Rey Resources Sells Gulliver Productions Pty Ltd for $400,000
REY RESOURCES LIMITED (REY) Share Update July 2024 Wednesday 31st
Rey Resources Announces Sale of Gulliver Productions
Rey Resources Limited (the 'Company') has announced a significant transaction involving the sale of its wholly-owned subsidiary, Gulliver Productions Pty Ltd ('Gulliver'), to China Guoxin Investment Holdings Co., Limited ('Guoxin').
Instant Summary:
- Rey Resources sells Gulliver Productions for $400,000.
- Gulliver holds a 100% interest in the Lennard Shelf Blocks.
- Initial deposit of $50,000 to be paid within one week.
- Remaining $350,000 payable within three weeks after formal agreement and approvals.
- Rey Resources to receive a 10% wellhead royalty from Gulliver's production.
Transaction Details
Rey Resources Limited has executed a Binding Cooperation Framework Agreement with China Guoxin Investment Holdings Co., Limited. Under this agreement, Guoxin will acquire all issued capital of Gulliver Productions Pty Ltd for a total cash consideration of $400,000.
Gulliver Productions holds a 100% interest in the Lennard Shelf Blocks, which include EP104, a Retention Lease (R1), and one Production Licence (L15). These blocks are located north of Rey Resources' existing interests in the Canning Basin petroleum exploration licence and are considered prospective for conventional oil and tight gas.
Payment Structure
According to the Framework Agreement, a deposit of $50,000 will be paid within one week after the execution of the agreement. The remaining balance of $350,000 is payable within three weeks after the execution of a formal agreement, Foreign Investment Review Board (FIRB) approval, and the extension of R1 is approved by the government.
Additional Benefits
In addition to the cash consideration, Rey Resources will also receive a wellhead royalty of 10% from the production of Gulliver's tenements, providing a future revenue stream for the company.
The sale of Gulliver Productions is a strategic move for Rey Resources, providing immediate working capital and reducing operational risks associated with the Lennard Shelf Blocks. The 10% wellhead royalty ensures that Rey Resources will continue to benefit from any future production, potentially boosting long-term revenue.
Investor Reaction:
Analysts are likely to view this transaction positively, as it provides immediate liquidity and reduces the company's exposure to exploration risks. However, the long-term impact will depend on the success of Guoxin in developing the Lennard Shelf Blocks.
Conclusion:
Investors should consider the immediate financial benefits and the potential long-term revenue from the wellhead royalty. This transaction could strengthen Rey Resources' financial position and support future growth initiatives.