Red Hill Enters Agreement on Ulaan Ovoo Coal Property

Jun 16 • Mining • 660 Views • No Comments on Red Hill Enters Agreement on Ulaan Ovoo Coal Property

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Red Hill Energy announced today that it has signed an agreement with Falcon Mining AG of Zug, Switzerland whereby Falcon Mining will acquire a 100% interest in Red Hill Mongolia LLC, a wholly owned subsidiary of Red Hill Energy, which owns a 100% interest in Red Hill’s Ulaan Ovoo coal project in northern Mongolia. Hereafter Falcon Mining LLC will assume operational activities and incur 100% of all costs pertaining to pre-production, coal mine development and managing all coal production activities at Ulaan Ovoo. Launching of the Ulaan Ovoo coal project by Falcon Mining will facilitate the supply of coal to support Mongolia’s economy in addition to realizing export opportunities to Russia and beyond. The project is located within 120 km (75 miles) of Mongolia’s central railroad.

The Mongolian government has granted the Ulaan Ovoo coal project the major pre-requisite approvals required prior to commencing with coal mining operations in Mongolia including approval of the Company’s Detailed Environmental Impact Assessment (DEIA) as well as the issuance of a long term, fully transferable mining license. Red Hill Energy will offer assistance to Falcon Mining in the procurement of a permit to mine at Ulaan Ovoo, at which point Falcon Mining will commence with pre-production and production activities.

Under the terms of the agreement Falcon Mining has agreed to pay Red Hill Energy US$30,000,000 with the first US$3,000,000 due within 14 days of Red Hill Energy receiving both shareholder and TSX-V regulatory approval. Eight months thereafter an additional payment of US$7,000,000 will be made, followed by a further US$10,000,000 within 12 months and finally, three annual payments of US$3,333,333 totaling US$10,000,000. Pursuant to the agreement, the shares of Red Hill Mongolia LLC will be transferred to Falcon Mining following receipt by Red Hill of US$10,000,000 of the purchase price, but will be held in escrow, along with other documentation, until such time as the full $30,000,000 has been paid. All payments are non-refundable once made, provided however that in the event Red Hill is unable to complete the transfer of the shares upon the date Falcon Mining is to pay the US$7,000,000 payment due to certain specific circumstances, Red Hill will refund the US$3,000,000 cash payment previously made by Falcon Mining or will grant to Falcon Mining a 2% net smelter return royalty over the Ulaan Ovoo project, which may be purchased by Red Hill at any time for US$3,000,000. In conjunction with the aforementioned transaction, Red Hill Energy has secured an option to purchase the outstanding NSR for a period of 90 days from the NSR holder for a price of US $1.350 million. No finder’s fees are payable in respect of the transaction and the transaction is at arm’s length.

Ranjeet Sundher, President of Red Hill, stated today that:

“We are very happy to have Falcon Mining advance Ulaan Ovoo to production for the benefit of all Mongolians.”
Source: www.marketwire.com

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