Final Results for the Year Ended 30 June 2015
Red Rock Resources plc
("Red Rock" or the "Company")
Final Results for the Year Ended 30 June 2015
12 November 2015
Chairman's Review
Dear Shareholders,
Overview
The year ended 30 June 2015 was frustrating for all of us. It contained a period of great difficulty for the entire exploration and mining sector, when in a short period from late 2014 most commodity metals saw substantial price declines, in many cases of 30% to 50%.
Forecasts for commodity demand had been heavily dependent on assumptions of a continuance of previous Chinese industrial growth and capital investment trends, and when these assumptions had to be revised, the vulnerability of the sector became apparent. Once the supply/demand balance was adjusted, there was little to hold prices above their long term trend rates, from which they had risen so sharply since 2003.
It cannot be certain that these falls are over, and only gold, which follows its own path and only sometimes behaves as a metal, remains a relatively safe haven in a mineral sector that is painfully adjusting its cost and break-even assumptions.
Our frustrations were not restricted to the general ills of the sector. The transactions that formed part of our restructuring strategy proceeded with agonising slowness too. We began the year with a sale process of our Colombian gold assets under way, and we almost ended it the same way, as the transaction only completed in May of this year. The delays were hard to explain to you, and doubts were frequently expressed as to whether the transaction would ever complete. We did not share the doubt, but felt and shared your frustration. We also announced early in the year that our associate Resource Star Limited (now Star Striker Limited) in Australia was entering into a significant transaction. Star Striker Ltd terminated this deal, and on the last day of the year we had to announce it was terminating the next one.
In May the bad faith with which we suspected we were being treated by certain authorities in relation to our Kenyan gold interests including Mid Migori Mining Ltd broke cover and became public: this ended another long frustration as it provided us a clear course of action and gave us the power to seize the initiative, which we did, instituting proceedings for judicial review.
These matters, the general and the particular, apart, we accomplished a certain amount. We conducted some early stage exploration in Côte d'Ivoire, and we continued our efforts to reduce liabilities, improve the balance sheet, and make significant reductions in our administration costs.
One bright spot was Jupiter Mines Ltd, where we hold a small but valuable stake, and which owns half of one of the world's leading and lowest cost manganese mines, Tshipi é Ntle in the South Kalahari Basin. Jupiter announced during the year both its maiden production of 1Mt in its first year of operation, and just before the year end the impressive achievement of a production of over 2Mt in its second year of operation.
The period was therefore one where the restructuring and improvement of finances we sought made progress, but more slowly than we expected or wanted, and against a most unfavourable backdrop. This both necessitated the raising of finance, and affected the terms on which we were able to finance. Since this sale, and the restructuring, were the necessary precursor to recovery and to those actions which could rebuild value, it is only in the post-balance sheet events that we have begun to chart our new course. The Elephant Oil investment in July 2015 was a small investment in onshore oil in West Africa. The option over a participating interest in an oil exploration and development programme at Shoats Creek in Louisiana is much more significant, since it offers the transformative prospect of a significant flow of income within the current financial year. Also since year-end the value of our holding in Star Striker, a non-core holding which we may look to reduce, has increased substantially.
Review of the Results
In the Consolidated statement of financial position, the significant change during the year was the sale of the Colombian asset, where we had owned just over 50% of Four Points Mining Ltd and so had consolidated 100%. With the sale, total assets shrank to £9,625,758 as £6,994,468 of assets classified as held for sale disappeared, as on the other side of the balance sheet did £4,744,285 of liabilities directly associated with the assets classified as held for sale.
Parent company borrowings, reduced from £2,557,013 to £1,074,867 in the previous year, were reduced to nil in the year under review.
The Consolidated income statement shows losses from continuing operations rising from £3,768,558 to £7,727,371. This results principally from impairment of amounts due from associates of £5,280,000: we took a prudent view of the Kenyan exposure pending results of the court case, notwithstanding our view that we will prevail. A significant impairment was also taken against the iron ore assets in Greenland, reflecting the current weakness in iron ore prices, and this appears under the £1,349,245 impairment of investment in associates and joint ventures. Included within the heading other expenses is a £380,000 exchange loss on translation. These three non-cash items account for £7,009,245 of the declared loss.
After a decline from £2,244,908 to £1,563,808 in the previous year, other expenses declined further in the year to 30 June 2015 to £1,334,404. Without an increase in the figure for exchange loss on translation of £196,000, a non-cash item, the decrease would have been greater. We expect other expenses to be running for the latter part of the current year at less than half this annualised level, as a result of the cost reduction programme.
Prospects
Since the year end the Company has further reduced its liabilities and has undertaken a further and more extensive cost reduction programme. This programme is cutting costs across the board, sharing or eliminating office costs, and implementing a reduction in staff numbers (excluding Non-executive Directors) of over 80% from the average level of the 2014-2015 year.
We are sorry to lose capable and hard-working colleagues with whom we have worked for some time, as we adapt to the new marketplace. As we go forward now, having divested operational responsibilities and costs for our mineral exploration and production activities, we are looking at non-operator participations in onshore oil and gas projects. These matters apart we accomplished a significant amount during this period. As we rebuild, it is specialist oil geology skills for the particular basins where we may have interest that we may require, and initially it will be more economically effective to bring these in on a consultancy basis as needed.
The projects we look at are now either producing or capable of producing cash flow, and this means that as we look forward at the shape of the Company we want to see our analysis is driven by cost and revenue at the Company as well as the project scale. This is different from exploration, where the cost is simply "whatever is required" to progress to the next milestone or to establish or increase a resource, and is undertaken in the safe knowledge that whatever level of speed or cost is set, our operations and cost of discovery are likely to be far cheaper than those of a major. This cost differential, and the ability to sell on or farm in to a major if one did not self-develop, was the engine that in large part drove the exploration model for juniors. For a number of reasons, that model cannot now be relied upon. Our business has changed, and that means that even as we grow we intend to remain a lean operation that tightly controls costs.
Our announcement of the option over Shoats Creek offers us the opportunity to participate in a project that has low geological risk, low cost to us, and where we can look to early production.
Our new prospective partner there is Northcote Energy Limited (AIM:NCT), a company with which we have built over recent months a solid relationship and with which we hope we would continue to co-operate in this area.
The Company will be open to further opportunities to enhance and possibly scale up its onshore low cost oil production and development portfolio, but no project will now be considered that does not meet certain base criteria. These include early cash flow, low entry and operating cost, low geological risk, high anticipated IRR, and expected positive share price impact.
We will continue to seek favourable outcomes for our mineral and investment interests, including Star Striker, whether through sale or farm-out.
Finally, I thank you, the shareholders, for your support through difficult times. We are confident that we can stabilise and grow the Company while creating shareholder value in the months ahead.
Andrew Bell
Chairman and CEO
12 November 2015
Results and dividends
Red Rock (the "Parent") and its subsidiaries made a post-tax loss of £8,411,541 (2014: £4,113,460).
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 12 November 2015.
For further information, please contact:
Andrew Bell 0207 747 9990 or 0776 647 4849 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 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd
Christian Pickel 0203 128 8208 Media Relations MHP Communications
Consolidated statement of financial position
as at 30 June 2015
|
|
Notes |
30 June 2015 £ |
30 June 2014 £ |
|
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10 |
266 |
5,100 |
|
Investments in associates and joint ventures |
12 |
3,968,878 |
5,319,306 |
|
Available for sale financial assets |
13 |
1,331,766 |
1,583,984 |
|
Non-current receivables |
15 |
3,634,270 |
7,148,560 |
|
Total non-current assets |
|
8,935,180 |
14,056,950 |
|
Current assets |
|
|
|
|
Cash and cash equivalents |
14 |
29,426 |
51,167 |
|
Restricted cash |
14 |
- |
221,846 |
|
Other receivables |
16 |
661,152 |
579,145 |
|
Total current assets |
|
690,578 |
852,158 |
|
Assets classified as held for sale |
8 |
- |
6,994,468 |
|
TOTAL ASSETS |
|
9,625,758 |
21,903,576 |
|
EQUITY AND LIABILITIES |
|
|
|
|
Equity attributable to owners of the Parent |
|
|
|
|
Called up share capital |
19 |
2,600,207 |
1,934,588 |
|
Share premium account |
|
24,285,503 |
22,663,691 |
|
Other reserves |
|
394,899 |
604,064 |
|
Retained earnings |
|
(19,747,630) |
(11,671,669) |
|
Total |
|
7,532,979 |
13,530,674 |
|
Non-controlling interest |
|
(5,491) |
60,461 |
|
Total equity |
|
7,527,488 |
13,591,135 |
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
17 |
2,098,270 |
2,493,289 |
|
Short-term borrowings |
17 |
- |
755,889 |
|
Total current liabilities |
|
2,098,270 |
3,249,178 |
|
Liabilities directly associated with the assets classified as held for sale |
8 |
- |
4,744,285 |
|
Non-current liabilities |
|
|
|
|
Long-term borrowings |
17 |
- |
318,978 |
|
Deferred tax liabilities |
18 |
- |
- |
|
Total non-current liabilities |
|
- |
318,978 |
|
TOTAL EQUITY AND LIABILITIES |
|
9,625,758 |
21,903,576 |
These financial statements were approved by the Board of Directors and authorised for issue on 12 November 2015 and are signed on its behalf by:
Andrew Bell
Executive Chairman
The accompanying notes form an integral part of these financial statements.
