Date or (ii) the price per share of common stock or common stock equivalent paid in the most recently completed arm’s length equity investment by a non-affiliated investor occurring after the date of this Amendment.”  

 

 

2. Rose and Magellan agree that Section 5 of the MOU is hereby deleted and replaced in its entirety by the following:  

 

“5. Option . Upon the execution of this Amendment, Rose shall be deemed to have granted Magellan an exclusive option (“ Option ”) exercisable for a period commencing the date of this Amendment and terminating on August 15, 2017 (the “ Option Period ”) . Magellan shall have the right to extend the Option Period until the earlier of (i) the consummation of a definitive Stock Purchase Agreement (“ SPA” ) covering the sale of the outstanding equity of VANE following its restructuring to include the split-off of all assets and operations not related to the SDA Mill (“ Vane Restructure” ”) or (ii) the Transaction is abandoned by the Parties (the “ Option Extension Period” ) provided that on or before August 15, 2017, Magellan provides Rose  

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(a) executed irrevocable bridge loan commitments representing an aggregate of not less than $900,000 in commitments available to fund the Transaction (the “Commitments” ) conditional only on the consummation of the SPA and (b) bank statements or other evidence that sufficient funds are on deposit to support such Commitments. Rose acknowledges receipt of the $100,000 Option Extension Payment paid on May 31, 2017 and agrees that it shall be credited against the Purchase Price at closing.  If the closing does not occur due to Rose’s failure to secure shareholder approval for closing to occur, then the Option Extension Payment shall be returned to Magellan by Rose either in cash or in shares of Rose common stock valued at the lower of (i) the 30 day VWAP immediately preceding the Closing Date or (ii) the price per share of common stock or common stock equivalent paid in the most recently completed arm’s length equity investment by a non-affiliated investor occurring after the date of this Amendment, at Roses option.

 

3. On or before August 4, 2017, Magellan shall reimburse Rose for the Mill employee holding costs set forth on Schedule A hereto for the month of August 2017 and shall reimburse Rose for the Mill maintenance costs set forth on Schedule B hereto for the month of August 2017.  On or before September 1, 2017, Magellan shall reimburse Rose for the employee holding and maintenance costs for the SDA Mill for the month of September 2017.  In the event Rose reopens the SDA Mill during the Option Extension Period, the reimbursements provided for in this paragraph 3 shall terminate.  

 

4. At the Closing of the SPA, Magellan shall pay Rose the amount of $17,000 representing reimbursement of certain of Rose’s employee holding costs for the months of June and July 2017  

 

5. Section 9(h) of the MOU is hereby deleted.  

 

All other terms and conditions set forth in the MOU shall remain in full force and effect.

 

 

MAGELLAN GOLD CORPORATION  

 

 

July 31, 2017 ______________ By:__ /s/ W. Pierce Carson _____________  

Date      W. Pierce Carson, President  

 

ROSE PETROLEUM, plc  

 

 

July 31, 2017 ______________ By:__ /s/ Matthew Idiens ________________  

Date     Matthew Idiens, Managing Director  

 

 

 

 

 

 

MINERALES VANE S.A. de C.V.

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July 31, 2017 _______________ By:__ /s/ Matthew Idiens _______________  

Date      Matthew Idiens,  Director  

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Magellan Gold Extends Option to Purchase Flotation Plant in Mexico

 

FOR IMMEDIATE RELEASE                    August 1, 2017  

Reno, Nevada – Magellan Gold Corporation (OTCQB:  MAGE) ( “ Magellan ” or “the Company ”) is pleased to announce it has reached agreement with Rose Petroleum plc (AIM: ROSE) (“Rose”) to extend the Company’s option to purchase a flotation plant and associated assets, licenses and agreements (together, the “SDA Mill" ) located in the State of Nayarit, Mexico. Total consideration for the the purchase is US$1.5 million, consisting of $1.0 million in cash and $500,000 in Magellan stock, of which $100,000 in cash was paid on May 31, 2017. The mill has a history of producing precious metals dating back for ten years and its normal operation is based on sales of flotation concentrates to smelters. The Company paid an initial $50,000 option payment and announced a MOU on March 6, 2017.

Under terms of the option extension, Magellan has the obligation by August 15, 2017, to deliver executed irrevocable bridge loan commitments representing not less than $900,000 in cash required to fund the transaction. Also under terms of the extension, for the months of August and September 2017, Magellan must reimburse Rose for mill employee and maintenance costs of approximately $25,000 per month. The August reimbursement payment is due by August 4, 2017.

Upon Magellan delivering the irrovocable bridge loan commitments by August 15, 2017, closing of the transaction still will be subject to satisfaction of a number of conditions, the most important of which include legal restructuring of Mexican ownership of the SDA Mill, Rose’s shareholder approval if required, and completion of the final definitive agreement. The parties are targeting closing to occur by the end of September 2017, however there can be no assurance that the purchase of the mill will be completed.

Milling activity at the SDA mill currently is on hold pending the completion of this transaction.

 

The Company’s strategy following the acquisition will be to resume processing operations, build production and increase cash flow. A key objective will be to secure high-grade feed sources. The mill lies within the rich Sierra Madre Occidental mineralized belt, which historically has yielded millions of ounces of precious metals and offers multiple high-grade gold and silver epithermal vein opportunities.

 

About Magellan Gold Corporation

 

Magellan Gold Corporation (OTCQB: MAGE) is a US public enterprise focused on the exploration and development of precious metals.  The Company has obtained an option to acquire the SDA flotation plant in the State of Nayarit, Mexico, and controls two precious metals exploration properties located in Arizona and in Peru.

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The 100% owned Silver District Property in southwest Arizona comprises over 2,000 acres covering the heart of the historic Silver District.  The property contains a near-surface historical drilled resource of 16 million ounces of silver and exhibits exploration promise for significant expansion.  The Niñobamba Silver-Gold Property in central Peru, on which the Company has the right to earn a 50% interest, covers 9,027 acres and demonstrates potential for a large, bulk tonnage, silver-gold deposit.

 

To learn more about Magellan Gold Corporation, visit www.magellangoldcorp.com .

 

Cautionary Statement

 

The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can legally extract or produce. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves. Currently we have not delineated “reserves” on any of our properties. We cannot be certain that any deposits at our properties will ever be confirmed or converted into SEC Industry Guide 7 compliant "reserves." Investors are cautioned not to assume that all or any part of any “resource” estimates will ever be confirmed or converted into reserves or that they can be economically or legally extracted.

 

Forward Looking Statements

 

This release contains “forward-looking statements.”  Such statements are based on good faith assumptions that Magellan Gold Corporation believes are reasonable but which are subject to a wide range of uncertainties and business risks that could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements.  Factors that could cause actual results to differ from those anticipated are discussed in Magellan Gold Corporation’s periodic filings with the Securities and Exchange Commission.

 

Contacts:

Magellan Gold Corporation

Pierce Carson (505) 463-9223

John Power (707) 884-3766