Final Results for the year en

RNS Number : 9927C

Red Rock Resources plc

24 November 2009

 



Red Rock Resources plc

("Red Rock" or the "Company")

Final Results

for the year ended 30 June 2009

24 November 2009

Chairman's statement

Dear Shareholders

I am pleased to present to shareholders your Company's annual report for the financial year to 30 June 2009.  

The collapse in market liquidity and in commodity prices at the beginning of the year put great pressure on the Company, but we treated the difficult period that followed as an opportunity for growth rather than a threat. By the end of the financial year the improvement in our prospects was evident, and the time since has been one of extraordinary progress and activity. 

The disposal of the Company's iron ore and manganese assets in Western Australia to a separate listed associate company, Jupiter Mines Limited, has been completed, and the final stages in the floating off of our uranium, specialty metal and rare earth assets through our ASX-listed associate Resource Star Limited are being completed. Both companies have excellent prospects.

A new focus on our major gold and volcanic massive sulphide ("VMS") project in the Migori greenstone belt sees us becoming an active explorer in Kenya.  

Summary

The Company reports the following developments in the financial year to 30 June 2009:

• Share price decline from 2p to 0.975p;

• £1,147,725 new cash before expenses raised from share placings; 

• £1,420,823 increase in net assets;

• £3m SEDA facility put in place;

• Sale of Mt Alfred and other Western Australian iron ore assets to Jupiter Mines Limited ("Jupiter"), and establishment with Pallinghurst Resources of joint control over Jupiter;

• Grant of Oakover manganese tenements; 

• Investment in Resource Gold Pty Limited and order for gravity gold plant; and

• Exploration at Mt Alfred.

Since the end of the financial year, there have been a number of further developments:

• Share price rise from 0.975p to 1.5p;

• £633,000 new cash before expenses raised from share placings; 

• Sale at profit of investment in Africa China Mining Corporation;

• Cancellation of order for gravity gold plant;

• Investment in 15%, with farm-in to 60%, of Mid Migori Mining Kenyan gold project;

• Completion of sale of Oakover tenements to Jupiter, with a corresponding rise in our Jupiter shareholding to 27%;

• Option over Ngira-Migori licenses;

• 24.2% owned uranium associate Resource Star Ltd raises A$600,000 and issues prospectus to raise up to A$5m and relist;

• POSCO takes key stake in Jupiter;

• Acquisition of 15.78% holding in Cue Resources Limited, which has over 9m lbs Indicated/Inferred Resource of uranium;

• Announcement of December drill programme at Migori. 

Financial review

The Group made a pre-tax loss of £928,525 (2008 restated loss of £153,604) during the period; no dividends have been paid or proposed. The restatement of last year's Income Statement is to take revaluation surpluses and losses arising on available-for-sale trade investments and on associate investments direct to equity rather than through the income statement. Recognised profit in the financial period rose from £103,716 to £243,860, and net assets rose from £3,951,167 to £5,371,990.

The rise in net assets was principally because of the increase in the value of available-for-sale financial assets following the issue to the Company of 23,839,183 Jupiter shares upon the sale to Jupiter by the Red Rock-Pallinghurst joint venture of West Australian iron ore assets at the end of March 2009.

After the end of the financial year, a further 54,155,867 Jupiter shares were issued to the Company in September upon implementation of the final phase of the Jupiter transaction and sale of the Oakover manganese tenements to Jupiter; the Company now holds 93,104,165 Jupiter shares.

The Company's holding in Jupiter, that currently has a market value of approximately £11m, will be reflected in the income statement as and when the shares are sold.  

Exploration review

The Company recognised that in the year under review its fortunes would be principally affected by the successful conclusion of the Jupiter transaction, the pursuit of which involved some continuing cost, rather than exploration activity. The year was a time of financial constraint when equity fundraisings were expensive in terms of dilution because of the Company's low share price for much of the year. Exploration was therefore kept to modest levels, influenced also by our view that it would be cheaper to explore for resources on the stock market than in the ground. 

New ventures were looked at and geological research performed in Mozambique and Chad, and this expenditure was written off as the investments did not proceed. Exploration including a gravity survey was completed at Mt Alfred in the period before the sale to Jupiter.