Consolidated income statement
for the year ended 30 June 2015
|
|
Notes |
Year to 30 June 2015 £ |
Year to 30 June 2014 £ |
|
|
|
|
|
|
Gain on sales of investments |
|
4,308 |
6,994 |
|
Impairment of investment in associates and joint ventures |
12 |
(1,349,245) |
(1,863,962) |
|
Impairment of available for sale investment |
13 |
- |
(469,446) |
|
Impairment of amount due from associates |
|
(5,280,000) |
- |
|
Exploration expenses |
|
(139,221) |
(34,939) |
|
Other expenses |
|
(1,334,404) |
(1,563,808) |
|
Share of losses of associates |
12 |
(1,183) |
(105,092) |
|
Provision for bad debts |
|
(222,830) |
(599,673) |
|
Other income |
|
30,033 |
375,643 |
|
Finance income, net |
4 |
565,171 |
485,725 |
|
Loss for the year before taxation from continuing operations |
3 |
(7,727,371) |
(3,768,558) |
|
Tax |
5 |
- |
- |
|
Loss for the year from continuing operations |
|
(7,727,371) |
(3,768,558) |
|
Discontinued operations |
|
|
|
|
Loss after tax for the year from discontinued operations |
8 |
(684,170) |
(344,902) |
|
Loss for the year |
|
(8,411,541) |
(4,113,460) |
|
Loss for the year attributable to: |
|
|
|
|
Equity holders of the Parent |
|
(8,091,951) |
(4,043,784) |
|
Non-controlling interest |
|
(319,590) |
(69,676) |
|
|
|
(8,411,541) |
(4,113,460) |
|
Loss per share attributable to owners of the Parent: |
|
|
|
|
Basic loss per share |
|
|
|
|
- Loss from continuing operations |
|
(0.27) pence |
(0.25) pence |
|
- Loss from discontinued operations |
|
(0.01) pence |
(0.02) pence |
|
Total |
9 |
(0.28) pence |
(0.27) pence |
|
Diluted |
|
|
|
|
- Loss from continuing operations |
|
(0.27) pence |
(0.25) pence |
|
- Loss from discontinued operations |
|
(0.01) pence |
(0.02) pence |
|
Total |
9 |
(0.28) pence |
(0.27) pence |
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
for the year ended 30 June 2015
|
|
Notes |
30 June 2015 £ |
30 June 2014 £ |
|
Loss for the year |
|
(8,411,541) |
(4,113,460) |
|
Other comprehensive income |
|
|
|
|
Items that will be reclassified subsequently to profit or loss |
|
|
|
|
(Deficit)/Surplus on revaluation of available for sale investment |
13 |
(242,148) |
390,001 |
|
Unrealised foreign currency profit arising upon retranslation of foreign operations |
|
48,973 |
126,006 |
|
Total other comprehensive income net of tax for the year |
|
(193,175) |
516,007 |
|
Total comprehensive expense net of tax for the year |
|
(8,604,716) |
(3,597,453) |
|
Total comprehensive expense net of tax attributable to: |
|
|
|
|
Owners of the Parent |
|
(8,285,126) |
(3,527,777) |
|
Non-controlling interest |
|
(319,590) |
(69,676) |
|
|
|
(8,604,716) |
(3,597,453) |
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
for the year ended 30 June 2015
The movements in equity during the period were as follows:
|
|
Share capital £ |
Share premium account £ |
Retained earnings £ |
Other reserves £ |
Total attributable to owners of the Parent £ |
Non-controlling interest £ |
Total equity £ |
|
As at 30 June 2013 |
1,279,769 |
20,558,401 |
(7,783,544) |
243,716 |
14,298,342 |
130,137 |
14,428,479 |
|
Changes in equity for 2014 |
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(4,043,784) |
- |
(4,043,784) |
(69,676) |
(4,113,460) |
|
Other comprehensive income for the year |
- |
- |
- |
516,007 |
516,007 |
- |
516,007 |
|
Transactions with owners |
|
|
|
|
|
|
|
|
Issue of shares |
627,739 |
2,076,484 |
- |
- |
2,704,223 |
- |
2,704,223 |
|
Share issue costs |
- |
(56,465) |
- |
- |
(56,465) |
- |
(56,465) |
|
Share issue in relation to SIP |
27,080 |
85,271 |
- |
- |
112,351 |
- |
112,351 |
|
Share-based payment transfer |
- |
- |
155,659 |
(155,659) |
- |
- |
- |
|
Total transactions with owners |
654,819 |
2,105,290 |
155,659 |
(155,659) |
2,760,109 |
- |
2,760,109 |
|
As at 30 June 2014 |
1,934,588 |
22,663,691 |
(11,671,669) |
604,064 |
13,530,674 |
60,461 |
13,591,135 |
|
Changes in equity for 2015 |
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(8,091,951) |
- |
(8,091,951) |
(319,590) |
(8,411,541) |
|
Disposal of subsidiary |
- |
- |
- |
- |
- |
253,638 |
253,638 |
|
Other comprehensive income for the year |
- |
- |
|
(193,175) |
(193,175) |
- |
(193,175) |
|
Transactions with owners |
|
|
|
|
|
|
|
|
Issue of shares |
655,354 |
1,656,938 |
- |
- |
2,312,292 |
- |
2,312,292 |
|
Share issue costs |
- |
(112,116) |
- |
- |
(112,116) |
- |
(112,116) |
|
Share issue in relation to SIP |
10,265 |
76,990 |
- |
- |
87,255 |
- |
87,255 |
|
Share-based payment transfer |
- |
- |
15,990 |
(15,990) |
- |
- |
- |
|
Total transactions with owners |
665,619 |
1,621,812 |
15,990 |
(15,990) |
2,287,431 |
- |
2,287,431 |
|
As at 30 June 2015 |
2,600,207 |
24,285,503 |
(19,747,630) |
394,899 |
7,532,979 |
(5,491) |
7,527,488 |
|
|
Available for sale trade investments reserve £ |
Associate investments reserve £ |
Foreign currency translation reserve £ |
Share-based payment reserve £ |
Total other reserves £ |
|
As at 30 June 2013 |
(6,043) |
- |
(33,819) |
283,578 |
243,716 |
|
Changes in equity for 2014 |
|
|
|
|
|
|
Other comprehensive income for the year |
390,001 |
- |
126,006 |
- |
516,007 |
|
Transactions with owners |
|
|
|
|
|
|
Share-based payment transfer |
- |
- |
- |
(155,659) |
(155,659) |
|
Total transactions with owners |
- |
- |
- |
(155,659) |
(155,659) |
|
As at 30 June 2014 |
383,958 |
- |
92,187 |
127,919 |
604,064 |
|
Changes in equity for 2015 |
|
|
|
|
|
|
Other comprehensive income for the year |
(242,148) |
- |
48,973 |
- |
(193,175) |
|
Transactions with owners |
|
|
|
|
|
|
Share-based payment transfer |
- |
- |
- |
(15,990) |
(15,990) |
|
Total transactions with owners |
- |
- |
- |
(15,990) |
(15,990) |
|
As at 30 June 2015 |
141,810 |
- |
141,160 |
111,929 |
394,899 |
See note 20 for a description of each reserve included above.
Consolidated statement of cash flows
for the year ended 30 June 2015
|
|
Notes |
Year to 30 June 2015 £ |
Year to 30 June 2014 £ |
|
Cash flows from operating activities |
|
|
|
|
Loss before tax from continuing operations |
|
(7,727,371) |
(3,768,558) |
|
Loss before tax from discontinued operations |
8 |
(721,226) |
(2,542,156) |
|
Loss before tax |
|
(8,448,597) |
(6,310,714) |
|
Decrease/(Increase) in receivables |
|
4,898,171 |
(407,285) |
|
Decrease in payables |
|
(4,885,663) |
(470,342) |
|
Share of losses in associates |
|
1,183 |
105,092 |
|
Interest receivable and finance income |
|
(668,438) |
(627,557) |
|
Interest payable |
|
103,267 |
141,832 |
|
Share-based payments |
|
72,170 |
92,712 |
|
Unrealised foreign exchange loss |
|
411,988 |
125,364 |
|
Impairment of associates and joint ventures |
|
6,629,245 |
1,863,962 |
|
Impairment of available for sale investment |
|
- |
469,446 |
|
Impairment of assets classified as held for sale |
8 |
64,406 |
2,388,158 |
|
Loss on write-off/impairment of property, plant and equipment |
|
- |
41,326 |
|
Gain on sale of investments |
|
(4,308) |
(6,994) |
|
Provision for bad debts |
|
222,830 |
599,673 |
|
Depreciation |
|
4,834 |
522,497 |
|
Net cash outflow from operations |
|
(1,598,912) |
(1,472,830) |
|
Corporation tax reclaimed/(paid) |
|
37,056 |
(18,946) |
|
Net cash used in operations |
|
(1,561,856) |
(1,491,776) |
|
Cash flows from investing activities |
|
|
|
|
Interest received |
|
125 |
516 |
|
Proceeds of sale of investments |
|
14,378 |
1,712,992 |
|
Proceeds of sale of subsidiary |
|
292,141 |
- |
|
Payments to acquire associate company and joint venture investments |
|
- |
(83,897) |
|
Payments to acquire available for sale investments |
|
- |
(232,978) |
|
Payments to acquire property, plant and equipment |
|
- |
(39,430) |
|
Net cash inflow from investing activities |
|
306,644 |
1,357,203 |
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of shares |
|
2,327,377 |
2,723,861 |
|
Transaction costs of issue of shares |
|
(112,116) |
(56,465) |
|
Interest paid |
|
(103,267) |
(106,285) |
|
Proceeds of new borrowings |
|
- |
1,328,154 |
|
Repayments of borrowings |
|
(882,974) |
(3,720,155) |
|
Net cash inflow from financing activities |
|
1,229,020 |
169,110 |
|
Net (decrease)/increase in cash and cash equivalents |
|
(26,192) |
34,537 |
|
Cash and cash equivalents at the beginning of period |
|
55,618 |
21,081 |
|
Cash and cash equivalents at end of period |
14 |
29,426 |
55,618 |
The accompanying notes and accounting policies form an integral part of these financial statements.
Registration number: 05225394
Company statement of financial position
as at 30 June 2015
|
|
Notes |
30 June 2015 £ |
30 June 2014 £ |
|
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10 |
266 |
5,100 |
|
Investments in subsidiaries |
11 |
131 |
- |
|
Investments in associates and joint ventures |
12 |
4,299,422 |
5,693,873 |
|
Available for sale financial assets |
13 |
1,331,766 |
1,583,984 |
|
Non-current receivables |
15 |
3,634,270 |
7,148,560 |
|
Total non-current assets |
|
9,265,855 |
14,431,517 |
|
Current assets |
|
|
|
|
Cash and cash equivalents |
14 |
22,841 |
50,969 |
|
Restricted cash |
14 |
- |
221,846 |
|
Other receivables |
16 |
703,172 |
577,970 |
|
Total current assets |
|
726,013 |
850,785 |
|
Assets classified as held for sale |
8 |
- |
2,189,723 |
|
TOTAL ASSETS |
|
9,991,868 |
17,472,025 |
|
EQUITY AND LIABILITIES |
|
|
|
|
Called up share capital |
19 |
2,600,207 |
1,934,588 |
|
Share premium account |
|
24,285,503 |
22,663,691 |
|
Other reserves |
|
255,090 |
513,228 |
|
Retained earnings |
|
(19,242,714) |
(11,207,345) |
|
Total equity |
|
7,898,086 |
13,904,162 |
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
17 |
2,093,782 |
2,492,996 |
|
Short-term borrowings |
17 |
- |
755,889 |
|
Total current liabilities |
|
2,093,782 |
3,248,885 |
|
Non-current liabilities |
|
|
|
|
Long-term borrowings |
17 |
- |
318,978 |
|
TOTAL EQUITY AND LIABILITIES |
|
9,991,868 |
17,472,025 |
These financial statements were approved by the Board of Directors and authorised for issue on 12 November 2015 and are signed on its behalf by:
Andrew Bell
Executive Chairman
The accompanying notes form an integral part of these financial statements.
Company statement of changes in equity
for the year ended 30 June 2015
The movements in equity during the period were as follows:
|
|
Share capital £ |
Share premium account £ |
Retained earnings £ |
Other reserves £ |
Total equity £ |
|
As at 30 June 2013 |
1,279,769 |
20,558,401 |
(5,552,141) |
278,886 |
16,564,915 |
|
Changes in equity for 2014 |
|
|
|
|
|
|
Loss for the year |
- |
- |
(5,810,863) |
- |
(5,810,863) |
|
Other comprehensive income for the year |
- |
- |
- |
390,001 |
390,001 |
|
Transactions with owners |
|
|
|
|
|
|
Issue of shares |
627,739 |
2,076,484 |
- |
- |
2,704,223 |
|
Share issue costs |
- |
(56,465) |
- |
- |
(56,465) |
|
Share issues in relation to SIP |
27,080 |
85,271 |
- |
- |
112,351 |
|
Share-based payment transfer |
- |
- |
155,659 |
(155,659) |
- |
|
Total transactions with owners |
654,819 |
2,105,290 |
155,659 |
(155,659) |
2,760,109 |
|
As at 30 June 2014 |
1,934,588 |
22,663,691 |
(11,207,345) |
513,228 |
13,904,162 |
|
Changes in equity for 2015 |
|
|
|
|
|
|
Loss for the year |
- |
- |
(8,051,359) |
- |
(8,051,359) |
|
Other comprehensive income for the year |
- |
- |
- |
(242,148) |
(242,148) |
|
Transactions with owners |
|
|
|
|
|
|
Issue of shares |
655,354 |
1,656,938 |
- |
- |
2,312,292 |
|
Share issue costs |
- |
(112,116) |
- |
- |
(112,116) |
|
Share issues in relation to SIP |
10,265 |
76,990 |
- |
- |
87,255 |
|
Share-based payment transfer |
- |
- |
15,990 |
(15,990) |
- |
|
Total transactions with owners |
665,619 |
1,621,812 |
15,990 |
(15,990) |
2,287,431 |
|
As at 30 June 2015 |
2,600,207 |
24,285,503 |
(19,242,714) |
255,090 |
7,898,086 |
|
|
Available for sale trade investments reserve £ |
Share-based payment reserve £ |
Total other reserves £ |
|
As at 30 June 2013 |
(4,692) |
283,578 |
278,886 |
|
Changes in equity for 2014 |
|
|
|
|
Other comprehensive income for the year |
390,001 |
- |
390,001 |
|
Transactions with owners |
|
|
|
|
Share-based payment transfer |
- |
(155,659) |
(155,659) |
|
Total transactions with owners |
- |
(155,659) |
(155,659) |
|
As at 30 June 2014 |
385,309 |
127,919 |
513,228 |
|
Changes in equity for 2015 |
|
|
|
|
Other comprehensive income for the year |
(242,148) |
- |
(242,148) |
|
Transactions with owners |
|
|
|
|
Share-based payment transfer |
- |
(15,990) |
(15,990) |
|
Total transactions with owners |
- |
(15,990) |
(15,990) |
|
As at 30 June 2015 |
143,161 |
111,929 |
255,090 |
See note 20 for a description of each reserve included above.
