Annual Financial Report
Red Rock Resources plc
("Red Rock" or the "Company")
Final Audited Results for the Year Ended 30 June 2017
23 November 2017
A copy of the Company's annual report and financial statements for 2017 - extracts from which are set out below - will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting to be held on 22 December 2017.
Chairman's Review
Dear Shareholders,
Overview
I began last year's review by repeating the statement we had made several times in 2016, that there had been a significant turning point in the commodity sector and that the multi-year recession in the sector had ended. If I return to this point again, it is only to suggest that our price expectations may still be to some extent conditioned by the extreme price lows seen in late 2015 to early 2016, and the rises in price some commodities have seen may seem substantial only because the levels from which they occurred were anomalously low.
The recovery is still a young recovery, and two factors in particular suggest that there may be continuing commodity strength. First, that economic growth seems to be picking up in all regions of the world and in almost all large economies. Such a synchronised recovery is unusual and will translate directly into increased commodity demand. Secondly, an electric vehicle and battery revolution is gathering pace, and this will have large but not yet perfectly quantifiable effects on incremental demand for several commodities, including nickel, manganese, cobalt and lithium, as well as copper (at least short term) and possibly vanadium.
We are fortunate in our involvement as a shareholder in the unlisted Jupiter Mines Ltd, the co-owner and operator of the open pit Tshipi é Ntle Mine in the Northern Cape Province, the world's third largest producer, we believe, of metallurgical grade manganese. Tshipi is in the exceptional position of having at current levels of production some 100 years of reserves. Since some 95% of current metallurgical manganese production goes to steel making, the impact of battery demand on the supply-demand equation is likely to be large. Current price levels have enabled us to receive a distribution of £538,740 in the Spring of 2017 with another of c.£250,000 due in early December 2017, and a few months ago we might have shared the general expectation that the long-term trend of price was likely to be slightly lower than these levels. The battery use for manganese, and the balanced global recovery under way, make that assumption look increasingly conservative.
We made clear a year ago our focus on cost control, and our desire to avoid financing through equity markets at a time we expected several income streams to develop and when the Company's market valuation seemed significantly to undervalue its assets. These both remain high priorities, and after external equity financing of £1,153,323 in the year ending 30 June 2016, no further equity financing has been undertaken since a £300,000 placing of stock in early August 2016.
The development of the income stream from Jupiter distributions has exceeded expectations, while the expected income stream from gold royalties from Colombia has been slow to develop to the expected levels due to delays in installation and commissioning of a ball mill and other factors. It should begin to contribute more significantly from the November 2017 quarterly payment on. Sub-letting income has been as expected, but will end now that we are moving in late November to a new and cheaper office. We are disappointed that we have not yet received any income from our Louisiana oil production participation at Shoat's Creek. However, we have added a new source of profit likely to start contributing from early calendar 2018 through our equity investment in the Steelmin ferrosilicon plant in Jajce, Bosnia.
Year in Review
During the financial period to 30 June 2017 our main priorities remained to obtain or develop cash flow-producing assets to give us greater resilience and less dependence on funding from financial markets; to keep costs down meanwhile to minimise dependence on external financing; and consequent on that funding aversion, to wait for value crystallisation or other events that would increase our market valuation before taking any significant initiatives. We considered that as a result of prior years' actions we were well positioned to gain from the recovery as long as we kept a steady course.
For much of the year we lived in expectation of a value crystallisation event in relation to our Jupiter holding that would occur at or shortly after the financial year end, since Tshipi é Ntle had appointed financial advisers to look at a possible IPO or sale. We anticipated that any sale or other value crystallisation would show the underlying value of this one investment of ours in Jupiter to exceed the market capitalisation of Red Rock. There were no significant new initiatives taken therefore for much of the year, while we awaited this.
We did pursue an arbitration case in relation to some unclear points relating to the royalty and promissory note payable on our former Colombian assets, but we were able to settle this at an early stage. As a result of this settlement we received an early repayment of USD250,000 on the promissory note, with the balance of USD750,000 being due in April 2018.
Shortly before year end, matters changed in relation to Jupiter, when the publication of the plans for Mining Charter 3 in South Africa led to a stand-off between the Minister and the industry, and uncertainty about the conditions under which BEE (Black Economic Empowerment) shareholders would be able to dispose of their shares, it appeared likely that this would impact, at least by way of slight delay, Tshipi's plans, and we concluded that we should no longer wait if we saw an investment opportunity with a potential for adding very significant shareholder value. The opportunity to fund Steelmin, a company recommissioning a furnace at a ferrosilicon plant in Bosnia, arose at this time, and we were able to structure the investment through a back to back loan structure and receive free equity amounting to 16% at the time (and now 19%).
We saw the starting and building up of revenues during the year, notably from Jupiter dividends and from gold royalties.
The financial results for the year ended 30 June 2017 show an increase of 41.2% in total equity at 30 June 2017 from £8,627,235 to £12,182,742 during a year in which only £300,000 new equity was raised, after a 14.6% increase the previous year. This largely resulted from the reversal of previous impairments of £4,260,421 at Jupiter. Equity per share therefore rose by 16.4% from 2.20p to 2.56p.
Total assets rose by 61.3% from £10,538,727 to £16,995,015 after a 9.5% increase the previous year as a result of the increase in available for sale financial assets, again mainly Jupiter, and in short-term loans and other receivables following the completion of the back to back arrangements in relation to Steelmin.
Current assets rose by 429.5% to £5,115,974 from £966,118, as a result of an increase in cash and in short-term loans and other receivables. Current liabilities rose to £4,812,273 from £1,911,492 with an increase in short-term borrowings again following the completion of the back to back arrangements in relation to Steelmin.
Following repayments made by Red Rock since financial year-end, the excess of short-term loans made over short-term borrowings has increased to £1.33m.
The Company's financial position has thus improved substantially over the year on most metrics.
This is not however reflected in the consolidated income statement, where a loss of £283,280 has widened to £1,114,213. This reflects an impairment of £1,496,550, essentially the same as last year's, in the value of Greenland iron ore assets, where we finally took the decision to fully impair the investment, but which was not offset this year by share sale profits or a recalculation of the fair value of a Colombian receivable.
Current Financial Year
We continue with the prosecution of our judicial review case in Kenya, to protect our interest in the Migori gold asset and its 1.2m oz gold resource, as well as in the old Macalder gold tailings where we had already submitted a feasibility study and applied for a mining licence. In parallel, we are in positive and substantive discussion with the Ministry and other interested parties to agree an early resolution that will enable us to restart operations and bring the tailings into production.
We will then move to address our gold interests in Côte d'Ivoire and our minor oil interests in Louisiana and onshore Benin.
Since year end we have begun due diligence on copper and cobalt tailings in the Democratic Republic of Congo. The DRC produces more than half the world's cobalt, a material for which demand is rapidly increasing for use in battery cathodes. This appears to be an attractive and potentially Company-changing asset, and in principle we like tailings which are easy to assess, mine and process, but we must await the results of due diligence in a country new to us.
We have recently announced a further, Spring 2018, distribution by Jupiter, expected to be similar in amount to the December 2017 distribution, and we expect rising gold royalties from Colombia and at the profit level a useful contribution from Steelmin. Should Steelmin succeed in commissioning a second furnace, then its EBITDA may be running later in 2018 at an annualised level up to €10m.
We expect in the current year to be net interest recipients on our loan book, and that we will be repaid the loans to Steelmin and the USD750,000 outstanding on the Colombia promissory note.
There is a strong probability of a liquidity event at Jupiter during the year, and a liquidity event could also occur at Steelmin.
Overall, we can as shareholders look to the prospects for the year to 30 June 2018 with considerable confidence.
Prospects
Our historic preference has been for assets near production where we can get a favourable deal by putting in the last, or the strategic, dollar, as with Steelmin and as previously in Colombia. We also favour pre-digested minerals left in tailings, as in Kenya, and now potentially in the DRC. We also seek to work with first class partners on first class assets, as with Jupiter. We will strive to stick closely to these models in looking at potential new ventures.
We must not however lose sight of the fact that we are in a recovering market, with multiple high quality assets in Jupiter and Steelmin, with revenues, and with a presence or opportunity in some of the most exciting commodities to be in during the sector recovery. This gives us a good platform to take the actions necessary to raise Red Rock to a much higher level, and to recover in the good years all and more of the value lost in the difficult lean years.
It has been a pleasure to work step by step to ready the Company this year and last for the next stage of growth. Our motivation is to add value for you, the shareholders, and to repay the trust you put in us.
Andrew Bell
Chairman and CEO
22 November 2017
Results and dividends
Red Rock (the "Parent") and its subsidiaries made a post-tax loss of £1,114,213 (2016: £283,280). The Directors do not recommend the payment of a dividend. The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issue on 22 November 2017.
For further information, please contact:
Andrew Bell 0207 747 9990 Chairman Red Rock Resources Plc
Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0207 374 2212 Broker First Equity Limited
Consolidated Statement of Financial Position
as at 30 June 2017
|
|
Notes |
30 June |
30 June |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
9 |
15,600 |
17,400 |
|
Investments in associates and joint ventures |
11 |
963,080 |
2,459,638 |
|
Exploration assets |
12 |
280,460 |
280,460 |
|
Available for sale financial assets |
13 |
6,080,146 |
1,976,552 |
|
Non-current receivables |
15 |
4,543,755 |
4,838,559 |
|
Total non-current assets |
|
11,883,041 |
9,572,609 |
|
Current assets |
|
|
|
|
Cash and cash equivalents |
14 |
909,094 |
26,564 |
|
Other receivables |
16 |
4,202,880 |
939,554 |
|
Total current assets |
|
5,111,974 |
966,118 |
|
