Final Results

RNS Number : 3011U

Red Rock Resources plc

29 November 2013

 



Red Rock Resources plc

("Red Rock" or "the Company")

Final Results for the Year Ended 30 June 2013

Highlights

Operational progress in tough environment for junior miners:

·      MK Mineral Resource Estimate & pit optimisation study in Kenya completed

·      Greenland Mineral Resource Estimate delivered

·      First Manganese produced and shipped from Jupiter's Tshipi mine

·      Four Points Mining continued to pay down debt and improve operations

·      Cost reduction programme undertaken across Group

·      Parent company borrowings cut to £800,000 post period end from £2.6m

·      Total assets £28.0m (2012: £37.1m)

·      Sales process in Greenland ongoing

Andrew Bell, Chairman, commented:

"Despite the market environment, we have continued to concentrate on developing Red Rock's portfolio of assets and enhancing value where we see opportunities within our focus on gold, iron ore and manganese.

"We believe that our approach has been validated through the offers we received in respect of our assets in Greenland and Colombia and will be working to progress these.

"Red Rock has a strong portfolio of assets and, having significantly reduced debt, some flexibility in how we develop them.  We remain confident for the future and look forward to making further progress in the current financial year.We reiterate that the investment in Jupiter Mines, where write-offs and disposal losses accounted for the bulk of Red Rock's reported losses in the year, remains an asset of the highest quality where we see unrecognised value and expect recovery."

Executive Chairman's Review

Dear Shareholders,

Overview

As shareholders will be aware, the year under review was a challenging one for our sector. However, despite the challenges faced by Red Rock, I am pleased to report that we have made significant progress towards overcoming these obstacles.

The market environment has been hostile to the minerals sector, at the same time as it has been favourable for others, and so the underperformance of the market by our peer group has been significant. This has led us to cut overheads and reduce debt to ensure the stability of the business and reduce the need for external funding. As part of this process, we have had to lose colleagues we valued and trusted.

Reported losses have been severely affected by a £12,191,284 impairment on our holding in Jupiter Mines Ltd (ASX:JMS) ("Jupiter") and £2,468,814 of losses on sale of Jupiter shares. These combined have more than wiped out the credit taken to profit on transfer of the Jupiter investment from associate two years ago of £14,238,297.

We have focused on the immediate operational goals outlined in last year's outlook of delivering an MK Mineral Resource Estimate in Kenya, and a Greenland Mineral Resource Estimate, and both of these have been met. We have also been able to produce a pit optimisation study in Kenya and have carried out exploration and assessment work on our Kenya prospects. We were also able, during the year, to reduce parent company non-convertible debt from £3,502,730 to £2,557,013 and since the year end that has been further reduced to under £800,000.

The other area of frustration during the year was the drawn out processes following our announced intentions to sell part of our Greenland asset and the totality of our Colombian asset, where transactions have still not been consummated.

However, the sales processes are still progressing and with our reduced cost base we expect to be able to withstand whatever the market may throw at us and be well positioned for recovery and exploitation of market conditions over the coming months.

Colombia

In last year's accounts, we accounted for Colombia as an asset held for sale. Given the delay in concluding that sale, it was decided that it would be appropriate to move Colombia back into continuing operations and make the retrospective adjustments for the preceding year.

Over the past year, when we expected a more rapid sale, we concentrated on optimising operations without incurring additional costs. This, in retrospect, was the right thing to do from an operational standpoint as well since it enabled us, in cutting costs, to get a better understanding of how we could increase efficiencies and maximise from the mine's profitability. At the same time, the local management came to identify with a culture of strict cost-control. This culture shift has had a number of favourable effects; the declining gold price has meant that many mines have gone out of operation in Colombia, while our subsidiary, Four Points Mining, has been paying down creditors and improving operations. In this, it has been giving an appearance of improvement when others were showing deterioration. Business partners and good quality professionals are now seeking us out regarding these improved assets.