Company statement of cash flows
for the year ended 30 June 2015
|
|
30 June 2015 £ |
30 June 2014 £ |
|
Cash flows from operating activities |
|
|
|
Loss before taxation |
(8,051,359) |
(5,810,863) |
|
Increase in receivables |
(240,028) |
(467,823) |
|
Decrease in payables |
(399,213) |
(983,976) |
|
Interest receivable and finance income |
(668,438) |
(727,987) |
|
Interest payable |
101,395 |
141,832 |
|
Share-based payments |
72,170 |
92,712 |
|
Impairment of assets held for sale |
358,987 |
1,393,955 |
|
Impairment of investments in associates and joint ventures |
6,674,451 |
2,732,553 |
|
Impairment of available for sale investment |
- |
469,446 |
|
(Gain) on sale of investments |
(4,308) |
(6,994) |
|
Provision for bad debts |
222,830 |
599,673 |
|
Unrealised foreign exchange loss |
363,015 |
315,898 |
|
Depreciation |
4,834 |
14,366 |
|
Net cash outflow from operations |
(1,565,664) |
(2,237,208) |
|
Corporation tax |
- |
- |
|
Net cash used in operations |
(1,565,664) |
(2,237,208) |
|
Cash flows from investing activities |
|
|
|
Interest received |
125 |
516 |
|
Proceeds of sale of investments |
14,378 |
1,712,992 |
|
Proceeds from sale of subsidiary |
292,141 |
- |
|
Payments to acquire associate company investments |
- |
(83,897) |
|
Payments to acquire available for sale investments |
- |
(232,978) |
|
Net cash outflow from investing activities |
306,644 |
1,396,633 |
|
Cash flows from financing activities |
|
|
|
Proceeds from issue of shares |
2,327,377 |
2,723,861 |
|
Transaction costs of issue of shares |
(112,116) |
(56,465) |
|
Interest paid |
(101,395) |
(141,832) |
|
Proceeds of new borrowings |
- |
1,328,154 |
|
Repayments of borrowings |
(882,974) |
(2,970,404) |
|
Net cash inflow from financing activities |
1,230,892 |
883,314 |
|
Net (decrease)/increase in cash and cash equivalents |
(28,128) |
42,739 |
|
Cash and cash equivalents at the beginning of period |
50,969 |
8,230 |
|
Cash and cash equivalents at end of period |
22,841 |
50,969 |
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 2015
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 2015 were authorised for issue by the Board on 12 November 2015 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 historical cost basis, except for the revaluation of certain financial instruments. 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 £8,051,359 (2014: £5,810,863). The Company's other comprehensive expense for the financial year was £242,148 (2014: £390,001 income).
Amendments to published standards effective for the year ended 30 June 2015
The following standards have been adopted during the year:
· IFRS 10 "Consolidated Financial Statements";
· IFRS 11 "Joint Arrangements";
· IFRS 12 "Disclosure of Interests in Other Entities";
· IAS 27 (Revised) "Separate Financial Statements"; and
· IAS 28 (Revised) "Investments in Associates and Joint Ventures".
Additional disclosures, where applicable, have been provided to comply with the revised standards although the adoption of these amendments has had no significant impact on the financial position and performance of the Group.
IFRS 10 is a new standard which establishes principles for the presentation and preparation of consolidated financial statements. As a result of its publication, the Directors are required to consider the application of the revised definition of control to determine whether additional entities will need to be consolidated and whether consolidation is still appropriate for those that currently are.
The new definition of control will require the Directors to consider whether the Company has:
a) power over the investee;
b) exposure, or rights, to variable returns from involvement with the investee; and
c) the ability to use power over the investee to affect the amount of the investor's returns.
The Directors considered whether the new definition of control above would apply to the Company's associate, Mid Migori Mining Company Limited, and decided that it would not be applicable primarily because the Company is not using its power over the investee to affect the amount of investor returns but rather acting in the role of an agent as opposed to a principal.
IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly Controlled Entities - Non-monetary Contributions by Venturers". It removes the option to account for jointly controlled entities ("JCEs") using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. JCEs under current IAS 31 that will be classified as joint ventures under IFRS 11 will transition from proportionate consolidation to the equity method by aggregating the carrying values previously recorded, testing that amount for impairment and then using that amount as deemed cost for applying the equity method going forward. The Group recognises its interest in jointly controlled entities using the equity method of accounting. The application of this new standard will not impact the financial position of the Group.
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures related to an entity's interests in subsidiaries, joint arrangements, associates and structured entities.
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.
Adoption of standards and interpretations
As at the date of authorisation of these financial statements, there were standards and interpretations in issue but that are not yet effective and have not been applied in these financial statements, as listed below.
Standards, amendments and interpretations in issue but not effective
Effective for annual periods beginning on or after 1 January 2015:
· IFRS 9 "Financial Instruments: Classification and Measurement".
Effective for annual periods beginning on or after 1 January 2016:
· IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations";
· IAS 1 "Presentation of Financial Statements (revised)"; and
· IAS 34 "Interim Financial Reporting (revised)".
The Directors do not anticipate that the adoption of these standards and interpretations in future periods could have a material effect on the financial position or performance of the Group and Company.
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 year ended 30 June 2015, the consolidated financial statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd and Red Rock Kenya Ltd. American Gold Mines Limited and Four Points Mining SAS ("FPM") (formerly "Mineras Four Points SA") are no longer consolidated as they were sold during the year.
The Group's dormant subsidiary, Intrepid Resources Limited and the two new subsidiaries in the 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 is in a position to exercise significant influence, but not control or jointly control, 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 are 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 Company has 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.
The Group recognises its interest in the 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.
Financial statements of the jointly controlled entity are prepared as at and for the year ended 30 November 2014. 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. Where necessary, adjustments are made to bring the accounting policies used into line with those of the Group 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.
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 retranslated 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 retranslation 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
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 statements of income with a corresponding increase in equity reserves - the share-based payment reserve.
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. There are no market vesting conditions. The exercise price is fixed at the date of grant.
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.
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 costs/revenue
Borrowing costs are recognised on an accruals basis using the effective interest method.
Finance revenue 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.
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.
Financial assets
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 impairments.
Investments in associate 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 impairments.
Available for sale financial assets
Equity investments intended to be held for an indefinite period of time are classified as available for sale investments. 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 statement of income.
Income from available for sale investments is accounted for in the statement of income 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.
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 twelve 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 and carried 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.
After initial recognition these assets are measured at amortised cost using the effective interest method less provision for impairment.
Financial liabilities and equity
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 profit or loss 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.
Equity instruments
Equity instruments issued by the Company are recorded at fair value at initial recognition net of issue costs.
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 £8.4 million for the year ended 30 June 2015. At that date there was a net current liability of £1.4 million. The loss resulted mainly from impairments of £6.6 million. Whilst the Directors have instituted measures to preserve cash and secure additional finance, these circumstances create material uncertainties over future trading results and cash flows.
During the fiscal year the Board of Directors has completed the sale of its gold interests in Colombia for a total consideration of US$5.0m. Fixed cash payments are to occur in three tranches, with the US$0.450m having been paid at closing, US$0.225m payable 9 months after closing, and a third tranche of $US0.225 payable 15 months after closing. In addition the Company has received a three year convertible promissory note of US$1.0m secured over the assets of the gold mine and associated plant and bearing interest of 5% per annum. Additional payments of up to $2.0m will be paid in the form of a 3% net smelter royalty payable quarterly on gold production and commencing at the earlier of 9 months or 100 tons per day processing and production at the plant in Colombia for 30 consecutive days. A final royalty stream of up to $1.0m will be paid following the payment in full of the initial net smelter royalty in the form of a 0.5% net smelter royalty.
The Company has in September 2015 announced the raising of a convertible loan note of £250,000 from YA Global Master SPV, Ltd and is currently in discussions regarding additional fundraising options expected to complete prior to the end of the calendar year. The Directors feel that sales of non-core assets and/or a fundraising associated with a current or new project development plan will be the most likely scenario at this time.
In March 2015 the Company paid off the entirety of its outstanding term loans with YA Global and UK Bond Network, removing £882,974 of corporate debt from the balance sheet and largely completing the deleveraging efforts begun in the prior year.
The Group has further implemented plans to minimise its cash outflows by reducing its fixed costs and overheads by such measures as staff reductions both in the form of redundancies and natural employee attrition, as well as minimizing marketing costs and other office and corporate expenditure. The decision was made during the year to close the geology and accounting departments and instead to rely on outsourced contractors on an ad hoc basis to perform residual functions, giving the Company a
much lower level of fixed costs and much greater operational flexibility. As currently proposed total headcount is expected to fall to under three full time employees by January 2016,
The Directors are confident in the Company's ability to raise new finance from stock markets if this is required during 2016 and the Group has demonstrated a consistent ability to do so. This includes recent share issues of 1.5 billion shares for a total consideration of £1.0 million as well as the issuance of 689 million shares for a total consideration of £0.327m. Furthermore the Company retains liquid investments in the form of Star Striker Limited and Regency Mines Plc, as well as a substantial stake in Jupiter Mines Limited, all of which may be sold or disposed of if required during the course of the year. Currently the firm is in discussions with major stakeholders of Star Striker Limited regarding a complete disposal of its stake in this non-core business.
The Directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Group's ability to continue as a going concern. Nevertheless after making enquiries, and considering the uncertainties described above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts.
Assets classified as held for sale
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, an experienced mining executive who was the CEO of Colombia Goldfields Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco. Under the Sale Agreement, the Company sells, and CML buys, (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 will also purchase an 11.2% stake from a minority shareholder in the business. Payment of the unchanged consideration of USD5,000,000 will occur in tranches. The initial payment of USD100,000, was previously made in respect of the CML's due diligence review. The first tranche of USD450,000 was paid at the closing of the transaction ("Completion") on 13 May 2015. The second tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of USD225,000 will be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be 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 the CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or vend of the assets into a public vehicle. 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 on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. 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.
Based on this and in accordance with IFRS 5, FPM is classified as a disposal group held for sale in the Company & Group's accounts as at 30 June 2014. The AGM results up to the completion date of 13 May 2015 have been included in the Consolidated Income Statement.
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 year ended 30 June 2015.
The effect of recognising MMM as an available for sale financial asset would be to decrease the loss by £43.