Total assets |
|
16,995,015 |
10,538,727 |
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
Equity attributable to owners of the Parent |
|
|
|
|
Called up share capital |
18 |
2,760,859 |
2,752,487 |
|
Share premium account |
|
25,604,689 |
25,275,788 |
|
Other reserves |
|
4,855,879 |
523,431 |
|
Retained earnings |
|
(21,022,232) |
(19,910,736) |
|
Total |
|
12,199,195 |
8,640,971 |
|
Non-controlling interest |
|
(16,453) |
(13,736) |
|
Total equity |
|
12,182,742 |
8,627,235 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
17 |
1,553,665 |
1,854,002 |
|
Short-term borrowings |
17 |
3,258,608 |
57,490 |
|
Total current liabilities |
|
4,812,273 |
1,911,492 |
|
Total equity and liabilities |
|
16,995,015 |
10,538,727 |
These financial statements were approved by the Board of Directors and authorised for issue on 22 November 2017 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
Consolidated Income Statement
for the year ended 30 June 2017
|
|
Notes |
Year to |
Year to |
|
Loss on sales of investments |
|
(60,785) |
- |
|
Gain on sale of associates |
|
- |
599,225 |
|
Impairment of investment in associates and joint ventures |
11 |
(1,496,550) |
(1,500,000) |
|
Exploration expenses |
|
(42,190) |
(119,768) |
|
Administration expenses |
|
(644,688) |
(758,351) |
|
Share of losses of associates |
11 |
(8) |
(9,240) |
|
Provision for bad debts |
|
(140,178) |
(57,768) |
|
Other income and currency gain on MFP receivable |
4 |
351,944 |
918,767 |
|
Other currency gain |
|
47,658 |
346,155 |
|
Finance income, net |
4 |
870,584 |
297,700 |
|
Loss for the year before taxation from continuing operations |
3 |
(1,114,213) |
(283,280) |
|
Tax |
5 |
- |
- |
|
Loss for the year from continuing operations |
|
(1,114,213) |
(283,280) |
|
Loss for the year |
|
(1,114,213) |
(283,280) |
|
Loss for the year attributable to: |
|
|
|
|
Equity holders of the Parent |
|
(1,111,496) |
(275,035) |
|
Non-controlling interest |
|
(2,717) |
(8,245) |
|
|
|
(1,114,213) |
(283,280) |
|
Loss per share attributable to owners of the Parent: |
|
|
|
|
Basic loss per share |
|
|
|
|
- Loss from continuing operations |
|
(0.24) pence |
(0.10) pence |
|
Total |
8 |
(0.24) pence |
(0.10) pence |
|
Diluted |
|
|
|
|
- Loss from continuing operations |
|
(0.24) pence |
(0.10) pence |
|
Total |
8 |
(0.24) pence |
(0.10) pence |
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2017
|
|
Notes |
30 June |
30 June |
|
(Loss) for the year |
|
(1,114,213) |
(283,280) |
|
Other comprehensive income |
|
|
|
|
Items that will be reclassified subsequently to profit or loss |
|
|
|
|
Surplus/(deficit) on revaluation of available for sale investment |
13 |
4,217,753 |
157,286 |
|
Unrealised foreign currency gain arising upon retranslation of foreign operations |
|
17,095 |
19,905 |
|
Total other comprehensive income net of tax for the year |
|
4,234,848 |
177,191 |
|
Total comprehensive income/(expense) net of tax for the year |
|
3,120,635 |
(106,089) |
|
Total comprehensive expense net of tax attributable to: |
|
|
|
|
Owners of the Parent |
|
3,123,352 |
(97,844) |
|
Non-controlling interest |
|
(2,717) |
(8,245) |
|
|
|
3,120,635 |
(106,089) |
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2017
The movements in equity during the period were as follows:
|
|
Share |
Share |
Retained |
Other |
Total |
Non-controlling |
Total |
|
As at 30 June 2015 |
2,600,207 |
24,285,503 |
(19,747,630) |
394,899 |
7,532,979 |
(5,491) |
7,527,488 |
|
Changes in equity for 2016 |
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(275,035) |
- |
(275,035) |
(8,245) |
(283,280) |
|
Disposal of subsidiary |
- |
- |
- |
- |
- |
- |
- |
|
Other comprehensive income for the year |
- |
- |
|
177,191 |
177,191 |
- |
177,191 |
|
Transactions with owners |
|
|
|
|
|
|
|
|
Issue of shares |
151,541 |
1,003,782 |
- |
- |
1,155,323 |
- |
1,155,323 |
|
Share issue costs |
- |
(40,500) |
- |
- |
(40,500) |
- |
(40,500) |
|
Share issue in relation to SIP |
740 |
27,003 |
- |
- |
27,743 |
- |
27,743 |
|
Share-based payment transfer |
- |
- |
111,929 |
(48,659) |
63,270 |
- |
63,270 |
|
Total transactions with owners |
152,281 |
990,285 |
111,929 |
(48,659) |
1,205,836 |
- |
1,205,836 |
|
As at 30 June 2016 |
2,752,488 |
25,275,788 |
(19,910,736) |
523,431 |
8,640,971 |
(13,736) |
8,627,235 |
|
Changes in equity for 2017 |
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(1,111,496) |
- |
(1,111,496) |
(2,717) |
(1,114,213) |
|
Other comprehensive income for the year |
- |
- |
|
4,234,848 |
4,234,848 |
- |
4,234,848 |
|
Transactions with owners |
|
|
|
|
|
|
|
|
Issue of shares |
7,500 |
292,500 |
- |
- |
300,000 |
- |
300,000 |
|
Share issue costs |
- |
(15,000) |
- |
- |
(15,000) |
- |
(15,000) |
|
Share issue in relation to SIP |
871 |
51,401 |
- |
- |
52,272 |
- |
52,272 |
|
Share-based payment transfer |
- |
- |
- |
97,600 |
97,600 |
- |
97,600 |
|
Total transactions with owners |
8,371 |
328,901 |
- |
97,600 |
434,872 |
- |
434,872 |
|
As at 30 June 2017 |
2,760,859 |
25,604,689 |
(21,022,232) |
4,855,879 |
12,199,195 |
(16,453) |
12,182,742 |
|
|
Available |
Associate |
Foreign |
Share-based |
Total |
|
As at 30 June 2015 |
141,810 |
- |
141,160 |
111,929 |
394,899 |
|
Changes in equity for 2016 |
|
|
|
|
|
|
Other comprehensive income for the year |
157,286 |
- |
19,905 |
- |
177,191 |
|
Transactions with owners |
|
|
|
|
|
|
Share-based payment transfer |
- |
- |
- |
(48,659) |
(48,659) |
|
Total transactions with owners |
- |
- |
- |
(48,659) |
(48,659) |
|
As at 30 June 2016 |
299,096 |
- |
161,065 |
63,270 |
523,431 |
|
Changes in equity for 2017 |
|
|
|
|
|
|
Other comprehensive income for the year |
4,217,753 |
- |
17,095 |
- |
4,234,848 |
|
Transactions with owners |
|
|
|
|
|
|
Share-based payment transfer |
- |
- |
- |
97,600 |
97,600 |
|
Total transactions with owners |
- |
- |
- |
97,600 |
97,600 |
|
As at 30 June 2017 |
4,516,849 |
- |
178,160 |
160,870 |
4,855,879 |
See note 19 for a description of each reserve included above.
Consolidated Statement of Cash Flows
for the year ended 30 June 2017
|
|
Notes |
Year to |
Year to |
|
Cash flows from operating activities |
|
|
|
|
(Loss) before tax from discontinued operations |
|
(1,114,213) |
(283,280) |
|
(Loss) before tax |
|
(1,114,213) |
(283,280) |
|
Decrease/(increase) in receivables |
|
29,126 |
(936,540) |
|
Decrease in payables |
|
(300,338) |
(244,269) |
|
Share of losses in associates |
|
8 |
9,240 |
|
Interest receivable and finance income from MFP |
4 |
(620,053) |
(323,229) |
|
Dividend income |
4 |
(538,740) |
- |
|
Interest payable |
4 |
11,086 |
25,529 |
|
Share-based payments |
|
142,732 |
91,013 |
|
Foreign exchange gain/loss |
|
(122,480) |
(292,230) |
|
Impairment of associates and joint ventures |
|
1,496,550 |
1,500,000 |
|
Gain on sale of associates |
|
- |
(599,225) |
|
Gain on sale of available for sale investments |
|
60,785 |
- |
|
Provision for bad debts |
|
140,178 |
57,769 |
|
Depreciation |
|
1,800 |
867 |
|
Net cash outflow from operations |
|
(813,559) |
(994,356) |
|
Corporation tax reclaimed/(paid) |
|
- |
- |
|
Net cash used in operations |
|
(813,559) |
(994,356) |
|
Cash flows from investing activities |
|
|
|
|
Interest received |
|
- |
34,785 |
|
Proceeds on sale of available for sale investments |
|
150,659 |
- |
|
Dividends received |
|
538,740 |
- |
|
Proceeds on sale of associates |
|
- |
599,225 |
|
Loan to Steelmin |
|
(2,427,378) |
- |
|
Payments to acquire available for sale investments |
|
(96,435) |
(487,500) |
|
Payments to acquire exploration assets |
|
- |
(280,460) |
|
Payments to acquire property, plant and equipment |
|
- |
(18,000) |
|
Net cash inflow from investing activities |
|
(1,834,414) |
(151,950) |
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of shares |
|
300,000 |
1,155,323 |
|
Transaction costs of issue of shares |
|
(15,000) |
(40,500) |
|
Interest paid |
|
(194) |
(25,529) |
|
Proceeds of new borrowings |
|
3,308,774 |
175,000 |
|
Repayments of borrowings |
|
(59,377) |
(120,850) |
|
Net cash inflow from financing activities |
|
3,534,203 |
1,143,444 |
|
Net (decrease)/increase in cash and cash equivalents |
|
886,230 |
(2,862) |
|
Cash and cash equivalents at the beginning of period |
|
26,564 |
29,426 |
|
Exchange (losses)/gains on cash and cash equivalents |
|
(3,700) |
- |
|
Cash and cash equivalents at end of period |
14 |
909,094 |
26,564 |
The accompanying notes and accounting policies form an integral part of these financial statements.
Company Statement of Financial Position
as at 30 June 2017
|
|
Notes |
30 June |
30 June |
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
9 |
15,600 |
17,400 |
|
|
Investments in subsidiaries |
10 |
941 |
941 |
|
|
Investments in associates and joint ventures |
11 |
1,048,216 |
2,544,765 |
|
|
Available for sale financial assets |
13 |
6,080,146 |
1,976,552 |
|
|
Non-current receivables |
15 |
4,543,755 |
4,838,558 |
|
|
Total non-current assets |
|
11,688,658 |
9,378,216 |
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
14 |
905,135 |
24,370 |
|
|
Other receivables |
16 |
4,576,789 |
1,273,496 |
|
|
Total current assets |
|
5,481,924 |
1,297,866 |
|
|
Total assets |
|
17,170,582 |
10,676,082 |
|
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
Called up share capital |
18 |
2,760,859 |
2,752,489 |
|
|
Share premium account |
|
25,604,689 |
25,275,784 |
|
|
Other reserves |
|
4,679,070 |
363,715 |
|
|
Retained earnings |
|
(20,682,534) |
(19,606,456) |
|
|
Total equity |
|
12,362,084 |
8,785,532 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
17 |
1,549,892 |
1,833,060 |
|
|
Short-term borrowings |
17 |
3,258,608 |
57,490 |
|
|
Total current liabilities |
|
4,808,500 |
1,890,550 |
|
|
Non-current liabilities |
|
|
|
|
|
Total equity and liabilities |
|
17,170,582 |
10,676,082 |
|
These financial statements were approved by the Board of Directors and authorised for issue on 22 November 2017 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
Company Statement of Changes in Equity
for the year ended 30 June 2017
The movements in equity during the period were as follows:
|
|
Share |
Share |
Retained |
Other |
Total |
|
As at 30 June 2015 |
2,600,207 |
24,285,503 |
(19,242,714) |
255,090 |
7,898,086 |
|
Changes in equity for 2016 |
|
|
|
|
|
|
Loss for the year |
- |
- |
(475,671) |
- |
(475,671) |
|
Other comprehensive income for the year |
- |
- |
- |
157,286 |
157,286 |
|
Transactions with owners |
|
|
|
|
|
|
Issue of shares |
151,541 |
1,003,782 |
- |
- |
1,155,323 |
|
Share issue costs |
- |
(40,500) |
- |
- |
(40,500) |
|
Share issues in relation to SIP |
740 |
27,003 |
- |
- |
27,743 |
|
Share-based payment transfer |
- |
- |
111,929 |
(48,659) |
63,270 |
|
Total transactions with owners |
152,281 |
990,285 |
111,929 |
(48,659) |
1,205,836 |
|
As at 30 June 2016 |
2,752,488 |
25,275,788 |
(19,606,456) |
363,717 |
8,785,537 |
|
Changes in equity for 2017 |
|
|
|
|
|
|
Loss for the year |
- |
- |
(1,076,078) |
- |
(1,076,078) |
|
Other comprehensive income for the year |
- |
- |
- |
4,217,753 |
4,217,753 |
|
Transactions with owners |
|
|
|
|
|
|
Issue of shares |
7,500 |
292,500 |
- |
- |
300,000 |
|
Share issue costs |
- |
(15,000) |
- |
- |
(15,000) |
|
Share issues in relation to SIP |
871 |
51,401 |
- |
- |
52,272 |
|
Share-based payment transfer |
- |
- |
- |
97,600 |
97,600 |
|
Total transactions with owners |
8,371 |
328,901 |
- |
97,600 |
434,872 |
|
As at 30 June 2017 |
2,760,859 |
25,604,689 |
(20,682,534) |
4,679,070 |
12,362,084 |
|
|
Available |
Share-based |
Total |
|
As at 30 June 2015 |
143,161 |
111,929 |
255,090 |
|
Changes in equity for 2016 |
|
|
|
|
Other comprehensive income for the year |
157,286 |
- |
157,286 |
|
Transactions with owners |
|
|
|
|
Share-based payment transfer |
- |
(48,659) |
(48,659) |
|
Total transactions with owners |
- |
(48,659) |
(48,659) |
|
As at 30 June 2016 |
300,447 |
63,270 |
363,717 |
|
Changes in equity for 2017 |
|
|
|
|
Other comprehensive income for the year |
4,217,753 |
- |
4,217,753 |
|
Transactions with owners |
|
|
|
|
Share-based payment transfer |
- |
97,600 |
97,600 |
|
Total transactions with owners |
- |
97,600 |
97,600 |
|
As at 30 June 2017 |
4,518,200 |
160,870 |
4,679,070 |
See note 19 for a description of each reserve included above.