When we look back, we can see that to arrive in Colombia - with its different language, culture and traditions - and to move straight into our first role as mine operators when we exercised our option was a brave decision. However, in the event, we have developed some skills in operation and developed a record and a base that, if we were to retain the asset, we could build on. If we were to bring a gold mine into production again, we could do much better still. The next step at El Limon, whether for us or for a buyer, will be to do some more geology and establish a mineral resource and perhaps a mineral reserve. The Company is taking the first steps in that direction by drilling three underground holes, and has plans to do some additional surface drilling.

We are aware that some shareholders have wanted to see production figures. We took the view, over the last year, that the asset sale process made these irrelevant unless there was a significant divergence from trend and expectations. In retrospect, there was another justification. The key over the last year was to achieve professional and efficient operation of the mine and plant. There is a missing generation of Colombian professionals suitable for this kind of work, and we found that professionals imported from neighbouring countries had at least as great cultural problems as we did. We therefore recognised that we would have, by trial and error, to identify and build the confidence of key local staff and establish a team that could take the project forward. The pressures of demands to produce either fixed tonnages of ore or fixed ounces of gold monthly would have acted counter to our policy of patiently working with local staff to resolve issues one by one. There will always be more than one opinion over whether this was right or wrong, but at the moment we stand as a foreign company operating a modestly successful gold mine in Colombia when all about us, we have seen operations closing and foreign companies admitting defeat.

Greenland

In Greenland, the Company owns 60% of NAMA Greenland Ltd, which owns the Melville Bugt iron ore project. Late in 2012, we produced the maiden JORC compliant Mineral Resource Estimates for the Havik East and Havik Northeast project. This gave an Inferred Mineral Resource Estimate of 67mt of magnetite at 31.4% Fe for the Havik asset. The potential targets at Melville Bugt comprise both magnetite and haematite, although the magnetite is obviously easier to locate as it shows up strongly in magnetic surveys.

The Company's progress in going from greenfields to mineral resource in two extremely short seasons is remarkable and the mineral potential of the area remains largely untapped. It was our view that the next stages of exploration should if possible be carried out with a financially much stronger partner, because as exploration progresses, the amounts of money required will increase, and Red Rock remains a relatively small company that needs to control its risk and exposure on any one project. In November 2012, therefore, after several months of discussions with various parties, the Company announced an indicative offer, subject to due diligence, of 51% of its stake, with other shareholders in NAMA Greenland Ltd selling similar proportions of their shares. It was also provided that Red Rock would maintain a royalty interest.

It has been as much a frustration to us as no doubt to other shareholders that the process has taken so long, particularly since we have received repeated assurances from our partner's representatives that the process would move more quickly. It is worth pointing out that at Red Rock's sister company Regency Mines Plc, a transaction has just completed a year after the original announcement, and that was in a case where the legal system and language are similar to those in England.

As we awaited this transaction, no work was carried out in Greenland other than a short field trip conducted by local hires journeying to camp to check on equipment and supplies. After the transaction completes, which we continue to expect, we will plan an exploration programme for 2014 which will build on the achievements of 2012.

Kenya

In Kenya, we have a combined direct and indirect interest of approximately 47% in Mid Migori Mining Ltd with the right to farm in to a majority and are the largest shareholder in Mid Migori's controlling shareholder, Kansai Mining Corporation Ltd. We have continued to conduct geological assessments during the year, beginning with a Mineral Resource Estimate at MK, and ending with a pit optimisation study for the Migori gold project, which was carried out for the Company by SRK Consulting. The pit optimisation study demonstrated the overall economic potential of the project and supports the advancement to scoping study and feasibility stages. A proposal for work through to feasibility study has been received and the Company anticipates moving forward with this. The Company has also been discussing a restructuring of its Kenyan interests in order to enable it and the other Kansai shareholders together to source exploration funding for the next stages. This is not a prerequisite of Red Rock proceeding with feasibility work, but it would enable early recognition of the value of the project. The decline in valuations on the market of exploration companies has however made this reorganisation less of a priority than it was a year ago, but ongoing discussions continue.