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 selling price of assets held for sale, 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 applied two different methodologies to estimate the fair value of its holding. These included an Adjusted Net Asset Method and a Market Approach. Under the Adjusted Net Asset method, the final results of Jupiter for the year ended 28 February 2015 announced on 26th June 2015, as well as the independent business valuation on the Tshipi asset by Venmyn Deloitte were used to provide relevant data points. Taking the net asset value, an adjusted hard asset only net asset value, and a further adjusted asset value modified using figures from Venmyn Deloitte, management arrived at an average value of 19.8 cents per share and a total valuation of AUD 5.40m (£2.63m). Applying a discount of 40% to this for illiquidity would reduce the fair value to 11.88 cents per share or AUD 3.24m (£1.58m). Under the Market Approach, the Company considered all the transactions involving Jupiter shares since de-listing. A total of thirty five transactions occurred between the de-listing date in January 2014 and the financial year-end, at an average price of 9.8 cents per share. This period is determined to be representative of the fair value at year end since there were no significant changes to the business and the transactions were considered orderly. After careful consideration of all the facts and circumstances that existed at the year-end date, Management believes that greater weight should be given to the actual transactions between buyers and sellers rather than the net asset value figures. Thus, the market value approach was determined to be more suitable, and the corresponding 9.8 cents per share value implies that the Company's holding in Jupiter Mines is valued at AUD 2.68m (£1.30m).
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.
Impairment of financial assets
The Group follows the guidance of IAS 39 to determine when a financial asset or a group of financial assets is impaired. 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, no impairment on available for sale financial assets was recognised in the income statement for the year ended 30 June 2015.
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.
As a result of the Group's evaluation of its non-financial assets, an impairment loss of £1,349,245 on investments in associates and joint ventures was recognised in the income statement (2014: £1,863,962) This relates to the Company's iron ore assets in Greenland. Management recognises that the declines in the price of iron ore and the general decline in global growth rates, are all factors which indicate a further impairment may be required in the Greenland asset. In estimating the level of this impairment, management have considered factors such as the outlook for the iron ore market and the infrastructure which would be required to produce iron ore for the Greenland asset. It was decided that a valuation based on the income approach would not be appropriate due to the relative infancy of the project, and an inability to accurately project cash-flows in a meaningful way. Particular attention was also paid to the Baffinland Iron Mines Corporation and its operations at the Nunavut based Mary River Project in NE Canada. Long considered the closest known comparator to Melvile Bugt, Mary River announced an expansion to its shipping schedule to 10 months a year, further validating the Company's underlying investment thesis regarding the viability of iron exploration and development in nearby Greenland.. After extensive review and analysis, a final impairment value of £1.349m for the year was thus determined to be most appropriate.
Amounts due from associates
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. . As of mid-2015 the Company was currently engaged via its local partner in Kenya, Mid Migori Mining, in a legal challenge of the purported termination of its Special License numbers 122 and 202, and in May 2015 was granted a leave to institute judicial review proceedings and a stay on the implementation of the Ministry of Mines revocation decision. Red Rock has also applied via a local affiliate, Red Rock Kenya, for the same ground covered by the existing licenses. While the Company feels it has a strong and quite valid case for retention of the licenses and the existing JORC resource the ongoing legal process makes the timing of any resolution unclear and difficult to project As a result of the uncertainties associated with the project the Company felt it prudent to further impair the value of the Kenya project by £5.28m..
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 2015 |
Jupiter Mines Limited £ |
Other investments £ |
|
Australian exploration £ |
African exploration £ |
|
Corporate and unallocated £ |
Total £ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gain on sales of investments |
- |
4,308 |
|
- |
- |
|
- |
4,308 |
|
|||
|
Impairment of amounts due from associates and ventures |
- |
- |
|
- |
(5,280,000) |
|
- |
(5,280,000) |
|
|||
|
Impairment of investments in associates and joint ventures |
- |
(1,349,245) |
|
- |
- |
|
- |
(1,349,245) |
|
|||
|
Exploration expenses |
- |
(65,960) |
|
16,710 |
(81,409) |
|
(8,562) |
(139,221) |
|
|||
|
Other expenses (excl currency loss)* |
- |
- |
|
(2,895) |
(11,677) |
|
(937,613) |
(952,185) |
|
|||
|
Currency loss |
- |
- |
|
(35,648) |
- |
|
(346,571) |
(382,219) |
|
|||
|
(Provision for)/Reversal of provision for bad debts |
- |
(222,830) |
|
- |
- |
|
- |
(222,830) |
|
|||
|
Shares of losses in associates |
- |
- |
|
- |
- |
|
(1,183) |
(1,183) |
|
|||
|
Other income |
- |
- |
|
- |
- |
|
30,033 |
30,033 |
|
|||
|
Finance (cost)/income, net |
- |
- |
|
- |
(1,872) |
|
567,042 |
565,170 |
|
|||
|
Net profit/(loss) before tax from continuing operations |
- |
(1,633,727) |
|
(21,833) |
(5,374,958) |
|
(696,854) |
(7,727,372) |
|
|||
* Included in other expenses is a depreciation charge of £4,834.
|
|
Investment |
|
Exploration |
|
Other |
|
||||||
|
Year to 30 June 2014 |
Jupiter Mines Limited £ |
Other investments £ |
|
Australian exploration £ |
African exploration £ |
|
Corporate and unallocated £ |
Total £ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gain on sales of investments |
6,994 |
- |
|
- |
- |
|
- |
6,994 |
|
|||
|
Impairment of available for sale investments |
- |
- |
|
- |
(469,446) |
|
- |
(469,446) |
|
|||
|
Impairment of investments in associates and joint ventures |
- |
(1,863,962) |
|
- |
- |
|
- |
(1,863,962) |
|
|||
|
Exploration expenses |
- |
(31,865) |
|
(871) |
(1,838) |
|
(365) |
(34,939) |
|
|||
|
Other expenses (excl currency loss)* |
- |
- |
|
(2,337) |
- |
|
(1,377,853) |
(1,380,190) |
|
|||
|
Currency loss |
- |
- |
|
(18,983) |
- |
|
(164,635) |
(183,618) |
|
|||
|
(Provision for)/Reversal of provision for bad debts |
- |
(600,000) |
|
- |
- |
|
327 |
(599,673) |
|
|||
|
Shares of losses in associates |
- |
(85,696) |
|
- |
(19,396) |
|
- |
(105,092) |
|
|||
|
Other income |
- |
- |
|
- |
- |
|
375,643 |
375,643 |
|
|||
|
Finance income, net |
- |
- |
|
- |
- |
|
485,725 |
485,725 |
|
|||
|
Net profit/(loss) before tax from continuing operations |
6,994 |
(2,581,523) |
|
(22,191) |
(490,680) |
|
(681,158) |
(3,768,558) |
|
|||
* Included in other expenses is a depreciation charge of £14,409.
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 2015 |
UK £ |
Australia £ |
Greenland £ |
Africa £ |
Total £ |
||
|
Revenue |
|
|
|
|
|
||
|
Gain on sales of investments |
4,308 |
- |
- |
- |
4,308 |
||
|
Total segment revenue and other gains |
4,308 |
- |
- |
- |
4,308 |
||
|
Non-current assets |
|
|
|
|
|
||
|
Property, plant and equipment |
266 |
- |
- |
- |
266 |
||
|
Investments in associates and joint ventures |
- |
- |
2,997,060 |
971,818 |
3,968,878 |
||
|
Total segment non-current assets |
266 |
- |
2,997,060 |
971,818 |
3,969,144 |
||
|
Available for sale financial assets |
|
|
|
|
1,331,766 |
||
|
Non-current receivables |
|
|
|
|
3,634,270 |
||
|
Total non-current assets |
|
|
|
|
8,935,180 |
||
|
Year ended 30 June 2014 |
UK £ |
Australia £ |
Greenland £ |
Africa £ |
Total £ |
||
|
Revenue |
|
|
|
|
|
||
|
Gain on sales of investments |
6,994 |
- |
- |
- |
6,994 |
||
|
Total segment revenue and other gains |
6,994 |
- |
- |
- |
6,994 |
||
|
Non-current assets |
|
|
|
|
|
||
|
Property, plant and equipment |
5,100 |
- |
- |
- |
5,100 |
||
|
Investments in associates and joint ventures |
- |
- |
4,347,446 |
971,860 |
5,319,306 |
||
|
Total segment non-current assets |
5,100 |
- |
4,347,446 |
971,860 |
5,324,406 |
||
|
Available for sale financial assets |
|
|
|
|
1,583,984 |
||
|
Non-current receivables |
|
|
|
|
7,148,560 |
||
|
Total non-current assets |
|
|
|
|
14,056,950 |
||
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
|
|
2015 £ |
2014 £ |
|
Auditor's remuneration: |
|
|
|
- fees payable to the Company's auditor for the audit of consolidated and Company financial statements |
20,000 |
79,659 |
|
|
|
|
|
Directors' emoluments |
157,169 |
218,566 |
|
Share-based payments - Directors |
24,000 |
24,000 |
|
Share-based payments - staff |
48,170 |
68,712 |
|
Depreciation - continuing operations |
4,834 |
14,409 |
|
Depreciation - discontinued operations |
- |
508,088 |
|
Currency losses |
382,219 |
183,618 |
4 Finance income/(costs), net
|
|
2015 £ |
2014 £ |
|
Interest income |
668,438 |
596,416 |
|
Interest expense |
(103,267) |
(141,832) |
|
Other finance income |
- |
31,141 |
|
|
565,171 |
485,725 |
Interest income comes mainly from non-current receivables from an associate. Please refer to note 15.
5 Taxation
|
|
Note |
2015 £ |
2014 £ |
|
Current period taxation on the Group |
|
|
|
|
UK corporation tax at 20.75% (2014: 22.50%) on profits for the period |
|
- |
- |
|
|
|
- |
- |
|
Deferred tax |
|
|
|
|
Origination and reversal of temporary differences |
|
- |
(2,279,276) |
|
Deferred tax assets not recognised |
|
- |
82,022 |
|
Tax credit |
|
- |
(2,197,254) |
|
Factors affecting the tax charge for the year |
|
|
|
|
Loss on ordinary activities before taxation |
|
(8,411,542) |
(6,310,714) |
|
Loss on ordinary activities at the average UK standard rate of 20.75% (2014: 22.50%) |
|
(1,745,395) |
(1,419,911) |
|
Impact of subsidiaries and associates |
|
74,738 |
(1,304,135) |
|
Effect of expenditure not deductible |
|
1,358,309 |
41,298 |
|
Effect of non-taxable income |
|
- |
(84,799) |
|
Effect of losses carried forward not recognised |
|
312,348 |
570,293 |
|
Tax credit |
|
- |
(2,197,254) |
|
|
|
|
|
|
Tax credit arising from continuing operations |
|
- |
- |
|
Tax credit arising from discontinued operations |
8 |
|
(2,197,254) |
|
Total tax credit |
|
- |
(2,197,254) |
Deferred tax amounting to £nil (2014: £nil) relating to the Group's investments was recognised in the statement of comprehensive income. In 2014 the deferred tax credit of £2,197,254 relates to discontinued operations and is included in the loss after tax for the year from discontinued operations in the income statement.