Since the June year end a full geological due diligence study and further exploration work have been carried out on the gold prospectivity of the Migori greenstone belt in Kenya, where we subsequently made an investment; at the beginning of December 2009 a reverse circulation drill programme is scheduled to start on part of the Migori licenses, which is expected to be followed shortly by the commencement of a diamond drill programme on other previously drilled targets. The current year is expected to see the Company's most active exploration and drilling schedule to date. 

The Company's associates Jupiter and Resource Star have ambitious exploration programmes for the coming months; Jupiter has already begun exploration of the Oakover manganese tenements. 

Corporate review

The Company's objectives include the enhancement of shareholder value through acquisition, disposal, joint venture transactions and flotations as well as by exploration. We have made many disposals in our short corporate life, and the Pallinghurst joint venture and sale of interests to Jupiter is a successful case study for our joint venture strategy.

Joint Venture: Much value has been added already, but Jupiter is still a work in progress. It is our hope and belief that the strengths of the partners allied with us there, Pallinghurst and POSCO, will enable us to identify and complete accretive and value additive transactions that will create a new force in the 'steel feed' sector. Shareholders will note that to be a force in this sector it is necessary to be or to become very large, and we expect both to see the value of the Company's shareholding in Jupiter increase greatly in value. 

Relisting: The planned 2009 relisting of Resource Star, announced after the year end, will, we expect, add value and potential to our uranium, niobium, and rare earth portfolio. Resource Star has just completed a A$600,000 fundraising preparatory to listing, as a result of which our shareholding is now 24.2%. The relisted entity, with a strong nucleus of management, will be in a position to enter into farm in and farm out deals, joint ventures, acquisitions, and exploration, and to look for a major strategic partner. 

Acquisition: Our acquisition since year end of a key 15.8% stake in Canadian uranium explorer Cue Resources Limited, the owner of the sandstone-hosted roll-front Yuty project in Paraguay, with an Indicated Resource of 8.3m lbs at 420ppm U3O8 and Inferred Resource of 1.2m lbs at 500 ppm U3O8, complements our investment in Resource Star and we hope to develop synergies between the two companies. 

Acquisition and farm-in: On 14 August 2009 the Company entered into an agreement with Kansai Mining Corporation Limited ("Kansai") whereby it may acquire up to 60 per cent of Kansai's wholly owned subsidiary company Mid-Migori Mining Company Ltd ("MMM"), a company incorporated in Kenya which owns the Migori Gold Project. The Migori Gold Project has an Indicated Resource of 1,172,000 ounces gold, and our due diligence and exploration work to date indicates considerable potential. 

The Company will be allotted 15 per cent of the issued share capital of MMM for a total consideration of US$750,000, part of which has been paid, and will be able to farm in to a further 45% on completion of a bankable feasibility.

Disposal: After the year end the Company disposed of its interest in Africa China Mining Corporation for US$1m.

Personnel

I would like to thank all our staff for their considerable contribution during the year. We also report with regret, and with thanks for all his services, the resignation during the year of Ken Watson, our Managing Director and co-founder. We wish him well in developing his gold reclamation business, which has started well and in which we hold 11%.

In October 2009 we welcomed to the Board Manoli Yannaghas, who has been a key part of our group for three years.

Auditor

We are grateful to Chapman Davis LLP for the advice and assistance given to us since the Company was incorporated and admitted to AIM in 2005. The Board has now decided that it is prudent for the Company's auditor for the future to be independent of the auditor of Regency Mines plc. Accordingly, Chapman Davis LLP has agreed to be proposed as auditor of Regency Mines plc for the coming year, but to resign as auditor to the Company. Grant Thornton UK LLP has agreed to be proposed as auditor to the Company. 

The Future

It is encouraging that in the last few months we have been able to add interests in Indicated Resources of uranium and gold to our portfolio. Through Jupiter we also have an interest in a small iron ore Inferred Resource. For all these opportunities we have, directly or indirectly, to thank the poor markets and the damage inflicted on other small listed companies by the loss of market liquidity and depth. We hope to add to all these resources in the next months, and in particular to see Jupiter move towards declared resources of magnetite and manganese as well.  