Company Statement of Cash Flows
for the year ended 30 June 2017
|
|
30 June |
30 June |
|
Cash flows from operating activities |
|
|
|
Loss before taxation |
(1,076,076) |
(475,671) |
|
(Increase) in receivables |
(10,674) |
(1,229,274) |
|
Decrease in payables |
(283,170) |
(260,726) |
|
Dividend income |
(538,740) |
- |
|
Interest receivable and finance income |
(620,053) |
(323,229) |
|
Interest payable |
10,612 |
24,575 |
|
Share-based payments |
142,732 |
91,013 |
|
Impairment of investments in associates and joint ventures |
1,496,550 |
1,500,000 |
|
Loss on sale of investments |
60,785 |
- |
|
(Gain) on sale of associates |
- |
(344,569) |
|
Provision for bad debts |
140,178 |
57,769 |
|
Foreign exchange (gain) |
(142,968) |
(312,134) |
|
Depreciation |
1,800 |
867 |
|
Net cash outflow from operations |
(819,024) |
(1,271,379) |
|
Corporation tax |
- |
- |
|
Net cash used in operations |
(819,023) |
(1,271,379) |
|
Cash flows from investing activities |
|
|
|
Interest received |
- |
34,785 |
|
Dividends received |
538,740 |
- |
|
Loan to Steelmin |
(2,427,378) |
- |
|
Proceeds of sale of available for sale investments |
150,659 |
- |
|
Proceeds from sale of associates |
- |
599,225 |
|
Payments to acquire available for sale investments |
(96,435) |
(487,500) |
|
Payments to acquire property, plant and equipment |
- |
(18,000) |
|
Net cash outflow from investing activities |
(1,834,414) |
128,510 |
|
Cash flows from financing activities |
|
|
|
Proceeds from issue of shares |
300,000 |
1,155,323 |
|
Transaction costs of issue of shares |
(15,000) |
(40,500) |
|
Interest paid |
(194) |
(24,575) |
|
Proceeds of new borrowings |
3,308,774 |
175,000 |
|
Repayments of borrowings |
(59,377) |
(120,850) |
|
Net cash inflow from financing activities |
3,534,203 |
1,144,398 |
|
Net increase/(decrease) in cash and cash equivalents |
880,765 |
1,529 |
|
Cash and cash equivalents at the beginning of period |
24,370 |
22,841 |
|
Cash and cash equivalents at end of period |
905,135 |
24,370 |
The accompanying notes and accounting policies form an integral part of these financial statements.
Notes to the Financial Statements
for the year ended 30 June 2017
1 Principal accounting policies
1.1 Authorisation of financial statements and statement of compliance with IFRS
The Group financial statements of Red Rock Resources plc for the year ended 30 June 2017 were authorised for issue by the Board on 22 November 2017 and the statement of financial position signed on the Board's behalf by Andrew Bell. Red Rock Resources plc is a public limited company incorporated and domiciled in England and Wales. The Company's Ordinary shares are traded on AIM.
1.2 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
The financial statements have been prepared on the cost basis, except for certain financial instruments, which are carried as described in the respective sections in the policies below. The principal accounting policies adopted are set out below.
Company statement of comprehensive income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income. The Company's loss for the financial year was £1,114,213 (2016: £475,671). The Company's other comprehensive income for the financial year was £4,217,753 (2016: £157,286 income).
Amendments to published standards effective for the year ended 30 June 2017.
New standards, amendments and interpretations effective for the periods from 1 January 2016
The following new standards, amendments and interpretations are effective for the first time in these financial statements. However, none have a material effect on the Group and Company:
· Annual Improvements to IFRSs (2012-2014 cycle): IAS 19 Employee Benefits, IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures;
· Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interest in Other Entities and IAS 28 Investments in Associates and Joint Venture (2011);
· Amendments to IFRS 11 Joint Arrangements in relation to accounting for acquisition of interests in joint operations.
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 July 2016 that had a significant effect on the Group's financial statements.
New standards, amendments and interpretations not yet adopted
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective for the year presented:
· IFRS 9 Financial Instruments, effective for accounting periods beginning on or after 1 January 2018;
· IFRS 15 Revenue from Contracts with Customers, effective for accounting periods beginning on or after 1 January 2017;
· Amendments to IAS 12 Deferred Tax relating to recognition of deferred tax assets for unrealised losses, effective for periods beginning on or after 1 January 2017 (not yet endorsed in the EU);
· Amendments to IAS 7 Financial Instruments: Disclosures, effective for accounting periods beginning on or after 1 January 2017 (not yet endorsed in the EU);
· Annual Improvements to IFRSs (2014-2016 cycle), Amendments to IFRS 12, effective for accounting periods beginning on or after 1 January 2017 (not yet endorsed in the EU).
The effects of IFRS 15 Revenues from Contracts with Customers and IFRS 9 Financial Instruments are still being assessed, but it is not expected that these new standards and the amendments mentioned above may have a significant effect on the Group or Company's future financial statements.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.
1.3 Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and subsidiaries controlled by the Company made up to 30 June each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, up until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.
Non-controlling interests in subsidiaries are measured at the proportionate share of the fair value of their identifiable net assets.
Intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.
For the years ended 30 June 2017 and 30 June 2016, the consolidated financial statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd and Red Rock Kenya Ltd.
The Group's dormant subsidiary Intrepid Resources Limited, Red Rock Resources Inc., Ivory Coast, Red Rock Cote D'Ivoire sarl and Basse Terre sarl, have been excluded from consolidation on the basis of the exemption provided by Section 405(2) of the Companies Act 2006 that their inclusion is not material for the purpose of giving a true and fair view.
Non-controlling interests
Profit or loss and each component of other comprehensive income are allocated between the aims of the Parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in equity.
1.4 Summary of significant accounting policies
1.4.1 Property, plant and equipment
Assets in the course of construction are stated at cost, less any identified impairment loss. Depreciation of these assets commences when the assets are ready for their intended use.
Field equipment and fixtures and fittings are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight line method, on the following bases:
Mines 5% per annum
Field equipment 33% per annum
Fixtures and fittings 10% per annum
Assets under construction not depreciated until brought into use
1.4.2 Investment in associates
An associate is an entity over which the Group has the power to exercise significant influence, but not controlled or jointly controlled by the Group, through participation in the financial and operating policy decisions of the investee.
Investments in associates are recognised in the consolidated financial statements using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income is recognised directly in other comprehensive income. The carrying value of the investment, including goodwill, is tested for impairment when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised unless the Group has incurred obligations or made payments on behalf of the associate.
Where a Group company transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.
In the Company accounts investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment when there is objective evidence of impairment.
1.4.3 Interests in joint ventures
The Group recognises its interest in the jointly controlled entity's assets and liabilities using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group income statement reflects the share of the jointly controlled entity's results after tax.
Any goodwill arising on the acquisition of a jointly controlled entity is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Group's and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.
The Company has a 60% interest in Melville Bay Limited (formerly known as "NAMA Greenland Limited"). The Company does not have significant control over Melville Bay Limited but has joint control along with North Atlantic Mining Associates Limited and International Media Projects Ltd through a contractual joint venture arrangement making it a jointly controlled entity.
Financial statements for Melville Bay Limited are prepared as at and for the year ended 30 November 2016. The joint venture entity prepares, for the use of the Group, financial statements as of the same date as the financial statements of the Group.
1.4.4 Non-current assets held for sale
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
When a non-current asset ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) the asset is measured at the lower of: its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale; and its recoverable amount at the date of the subsequent decision not to sell.
1.4.5 Taxation
Corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax relates to income tax levied by the same tax authorities on either:
· the same taxable entity; or
· different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected to be realised or settled.
1.4.6 Foreign currencies
Both the functional and presentational currency of Red Rock Resources plc is Sterling (£). Each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The functional currency of the foreign subsidiaries are Australian Dollars (AUD) and Kenyan Shillings.
Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on translation are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.
1.4.7 Share-based payments
Share options
The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted.
The fair value of options granted to Directors and others in respect of services provided is recognised as an expense in the income statement with a corresponding increase in equity reserves - the share-based payment reserve until the award has been settled and then make a transfer to share capital.
On exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the vesting period during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. The exercise price is fixed at the date of grant.
Non-market conditions are performance conditions that are not related to the market price of the entity's equity instruments. They are not considered when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period based on the best available estimate of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date based on factors such as a shortened vesting period, and the cumulative expense is 'trued up' for both the change in the number expected to vest and any change in the expected vesting period.
Market conditions are performance conditions that relate to the market price of the entity's equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is accelerated in the period that the entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period.
For other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price.
When a share-based payment is modified, the Group determines whether the modification affects the fair value of the instruments granted, affects the number of equity instruments granted or is otherwise beneficial to the employee. In cases where the exercise price of options granted to employees is reduced, the Group recognises the incremental change in fair value (along with the original fair value determined at grant date) over the remaining vesting period as an expense and an increase in equity. Decreases in the fair value are not considered. To determine if an increase has occurred, management compares the fair value of the modified award with the fair value of the original award at the modification date. Any other benefit to the employee is taken into account in estimating the number of equity instruments that are expected to vest.
Share Incentive Plan
Where shares are granted to employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date, and is recognised as an expense in the income statement on the date of the grant. For the partnership shares the charge is calculated as the excess of the mid-market price on the date of grant over the employee's contribution.
1.4.8 Pension
The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered fund. Contributions to the defined contribution scheme are charged to the profit and loss account as they become payable.
1.4.9 Finance income and expense
Finance expense is recognised on an accruals basis using the effective interest method.
Finance income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Dividends received from available for sale investments are recognised as finance income in the period when they are declared by the investee. In case of distributions made by way of equal rights share buyback by an investee, the funds received as a part of such distribution are shown by the Company and by the Group in the period when right to receive them becomes established and presented in the dividends received of the income statement.
1.4.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised where the Group has become party to the contractual provisions of the instrument.
Investments
Investments in subsidiary companies are classified as non-current assets and included in the statement of financial position of the Company at cost at the date of acquisition less any identified impairment.
Investments in associates and joint ventures are classified as non-current assets and included in the statement of financial position of the Company at cost at the date of acquisition less any identified impairment.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity or fair value through profit and loss.
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through the provision of goods or services (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transactions costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using effective interest rate method, less provision for impairment.
Impairment provision is recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such provision being the difference between the net carrying amount and the net resent value of the future expected cash flows associated with the impaired receivable.
The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period is not considered cash and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised at original invoice amount less an allowance for any uncollectable amounts. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
Available for sale financial assets
Non-derivative financial assets not included in the above categories are classified as available for sale and comprise principally the Group's strategic investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. These equity investments are intended to be held by the Group for an indefinite period of time. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other comprehensive income and debited or credited to the available for sale trade investments reserve. Where the fair value cannot be reliably measured, the investment is carried at cost or a lower valuation where the Directors consider the value of the investment to be impaired.
Available for sale investments are included within non-current assets. On disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the income statement, and the cost of such disposed of investments is written off on a first in first out method.
Income from available for sale investments is accounted for in the income statement when the right to receive it has been established.
The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. When there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement - is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income.
Financial liabilities and equity
The Group classifies its financial liabilities into one of two categories: fair value through profit and loss or other financial liabilities. The Group has not classified any of its financial liabilities as fair value through profit and loss.
Other financial liabilities comprise trade and other payables and borrowings.
Trade and other payables
Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in the income statement over the term of the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter, with any change in the estimated liability being reflected in the income statement. Where deferred consideration is payable after more than one year the estimated liability is discounted using an appropriate rate of interest.
1.4.11 Dividend income
Dividends received from strategic investments are recognised when they become legally receivable. In case of interim dividends, this is when declared. In case of final dividends, this is when approved by the shareholders at the AGM.
1.4.12 Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
Going concern
The Group has incurred a loss of £1,114,213 for the year ended 30 June 2017. At that date there was a net current assets of £299,702 (2016: net current liability of £945,374). The loss resulted mainly from further £1.49m impairment of the Company's iron exploration assets in Greenland. Cash and cash equivalents were £909,094 (2016: 26,564) at year end.
During the reporting year the Company has continued to receive proceeds from the sale of its gold interests in Colombia. The Company has a three-year convertible promissory note of USD1.0m secured over the assets of its former gold mine and associated plant and bearing interest of 5% per annum due in 2018. A partial pre-payment of this note occurred on 09 June 2017, whereby USD250,000 was paid as part of a settlement agreement involving waiver of the potential conversion rights, with the balance of the note plus interest, estimated at USD783k, due in 2018.
Additional payments of up to USD2.0m will be paid in the form of a 3% net smelter royalty payable quarterly on gold production and these payments continued in 2017 and totalled USD36,747 to 30 June 2017. The Company estimates that approximately £400k will be paid out towards the initial USD2m royalty during 2018 based on updated projections from the operator in Colombia. A final royalty stream of up to USD1.0m will be paid following the payment in full of the initial net smelter royalty in the form of a 0.5% net smelter royalty.