Finance Act 2013 set the main rate of corporation tax at 21% from 1 April 2014 and at 20% from 1 April 2015. Therefore deferred tax assets/(liabilities) are calculated at 20% (2014: 21%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:
|
|
2015 £ |
2014 £ |
|
Wages and salaries |
546,749 |
750,628 |
|
Pension |
19,083 |
28,588 |
|
Social security costs |
60,174 |
76,654 |
|
Employee share-based payment charge |
72,170 |
92,712 |
|
Total staff costs |
698,176 |
948,582 |
The average number of Group employees (including Directors) during the year was:
|
|
2015 Number |
2014 Number |
|
Executives |
4 |
4 |
|
Administration |
12 |
16 |
|
Exploration |
5 |
8 |
|
|
21 |
28 |
The Company's staff also work for Regency Mines plc and staff costs of £44,031 (2014: £82,500) were recharged during the year. Such charges are offset against administration expenses in the income statement.
In addition, professional staff employed by Regency Mines plc are sub-contracted to the Company to work on specific assignments as necessary. During the year, the total charge was £105,848 (2014: £174,863).
The average number of employees includes 5 (2014: 6) administration employees of the Four Points Mining SAS, a subsidiary company until 13 May 2015, which runs its own payroll for administrative staff. The key management personnel are the Directors and their remuneration is disclosed within note 7.
7 Directors' emoluments
|
2015 |
Directors' fees £ |
Consultancy fees £ |
|
Share Incentive Plan £ |
|
Pension contributions £ |
Social security costs £ |
Total £ |
|
Executive Directors |
|
|
|
|
|
|
|
|
|
A R M Bell |
61,750 |
15,000 |
|
6,000 |
|
3,361 |
5,384 |
91,495 |
|
Other Directors |
|
|
|
|
|
|
|
|
|
J F Ladner |
16,500 |
8,500 |
|
6,000 |
|
- |
956 |
31,956 |
|
M C Nott |
16,500 |
8,500 |
|
6,000 |
|
795 |
905 |
32,700 |
|
J Watkins |
16,500 |
1,500 |
|
6,000 |
|
- |
1,018 |
25,018 |
|
|
111,250 |
33,500 |
|
24,000 |
|
4,156 |
8,263 |
181,169 |
|
2014 |
Directors' fees £ |
Consultancy fees £ |
|
Share Incentive Plan £ |
|
Pension contributions £ |
Social security costs £ |
Total £ |
|
Executive Directors |
|
|
|
|
|
|
|
|
|
A R M Bell |
100,833 |
15,000 |
|
6,000 |
|
7,321 |
9,854 |
139,008 |
|
Other Directors |
|
|
|
|
|
|
|
|
|
M G R Yannaghas |
12,500 |
- |
|
- |
|
- |
1,548 |
14,048 |
|
J F Ladner |
16,000 |
9,000 |
|
6,000 |
|
- |
930 |
31,930 |
|
M C Nott |
16,000 |
9,000 |
|
6,000 |
|
808 |
842 |
32,650 |
|
J Watkins |
16,000 |
2,000 |
|
6,000 |
|
- |
930 |
24,930 |
|
|
161,333 |
35,000 |
|
24,000 |
|
8,129 |
14,104 |
242,566 |
On 30 June 2015, Mr Scott Kaintz was appointed an executive Director, Mr Sam Quinn was appointed a non-executive Director and Mr John Watkins resigned as a Director. Neither Mr Scott Kaintz nor Mr Sam Quinn received any emoluments for their roles as a Director in the year under review.
The number of Directors who exercised share options in the year was nil (2014: nil).
During the year, the Company contributed to a Share Incentive Plan. 3,529,411 (2014: 631,578) free shares were issued to each employee, including Directors, making a total of 14,117,644 (2014: 2,526,312) to Directors.
In addition to Director's fees, consultancy fees in respect of Mike Nott were payable to Woodridge Associates, a business which provided his services.
In addition to Director's fees, consultancy fees in respect of John Watkins were payable to his business as a chartered accountant in practice.
8 Assets classified as held for sale
Four Points Mining SAS
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, an experienced mining executive who was the CEO of Colombia Goldfields Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco. Under the Sale Agreement, the Company sells, and CML buys, (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 will also purchase an 11.2% stake from a minority shareholder in the business. Payment of the unchanged consideration of USD5,000,000 will occur in tranches. The initial payment of USD100,000 was previously made in respect of CML's due diligence review. The first tranche of USD450,000 was paid at the closing of the transaction ("Completion"). The second tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of USD225,000 will be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be 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 the duration of the loan, CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or transfer of the assets into a public vehicle.
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 on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. 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. Completion took place on 13 May 2015. . A 7% commission is payable to Ariel Partners on the transaction.
Based on this, FPM is classified as a disposal group held for sale in the Company and Group's accounts as at 30 June 2014.
The results of FPM for the period to completion, 13 May 2015, and for the prior year are presented below:
|
|
|
30 June |
30 June |
|||
|
|
|
2015 |
2014 |
|||
|
|
Note |
£ |
£ |
|||
|
Revenue |
|
1,682,567 |
2,424,539 |
|||
|
Cost of sales |
|
(1,210,993) |
(1,673,479) |
|||
|
Gross profit |
|
471,574 |
751,060 |
|||
|
Expenses |
|
(960,068) |
(790,783) |
|||
|
Finance costs, net |
|
(168,326) |
(114,275) |
|||
|
Impairment of assets held for sale |
|
(64,406) |
(2,388,158) |
|||
|
Loss before tax from a discontinued operation |
|
(721,226) |
(2,542,156) |
|||
|
Tax credit |
|
37,056 |
2,197,254 |
|||
|
Loss after tax from a discontinued operation |
|
(684,170) |
(344,902) |
|||
|
Loss from a discontinued operation attributable to: |
|
|
|
|||
|
Owners of the parent |
|
(370,071) |
(275,226) |
|||
|
Non-controlling interest |
|
(314,099) |
(69,676) |
|||
|
|
|
(684,170) |
(344,902) |
|||
|
Loss per share attributable to owners of the parent: |
|
|
|
|
||
|
Basic |
9 |
(0.01) pence |
(0.02) pence |
|
||
|
Diluted |
9 |
(0.01) pence |
(0.02) pence |
|
||
The major classes of assets and liabilities classified as held for sale as at 30 June 2015 are as follows:
|
Group |
30 June 2015 £ |
30 June 2014 £ |
|
Assets |
|
|
|
Property, plant and equipment |
- |
4,916,147 |
|
Inventory |
- |
77,750 |
|
Other receivables |
- |
1,996,120 |
|
Cash and cash equivalents |
- |
4,451 |
|
Assets classified as held for sale |
- |
6,994,468 |
|
Liabilities |
|
|
|
Trade and other payables |
- |
1,530,130 |
|
Borrowings |
- |
2,266,354 |
|
Deferred tax liabilities |
- |
947,801 |
|
Liabilities directly associated with assets classified as held for sale |
- |
4,744,285 |
|
Net assets directly associated with disposal group |
- |
2,250,183 |
|
Non-controlling interest |
- |
(60,461) |
|
Net assets directly associated with disposal group attributable to owners of the Parent |
- |
2,189,722 |
|
Company |
30 June 2015 £ |
30 June 2014 £ |
|
Assets |
|
|
|
Investment in subsidiary |
- |
947,149 |
|
Amounts due from subsidiary |
- |
1,115,248 |
|
Other receivables |
- |
1,521,280 |
|
Impairment of assets classified as held for sale |
- |
(1,393,955) |
|
Assets classified as held for sale |
- |
2,189,722 |
The net cash flows of discontinued operations are as follows:
|
|
30 June 2015 £ |
30 June 2014 £ |
|
Operating |
286,751 |
996,491 |
|
Investing |
(45,699) |
(39,241) |
|
Financing |
(245,503) |
(964,644) |
|
Net cash outflows |
(4,451) |
(7,394) |
9 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:
|
|
2015 |
2014 |
|
Loss attributable to equity holders of the parent from continuing operations |
£(7,721,880) |
£(3,768,558) |
|
Loss attributable to equity holders of the parent from discontinued operations |
£(370,071) |
£(275,226) |
|
Loss attributable to equity holders of the Parent |
£(8,091,951) |
£(4,043,784) |
|
Weighted average number of Ordinary shares of £0.0001 (2014: £0.001) in issue |
2,884,093,532 |
1,518,425,648 |
|
Loss per share - basic |
(0.28) pence |
(0.27) pence |
|
Weighted average number of Ordinary shares of £0.0001 (2014: £0.001) in issue inclusive of outstanding dilutive options* |
2,884,093,532 |
1,518,425,648 |
|
Loss per share - fully diluted |
(0.28) pence |
(0.27) 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:
|
|
2015 |
2014 |
|
Loss per share denominator |
2,884,093,532 |
1,518,425,648 |
|
Weighted average number of exercisable share options |
- |
- |
|
Diluted loss per share denominator* |
2,884,093,532 |
1,518,425,648 |
In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of Ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 7,265,753 (2014: 20,590,411). These were not included in the calculation of diluted earnings per share because all the options are not likely to be exercised given that even the lowest exercise price is substantially higher than the market price and are therefore non-dilutive for the period presented.
10 Property, plant and equipment
|
|
Group |
Mines £ |
Field equipment and machinery £ |
Fixtures and fittings £ |
Assets under construction £ |
Total £ |
|
|
Cost |
|
|
|
|
|
|
|
At 1 July 2013 |
12,970,084 |
968,148 |
88,097 |
402,546 |
14,428,875 |
|
|
Reclassification to assets held for sale |
(12,716,945) |
(832,554) |
(51,581) |
(368,874) |
(13,969,954) |
|
|
Additions |
- |
37,487 |
1,943 |
- |
39,430 |
|
Disposals |
- |
(60,385) |
(4,838) |
- |
(65,223) |
|
|
|
Currency exchange |
(253,139) |
(78,089) |
(4,972) |
(33,672) |
(369,872) |
|
|
At 30 June 2014 |
- |
34,607 |
28,649 |
- |
63,256 |
|
|
Disposals |
- |
- |
(842) |
- |
(842) |
|
|
At 30 June 2015 |
- |
34,607 |
27,807 |
- |
62,414 |
|
|
Depreciation and impairment |
|
|
|
|
|
|
|
At 1 July 2013 |
(5,926,741) |
(280,674) |
(47,935) |
- |
(6,255,350) |
|
|
Reclassification to assets held for sale |
6,316,400 |
319,335 |
29,913 |
- |
6,665,648 |
|
|
Depreciation charge |
(394,145) |
(113,541) |
(14,811) |
- |
(522,497) |
|
|
Disposal |
- |
19,676 |
4,221 |
- |
23,897 |
|
|
Currency exchange |
4,486 |
23,224 |
2,436 |
- |
30,146 |
|
|
At 30 June 2014 |
- |
(31,980) |
(26,176) |
- |
(58,156) |
|
|
Depreciation charge |
- |
(2,627) |
(2,207) |
- |
(4,834) |
|
|
Disposals |
- |
- |
842 |
- |
842 |
|
|
At 30 June 2015 |
- |
(34,607) |
(27,541) |
- |
(62,148) |
|
|
Net book value |
|
|
|
|
|
|
|
At 30 June 2015 |
- |
- |
266 |
- |
266 |
|
|
At 30 June 2014 |
- |
2,627 |
2,473 |
- |
5,100 |
Of the depreciation charge, £4,834 (2014:£14,409) is included within other expenses and £0 (2014:£508,088) within loss after tax from discontinued operations in the income statement.