It was pleasing that the elections under the new constitution held early this year passed off without communal strife, in contrast to the 2007 presidential election. However, the new constitutional arrangements and the multiplicity of elected positions have created a prolonged period of transition. We now no longer deal with the Minister for Mining and Environment but with a Cabinet Secretary for Mining, and with a new Commissioner. Locally, we no longer deal with an MP but with a Governor, a Senator and an MP. The new administration is looking to introduce a new draft Mining Bill and we, through the Chamber of Mines, have contributed our suggestions.

A number of companies have found themselves in conflict with the Ministry for Mining, and with what they believe is an inclination to disregard previous commitments and agreements. We are actively engaging with the Ministry, the British High Commission and the Chamber of Mines to ensure that our credentials and record are recognised and we are determined to maintain a good relationship with the Ministry. It remains the case that Kenya is still developing as a mining jurisdiction and that each time officials change, we have to re-explain our operations. Our view is that working to high standards and demonstrating continued progress in work on the ground will be the best evidence of our seriousness and commitment to the country, and will, as it has in the past, be rewarded by the esteem of the officials with whom we have to deal.

Jupiter Mines Ltd

During the year, Jupiter Mines saw a considerable decrease in share price as the expected strengthening of its position following the Tshipi mine coming into operation did not occur. The holding of over 90 million Jupiter shares, which at their peak were valued at nearly 90 cents each, was a core asset that for a time gave us enormous stability. The Jupiter share price has fallen to a current level of less than 7 cents over two years, and despite the periodic sales that we have been able to achieve, this has been a considerable blow to our balance sheet. The asset which we thought would be a strong buttress, enabling the rest of the business to weather the downturn of the sector, proved to be as vulnerable as any other. This was despite a string of good news about production, transport, and marketing arrangements.

However, this is no way reflects underlying fundamentals. The Tshipi manganese mine, which successfully shipped its first shipment of manganese ore from Port Elizabeth in December 2012, is a long-life, open-pit manganese mine with state-of-the art railway loading and handling facilities. It is destined to be one of the world's leading and most cost-effective producers of manganese for decades to come.

Although some analysts had suggested Jupiter might have difficulty in obtaining railway or port capacity, we did not believe this would be the case and announcements were made during the year to confirm that port and railway capacity were agreed with Transnet. The establishment of a joint venture marketing company with OM Holdings, a company with strong credentials in marketing to China, was also announced.

Despite this, and the substantial cash holdings of Jupiter, the share price has continued to decline and Jupiter has now decided to delist from the ASX. We believe this to be a sensible decision, as the main ownership group is now moving into the harvesting phase of its investment and can expect considerable industry interest from potential acquirers and may itself be in a position to consolidate the industry regionally. In these efforts, it would be inhibited by a share price and market value capitalisation that understated its real worth and prevented it from realising full asset values.

Elsewhere, in January 2013 Jupiter announced an increased JORC-compliant Mineral Resource Estimate at its Mt Ida magnetite project to 1.86 billion tonnes at 29.48% Fe. Red Rock has a gross production royalty of 0.75% on this project. In November 2012, Jupiter announced a freeze on expenditure on this project, reflecting weak iron ore prices, but our expectation is that improved iron ore prices and progress with the Esperance port development plans will lead to movement in the next year at the Mt Mason haematite project and eventually at Mt Ida. We still believe there is value in that royalty interest which has a book value of nil, and so represents great upside potential.

One concern that has been expressed is that delisting may reduce our ability to sell Jupiter shares. We do not see this as probable, as this is likely to be a consideration only for small shareholders. All sales carried out by us in the last two years have been off-market and Jupiter intends to maintain a matched buyer and seller market in its shares after its delisting.

Outlook

There have recently been some signs of improvement in sentiment towards the mining sector, but it is still too early to say whether this will be the beginning of a lasting trend. However, regardless of the market environment we have continued to focus on developing Red Rock's core portfolio of assets, enhancing value where we see opportunities, while retaining our focus on gold, iron ore, and its related commodity, manganese.