Further developments at Jupiter, and we believe at Resource Star after its relisting, will we hope provide additional growth to our balance sheet this year and next.

We shall work diligently to add resource at Migori, concentrating not only on lode gold but also on the banded iron formations in the shear zone and on the base metal and gold potential of the rich VMS system at the old Macalder mine. If possible, we shall look to limited production of gold from some of the surface and near-surface deposits.  

Andrew Bell

Chairman & chief executive  

For further information please contact: 

Peter Trevelyan-Clark/Ben Jeynes, Blomfield Corporate Finance Ltd (Nominated Adviser)

020 7444 0800

Nick Emerson, Simple Investments Ltd (Broker)

01483 413500

Ron Marshman/John Greenhalgh, Lothbury Financial Limited (Public Relations)

020 7011 9411

Results and dividends

The Group's results are set out in the group income statement below.  

The Group made a loss of £928,525 (2008: loss as restated£153,604).

The Directors do not recommend the payment of a dividend.

Consolidated income statement

for the year ended 30 June 2009

			Year to  30 June 2009		Year to  30 June 2008
			£		£
Revenue Sales of investments Cost of sales Management services			64,869 (107,557) 3,285		1,322,735 (1,025,884) 24,393
Gross (loss)/profit Exploration expenses			(39,403) (160,087)		321,244 (167,711)
Administrative expenses Currency loss/(gain)			(550,563) (2,543)		(402,389) 74,521
Operating (loss)			(752,596)		(174,335)
Share of operating loss in associates Profit on sale of subsidiary Interest receivable Interest payable			(170,545) - 3,618 (9,002)		(82,556) 89,912 19,308 (5,933)
Loss from continuing operations			(928,525)		(153,604)
Tax on profit/(loss) on ordinary activities			-		-
Loss for the year attributable to equity shareholders of the parent			(928,525)		(153,604)
(Loss) per share - basic  (Loss) per share - diluted			(0.24) pence (0.24) pence		(0.06) pence (0.06) pence

All of the operations are considered to be continuing.

Consolidated statement of recognised income and expense 

for the year ended 30 June 2009

		Group  Year to  30 June 2009		Group  Year to  30 June 2008
		£		£
Surplus on revaluation of available-for-sale investment		1,165,635		384,100
Loss on revaluation of associate company investment		-		(126,780)
Unrealised foreign currency gain		6,750		-
		1,172,385		257,320
(Loss) for the financial period		(928,525)		(153,604)
Total recognised profit for the financial period		243,860		103,716
Attributable to:  Equity holders of the parent		243,860		103,716

Consolidated balance sheet 

as at 30 June 2009

		30 June 2009		30 June 2008
		£		£
Current assets Cash and cash equivalents Trade and other receivables Investments in associates Available for sale financial assets Exploration properties		49,439 274,542 1,044,853 3,676,909 506,230		87,599 394,198 958,835 2,355,925 567,905
Total current assets		5,551,973		4,364,462
Total assets		5,551,973		4,364,462
Current liabilities Trade and other payables		(179,983)		(413,295)
Total liabilities		(179,983)		(413,295)
Net assets		5,371,990		3,951,167

Equity Called up share capital Share premium account Other reserves Retained earnings		464,843 4,853,650 1,564,973  (1,511,476)		305,481 3,888,736 339,901 (582,951)
Total equity		5,371,990		3,951,167

Consolidated statement of changes in equity

for the year ended 30 June 2009

The movements on reserves during the period were as follows:

	Share capital	Share premium reserve	Retained earnings	Other reserves	Total equity
	£	£	£	£	£
As at 30 June 2007 Changes in equity for 2008	235,481	2,665,486	(429,347)	82,581	2,554,201
Issue of shares	70,000	1,280,000	-	-	1,350,000
Share issue and fundraising costs	-	(56,750)	-	-	(56,750)
Loss for the year	-	-	(153,604)	-	(153,604)
Net unrealised gains recognised directly to equity	-	-	-	257,320	257,320
As at 30 June 2008	305,481	3,888,736	(582,951)	339,901	3,951,167
Changes in equity for 2009 Issue of shares	159,362	1,085,063	-	-	1,244,425
Share issue and fundraising costs	-	(120,149)	-	-	(120,149)
Net unrealised gains recognised directly to equity	-	-	-	1,165,635	1,165,635
Unrealised foreign currency gains	-	-	-	6,750	6,750
Loss for the year	-	-	(928,525)	-	(928,525)
Share based payments	-	-	-	52,687	52,687
As at 30 June 2009	464,843	4,853,650	(1,511,476)	1,564,973	5,371,990