On 21 November 2016, Jupiter Mines Ltd, where the Company holds a 1.2% stake, announced that it plans to make a cash distribution to its shareholders, which it completed in March 2017. In announcements on 31 July 2017, 11 September 2017 and 28 September 2017 Jupiter announced its intentions to buy back a further 4% of its outstanding share capital as part of a USD25m distribution expected to complete in December 2017. Red Rock announced its intention to accept this second buyback and the Company expects the total proceeds of these two buybacks to be over USD950,000 for the calendar year.
In the longer term, Jupiter may look to re-list or to dispose of its main production asset, the Tshipi Manganese Mine in South Africa, which would likely result in a significant value crystallisation event for the Company. If a strategic exit or IPO does not happen the Company expects to receive dividend or buyback payments in roughly the same quantity in 2018 as it did in 2017 provided manganese pricing levels are stable.
Income streams from the Company's investment in Steelmin are set to begin with smelter recommissioning in Q1 2018. Currently the Company sits in a positive net debt position relative to its loans made into Steelmin and its outstanding loans of over £1.3m. Give the differences in loan duration the Company would have expected to reduce its outstandings to under USD3m by the end of January 2018, whereas the amount due to be repaid by Steelmin in February 2018 will sit at €4.32m. The repayment of this loan on schedule should, once borrowings are repaid, net the Company approximately £1.5m in surplus cash.
The Group retains a very lean operating structure, with three employees and both accounting and geological services remaining outsourced. The Company is continuing these cost control efforts by downsizing its offices following the end of its lease in Q4 2017.
The Directors are confident in the Company's ability to raise new finance from equity and debt markets when required, as demonstrated by the USD4.4m in debt taken on in 2017 to invest in Steelmin Ltd, as well as the £300,000 in new equity raised during this period. The Directors have concluded that the combination of these circumstances that preparation of the Group's financial statements on a going concern basis is appropriate. The Company's income has increased due to multiple revenue streams as well the return on prior investments such as Jupiter Mines. The Group expects to receive cashflows from its ongoing disposal and debt repayment in Colombia, debt repayment and potential revenues from its investment in Steelmin, and either a complete exit or ongoing distributions from its holdings in Jupiter Mines.
As sentiment in natural resource investment and development continues to improve, driven in large part by expectations for rapid development of electric vehicles, home battery storage, and grid level storage and associated infrastructure, the Directors feel strongly that they will be able to access capital as required during 2018.
Recognition of holdings less than 20% as an associate
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider this, and the input of resource by the Company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the standard. As such, MMM has been recognised as an associate for the years ended 30 June 2017 and 30 June 2016.
The effect of recognising MMM as an available for sale financial asset would be to decrease the loss by £8 (2016: £8,245).
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period include the impairment determinations, the useful lives of property, plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.
For unquoted equity investments, we have based our valuation on the weighted average share price of actual sale transactions which we consider as level 2 of the fair value hierarchy as they are based on indirectly observable inputs. In the absence of a quoted liquid market for Jupiter shares directly determining their value, the Company relied on the single share buy-back that occurred during 2017.
Using the preferred Market Approach the Company has taken the price used in the proposed in September 2017 Jupiter Mines share buyback of 134,190,158 shares at USD0.29, and this gives a total valuation for Red Rock's Jupiter holdings of USD7,448,625, relied on the single share buy back.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model. The model has its strengths and weaknesses and requires six inputs as a minimum: 1. The share price; 2. The exercise price; 3. The risk free rate of return; 4. The expected dividends or dividend yield; 5. The life of the option; and 6. The volatility of the expected return. The first three inputs are normally, but not always, straightforward. The last three involve greater judgement and have the greatest impact on the fair value.
Impairment of financial assets
A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.
In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.
As a result of the Group's evaluation, the Group partially reversed £4,260,421 of prior year's impairment (2016: nil). No additional impairment on available for sale financial assets was recognised in the income statement for the year ended 30 June 2017 (2016: nil).
Impairment of non-financial assets
The Group follows the guidance of IAS 36 to determine when a non-financial asset is impaired. The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These projections generally cover a period of five years with a terminal value or salvage value applied.
Impairment losses of continuing operations are recognised in the income statement in expense categories consistent with the function of the impaired asset.
For investments in associates and joint ventures, the Group assesses impairment after the application of the equity method.
Amounts due from associates
As a result of the Group's evaluation of its non-financial assets, an impairment loss of £1,496,550 on investments in associates and joint ventures was recognised in the income statement (2016: £1,500,000), which related to the Company's iron ore assets in Greenland). During the year in question the Company let lapse its iron ore exploration licenses in Greenland and so has chosen to fully impair the residual exploration assets.
The Company conducted a review of the carrying value of the amount receivable from Mid Migori Mining Company Limited in relation to the Kenya asset. For the purpose of impairment review, the Company views this receivable as part of its net investment in the associate and hence followed the guidance of IAS 36. Management recognise that the recent variability in gold prices, change in market fundamentals based on demand from key consumers, concerns around the global macroeconomic environment in general, and the key uncertainty relating to the renewals of licences can all have an effect on the value of this project. The Company is currently engaged via its local partner in Kenya, Mid Migori Mining, in a legal challenge of the purported termination of its Special Licence numbers 122 and 202. In May 2015 the Company was granted leave to institute judicial review proceedings and a stay on the implementation of the Ministry of Mines revocation decision, which is currently ongoing. Red Rock has also applied via a local affiliate, Red Rock Kenya, for the same ground covered by the existing licences. While the Company feels it has a strong and quite valid case for retention of the licences and the existing JORC resource the ongoing legal process makes the timing of any resolution unclear and difficult to project.
2 Segmental analysis
The Group considered its mining and exploration activities as separate segments. These are in addition to the investment activities which continue to form a significant segment of the business. Its mining segment, which has now been sold, is currently presented as discontinued operations on the face of the income statement and is excluded from the continuing operations segmental analysis below.
The Group has made a strategic decision to concentrate on two commodities, gold and iron ore. However, as the Group was only in the production phase of gold during the year, a further segmental analysis by commodity has not been presented.
|
|
Investment |
Exploration |
Other |
|
||
|
Year to 30 June 2017 |
Jupiter |
Other |
Australian |
African |
Corporate |
Total |
|
Loss on sale of available for sale investments |
- |
(60,785) |
- |
- |
- |
(60,785) |
|
Impairment of investments in associates and joint ventures |
- |
(1,496,550) |
- |
- |
- |
(1,496,550) |
|
Exploration expenses |
- |
(29,103) |
- |
(13,087) |
- |
(42,190) |
|
Administration expenses* |
- |
- |
- |
- |
(644,687) |
(644,687) |
|
Currency gain |
- |
- |
41,430 |
- |
81,050 |
122,480 |
|
(Provision for)/Reversal of provision for bad debts |
- |
(140,178) |
- |
- |
- |
(140,178) |
|
Share of losses in associates |
- |
- |
- |
- |
(8) |
(8) |
|
Finance income, net |
538,740 |
- |
- |
- |
608,965 |
1,147,705 |
|
Net profit/(loss) before tax from continuing operations |
538,740 |
(1,726,616) |
41,430 |
(13,087) |
45,320 |
(1,114,213) |
|
|
Investment |
Exploration |
Other |
|||
|
Year to 30 June 2016 |
Jupiter |
Other |
Australian |
African |
Corporate |
Total |
|
Gain on sales of investments |
- |
- |
- |
- |
- |
- |
|
Impairment of amounts due from associates and ventures |
- |
- |
- |
- |
- |
- |
|
Impairment of investments in associates and joint ventures |
- |
(1,500,000) |
- |
- |
- |
(1,500,000) |
|
Exploration expenses |
- |
(51,321) |
1,277 |
(51,942) |
(15,228) |
(119,768) |
|
Administration expenses (excl. other income)* |
- |
- |
(1,176) |
(12,669) |
(744,505) |
(758,350) |
|
Currency gain/(loss) |
- |
- |
26,800 |
- |
319,355 |
346,155 |
|
(Provision for)/Reversal of provision for bad debts |
- |
(57,769) |
- |
- |
- |
(57,769) |
|
Share of losses in associates |
- |
- |
- |
- |
(9,240) |
(9,240) |
|
Other income |
- |
- |
- |
- |
599,225 |
599,225 |
|
Finance (cost)/income, net |
- |
- |
- |
(954) |
1,217,421 |
1,216,467 |
|
Net profit/(loss) before tax from continuing operations |
- |
(1,609,090) |
24,347 |
(65,566) |
1,367,029 |
(283,280) |
* Included in administration expenses is a depreciation charge of £1,800 (2016: £867).
Information by geographical area
Presented below is certain information by the geographical area of the Group's activities. Revenue from investment sales and the sale of exploration assets is allocated to the location of the asset sold.
|
Year ended 30 June 2017 |
UK |
USA |
Greenland |
Africa |
Total |
||
|
Revenue |
- |
- |
- |
- |
- |
||
|
(Loss) on sale of available for sale investments |
(60,785) |
- |
- |
- |
(60,785) |
||
|
Total segment revenue and other gains |
(60,785) |
- |
- |
- |
(60,785) |
||
|
Non-current assets |
|
|
|
|
|
||
|
Property, plant and equipment |
15,601 |
- |
- |
- |
15,601 |
||
|
Investments in associates and joint ventures |
- |
- |
- |
963,080 |
963,080 |
||
|
Exploration assets |
- |
280,460 |
- |
- |
280,460 |
||
|
Total segment non-current assets |
15,601 |
280,460 |
- |
963,080 |
1,259,141 |
||
|
Available for sale financial assets |
|
|
|
|
6,080,146 |
||
|
Non-current receivables |
|
|
|
|
4,543,755 |
||
|
Total non-current assets |
|
|
|
|
11,883,042 |
||
|
Year ended 30 June 2016 |
UK |
USA |
Greenland |
Africa |
Total |
|
Revenue |
|
|
|
|
|
|
Gain on sales of investments |
- |
- |
- |
- |
- |
|
Total segment revenue and other gains |
- |
- |
- |
- |
- |
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
17,400 |
- |
- |
- |
17,400 |
|
Investments in associates and joint ventures |
- |
- |
1,496,550 |
963,089 |
2,459,639 |
|
Exploration assets |
- |
280,460 |
- |
- |
280,460 |
|
Total segment non-current assets |
17,400 |
280,460 |
1,496,550 |
963,089 |
2,757,499 |
|
Available for sale financial assets |
|
|
|
|
1,976,552 |
|
Non-current receivables |
|
|
|
|
4,838,558 |
|
Total non-current assets |
|
|
|
|
9,572,609 |
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
|
|
2017 |
2016 |
|
Auditor's remuneration: |
|
|
|
- fees payable to the Company's auditor for the audit of consolidated and Company financial statements |
20,000 |
20,000 |
|
|
|
|
|
Directors' emoluments (note 7) |
343,681 |
324,421 |
|
- Share-based payments - Directors |
83,746 |
82,470 |
|
- Share-based payments - staff |
22,130 |
8,543 |
|
Depreciation - continuing operations |
1,800 |
867 |
|
Other income and currency gain on MFP receivable |
351,944 |
918,767 |
|
Other currency gain |
47,658 |
346,155 |
4 Finance income/(costs), net
|
|
2017 |
2016 |
|
Interest income (other than MFP finance income) |
342,932 |
323,229 |
|
Dividend income |
538,740 |
- |
|
Interest expense |
(11,088) |
(24,575) |
|
Total finance income (other than MFP finance income) |
870,584 |
298,654 |
|
MFP finance income |
277,121 |
918,767 |
|
Total finance income |
1,147,705 |
1,217,461 |
Interest income (other than MFP finance income) comes mainly from non-current receivables from an associate. Please refer to note 15.
Dividend income represents the money received from the Group's 1.2% holding in Jupiter Mines, full details are disclosed in note 22.