The progress made in de-gearing the balance sheet during the year absorbed much of the Company's fundraising proceeds. When we look forward, we hope that future funding will largely be provided by asset sales and realisations. It has always been an important part of our business model to fund in this way in order that we can rapidly circulate capital and redeploy assets to exploit what we believe is our greatest strength; our exploration capability. The ability to sell assets is much greater in more favourable markets. The ability to obtain new high quality exploration assets cheaply is greater in less favourable markets. In this, there is always a dilemma for us in that when the opportunities are greatest, we may not have the resources to pursue them. After the 2008 global financial crisis, we were willing to take the risk of raising money to invest in projects at the bottom of the cycle, which we then explored or developed. If we see suitable opportunities arise, we will have to consider whether this time we should be afraid of doing the same thing again, or whether we should persist. Our hope is that an early asset sale will put us in a position to make any future investment from retained cash these proceeds.

The Company has a strong portfolio of good assets and some flexibility in how it develops them. Our approach has been validated through the offers we received in respect of our assets in Greenland and Colombia. We consider that we remain good explorers and our prudence in maintaining geographical and commodity diversity has given us a capability for resilience that many others do not possess. We remain confident for the future and thank our shareholders for standing by us over the last year.

Yours sincerely,

Andrew Bell

Executive Chairman

28 November 2013

Results and dividends

Red Rock and its subsidiaries (the "Group") made a post-tax loss of £22,105,562 (2012: £1,962,882).

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 28 November 2013.

For further information contact:

Andrew Bell0207 747 9990 or 0776 647 4849               Chairman Red Rock Resources plc

Colin Aaronson / David Hignell 020 7383 5100           NOMAD Grant Thornton UK LLP

Nick Emerson 01483 413500                                          Broker SI Capital Ltd.

Guy Wheatley 02073828416                                          Joint Broker Beaufort Securities Ltd

Rupert Trefgarne 02031288817                                      Media Relations MHP Communications

Consolidated statement of financial position

as at 30 June 2013

		30 June 2013 £	30 June 2012 £
ASSETS
Non-current assets
Property, plant and equipment		8,173,525	38,240
Investments in associates and joint ventures		4,035,728	4,496,053
Available for sale financial assets		3,136,448	8,809,866
Non-current receivables		6,484,534	5,905,944
Other financial assets		-	150,413
Deferred tax assets		-	153,098
Total non-current assets		21,830,235	19,553,614
Current assets
Cash and cash equivalents		21,081	347,925
Other receivables		2,949,415	1,628,900
Current tax receivable		-	219,484
Total current assets		2,970,496	2,196,309
Assets classified as held for sale		3,168,735	15,387,802
TOTAL ASSETS		27,969,466	37,137,725
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent
Called up share capital		1,279,769	884,150
Share premium account		20,558,401	16,938,435
Other reserves		243,716	(7,872,920)
Retained earnings		(7,783,544)	11,892,745
Total		14,298,342	21,842,410
Non-controlling interest		130,137	2,559,410
Total equity		14,428,479	24,401,820
LIABILITIES
Current liabilities
Trade and other payables		4,528,558	1,526,869
Short-term borrowings		5,602,840	1,209,730
Total current liabilities		10,131,398	2,736,599
Liabilities directly associated with the assets classified as held for sale		-	7,706,306
Non-current liabilities
Long-term borrowings		245,588	2,293,000
Deferred tax liabilities		3,164,001	-
Total non-current liabilities		3,409,589	2,293,000
TOTAL EQUITY AND LIABILITIES		27,969,466	37,137,725