|
Company |
Field equipment and machinery £ |
Fixtures and fittings £ |
Total £ |
|
Cost |
|
|
|
|
At 1 July 2013 |
34,607 |
28,649 |
63,256 |
|
Additions |
- |
- |
- |
|
At 30 June 2014 |
34,607 |
28,649 |
63,256 |
|
Disposals |
- |
(842) |
(842) |
|
At 30 June 2015 |
34,607 |
27,807 |
62,414 |
|
Depreciation |
|
|
|
|
At 1 July 2013 |
(23,216) |
(20,574) |
(43,790) |
|
Charge |
(8,764) |
(5,602) |
(14,366) |
|
At 30 June 2014 |
(31,980) |
(26,176) |
(58,156) |
|
Charge |
(2,627) |
(2,207) |
(4,834) |
|
Disposals |
- |
842 |
842 |
|
At 30 June 2015 |
(34,607) |
(27,541) |
(62,148) |
|
Net book value |
|
|
|
|
At 30 June 2015 |
- |
266 |
266 |
|
At 30 June 2014 |
2,627 |
2,473 |
5,100 |
11 Investments in subsidiaries
|
Company |
2015 £ |
2014 £ |
|
Cost |
|
|
|
At 1 July 2014 |
482 |
4,004,554 |
|
Investment in subsidiary |
131 |
- |
|
Reclassification to assets held for sale |
- |
(4,004,072) |
|
At 30 June 2015 |
613 |
482 |
|
Impairment |
|
|
|
At 1 July 2014 |
(482) |
(3,057,405) |
|
Charge in the year |
- |
- |
|
Reclassification to assets held for sale |
- |
3,056,923 |
|
At 30 June 2015 |
(482) |
(482) |
|
|
|
|
|
Net book value |
131 |
- |
As at 30 June 2015, the Company held interests in the following subsidiary companies:
|
Company |
Country of registration |
Class |
Proportion held |
Nature of business |
|
Intrepid Resources Limited |
Zambia |
Ordinary |
100% |
Dormant |
|
Red Rock Australasia Pty Limited |
Australia |
Ordinary |
100% |
Mineral exploration |
|
Red Rock Kenya Limited |
Kenya |
Ordinary |
87% |
Mineral exploration |
|
Red Rock Cote D'Ivoire sarl |
Ivory Coast |
Ordinary |
100% |
Mineral exploration |
|
Basse Terre sarl |
Ivory Coast |
Ordinary |
100% |
Mineral exploration |
12 Investments in associates and joint ventures
|
|
Group |
|
Company |
||
|
|
2015 £ |
2014 £ |
|
2015 £ |
2014 £ |
|
Cost |
|
|
|
|
|
|
At 30 June 2014 |
9,108,304 |
5,855,672 |
|
8,951,460 |
5,698,828 |
|
Additions during the year |
- |
83,897 |
|
- |
83,897 |
|
Transfer from assets held for sale |
- |
3,168,735 |
|
- |
3,168,735 |
|
At 30 June 2015 |
9,108,304 |
9,108,304 |
|
8,951,460 |
8,951,460 |
|
Impairment |
|
|
|
|
|
|
At 30 June 2014 |
(3,788,998) |
(1,819,944) |
|
(3,257,587) |
(525,034) |
|
Losses during the year |
(1,183) |
(105,092) |
|
- |
- |
|
Impairment in the year |
(1,349,245) |
(1,863,962) |
|
(1,394,451) |
(2,732,553) |
|
At 30 June 2015 |
(5,139,426) |
(3,788,998) |
|
(4,652,038) |
(3,257,587) |
|
|
|
|
|
|
|
|
Net book amount |
3,968,878 |
5,319,306 |
|
4,299,422 |
5,693,873 |
The Company, at 30 June 2015, 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 incorporation |
Class of shares held |
Percentage of issued capital |
Accounting year ended |
|
Red Rock Zambia Limited* |
Zambia |
Ordinary |
28.40% |
30 June 2015 |
|
Melville Bay Limited (formerly "NAMA Greenland Limited") |
England |
Ordinary |
60.00% |
30 November 2014 |
* Financial information was not available for this company.
The Company, at 30 June 2015, had significant influence by virtue other than shareholding over 20% over the following companies:
|
Company |
Country of incorporation |
Class of shares held |
Percentage of issued capital |
Accounting year ended |
|
Star Striker Limited |
Australia |
Ordinary |
11.03% |
30 June 2015 |
|
Mid Migori Mining Company Limited |
Kenya |
Ordinary |
15.00% |
30 September 2014 |
Summarised financial information for the Company's associates and joint ventures, where available, as at 30 June 2015 is given below:
|
Company |
Revenue £ |
Loss £ |
Assets £ |
Liabilities £ |
|
Mid Migori Mining Company Limited |
- |
(288) |
2,200,810 |
(2,966,356) |
|
Star Striker Limited |
1,070 |
(614,833) |
227,484 |
(60,525) |
|
Melville Bay Limited |
- |
(1,742,607) |
4,106,839 |
(150,769) |
|
|
Mid Migori Mining Company Limited £ |
Red Rock Zambia Limited £ |
Star Striker Limited £ |
Melville Bay Limited £ |
Total £ |
|
Cost |
|
|
|
|
|
|
At 30 June 2014 |
1,044,766 |
140,596 |
1,709,735 |
6,213,207 |
9,108,304 |
|
Additions during the year |
- |
- |
- |
- |
- |
|
At 30 June 2015 |
1,044,766 |
140,596 |
1,709,735 |
6,213,207 |
9,108,304 |
|
Impairment and losses during the year |
|
|
|
|
|
|
At 30 June 2014 |
(72,905) |
(140,596) |
(1,709,735) |
(1,865,762) |
(3,788,998) |
|
(Losses) during the year |
(43) |
- |
- |
(1,140) |
(1,183) |
|
Impairment in period |
- |
- |
- |
(1,349,245) |
(1,349,245) |
|
At 30 June 2015 |
(72,948) |
(140,596) |
(1,709,735) |
(3,216,147) |
(5,139,426) |
|
Carrying amount |
|
|
|
|
|
|
At 30 June 2015 |
971,818 |
- |
- |
2,997,060 |
3,968,878 |
|
At 30 June 2014 |
971,861 |
- |
- |
4,347,445 |
5,319,306 |
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).
Red Rock Zambia Limited
The book value of Red Rock Zambia Limited was fully written off in previous years.
Star Striker Limited (formerly known as Resource Star Limited)
The market value as at 30 June 2015 of the Company's investments in listed associates was as follows:
|
|
2015 £ |
2014 £ |
|
Star Striker Limited |
222,824 |
112,448 |
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.
13 Available for sale financial assets
|
|
Group and Company |
|
|
|
2015 £ |
2014 £ |
|
Opening balance |
1,583,984 |
3,136,448 |
|
Additions |
- |
232,978 |
|
Disposals |
(10,070) |
(1,705,997) |
|
Revaluations |
(242,148) |
390,001 |
|
Impairment of available for sale financial assets |
- |
(469,446) |
|
Closing balance |
1,331,766 |
1,583,984 |
Market value of investments
The market value as at 30 June 2015 of the Company's available for sale listed and unlisted investments were as follows:
|
|
2015 £ |
2014 £ |
|
Quoted on London AIM |
27,120 |
94,765 |
|
Unquoted investments at fair value |
1,304,646 |
1,489,219 |
|
|
1,331,766 |
1,583,984 |
14 Cash and cash equivalents and restricted cash
|
Group |
30 June 2015 £ |
Cash flow £ |
30 June 2014 £ |
|
Cash in hand and at bank |
29,426 |
(21,741) |
51,167 |
|
Restricted cash |
- |
(221,846) |
221,846 |
|
|
29,426 |
(243,587) |
273,013 |
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:
|
|
30 June 2015 |
30 June 2014 £ |
|
Cash in hand and at bank |
29,426 |
51,167 |
|
Cash in hand and at bank attributable to asset held for sale (note 8) |
- |
4,451 |
|
|
29,426 |
55,618 |
|
Company |
30 June 2015 £ |
Cash flow £ |
30 June 2014 £ |
|
Cash in hand and at bank |
22,841 |
(28,128) |
50,969 |
|
Restricted cash |
- |
(221,846) |
221,846 |
|
|
22,841 |
(249,974) |
272,815 |
Cash of £221,846 was held in escrow as security for the bond liability with UK Bond Network Limited which was fully repaid during the year.
15 Non-current receivables
|
|
Group and Company |
|
|
|
2015 £ |
2014 £ |
|
Amounts due from associates |
2,228,812 |
7,148,560 |
|
FPM sale proceeds |
1,405,458 |
- |
|
|
3,634,270 |
7,148,560 |
Non-current related party receivables of £2,228,812 (2014: £7,148,560) 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 26. 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 due to the ongoing licence dispute, have impaired the asset by £5,280,000. More details are given in note 1.5, Significant accounting judgements, estimates and assumptions.
The FPM sale proceeds represents the fair value of the deferred consideration receivable for the sale of FPM. 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 |
||
|
|
2015 £ |
2014 £ |
|
2015 £ |
2014 £ |
|
Current trade and other receivables |
|
|
|
|
|
|
Prepayments |
270,110 |
272,322 |
|
231,290 |
272,322 |
|
Related party receivables: |
|
|
|
|
|
|
- due from subsidiaries |
- |
- |
|
82,978 |
- |
|
- due from associates |
715 |
49,251 |
|
715 |
49,251 |
|
- due from key management |
- |
5,687 |
|
- |
5,687 |
|
Other receivables |
390,327 |
251,885 |
|
388,189 |
250,710 |
|
Total |
661,152 |
579,145 |
|
703,172 |
577,970 |
Other receivables are stated after full provision of £600,000 relating to an amount due from North Atlantic Mining Associates Limited (2014: £600,000).
17 Trade and other payables
|
|
Group |
|
Company |
||
|
|
2015 £ |
2014 £ |
|
2015 £ |
2014 £ |
|
Trade and other payables |
1,410,726 |
1,855,719 |
|
1,406,238 |
1,855,426 |
|
Accruals |
302,397 |
318,394 |
|
302,397 |
318,394 |
|
Related party payables: |
|
|
|
|
|
|
- due to associates |
317,882 |
289,941 |
|
317,882 |
289,941 |
|
- due to key management |
67,265 |
29,235 |
|
67,265 |
29,235 |
|
Trade and other payables |
2,098,270 |
2,493,289 |
|
2,093,782 |
2,492,996 |
|
Short-term borrowings |
- |
755,889 |
|
- |
755,889 |
|
|
2,098,270 |
3,249,178 |
|
2,093,782 |
3,248,885 |
|
Long-term borrowings |
- |
318,978 |
|
- |
318,978 |
|
Total |
2,098,270 |
3,568,156 |
|
2,093,782 |
3,567,863 |
YA Global Master SPV Limited
A short-term loan of £nil (2014: £321,850) with YA Global Master SPV Limited ("YAGM") remains outstanding as at the end of the year.
UK Bond Network
In December 2013, the Company issued a £500,000 secured bond, arranged by the UK Bond Network Limited. The bond had a term of 2 years and a coupon of 14% per annum and was to be 50% amortised with payments that started in June 2014 and continuing on a semi-annual basis. The loan could be repaid at any time following the first anniversary of the date of issuance at no additional cost to the Company. The loan was fully repaid during the year and as at 30 June 2015 the outstanding bond liability was nil (2014: £443,693).