5 Taxation
|
|
Notes |
2017 |
2016 |
|
Current period taxation on the Group |
|
|
|
|
UK corporation tax at 19.75% (2016: 20%) on profits for the period |
|
- |
- |
|
|
|
|
|
|
Deferred tax |
|
|
|
|
Origination and reversal of temporary differences |
|
- |
- |
|
Deferred tax assets not recognised |
|
- |
- |
|
Tax credit |
|
- |
- |
|
Factors affecting the tax charge for the year |
|
|
|
|
Loss on ordinary activities before taxation |
|
(1,114,213) |
(283,280) |
|
Loss on ordinary activities at the average UK standard rate of 19.75% (2016: 20%) |
|
(220,057) |
(56,656) |
|
Impact of gain on disposal of associates and subsidiaries |
|
- |
(117,997) |
|
Effect of expenditure not deductible |
|
329,364 |
324,381 |
|
Utilisation of prior year losses |
|
(109,307) |
(149,728) |
|
Tax charge |
|
- |
- |
|
Tax credit arising from discontinued operations |
|
- |
- |
|
Total tax credit |
|
- |
- |
Deferred tax amounting to £nil (2016: £nil) relating to the Group's investments was recognised in the statement of comprehensive income.
Finance Act 2013 set the main rate of corporation tax at 20% from 1 April 2015 and at 20% from 1 April 2016. Therefore deferred tax assets/(liabilities) are calculated at 20% (2016: 20%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:
|
|
2017 |
2016 |
|
Wages and salaries |
210,500 |
284,473 |
|
Pension |
12,632 |
15,637 |
|
Social security costs |
16,536 |
21,692 |
|
Severance costs |
- |
14,679 |
|
Employee share-based payment charge |
142,732 |
91,013 |
|
Total staff costs |
382,400 |
427,494 |
The average number of Group employees (including Directors) during the year was:
|
|
2017 |
2016 |
|
Executives |
4 |
4 |
|
Administration |
1 |
1 |
|
Exploration |
- |
- |
|
|
5 |
5 |
The key management personnel are the Directors and their remuneration is disclosed within note 7.
7 Directors' emoluments
|
2017 |
Directors' |
Consultancy |
Share |
Share based Payments £ |
Pension |
Social |
Total |
|
Executive Directors |
|
|
|
|
|
|
|
|
A R M Bell |
82,000 |
13,750 |
10,440 |
35,115 |
6,091 |
7,847 |
155,243 |
|
S Kaintz |
65,000 |
- |
10,440 |
31,358 |
3,797 |
6,967 |
117,562 |
|
Other Directors |
|
|
|
|
|
|
|
|
M C Nott |
18,000 |
- |
10,212 |
1,245 |
976 |
1,175 |
31,608 |
|
S Quinn |
18,000 |
- |
10,440 |
8,031 |
275 |
2,522 |
39,268 |
|
|
183,000 |
13,750 |
41,532 |
75,749 |
11,139 |
18,511 |
343,681 |
|
2016 |
Directors' |
Consultancy |
Share |
Share based Payments £ |
Pension |
Social |
Total |
|
Executive Directors |
|
|
|
|
|
|
|
|
A R M Bell |
88,750 |
15,000 |
7,200 |
27,360 |
6,443 |
7,655 |
152,408 |
|
S Kaintz |
65,000 |
- |
7,200 |
22,230 |
3,284 |
6,468 |
104,182 |
|
Other Directors |
|
|
|
|
|
|
|
|
J F Ladner |
9,000 |
- |
- |
- |
- |
651 |
9,651 |
|
M C Nott |
18,000 |
- |
7,080 |
4,275 |
909 |
1,027 |
31,291 |
|
S Quinn |
18,069 |
- |
3,600 |
4,275 |
- |
945 |
26,889 |
|
|
198,819 |
15,000 |
25,080 |
58,140 |
10,636 |
16,746 |
324,421 |
The number of Directors who exercised share options in the year was nil (2016: nil).
During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors' Report.
3,000,000 (2016: 4,550,000) free shares were issued to each employee, including Directors, making a total of 8,712,000 (2016: 8,822,000) free shares issued.
8 Loss per share
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of Ordinary shares that would be issued on conversion of all dilutive potential Ordinary shares into Ordinary shares.
The following reflects the loss and share data used in the basic and diluted earnings per share computations:
|
|
2017 |
2016 |
|
Loss attributable to equity holders of the parent from continuing operations |
£(1,114,213) |
£(275,035) |
|
Loss attributable to equity holders of the parent from discontinued operations |
- |
- |
|
Loss attributable to equity holders of the Parent |
£(1,114,213) |
£(275,035) |
|
Weighted average number of Ordinary shares of £0.0001 (2016: £0.0001) in issue |
458,077,061 |
263,154,543 |
|
Loss per share - basic |
(0.24) pence |
(0.10) pence |
|
Weighted average number of Ordinary shares of £0.0001 (2016: £0.0001) in issue inclusive of outstanding dilutive options* |
458,077,061 |
263,154,543 |
|
Loss per share - fully diluted |
(0.24) pence |
(0.10) pence |
The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:
|
|
2017 |
2016 |
|
Loss per share denominator |
458,077,061 |
263,154,543 |
|
Weighted average number of exercisable share options |
- |
- |
|
Diluted loss per share denominator* |
458,077,061 |
263,154,543 |
* In accordance with IAS 33, the diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential ordinary shares. The effects of all the instruments in issue by the Group at 30 June 2017 is anti-dilutive (2016: all anti-dilutive) and all anti-dilutive potential ordinary shares are ignored in calculating diluted EPS. The details of all anti-dilutive warrants and options in issue are disclosed in note 18 and note 20 respectively.
9 Property, plant and equipment
|
Group and Company |
Field equipment |
Fixtures and |
Total |
|
Cost |
|
|
|
|
At 1 July 2015 |
34,607 |
27,807 |
62,414 |
|
Additions |
- |
18,000 |
18,000 |
|
Disposals |
- |
- |
- |
|
At 30 June 2016 |
34,607 |
45,807 |
80,414 |
|
Additions |
- |
- |
- |
|
Disposals |
- |
- |
- |
|
At 30 June 2017 |
34,607 |
45,807 |
80,414 |
|
|
|
|
|
|
Depreciation and impairment |
|
|
|
|
At 1 July 2015 |
(34,607) |
(27,541) |
(62,148) |
|
Depreciation charge |
- |
(866) |
(866) |
|
Disposals |
- |
- |
- |
|
At 30 June 2016 |
(34,607) |
(28,407) |
(63,014) |
|
Depreciation charge |
- |
(1,800) |
(1,800) |
|
Disposals |
- |
- |
- |
|
At 30 June 2017 |
(34,607) |
(30,207) |
(64,814) |
|
|
|
|
|
|
Net book value |
|
|
|
|
At 30 June 2017 |
- |
15,600 |
15,600 |
|
At 30 June 2016 |
- |
17,400 |
17,400 |
Of the depreciation charge, £1,800 (2016: £866) is included within other expenses in the income statement.
10 Investments in subsidiaries
|
Company |
2017 |
2016 |
|
Cost |
|
|
|
At 1 July 2016 |
1,423 |
613 |
|
Investment in subsidiary |
- |
810 |
|
At 30 June 2017 |
1,423 |
1,423 |
|
Impairment |
|
|
|
At 1 July 2016 |
(482) |
(482) |
|
Charge in the year |
- |
- |
|
At 30 June 2017 |
(482) |
(482) |
|
Net book value |
941 |
941 |
As at 30 June 2017, the Company held interests in the following subsidiary companies:
|
Company |
Country of |
Class |
Proportion |
Nature of business |
|
Red Rock Australasia Pty Limited |
Australia |
Ordinary |
100% |
Mineral exploration |
|
Red Rock Kenya Limited |
Kenya |
Ordinary |
87% |
Mineral exploration |
|
RRR Kenya Limited |
Kenya |
Ordinary |
100% |
Dormant |
|
Red Rock Inc. |
USA |
Ordinary |
100% |
Natural resources |
|
Red Rock Cote D'Ivoire sarl |
Ivory Coast |
Ordinary |
100% |
Dormant |
|
Basse Terre sarl |
Ivory Coast |
Ordinary |
100% |
Dormant |
As at 30 June 2016, the Company held interests in the following subsidiary companies:
|
Company |
Country of |
Class |
Proportion |
Nature of business |
|
|
Red Rock Australasia Pty Limited |
Australia |
Ordinary |
100% |
Mineral exploration |
|
|
Red Rock Kenya Limited |
Kenya |
Ordinary |
87% |
Mineral exploration |
|
|
Red Rock Inc. |
USA |
Ordinary |
100% |
Mining exploration |
|
|
Red Rock Cote D'Ivoire sarl |
Ivory Coast |
Ordinary |
100% |
Mineral exploration |
|
|
Basse Terre sarl |
Ivory Coast |
Ordinary |
100% |
Mineral exploration |
|
11 Investments in associates and joint ventures
|
|
Group |
Company |
||
|
|
2017 |
2016 |
2017 |
2016 |
|
Cost |
|
|
|
|
|
At 30 June |
7,398,569 |
9,108,304 |
7,241,725 |
8,951,460 |
|
Additions during the year |
- |
- |
- |
- |
|
Disposals during the year |
- |
(1,709,735) |
- |
(1,709,735) |
|
Transfer from assets held for sale |
- |
- |
- |
- |
|
At 30 June |
7,398,569 |
7,398,569 |
7,241,725 |
7,241,725 |
|
Impairment |
|
|
|
|
|
At 30 June |
(4,938,931) |
(5,139,426) |
(4,696,959) |
(4,652,038) |
|
Losses during the year |
(8) |
(9,240) |
- |
- |
|
Disposals during the year |
- |
1,709,735 |
- |
1,455,079 |
|
Impairment in the year |
(1,496,550) |
(1,500,000) |
(1,496,550) |
(1,500,000) |
|
At 30 June |
(6,435,489) |
(4,938,931) |
(6,193,509) |
(4,696,959) |
|
Net book amount at 30 June |
963,080 |
2,459,638 |
1,048,216 |
2,544,766 |
The Company, at 30 June 2017, had holdings amounting to 20% or more of the issued share capital of the following companies which amounted to significant influence or joint control:
|
Company |
Country of |
Class of |
Percentage of |
Accounting year ended |
|
Melville Bay Limited (formerly "NAMA Greenland Limited") |
England |
Ordinary |
60.00% |
30 November 2016 |
The Company, at 30 June 2016, had holdings amounting to 20% or more of the issued share capital of the following companies which amounted to significant influence or joint control:
|
Company |
Country of |
Class of |
Percentage of |
Accounting year ended |
|
Melville Bay Limited (formerly "NAMA Greenland Limited") |
England |
Ordinary |
60.00% |
30 November 2015 |
* Financial information was not available for this company.
The Company, at 30 June 2017 and 30 June 2016, had significant influence by virtue other than shareholding over 20% over the
following companies:
|
Company |
Country of |
Class of |
Percentage of |
Accounting year ended |
|
Mid Migori Mining Company Limited |
Kenya |
Ordinary |
15.00% |
30 September 2016 |
Summarised financial information for the Company's associates and joint ventures, where available, is given below:
For the year as at 30 June 2017:
|
Company |
Revenue |
Loss |
Assets |
Liabilities |
|
Mid Migori Mining Company Limited |
- |
(51) |
2,763,865 |
(3,434,865) |
|
Melville Bay Limited |
- |
(4,146,034) |
37,211 |
(228,025) |
For the year as at 30 June 2016:
|
Company |
Revenue |
Loss |
Assets |
Liabilities |
|
Mid Migori Mining Company Limited |
- |
(58,197) |
2,753,364 |
(3,411,111) |
|
Melville Bay Limited |
- |
(1,760,272) |
4,178,640 |
(223,420) |
|
|
Mid Migori |
Red Rock |
Melville |
Total |
|
Cost |
|
|
|
|
|
At 30 June 2016 |
1,044,766 |
140,596 |
6,213,207 |
7,398,569 |
|
Additions during the year |
- |
- |
- |
- |
|
Disposals during the year |
- |
- |
- |
- |
|
At 30 June 2017 |
1,044,766 |
140,596 |
6,213,207 |
7,398,569 |
|
|
|
|
|
|
|
Impairment and losses during the year |
|
|
|
|
|
At 30 June 2016 |
(81,677) |
(140,596) |
(4,716,657) |
(4,938,930) |
|
(Losses) during the year |
(8) |
- |
- |
(8) |
|
Impairment in period |
- |
- |
(1,496,550) |
(1,496,550) |
|
Disposals during the year |
- |
- |
- |
- |
|
At 30 June 2017 |
(81,685) |
(140,596) |
(6,213,207) |
(6,435,488) |
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
At 30 June 2017 |
963,081 |
- |
- |
963,081 |
|
At 30 June 2016 |
963,089 |
- |
1,496,550 |
2,459,639 |
Mid Migori Mining Company Limited
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). The Company has entered into an agreement whereby it manages and funds a number of MMM's development projects and has representation on the MMM board.