	Available for sale trade investments reserve	Available for sale associate investments reserve	Foreign currency translation reserve	Share based payment reserve	Total other reserves
	£	£	£	£	£
As at 30 June 2007	-	-	-	82,581	82,581
Net unrealised gains/losses recognised directly to equity	384,100	(126,780)	-	-	257,320
As at 30 June 2008	384,100	(126,780)	-	82,581	339,901
Net unrealised gains recognised directly to equity	1,165,635	-	-	-	1,165,635
Unrealised foreign currency gains	-	-	6,750	-	6,750
Share based payments	-	-	-	52,687	52,687
As at 30 June 2009	1,549,735	(126,780)	6,750	135,268	1,564,973

Consolidated cash flow statement

for the year ended 30 June 2009

		Group  Year to  30 June 2009		Group  Year to  30 June 2008
		£		£
Cash flows from operating activities
Operating loss Decrease/(increase) in receivables  (Decrease)/increase in payables Impairment of exploration properties Exploration property costs Exploration properties disposed of Share based payments Currency adjustments		(752,596) 119,656 (233,312) 24,154 (184,445) 221,964 52,687 8,637		(174,335) 685,815 119,686 11,034 (112,485) -  - -
Net cash outflow from operations		(743,255)		529,715
Cash flows from investing activities Interest received Interest paid Proceeds from sale of subsidiary  Available for sale investments disposed of Payments to acquire associate company investments Payments to acquire available for sale investments		3,618 (9,002) 482 107,557 (198,762) (309,079)		19,309 (5,933) 602,045 1,025,885 (1,142,533) (2,411,251)
Net cash flows from investing activities		(405,186)		(1,944,470)
Acquisitions and disposals Cash disposed of on sale of subsidiary		(2,169)		(11,243)
Net cash flow from acquisitions and disposals		(2,169)		(11,243)
Cash inflows from financing activities Proceeds from issue of shares Transaction costs of issue of shares		1,147,725 (35,275)		1,350,000 (56,750)
Net cash flows from financing activities		1,112,450		1,293,250
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of period		(38,160) 87,599		(132,748) 220,347
Cash and cash equivalents at end of period		49,439		87,599

Notes

1.         Basis of preparation

The consolidated financial statements of Red Rock Resources plc and its subsidiaries have been prepared in accordance with International Reporting Standards (IFRS) as adopted for use in the European Union and on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

2.            Earnings (loss) per share

Earnings/(loss) per share	2009 £		2008  £
The basic earnings/(loss) per share is derived by dividing the loss for the year attributable to ordinary shareholders by the weighted average number of shares in issue.
Profit/(loss) for the period after taxation	(928,525)		(153,604)
Weighted average number of Ordinary shares of £0.001 in issue	389,691,824		261,191,216
Earnings/(loss) per share - basic	(0.24) pence		(0.06) pence
Weighted average number of Ordinary shares of £0.001 in issue inclusive of outstanding options	401,678,125		266,191,216
Earnings/loss per share fully diluted	(0.24) pence		(0.06) pence

3.    The financial information set out above does not constitute the Company's financial statements for the years ended 30 June 2009 or 2008. The financial information for 2008 is derived from the financial statements for 2008 which have been delivered to the Registrar of Companies. The auditors have reported on the 2008 statements; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial statements for 2009 have been audited and will be delivered to the Registrar of Companies following the Company's Annual General Meeting on 23 December 2009. The auditors have reported on the 2009 statements; their report was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

The preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the year ended 30 June 2009.

Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. 

A copy of the Company's annual report and accounts for 2009 is available on the Company's website, www.rrrplc.com and will be mailed to shareholders by 30 November 2009.

 

END

 

 

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