18 Deferred tax
The movement in the Company's and Group's net deferred tax position is as follows:
|
|
Group |
|
Company |
||
|
|
2015 £ |
2014 £ |
|
2015 £ |
2014 £ |
|
Deferred tax liabilities as at 30 June 2014 |
- |
(3,164,001) |
|
- |
- |
|
Deferred tax credit recognised in the statement of income |
- |
- |
|
- |
- |
|
Deferred tax charge recognised in the statement of comprehensive income |
- |
- |
|
- |
- |
|
Transferred from liabilities associated with assets held for sale |
- |
- |
|
- |
- |
|
Transferred to liabilities associated with assets held for sale |
- |
3,164,001 |
|
- |
- |
|
Deferred tax liabilities as at 30 June 2015 |
- |
- |
|
- |
- |
The following are the major deferred tax liabilities and assets recognised by the Group and Company and the movements thereon during the period:
|
Group |
Depreciation £ |
Investments £ |
Employee benefits £ |
Total £ |
|
Deferred tax liabilities as at 30 June 2013 |
- |
(3,164,001) |
- |
(3,164,001) |
|
Transferred to liabilities associated with assets held for sale |
- |
3,164,001 |
- |
3,164,001 |
|
Deferred tax liabilities as at 30 June 2014 and 30 June 2015 |
- |
- |
- |
- |
|
Company |
Depreciation £ |
Investments £ |
Employee benefits £ |
Total £ |
|
Deferred tax liabilities as at 30 June 2013 |
- |
- |
- |
- |
|
Charge to the statement of income for the year |
- |
- |
- |
- |
|
Charge to the statement of comprehensive income |
- |
- |
- |
- |
|
Deferred tax liabilities as at 30 June 2014 |
- |
- |
- |
- |
|
Charge to the statement of income for the year |
- |
- |
- |
- |
|
Charge to the statement of comprehensive income |
- |
- |
- |
- |
|
Deferred tax liabilities as at 30 June 2015 |
- |
- |
- |
- |
19 Share capital of the Company
The share capital of the Company is as follows:
|
Issued and fully paid |
2015 £ |
2014 £ |
|
2,371,116,172 deferred shares of £0.0009 each |
2,134,005 |
- |
|
1,934,588 ordinary shares of £0.001 each |
- |
1,934,588 |
|
4,662,024,541 ordinary shares of £0.0001 each |
466,202 |
- |
|
As at 30 June |
2,600,207 |
1,934,588 |
|
Movement in share capital |
Number |
Nominal £ |
|
Ordinary shares of £0.001 each |
|
|
|
As at 30 June 2013 |
1,279,769,102 |
1,279,769 |
|
Shares issued in the year to 30 June 2014 |
654,818,441 |
654,819 |
|
As at 30 June 2014 |
1,934,587,543 |
1,934,588 |
|
Issued 11 August 2014 at 0.2257 pence per share |
97,363,903 |
97,364 |
|
Issued 29 August 2014 at 0.20 pence per share |
100,000,000 |
100,000 |
|
Issued 18 September 2014 at 0.22 pence per share |
76,056,779 |
76,056 |
|
Issued 25 November 2014 at 0.1686 pence per share |
163,107,947 |
163,108 |
|
As at 23 December 2014, pre-share re-organisation |
2,371,116,172 |
2,371,116 |
|
23 December 2014, Share Re-organisation (see below) |
|
|
|
Issue of deferred shares of £0.0009 each |
(2,371,116,172) |
(2,134,005) |
|
Issue of new ordinary shares of £0.0001 each |
2,371,116,172 |
237,112 |
|
Issued 2 March 2015 at 0.08 pence per share |
87,500,000 |
8,750 |
|
Issued 6 March 2015 at 0.0798 pence per share |
15,140,011 |
1,514 |
|
Issued 19 March 2015 at 0.065 pence per share |
1,538,461,538 |
153,846 |
|
Issued 19 March 2015 at 0.066554 pence per share |
7,598,784 |
760 |
|
Issued 25 March 2015 at 0.0666 pence per share |
200,000,000 |
20,000 |
|
Issued 1 April 2015 at 0.0665 pence per share |
121,703,854 |
12,170 |
|
Issued 2 April 2015 at 0.085 pence per share |
102,652,904 |
10,265 |
|
Issued 15 April 2015 at 0.06837 pence per share |
99,654,527 |
9,965 |
|
Issued 23 April 2015 at 0.06837 pence per share |
118,196,751 |
11,820 |
|
Total shares issued in the year |
2,727,436,998 |
665,619 |
|
As at 30 June 2015 - ordinary shares of £0.0001 each |
4,662,024,541 |
466,202 |
Change in Nominal Value / share re-organisation
The nominal value of shares in the company was originally 0.1 pence. At a shareholders meeting on 23 December 2014, the Company's shareholders approved a re-organisation of the company's shares which resulted in the creation of two classes of shares, being:
· Ordinary shares with a nominal value of 0.01 pence, which will continue as the company's listed securities.
· Deferred shares with a value of 0.09 pence which, subject to the provisions of the Companies Act 2006, may be cancelled by the company, or bought back for £1 and then cancelled. These deferred shares are not quoted and carry no rights whatsoever.
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 22).
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.
20 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.
21 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. All options have expired as at 30 June 2015 except for those issued for an exercise price of 3.2 pence. Under the plan, the options were granted for no consideration, vested immediately, expiring on 21 Sept 2015 and carry no dividend or voting rights.
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. The expense was charged in full during the previous years. There is no charge during the year.
At 30 June 2015, the Company had outstanding options to subscribe for Ordinary shares as follows:
|
|
Options issued 22 September 2010 exercisable at 3.2 pence per share expiring 21 September 2015 Number |
|
A R M Bell |
3,250,000 |
|
M C Nott |
2,000,000 |
|
J Watkins |
1,000,000 |
|
Employees |
750,000 |
|
Total |
7,000,000 |
|
|
Company and Group |
||||
|
|
2015 |
|
2014 |
||
|
|
Number of options |
Weighted average exercise price pence |
|
Number of options |
Weighted average exercise price pence |
|
Outstanding at the beginning of the period |
8,000,000 |
3.20 |
|
24,250,000 |
2.21 |
|
Expired |
(1,000,000) |
3.20 |
|
(16,250,000) |
1.72 |
|
Outstanding at the end of the period |
7,000,000 |
3.20 |
|
8,000,000 |
3.20 |
|
Exercisable at the end of the period |
7,000,000 |
3.20 |
|
8,000,000 |
3.20 |
The options outstanding at 30 June 2015 have an exercise price of 3.2 pence and a contractual life of 0.23 years.
During the financial year no options were exercised (2014: nil). During the financial year 1,000,000 options expired due to staff leaving the Company (2014: 16,250,000 due to the expiry date being reached).
The fair value of services received in return for options granted is measured by reference to the fair value of options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes option-pricing model. The contractual life of the options is used as an input into the model. The model assumes that an option is only capable of exercise at expiry.
|
|
Fair value per option pence |
Exercise price pence |
Price of shares on grant pence |
Estimated volatility % |
Risk free interest % |
Dividend % |
|
22 September 2010 |
1.60 |
3.20 |
3.20 |
50% |
1.84% |
- |
The expected volatility is based on the historic volatility of the Company and peer group entities (calculated on the weighted average remaining life of the share options), adjusted for any expected changes to volatility due to publicly available information and other factors indicating that expected future volatility might differ from past volatility.
Risk free interest rates are based on five year government bonds.
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.
The fair value of services provided is recognised as an expense in the income statement at grant date and is determined indirectly by reference to the fair value of the free and matching shares granted. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date.
During the financial year, a total of 84,905,853 free and matching shares were awarded with a fair value of 0.085 pence resulting in a share-based payment charge of £72,170 in the income statement.
22 Financial instruments
22.1 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:
|
Group |
2015 £ |
2014 £ |
|
Financial assets |
|
|
|
Available for sale financial assets at fair value through OCI |
|
|
|
Unquoted equity shares |
1,304,646 |
1,489,219 |
|
Quoted equity shares |
27,120 |
94,765 |
|
Total available for sale financial assets at fair value through OCI |
1,331,766 |
1,583,984 |
|
|
|
|
|
|
|
|
|
Loans and receivables |
|
|
|
Non-current receivables |
3,634,270 |
7,148,560 |
|
Other receivables - current |
391,042 |
306,823 |
|
Total loans and receivables |
4,025,312 |
7,455,383 |
|
|
|
|
|
Total financial assets |
5,357,078 |
9,039,367 |
|
|
|
|
|
Total current |
391,042 |
306,823 |
|
Total non-current |
4,966,036 |
8,732,544 |
The carrying value of non-current financial assets in the Company equals that of the Group.
The carrying value of current financial assets in the Company is not materially different from that of the Group.
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.
Financial instruments held at cost can be reconciled from beginning to ending balances as follows:
Available for sale financial assets at cost
|
|
Unlisted investments at cost |
||
|
Group and Company |
2015 £ |
2014 £ |
|
|
Brought forward |
- |
469,445 |
|
|
Impairment |
- |
(469,445) |
|
|
Carried forward |
- |
- |
|
|
|
|
|
|
|
Group |
2015 £ |
2014 £ |
|
|
Financial liabilities |
|
|
|
|
Loans and borrowings |
|
|
|
|
Trade and other payables |
2,098,270 |
2,174,895 |
|
|
Short-term borrowings |
- |
755,889 |
|
|
Long-term borrowings |
- |
318,978 |
|
|
Total loans and borrowings |
2,098,270 |
3,249,762 |
|
|
|
|
|
|
|
Total financial liabilities |
2,098,270 |
3,249,762 |
|
|
|
|
|
|
|
Total current |
2,098,270 |
2,930,784 |
|
|
Total non-current |
- |
318,978 |
|
The carrying value of non-current financial liabilities in the Company equals that of the Group.
The carrying value of current financial liabilities in the Company is not materially different from that of the Group.
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.
22.2 Fair values
22.2.1 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 |
Level 1 £ |
Level 2 £ |
Level 3 £ |
Total £ |
|
Available for sale financial assets at fair value through OCI |
|
|
|
|
|
- Unquoted equity shares |
- |
1,304,646 |
- |
1,304,646 |
|
- Quoted equity shares |
27,120 |
- |
- |
27,120 |
|
Group and Company |
Level 1 £ |
Level 2 £ |
Level 3 £ |
Total £ |
|
Available for sale financial assets at fair value through OCI |
|
|
|
|
|
- Unquoted equity shares |
- |
1,489,219 |
- |
1,489,219 |
|
- Quoted equity shares |
94,765 |
- |
- |
94,765 |
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.
22.3 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 to 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.
There are no amounts of collateral held as security in respect of trade and other receivables.
The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Limited, an associate of the Company. Management have impaired this asset by £5.28m. See note 1.5, 'Significant accounting judgements, estimates and assumptions' and note 15 for further details.
The Group has no outstanding pledges (2014: 19,666,540) of its shares in Jupiter Mines Limited as security.
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 that controls over expenditure are carefully managed.
As at 30 June 2015, the Group's non-derivative financial liabilities of £2,315,904 have contractual maturities of 0-6 months.
Management intend to meet obligations as they become due through 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.
The Group's exposure to price risk on listed investments is as follows:
|
Group and Company |
2015 £ |
2014 £ |
|
Change in profit: |
|
|
|
- increase in listed investments by 10% |
- |
- |
|
- decrease in listed investments by 10% |
- |
- |
|
Change in equity: |
|
|
|
- increase in listed investments by 10% |
2,712 |
9,477 |
|
- decrease in listed investments by 10% |
(2,712) |
(9,477) |
Foreign currency risk
The Groups transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, Colombian Peso, US Dollar, Kenyan Shilling, Canadian Dollar and Danish Krone.
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.
These assets are denominated in the following currencies:
|
Group and Company |
GBP £ |
AUD £ |
Total £ |
|
Available for sale investments |
27,120 |
1,304,646 |
1,331,766 |
|
Group and Company |
GBP £ |
AUD £ |
Total £ |
|
Available for sale investments |
94,765 |
1,489,219 |
1,583,984 |
The following table illustrates the sensitivity of the value of investments in regards to the relative Sterling and Australian Dollar, and Sterling and Canadian Dollar exchange rates.