In accordance with IAS 28, the involvement with MMM meets the definition of significant influence and therefore has been accounted for as an associate (note 1.5).
Melville Bay Limited
In consideration for funding the 2012 exploration programme of North Atlantic Mining Associates Limited ("NAMA"), the Company earned 60% interest in Melville Bay Limited ("MBL"). The Company does not have control over MBL but has joint control along with North Atlantic Mining Associates Limited and International Media Projects Ltd through a contractual joint venture arrangement making MBL a jointly controlled entity. The book value of MBL has been fully written off in the current financial year.
12 Exploration assets
|
Group |
2017 |
2016 |
|
Cost |
|
|
|
At 1 July 2016 |
280,460 |
- |
|
Additions |
- |
280,460 |
|
Disposals |
- |
- |
|
At 30 June 2017 |
280,460 |
280,460 |
|
Impairment |
|
|
|
At 1 July 2016 |
- |
- |
|
Charge in the year |
- |
- |
|
At 30 June 2017 |
- |
- |
|
Net book value |
280,460 |
280,460 |
13 Available for sale financial assets
|
|
Group and Company |
|
|
|
2017 |
2016 |
|
Opening balance |
1,976,552 |
1,331,766 |
|
Additions |
96,435 |
487,500 |
|
Disposals |
(210,594) |
- |
|
Revaluations |
(42,668) |
157,286 |
|
Reversal of previous impairment |
4,260,421 |
- |
|
Closing balance |
6,080,146 |
1,976,552 |
Market value of investments
The market value as at 30 June 2017 of the Company's available for sale listed and unlisted investments was as follows:
|
|
2017 |
2016 |
|
Quoted on London AIM |
61,607 |
218,433 |
|
Unquoted investments at fair value |
6,018,540 |
1,758,119 |
|
|
6,080,146 |
1,976,552 |
14 Cash and cash equivalents and restricted cash
|
Group |
30 June |
30 June |
|
Cash in hand and at bank |
909,094 |
26,564 |
|
|
909,094 |
26,564 |
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:
|
|
30 June |
30 June |
|
Cash in hand and at bank |
909,094 |
26,564 |
|
|
909,094 |
26,564 |
|
Company |
30 June |
30 June |
|
Cash in hand and at bank |
905,135 |
24,370 |
|
|
905,135 |
24,370 |
15 Non-current receivables
|
|
Group and Company |
|
|
|
2017 |
2016 |
|
Amounts due from associates |
3,206,177 |
2,857,810 |
|
MFP sale proceeds |
1,337,578 |
1,980,748 |
|
|
4,543,755 |
4,838,558 |
Non-current related party receivables of £3,206,176 (2016: £2,857,810) is recoverable from Mid Migori Mining Company Limited under the terms of the joint venture, purchase and sale agreement entered into in August 2009 as detailed in note 25. The amount is unsecured and has no fixed repayment date. Interest is charged at 8% per annum. Management have considered the recoverability of this debt and, although the Judicial Review case is ongoing, no further impairment is considered necessary (2016: £nil). More details are given in note 1.5, Significant accounting judgements, estimates and assumptions.
The MFP sale proceeds represents the fair value of the deferred consideration receivable for the sale of MFP. The fair value was estimated based on the consideration offered by the buyer adjusted to its present value based on the timing for which the consideration is expected to be received. The most significant inputs are the offer price per tranches, discount rate and estimated royalty stream. The estimated royalty stream takes into account current production level, estimates of future production level and gold price forecasts.
16 Other receivables
|
|
Group |
Company |
||
|
|
2017 |
2016 |
2017 |
2016 |
|
Current trade and other receivables |
|
|
|
|
|
Prepayments |
221,070 |
236,765 |
135,073 |
170,313 |
|
Related party receivables: |
|
|
|
|
|
- due from subsidiaries |
- |
- |
465,145 |
404,747 |
|
- due from associates |
118,965 |
225 |
118,965 |
225 |
|
- due from key management |
3,096 |
- |
3,096 |
- |
|
Short-term loan |
2,421,831 |
- |
2,421,831 |
- |
|
Other receivables |
1,437,918 |
702,563 |
1,432,679 |
698,211 |
|
Total |
4,202,880 |
939,553 |
4,576,789 |
1,273,496 |
17 Trade and other payables
|
|
Group |
Company |
||
|
|
2017 |
2016 |
2017 |
2016 |
|
Trade and other payables |
1,191,741 |
1,368,746 |
1,187,968 |
1,347,803 |
|
Accruals |
332,540 |
335,663 |
332,540 |
335,663 |
|
Related party payables: |
|
|
|
|
|
- due to associates |
- |
86,966 |
- |
86,966 |
|
- due to key management |
29,384 |
62,629 |
29,384 |
62,629 |
|
Trade and other payables |
1,553,665 |
1,854,004 |
1,549,892 |
1,833,061 |
|
Short-term borrowings |
3,258,608 |
57,490 |
3,258,608 |
57,490 |
|
Total |
4,812,272 |
1,911,494 |
|
|
As announced on 23 June 2017, the Company has borrowed USD4,400,000 in order to make a loan to Steelmin Ltd to fund refurbishment of its ferrosilicon smelter in Jacje, Bosnia. The Company borrowed USD4,400,000 from a group of institutional investors on a secured basis bearing interest at 13% pa with a renewal option for a further 8 months for a 5% fee. The Company further issued 20,000,000 warrants with a 24-month life exercisable at 2.2 pence per share. The loan has a three-month repayment holiday and 75% of the loan is to be amortized over 8 months leaving a 25% bullet at 12 months. A 7.5% arrangement fee was agreed with 4% to be withheld at closing and 3.5% at the earlier of an exit from the Company's stake in Jupiter Mines or 31 December 2017. The details of the security of the loan are descried in note 26.
18 Share capital of the Company
The share capital of the Company is as follows:
|
Issued and fully paid |
2017 |
2016 |
|
2,371,116,172 deferred shares of £0.0009 each |
- |
- |
|
4,662,024,541 ordinary shares of £0.0001 each |
- |
- |
|
241,354,445 ordinary shares of £0.01 each |
24,135 |
24,135 |
|
2,371,116,172 deferred shares of £0.09 each |
2,134,005 |
2,134,005 |
|
6,033,861,125 A deferred shares of £0.0096 each |
579,251 |
579,251 |
|
150,971,295 ordinary shares of £0.01 each |
15,097 |
15,097 |
|
83,712,000 ordinary shares of £0.01 each |
8,371 |
- |
|
As at 30 June |
2,760,859 |
2,752,488 |
|
Movement in share capital |
Number |
Nominal |
|
Ordinary shares of £0.001 each |
|
|
|
As at 30 June 2015 - ordinary shares of £0.0001 each |
4,662,024,541 |
2,600,207 |
|
Issued 7 July 2015 at 0.0475 pence per share |
421,052,632 |
42,105 |
|
Issued 7 July 2015 at 0.0475 pence per share |
268,421,074 |
26,842 |
|
Issued 8 July 2015 at 0.0475 pence per share |
107,894,948 |
10,789 |
|
Issued 13 July 2015 at 0.475 pence per share |
157,894,800 |
15,789 |
|
Issued 9 October 2015 at 0.0183 pence per share |
416,573,115 |
41,657 |
|
As at 21 December 2015, pre-share re-organisation |
6,033,861,110 |
2,737,389 |
|
21 December 2015, share re-organisation (see below) |
|
|
|
Issue of A deferred shares of £0.0096 each |
(6,033,861,110) |
(579,251) |
|
Issue of new ordinary shares of £0.0004 each |
(6,033,861,110) |
(24,135) |
|
Share consolidation: 1 new ordinary share of £0.01 for 25 ordinary shares of £0.0004 |
241,354,445 |
603,388 |
|
Issued 21 January 2016 at 0.375 pence per share |
3,750,000 |
375 |
|
Issued 1 April 2016 at 0.375 pence per share |
5,072,000 |
507 |
|
Issued 28 April 2016 at 0.52777 pence per share |
21,315,971 |
2,132 |
|
Issued 29 April 2016 at 0.42 pence per share |
97,023,801 |
9,702 |
|
Issued 29 April 2016 at 0.42 pence per share |
23,809,523 |
2,381 |
|
As at 30 June 2016 - ordinary shares of £0.01 each |
392,325,740 |
2,752,488 |
|
Issued 24 August 2016 at 0.4 pence per share |
75,000,000 |
7,500 |
|
Issued 5 April 2017 at 0.6 pence per share |
8,712,000 |
871 |
|
As at 30 June 2017 - ordinary shares of £0.01 each |
476,037,740 |
2,760,859 |
Change in nominal value/share re-organisation on 21 December 2015
On 21 December 2015, the Company announced that each of the existing 6,033,861,125 issued ordinary shares of 0.01 pence each in the capital of the Company ("Existing Ordinary Shares") will be subdivided into one A deferred share of 0.0096 pence each ("A Deferred Shares") and one new ordinary share of 0.0004 pence each. Furthermore, every 25 ordinary shares of 0.0004 pence each in the capital of the Company will be consolidated into one new ordinary share of 0.01 pence each ("New Ordinary Shares") and accordingly the Company will have 241,354,445 New Ordinary Shares in issue post consolidation. The New Ordinary Shares will have the same rights and be subject to the same restrictions as the Existing Ordinary Shares in the Company's Articles of Association and the A Deferred Shares will have the rights and be subject to the restrictions attached to A Deferred Shares as set out in the Articles of Association.
Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the Company, or bought back for £1 and then cancelled. The deferred shares are not quoted and carry no rights whatsoever.
Warrants
At 30 June 2017, the Company had 240,778,371 warrants in issue (2016: 145,778,371) with a weighted average exercise price of 0.99 pence (2016: 0.92 pence). Out of those, 97,023,801 (2016: 97,023,801) have market performance conditions that accelerate the expiry date. Weighted average remaining life of the warrants at 30 June 2017 was 434 days (2016: 768 days). All the warrants are issued by the Group to its shareholders in the capacity of shareholders and therefore are outside of IFRS 2 scope.
Capital management
Management controls the capital of the Group in order to control risks, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group's debt and capital includes Ordinary share capital and financial liabilities, supported by financial assets (note 21).
There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
19 Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen from the retranslation of overseas operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Available for sale trade investments reserve
The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments.
Associate investment reserve
The associate investments reserve represents the cumulative share of gains and losses of associates recognised in the statement of other comprehensive income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.
20 Share-based payments
Employee share options
In prior years, the Company established employee share option plans to enable the issue of options as part of the remuneration of key management personnel and Directors to enable them to purchase Ordinary shares in the Company. Under IFRS 2 "Share-based Payments", the Company determines the fair value of the options issued to Directors and employees as remuneration and recognises the amount as an expense in the statement of income with a corresponding increase in equity.
At 30 June 2017, the Company had outstanding options to subscribe for Ordinary shares as follows:
|
|
Options issued 14 June 2016 exercisable at 0.45 pence per share expiring 29 January 2022 Number |
Options issued 13 January 2017 exercisable at 0.8p per share, expiring on 13 January 2023, Number |
Total, Number |
|
A R M Bell |
5,760,000 |
12,000,000 |
17,760,000 |
|
S Kaintz |
4,680,000 |
11,000,000 |
15,680,000 |
|
M C Nott |
900,000 |
- |
900,000 |
|
S Quinn |
900,000 |
3,000,000 |
3,900,000 |
|
Employees |
1,080,000 |
9,000,000 |
10,080,000 |
|
Total |
13,320,000 |
35,000,000 |
48,320,000 |
|
|
Company and Group |
|||
|
|
2017 |
2016 |
||
|
|
Number of |
Weighted |
Number of |
Weighted |
|
Outstanding at the beginning of the period |
13,320,000 |
0.45 |
7,000,000 |
3.20 |
|
Granted during the period |
35,000,000 |
0.80 |
13,320,000 |
0.45 |
|
Forfeited during the period |
- |
- |
- |
- |
|
Exercised during the period |
- |
- |
- |
- |
|
Lapsed during the period |
- |
- |
(7,000,000) |
3.20 |
|
Outstanding at the end of the period |
48,320,000 |
0.70 |
13,320,000 |
0.45 |
During the financial year 35,000,000 options were issued at an exercise price of 0.8 pence and they expire on 13 January 2023. The grant was structured in four tranches, first tranche vested immediately and the other three tranches had time and market performance vesting conditions. (2016: 13,320,000 options at an exercise price of 0.45 pence, expiring on 29 January 2022, granted in four tranches, first vested immediately and the other three had time and market vesting conditions).