It assumes a +/-8% (2013: +/-7%) change in the AUD/GBP exchange rate for the year ended 30 June 2015. These percentages have been based on the average market volatility in exchange rates in the previous twelve months.
Impact on available for sale financial assets
|
|
2015 £ |
2014 £ |
|
8% (2014: 8%) increase in AUD fx rate against GBP |
104,372 |
119,138 |
|
8% (2014: 8%) decrease in AUD fx rate against GBP |
(104,372) |
(119,138) |
Exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.
23 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 12 November 2015. For the sake of completeness and of clarity, some events after the reporting period are included here and in note 25.
Board change
· On 30 June 2015, Scott Kaintz was appointed an executive director of the Company and Sam Quinn was appointed a non-executive director of the Company. The Company also accepted the resignation of John Watkins as a non-executive director of the Company.
FPM
· 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, an experienced mining executive who was the CEO of Colombia Goldfields Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco. Under the Sale Agreement, the Company sells, and CML buys, (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 will also purchase an 11.2% stake from a minority shareholder in the business. Payment of the unchanged consideration of USD5,000,000 will occur in tranches. The initial payment of USD100,000, was previously made in respect of the CML's due diligence review. The first tranche of USD450,000 will be payable at the closing of the transaction ("Completion"). The second tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of USD225,000 will be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be 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 the CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or vend of the assets into a public vehicle. closing of the transaction ("Completion"). The second tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of USD225,000 will be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be 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 the CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or vend of the assets into a public vehicle. 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 on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. 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. Completion took place on 13 May 2015.
Convertible loan notes
· On 11 August 2014, YA Global Master SPV Limited has converted £149,324 of its £550,000 unsecured Convertible Bonds, which are due for repayment in April 2015, into 66,160,425 ordinary shares of 0.1 pence each in the Company under the terms of the Convertible Bond Instrument as announced on 30 April 2014, at a price of £0.002257 per share. Simultaneously, £11,126, representing fees accrued on the Company's outstanding term loan, were converted into 4,929,663 shares of 0.1 pence each at a price of £0.002257 per share. On 1 April 2015, the Company repaid in full the outstanding convertible loan balance due to YA Global Master SPV Limited of US$110,000.
· On 6 January 2015 the Company announced that it had agreed to issue an unsecured convertible loan note of US$550,000 to MG Partners II Limited. The notes yield 4% per annum, have a maturity of 12 months, and are able to be converted into ordinary shares from 60 days after issue. The conversion price on each conversion will be the lower of a 10% discount to the average of the three lowest VWAPs over the 15 trading days immediately preceding the date of the conversion, or a price per share of 0.5p at the option of MG Partners II Limited. The notes fall due on 1 January 2016 if not previously converted. On 6 March 2015, MG Partners II Limited converted US$7,500 unsecured convertible notes into 6,117,455 ordinary shares of 0.01 pence each at a price of £0.000798 per share. On 19 March 2015, they converted a further US$7,500 unsecured convertible notes into 7,598,784 ordinary shares of 0.01 pence each at a price of £0.00066554 per share. On 25 March 2015, they converted a further US$200,000 unsecured convertible notes into 200,000,000 ordinary shares of 0.01 pence each at a price of £0.000666 per share. On 1 April 2015, they converted a further US$120,000 unsecured convertible notes into 121,703,854 ordinary shares of 0.01 pence each at a price of £0.000665 per share. On 15 April 2015, they converted a further US$100,000 unsecured convertible notes into 99,654,527 ordinary shares of 0.01 pence each at a price of £0.0006837 per share. On 23 April 2015, they converted the outstanding US$115,000 unsecured convertible notes into 118,196,751 ordinary shares of 0.01 pence each at a price of £0.0006837 per share.
Financing
· On 19 March 2015 the Company completed a placing with clients of Cornhill Capital Limited ("Cornhill") of 1,538,461,538 ordinary shares of 0.01p each ("Shares") in the Company at a price of 0.065p per Share (the "Placing"). The gross proceeds of the Subscription are £1,000,000. The proceeds of the Placing were applied towards funding exploration activities in Ivory Coast, and fully settling existing debt facilities with Yorkville and UKBN. The settlement amount of the Yorkville debt facility was approximately £442,128, and the final settlement amount of the UKBN facility was £400,109 gross (£208,387 net of cash escrow).
Share Incentive Plan
On 13 April 2015, the Board of Directors approved the issue of 102,652,904 ordinary shares of 0.01p each in the Company under the Company's Share Incentive Plan ("SIP") for the 2014/15 tax year. 49,411,754 Free Shares, 17,747,050 Partnership Shares and 35,494,100 Matching Shares have been awarded with reference to the mid-market closing price of 0.085p on 31 March 2015.
Kenya
· On 7 May 2015 the Company announced that its partner, Mid Migori Mining Ltd ("MMM"), has today been advised by the Ministry of Mining of the termination of its Special Licenses numbers 122 and 202 ("the SLs"). MMM intends to challenge this purported termination. MMM also continues to have an application for a Mining License over a part of the SLs, submitted in 2012 pending at the Ministry. Meanwhile Red Rock through its local affiliate Red Rock Kenya Limited is applying for the ground covered by the SLs. The Ministry has indicated that in considering this application the work and expenditure of the Company since 2009 will be taken into account.
· 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 Licenses 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.
Ivory Coast
On 18 September 2014 the Company announced that it has entered into an agreement whereby the right to acquire the entire issue share capital of Nemex Resources CI SARL and Barclay Resources SARL ("the IC Companies") is assigned to Red Rock for a cash consideration of £140,000. The IC Companies are special purpose vehicles which solely own three exploration licences totalling 1,200km2 and four exploration permits in the Ivory Coast. All licence areas are underlain by West Africa's highly gold prospective Birimian and Tarkwaian Greenstone belts, in a fast growing region for gold exploration and production.
Elephant Oil
On 26 June 2015 the Company announced that it has entered into an option agreement ("the Option") with Elephant Oil Limited ("Elephant"), an oil and gas exploration company focused on West Africa. The Option if exercised requires Red Rock to subscribe for 1,086,956 new ordinary shares in Elephant, at a price per share of 25.3 pence, for an aggregate consideration of £275,000. Further, the Option if executed, includes the right to invest an additional £412,500 in to Elephant within a six month period, also at 25.3 pence per share. The Option is exercisable within seven days, unless extended by Elephant. The last audited accounts of Elephant Oil were to 31 January 2014, and show total assets of £1,618,007 and total comprehensive loss for the year of £46,668.
24 Related party transactions
· On 5 April 2013, Regency Mines plc, Red Rock Resources plc and Greatland Gold plc, companies of which Andrew Bell and John Watkins are also directors, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total cost to the Company for these costs during the year was £151,632 (2014: £178,327), of which £48,725 represented the Company's share of the office rent and the balance services provided (2014: £55,784).
· In addition, professional staff employed by Regency Mines plc are sub-contracted to the Company to work on specific assignments as necessary. During the year, the total charge was £105,848 (2014: £174,863).
· The Company's staff are also sub-contracted to Regency Mines plc to work on specific assignments as necessary. During the year, staff costs of £44,031 (2014: £82,500) were recharged to Regency Mines plc. Such charges are offset against administration expenses in the income statement.
· The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled as soon as may be possible. 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 £16,865 (2014: £11,602).
· The Company has no amount outstanding to Star Striker Limited (formerly Resource Star Limited), an associate as at 30 June 2015. At 30 June 2014, there was an amount outstanding of £18,472, included in trade and other payables.
· Related party receivables and payables are disclosed in notes 15 to 17.
· The Company held 33,900,000 shares (1.65%) in Regency Mines plc as at 30 June 2015 and 33,900,000 (1.36%) as at 12 November 2015.
· On 29 August 2014, Regency Mines plc subscribed for 37,500,000 shares of the Company at £0.002 in settlement of shared costs and obligations. Following the issuance, Regency Mines plc held 227,119,006 shares representing 10.65% of the Company's total voting rights.
· The key management personnel are the Directors and their remuneration is disclosed within note 7.
25 Events after the reporting period
Issue of new shares
· On 7 July 2015, the Company agreed to subscribe for 1,086,956 new ordinary shares in Elephant Oil Limited, at a price per share of 25.3 pence, for an aggregate consideration of £275,000. The Company has also been granted the right to invest a further £412,500 in to Elephant Oil Limited within a six month period, also at 25.3 pence per share.
· On 7 July 2015, the Company raised £327,500 by way of an issue of 689,473,706 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017.
· On 8 July 2015, the Company raised £51,250 by way of an issue of 107,894,948 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. The Directors, Andrew Bell, Michael Nott and Sam Quinn participated in £41,250 of this placing. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017.
· On 13 July 2015, the Company raised £75,000 by way of an issue of 157,894,800 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017.
· On 4 September 2015, the Company agreed to issue an unsecured convertible loan note of up to £250,000 to YA Global Master SPV Ltd. The notes yield 10% per annum, have a maturity of 12 months and are able to be converted into ordinary shares at any time, up until maturity. The Company will issue warrants over the shares in the capital of the Company exercisable at a price of 0.036 pence and freely transferable for a period of 3 years.
· On 9 October 2015, the Company announced that YA Global Master SPV Ltd had converted £75,000 of its outstanding balance of £250,000 unsecured Convertible Notes and £1,233 of accrued interest, into 416,573,115 ordinary shares in the Company at a price of 0.0183 pence per share.
Option Agreement
· On 28 October 2015, the Company announced it had entered into an option agreement with Shoats Creek Development Corporation Inc, to take a 20% Working Interest in the planned development of the LM#21 and LM#22 wells at the Shoats Creek Field, Beaureard Parish, Louisiana. The Operator will be an affiliate of Northcote Energy plc. The 20% Working Interest is to be achieved at an aggregate cost of up to US$500,000 - US$600,000.
Annual General Meeting
The Company intends to issue a notice of Annual General Meeting of shareholders to be held at 11.00 a.m. on 21 December 2015 at 1 Adam Street, London WC2N 6LE for the purpose of dealing with the usual business applicable at such a meeting.
26 Commitments
As at 30 June 2015, 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 and Greenland. 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 the operations of the Group.
· Under the terms of the joint venture, purchase and sale agreement entered into in August 2009 between the Company and Kansai Mining Corporation Limited, the Company is required to act as manager of the tenements held by Mid Migori Mining Company Limited in Kenya, pay the costs of exploration and other costs except for the costs of licence renewal and rents, and keep the tenements in good standing.
· 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. Future minimum annual rental and service charges payable by the Company is £38,850.
27 Control
There is considered to be no controlling party. Whereas Regency Mines plc originally held a controlling interest, this was reduced to below 50% during the year to 30 June 2007, since when it has been progressively reduced to 4.87% as at 30 June 2015 and it further decreased to 3.76% as at 12 November 2015.
28 These results are audited, however, the financial 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 2015 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 2015 statutory financial statements. The auditors have reported on the 2015 financial statements; their report was unqualified but did contain an emphasis of matter paragraph on going concern as follows;.
''In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1.5 to the financial statements concerning the Group's ability to continue as a going concern.
The Group incurred a net loss of £8.4m during the year ended 30 June 2015 and, at that date, the Group had net current liabilities of £1.4m.
As explained in note 1.5, the Group has implemented plans to minimise its cash outflows by reducing its overheads and corporate expenditure. The Company is also considering disposals of investments to improve liquidity.
These conditions, along with the other matters explained in note 1.5 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.''
It contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2015 will be delivered to the Registrar of Companies by 31 December 2015.
29 A copy of the Company's annual report and financial statements for 2015 will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting on 21 December 2015; in addition the Annual Report will be posted to the Shareholders who requested a hard copy.
This information is provided by RNS
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