The weighted average fair value of each option granted during the year was 0.236 pence (2016: 0.394 pence).
The exercise price of options outstanding at 30 June 2017 ranged between 0.45p and 0.8p (2016: 0.45p). Their weighted average contractual life was 5.28 years (2016: 5.63 years).
Of the total number of options outstanding at 30 June 2017 24,160,000 (2016: 3,330,000) had vested and were exercisable.
The weighted average share price (at the date of exercise) of options exercised during the year was nil (2016: nil) as no options were exercised.
The following information is relevant in the determination of the fair value of options granted during the year under equity-settled share-based remuneration schemes:
|
|
Granted on 13 January 2017 |
Granted on 14 June 2016 |
|
Option pricing model used |
Black-Scholes model |
Black-Scholes model |
|
Weighted average share price at grant date, pence |
0.59 |
0.48 |
|
Exercise price, pence |
0.80 |
0.45 |
|
Weighted average contractual life, months |
66.50 |
55.00 |
|
Expected volatility, % |
51.42 |
112.00 |
|
Expected dividend growth rate, % |
0 |
0 |
|
Risk-free interest rate, % |
0.579 |
0.679 |
Share based remuneration expense related to the share options grant is included into the Administration expenses line in the Consolidated Income Statement in the amount of £97,600 (2016: £63,270).
In 2016 a credit of £111,929 was posted to the income statement in respect of the cancelled share options and a charge of £63,270 was posted to the income statement in respect of the share options issued during 2016. Therefore, a net credit of £48,659 was posted to the income statement during 2016.
Share Incentive Plan
In January 2012 the Company implemented a tax efficient Share Incentive Plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including Directors, who have served for three months or more at the time of issue. The terms of the plan provide for:
· each employee to be given the right to subscribe any amount up to £150 per month with Trustees who invest the monies in the
Company's shares;
· the Company to match the employee's investment by contributing an amount equal to double the employee's investment
("matching shares"); and
· the Company to award free shares to a maximum of £3,600 per employee per annum.
The subscriptions remain free of taxation and national insurance if held for five years.
All such shares are held by SIP Trustees and the Ordinary shares cannot be released to participants until five years after the date of the award.
During the financial year, a total of 7,398,000 free and matching shares were awarded (2016: 6,808,000) with a fair value of 0.375 pence (2016: 0.375-0.4 pence) resulting in a share-based payment charge of £45,132 (2016: £27,743), included into the Administration expenses line in the income statement.
21 Financial instruments
21.1 Categories of financial instruments
The Group and Company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables and trade payables.
The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies, are as follows:
|
30 June |
Group 2017 |
Group 2016 |
Company 2017 |
Company 2016 |
|
Financial assets |
|
|
|
|
|
Available for sale financial assets at fair value through OCI |
|
|
|
|
|
Unquoted equity shares |
6,018,540 |
1,758,119 |
6,018,540 |
1,758,119 |
|
Quoted equity shares |
61,606 |
218,433 |
61,606 |
218,433 |
|
Total available for sale financial assets at fair value through OCI |
6,080,146 |
1,976,552 |
6,080,146 |
1,976,552 |
|
|
|
|
|
|
|
Loans and receivables |
|
|
|
|
|
Non-current receivables |
4,543,755 |
4,838,559 |
4,543,755 |
4,838,559 |
|
Other receivables - current |
4,202,879 |
939,554 |
4,576,789 |
1,273,496 |
|
Total loans and receivables |
8,746,634 |
5,778,113 |
9,120,544 |
6,112,055 |
|
Total financial assets |
14,826,780 |
7,754,665 |
15,200,690 |
8,088,607 |
|
|
|
|
|
|
|
Total current financial assets |
4,202,879 |
939,554 |
4,576,789 |
1,273,496 |
|
Total non-current financial assets |
10,623,901 |
6,815,111 |
10,623,901 |
6,815,111 |
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
Short-term borrowings |
3,258,608 |
57,490 |
3,258,608 |
57,490 |
|
Total current financial liabilities |
3,258,608 |
57,490 |
3,258,608 |
57,490 |
Other receivables and trade payables
Management assessed that other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
Non-current receivables
Long-term fixed-rate receivables are evaluated by the Group based on parameters such as interest rates, recoverability and risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for any expected losses on these receivables.
Loans and borrowings
The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer's borrowing rate.
Financial instruments held at cost can be reconciled from beginning to ending balances as follows:
|
|
Group 2017 |
Group 2016 |
Company 2017 |
Company 2016 |
|
Financial liabilities |
|
|
|
|
|
Loans and borrowings |
|
|
|
|
|
Trade and other payables |
1,553,664 |
1,854,002 |
1,549,892 |
1,833,060 |
|
Total loans and borrowings |
1,553,664 |
1,854,002 |
1,549,892 |
1,833,060 |
|
Total financial liabilities |
1,553,664 |
1,854,002 |
1,549,892 |
1,833,060 |
|
Total current |
1,553,664 |
1,854,002 |
1,549,892 |
1,833,060 |
|
Total non-current |
- |
- |
- |
- |
The carrying value of current financial liabilities in the Company is not materially different from that of the Group.
21.2 Fair values
21.2.1 Fair values of financial assets and liabilities
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The carrying amount of the Company's financial assets and liabilities is not materially different to their fair value. The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Where a quoted price in an active market is available, the fair value is based on the quoted price at the end of the reporting period. In the absence of a quoted price in an active market, the Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.
|
Group and Company 30 June 2017 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Available for sale financial assets at fair value through OCI |
|
|
|
|
|
- Unquoted equity shares |
- |
6,018,540 |
- |
6,018,540 |
|
- Quoted equity shares |
61,606 |
- |
- |
61,606 |
|
Group and Company 30 June 2016 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Available for sale financial assets at fair value through OCI |
|
|
|
|
|
- Unquoted equity shares |
- |
1,758,119 |
- |
1,758,119 |
|
- Quoted equity shares |
218,433 |
- |
- |
218,433 |
The valuation techniques used for instruments categorised in Levels 2 and 3 are described below:
Unquoted available for sale financial assets (Level 2)
A significant portion of the Group's available for sale financial asset is an investment in equity shares of a non-listed company. The fair value of unquoted ordinary shares has been estimated using the weighted average share price of actual sale transactions that happened between de-listing date and the year end.
21.3 Financial risk management policies
The Directors monitor the Group's financial risk management policies and exposures and approve financial transactions.
The Directors' overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements.
Specific financial risk exposures and management
The main risks the Group are exposed to through its financial instruments are credit risk and market risk, consisting of interest rate risk, liquidity risk, equity price risk and foreign exchange risk.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss for the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and counterparties to transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for impairment.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Directors have otherwise cleared as being financially sound.
Other receivables which are neither past due nor impaired are considered to be of high credit quality.
The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Limited, an associate of the Company. See note 1.5, 'Significant accounting judgements, estimates and assumptions' and note 15 for further details.
The Group has an outstanding pledge (2016: £nil) of its shares in Jupiter Mines Limited as security for its USD4.4m loan to YA Global in relation to its investment into Steelmin Ltd.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
· monitoring undrawn credit facilities;
· obtaining funding from a variety of sources; and
· maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to finance operations for commercial exploration and development and that controls over expenditure are carefully managed.
Management intend to meet obligations as they become due through ongoing revenue streams, the sale of assets, the issuance of new shares, the collection of debts owed to the Company and the drawing of additional credit facilities.
Market risk
Interest rate risk
The Company is not exposed to any material interest rate risk.
Equity price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities, but also include political, economic, social, technical, environmental and regulatory factors.
Foreign currency risk
The Group's transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, US Dollar, Kenyan Shilling and Euro.
To mitigate the Group's exposure to foreign currency risk, non-Sterling cash flows are monitored. The Group does not enter into forward exchange contracts to mitigate the exposure to foreign currency risk as amounts paid and received in specific currencies are expected to largely offset one another and the currencies most widely traded in are relatively stable.
The Directors consider the balances most susceptible to foreign currency movements to be the available for sale financial assets as well as its back to back borrowing in Euros and loans outstanding in USD relating to its investment in Steelmin Ltd. The Company is considering hedging options in order to help mitigate the risks associated with adverse euro/dollar movements between these two loan amounts.
These assets are denominated in the following currencies:
|
Group 30 June 2017 |
GBP |
AUD |
USD |
EUR £ |
Other £ |
Total |
|
Cash and cash equivalents |
27,304 |
225 |
877,696 |
- |
3,869 |
909,094 |
|
Other receivables |
725,727 |
97 |
1,050,854 |
2,421,831 |
4,371 |
4,202,880 |
|
Available for sale investments |
61,606 |
5,743,540 |
275,000 |
- |
- |
6,080,146 |
|
Non-current receivables |
3,070,862 |
- |
1,337,578 |
- |
135,315 |
4,543,755 |
|
Trade and other payables |
549,930 |
267 |
161,171 |
- |
842,296 |
1,553,664 |
|
Short-term borrowings |
- |
- |
3,258,608 |
- |
- |
3,258,608 |
|
Group 30 June 2016 |
GBP |
AUD |
USD |
EUR |
Other |
Total |
|
Cash and cash equivalents |
23,847 |
106 |
388 |
- |
2,223 |
26,564 |
|
Other receivables |
549,179 |
242 |
386,833 |
- |
3,300 |
939,554 |
|
Available for sale investments |
218,432 |
1,483,120 |
275,000 |
- |
- |
1,976,552 |
|
Non-current receivables |
2,722,496 |
- |
1,980,748 |
- |
135,315 |
4,838,559 |
|
Trade and other payables |
965,553 |
597 |
85,214 |
- |
802,638 |
1,854,002 |
|
Short-term borrowings |
- |
- |
57,490 |
- |
- |
57,490 |
|
Company 30 June 2017 |
GBP |
AUD |
USD |
EUR £ |
Other £ |
Total |
|
Cash and cash equivalents |
27,304 |
- |
877,696 |
- |
135 |
905,135 |
|
Other receivables |
940,601 |
- |
964,856 |
2,421,831 |
249,501 |
4,576,789 |
|
Available for sale investments |
61,606 |
5,743,540 |
275,000 |
- |
- |
6,080,146 |
|
Non-current receivables |
3,070,862 |
- |
1,337,578 |
- |
135,315 |
4,543,755 |
|
Trade and other payables |
546,425 |
- |
161,171 |
- |
842,296 |
1,549,892 |
|
Short-term borrowings |
- |
- |
3,258,608 |
- |
- |
3,258,608 |
|
Company 30 June 2016 |
GBP |
AUD |
USD |
EUR |
Other |
Total |
|
Cash and cash equivalents |
23,847 |
- |
388 |
- |
135 |
24,370 |
|
Other receivables |
949,815 |
- |
320,381 |
- |
3,300 |
1,273,496 |
|
Available for sale investments |
218,432 |
1,483,120 |
275,000 |
- |
- |
1,976,552 |
|
Non-current receivables |
2,722,495 |
- |
1,980,748 |
- |
135,315 |
4,838,558 |
|
Trade and other payables |
945,207 |
- |
85,214 |
- |
802,639 |
1,833,060 |
|
Short-term borrowings |
- |
- |
57,490 |
- |
- |
57,490 |
Exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions.
22 Significant agreements and transactions
The following are the significant agreements and transactions recently undertaken having an impact in the year under review and for the period to 22 November 2017. For the sake of completeness and of clarity, some events after the reporting period are included here and in note 24.
Financing
On 22 August 2016, the Company raised £300,000 by way of an issue of 75,000,000 new ordinary shares of 0.01 pence each in the Company at a price of 0.40 pence per share. For every one share, each subscriber was issued with one warrant exercisable at a price of 0.80 pence per share and expiring on 22 August 2018. The proceeds of the placing were applied towards the Company's existing hard rock mineral projects and in expanding its project and business pipeline.
Steelmin
On 23 June 2017 the Company announced that it had entered into back to back financing agreements under which it would fund Steelmin Limited to complete the refurbishment and recommissioning of a ferrosilicon smelter complex in Jajce, Bosnia and to simultaneously acquire an equity interest in Steelmin.
In order to fund Steelmin's refurbishment, Red Rock issued an eight-month secured loan of €3,848,000 bearing 13% interest and extendable for a further eight months for a 5% renewal fee. The Company received a 7.5% arrangement fee with 4% due at close and the balance of 3.5% due after eight months.
For putting this loan in place Red Rock was issued 16% of the fully diluted equity of Steelmin. Red Rock also received a board seat and one observer seat, with the second seat converting to a full board position if the loan was extended. For each month following a holiday period lasting until 1 September 2017 the Company will receive a further 1% of the fully diluted equity of Steelmin on a predetermined schedule up to a maximum of 30%.
To fund the loan to Steelmin the Company borrowed USD4,400,000 from a group of institutional investors on a secured basis bearing interest at 13% pa with a renewal option for a further 8 months for a 5% fee. The Company further issued 20,000,000 warrants with a 24-month life exercisable at 2.2 pence per share. The loan has a three-month repayment holiday and 75% of the loan is to be amortized over 8 months leaving a 25% bullet at 12 months. A 7.5% arrangement fee was agreed with 4% to be withheld at closing and 3.5% at the earlier of an exit from the Company's stake in Jupiter Mines or 31 December 2017.
In the case of a Jupiter Mines liquidity event then depending on the quantum Red Rock will repay between 30% and 50% of the outstanding principal and interest of the loan. Any other early repayments outside of this mechanism will incur a 5% early repayment fee. In the event of a default in repayment in principal or interest by the Company of more than 5 days, the investors may convert the amount in default into new ordinary shares at 93% of the volume-weighted average price at which the shares have traded in the three days prior to the allotment, subject to a maximum value of 5x the average daily value traded over that period. The investors are to receive a potential earn out payment based on the value of the Company's Jupiter Mines investment at the time of a trade sale or IPO of the Tshipi Manganese mine, the amount payable is to vary between USDnil and USD410,000 with USD100k payable if no Jupiter Mines liquidity event occurs before 31 December 2017.
Jupiter Mines
On 21 November 2016 and 23 January 2017, the Company announced that Jupiter Mines Ltd, ("Jupiter") an Australian unlisted public company had provided details of its plans to distribute USD55m to shareholders. All Jupiter shareholders were made an equal offer to buy back 6% of their shares at a price of USD0.40 per share. At the time of the buyback Red Rock held 27,324,374 shares in Jupiter, equal to approximately 1.2% of the issued share capital. During the year the Company accepted the buy-back offer and received USD655,784 in consideration and following the buyback held 25,684,913 shares.
Four Points Mining
On 14 April 2015 the Company executed a Sale Agreement with Colombia Milling Limited ("CML"), a private company registered in Belize. CML is the nominee of Nicaragua Milling Company ("NML"), with which Red Rock signed a Letter of Intent on 12 May 2014. CML is represented by James Randall Martin and Geoff Hampson, and the entire share capital of CML has as of early 2016 been vended into Para Resources Ltd, a public vehicle listed on the TSX Venture Exchange. Completion ("Completion") of the Sale Agreement took place on 13 May 2015. Under the Sale Agreement, the Company sold, and CML bought, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in Four Points Mining SAS ("FPM"), the owner of the El Limón mine, and (b) its loans to FPM, for a total consideration of USD5,000,000. CML also purchased a 11.2% stake from a minority shareholder in the business. Payment of the consideration of USD5,000,000 occurs in tranches. The initial payment of USD100,000, was made in respect of the CML's due diligence review and was considered part of the first tranche. The balance of the first tranche of USD400,000, second tranche of USD225,000 and third tranche of USD225,000 have been paid as of 30 June 2017.
Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly and as of 30 June 2017 USD31,841 of the USD2,000,000 has been paid to the Company. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM.
A further payment of USD1,000,000 was satisfied by the issuance by CML to Red Rock at Completion of a three-year convertible 5% promissory note ("PN"), secured on the acquired shares in AGM and providing that during its currency CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN is held in the form of a charge over 100% of the shares in AGM and conversion was possible following any listing of CML or vend of the assets into a public vehicle. As of 05 April 2017, the Company has agreed to drop all claims of conversion in exchange for an early partial repayment of the loan note and a broadening of the definition of what production is covered by the First NSR and Second NSR. In particular both the First NSR and Second NSR will be payable on all gold production revenues of the plant at El Limon, and as such will include both ore mined locally as well as ore brought in from third party sources.
As of 12 June 2017, the early repayment of USD225,000 has been made, leaving the balance due with interest in May 2018.
Kenya
On 7 May 2015, the Company announced that its partner, Mid Migori Mining Ltd ("MMM"), has been advised by the Ministry of Mining of the termination of its Special Licences numbers 122 and 202 ("the SLs"). MMM intends to challenge this purported termination. MMM also continues to have an application for a Mining Licence over a part of the SLs, submitted in 2012 pending at the Ministry.
On 26 June 2015, the Company announced that it has been granted leave to institute judicial review proceedings and a stay in relation to the purported termination of the Special Licences covering the Migori Gold Project of its partner Mid Migori Mining Ltd ("MMM"). Red Rock has now executed an agreement with Kansai Mining Corporation Ltd ("Kansai"), the other shareholder in MMM, pursuant to which Red Rock's farm-in agreement is replaced by arrangements under which any interest in the Migori Gold Project or the other assets of MMM that may be retained by or granted to MMM or Red Rock shall be shared in the ratio 75% to Red Rock and 25% to Kansai. Kansai's interest will be carried up to the point of an Indicated Mineral Resource of 2m oz gold. Red Rock is to have full management rights and the conduct of legal proceedings on behalf of both MMM and itself. Red Rock at the same time surrenders all its share interest in Kansai and pays £25,000 to Kansai, with a further £25,000 due upon recovery of the Migori Gold Project.
During the year under review the Company continued to work to protect its interests and those of its local partner in Kenya via its application for judicial review in relation to its Kenyan licences.
Shoats Creek
On 20 January 2016 the Company announced that its wholly owned subsidiary Red Rock Resources Inc, has agreed to acquire a 20% working interest / 14.4% net revenue interest from Shoats Creek Development Corporation in the LM#20 well for an immediate payment of USD120,000 and a USD80,000 promissory note payable in monthly instalments between July 2016 and December 2018 and bearing 4.5% interest. In the event that cumulative production from the LM#20 well exceeds 100,000 barrels of oil within three years, a further payment of USD40,000 becomes due. Shoats Creek Development Corporation receives a back-in-after-payout so that once the Company has received payments for oil and gas sales minus operating expenses equal to the investment required to drill the wells and associated facilities, the Company's working interest will reset to 16.25% with a 11.7% net revenue interest. The Company further acquired the option but not the obligation to invest in additional wells and re-entry opportunities that might be proposed from time to time on a heads-up basis.
23 Related party transactions
· On 5 April 2013, Regency Mines plc, Red Rock Resources plc, where Andrew Bell currently is a Director, and Greatland Gold plc, where Andrew Bell previously was a Director, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total cost to the Company for these expenses during the year was £121,046 (2016: £110,918), of which £60,523 represented the Company's share of the office rent and the balance services provided (2016: £44,979). The Company planned to let this agreement lapse at expiration on 1 December 2017.
· The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled on a quarterly basis. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charge for the year was £44,645.59 (2016: £15,869).
· Related party receivables and payables are disclosed in notes 16 and 17.
· The Company held 1,695,000 shares (0.29%) in Regency Mines plc as at 30 June 2016, at 30 June 2017 and same number of shares at 22 November 2017.
· The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2017 are shown in the Director's Report.
· The key management personnel are the Directors and their remuneration is disclosed within note 7.
24 Events after the reporting period
Democratic Republic of Congo Copper-Cobalt project due diligence
On 27 September 2017 the Company announced that it has entered into a conditional agreement with Cobalt Blue Limited, a private Isle of Man company ("COB"), to acquire an interest in a Joint Venture company ("JVCo") to be newly formed for the exploitation of four or five copper/cobalt tailings near Kolwezi in the Democratic Republic of Congo ("Agreement" and "DRC"). RRR has 40 days for due diligence and an exclusivity period of 45 days. In the event that RRR elects to proceed with the transaction following due diligence and fulfilment or waiver of the conditions, it will acquire 26.25% of JVCo for:
· Cash payment of USD700,000
· £490,000 payable in RRR shares ("Shares") at 0.65 pence a share, with attached 5 for 3 three year warrants to subscribe for new Shares at 1p ("Warrants")
· Commitment by RRR to fund USD1.2m of exploration expenditure over 18 months to produce a bankable feasibility study ("BFS") on Kamirombe, and thereafter pro rata.
· Following completion of a BFS, Red Rock will have six months within which to elect to pay USD1m to farm into a further 26.25% of the JVCo bringing its interest to 52.5%
On 3 November 2017 the Company announced that the due diligence period had been extended by 30 days to allow additional time to complete the planned drilling and laboratory analysis in order to determine whether to proceed with the investment and JVCo.
Steelmin investment
On 1 September 2017 the Company was issued with an additional 1% of Steelmin's fully diluted shares. On 1 October 2017 the Company was issued with a further 1% of the fully diluted equity of Steelmin, and on 1 November the Company was issued with an additional 1% of Steelmin Ltd. share bringing its total to 19%.
Jupiter buy back
On 31 July 2017, 11 September 2017 and 28 September 2017 Jupiter Mines, an unlisted public company in which Red Rock owns approximately 1.2%, announced its intentions to distribute USD25m to shareholders. This distribution would be via an equal offer to buy back 4% of outstanding shares at a price of USD0.29 per share. Red Rock announced its intention to take up this offer and as such expected proceeds of approximately USD300,000 in early December 2017.
Issue of new shares
On 27 October 2017, Red Rock issued 4,500,000 share consideration as part of a settlement of obligations to Kansai Mining Corporation Ltd, originally announced on 26 June 2015. The commitment to pay Kansai an initial amount of £25,000 arising under that agreement was settled by shares which equated to £27,000 and included a notional charge for delayed interest.
Convertible Loan Issuance
On 10 November 2017 Red Rock announced the issuance of £495,000 of convertible loan notes with accompanying warrants to high net worth investors. The notes were issued at par and are convertible into ordinary shares of Red Rock at a price of £0.008 per share. Each note has a denomination of £1,000 and is convertible into 125,000 new shares in the Company. Conversion may take place at any time up to the final redemption date of 19 December 2018. Each note holder further receives 62,500 warrants for each note subscribed. Each warrant entitles the holder to subscribe for shares any time up to 30 April 2019 at a price of £0.014 per share. The interest rate on the notes is 10% per annum accruing monthly. Up to £1,000,000 may be issued in one or more tranches.
Annual General Meeting
The Company intends to issue a notice of Annual General Meeting of shareholders to be held on 22 December 2017 for the purpose of dealing with the usual business applicable at such a meeting.
25 Commitments
As at 30 June 2017, the Company had entered into the following commitments:
· Exploration commitments: ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits in Kenya. No provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of operations of the Group.
· On 26 June 2015 the Company announced an agreement with Kansai Mining Corporation Ltd - pursuant to which Red Rock's farm in agreement was replaced by agreements under which any interest in the Migori Gold Project or the other assets of Mid Migori Mines that may be retained or granted to Mid Migori Mines or Red Rock shall be shared 75% to Red Rock and 25% to Kansai. Kansai's interest is to be carried up the point of an Indicated Mineral Resource of 2m oz of gold. Red Rock committed to having full management rights of the operations and of the conduct of legal proceedings on behalf of both Mid Migori Mines and itself.
· On 5 April 2013, Red Rock Resources plc entered into a joint lease agreement with Regency Mines plc and Greatland Gold plc at Ivybridge House, 1 Adam Street, London WC2N 6LE. The lease is non-cancellable until 1 December 2017. As of 1 November 2017, the Company intended to let the lease expire on 1 December 2017 and to move into new offices.
26 Assets pledged as collateral
As announced on 23 June 2017 the Company has borrowed USD4,400,000 in order to make a loan to Steelmin Ltd to fund refurbishment of its ferrosilicon smelter in Jacje, Bosnia. As part of this loan the Company has given security over 100% of its holding in the shares of Jupiter Mines, being 25,684,913 shares, an unlisted public company in Australia, as well as over the Company's own €3,848,000 loan note to Steelmin secured with a fixed and floating charge over all the assets of Steelmin Ltd, which includes the shares of Steelmin limited in that of its Bosnian subsidiary, Steelmin BH, the 100% owner of the Jajce ferrosilicon smelter.
27 Control
There is considered to be no controlling party.
28 These results are audited, however the information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The consolidated statement of financial position at 30 June 2017 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2017 statutory financial statements. Their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2017 will be delivered to the Registrar of Companies by 31 December 2017.
This information is provided by RNS
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