Consolidated income statement

for the year ended 30 June 2013

		Year to 30 June 2013 £	Year to 30 June 2012* £
Revenue
Sale of minerals		2,564,688	5,215,581
Total revenue		2,564,688	5,215,581
Loss on sales of investments		(2,468,814)	(619,313)
Gain on sale of royalty interest		-	3,686,211
Cost of sale of minerals		(1,913,960)	(3,101,693)
Gain on dilution of interest in associate		17,942	12,204
Impairment of investment in associate		-	(358,188)
Impairment of available for sale investment		(12,667,999)	(716,605)
Impairment of fixed assets		(3,947,609)	-
Financial assets at fair value through profit and loss		(150,413)	(3,945,283)
Exploration expenses		(285,564)	(356,455)
Impairment of exploration assets		-	(7,077)
Administrative expenses		(4,751,948)	(3,916,661)
Share of losses of associates		(326,240)	(312,043)
Write-off of associate investment reserve		(126,226)	-
Dividend income		-	22,890
Finance (costs)/income, net		(431,860)	79,786
Loss for the year before taxation from continuing operations		(24,488,003)	(4,316,646)
Tax credit		2,382,441	2,353,764
Loss for the year		(22,105,562)	(1,962,882)
(Loss)/profit for the year attributable to:
Equity holders of the Parent		(19,676,289)	(2,183,162)
Non-controlling interest		(2,429,273)	220,280
		(22,105,562)	(1,962,882)
Loss per share attributable to owners of the Parent:
Basic		(1.83) pence	(0.28) pence
Diluted		(1.83) pence	(0.28) pence

* Certain amounts shown here do not correspond to the 2012 financial statements to re-present the results of an entity previously presented in discontinued operations.

Consolidated statement of comprehensive income

for the year ended 30 June 2013

		30 June 2013 £	30 June 2012 £
Loss for the year		(22,105,562)	(1,962,882)
Other comprehensive income
Deficit on revaluation of available for sale investment		(2,229,255)	(14,110,502)
Revaluation reserve transferred to the income statement on impairment of available for sale investments		12,603,355	-
Deferred tax (charge)/credit on revaluation of available for sale investments		(2,323,323)	3,386,520
Write-off of associate investment reserve to income statement		126,226	-
Unrealised foreign currency (loss)/profit arising upon retranslation of foreign operations		(60,367)	82,915
Total other comprehensive income/(expense) net of tax for the year		8,116,636	(10,641,067)
Total comprehensive expense net of tax for the year		(13,988,926)	(12,603,949)
Total comprehensive expense net of tax attributable to:
Owners of the Parent		(11,559,653)	(12,824,229)
Non-controlling interest		(2,429,273)	220,280
		(13,988,926)	(12,603,949)

Consolidated statement of changes in equity

for the year ended 30 June 2013

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 2011	723,983	13,041,125	13,988,004	2,751,616	30,504,728	2,339,130	32,843,858
Changes in equity for 2012
(Loss)/profit for the year	-	-	(2,183,162)	-	(2,183,162)	220,280	(1,962,882)
Other comprehensive expense for the year	-	-	-	(10,641,067)	(10,641,067)	-	(10,641,067)
Transactions with owners
Issue of shares	156,697	4,279,808	-	-	4,436,505	-	4,436,505
Share issue costs	-	(464,047)	-	-	(464,047)	-	(464,047)
Share issue in relation to SIP	3,470	81,549	-	-	85,019	-	85,019
Share-based payment charge	-	-	-	104,434	104,434	-	104,434
Share-based payment transfer	-	-	87,903	(87,903)	-	-	-
Total transactions with owners	160,167	3,897,310	87,903	16,531	4,161,911	-	4,161,911
As at 30 June 2012	884,150	16,938,435	11,892,745	(7,872,920)	21,842,410	2,559,410	24,401,820
Changes in equity for 2013
Loss for the year	-	-	(19,676,289)	-	(19,676,289)	(2,429,273)	(22,105,562)
Other comprehensive expense for the year	-	-	-	8,116,636	8,116,636	-	8,116,636
Transactions with owners
Issue of shares	382,064	3,696,111	-	-	4,078,175	-	4,078,175
Share issue costs	-	(210,276)	-	-	(210,276)	-	(210,276)
Share issue in relation to SIP	13,555	134,131	-	-	147,686	-	147,686
Total transactions with owners	395,619	3,619,966	-	-	4,015,585	-	4, 015,585
As at 30 June 2013	1,279,769	20,558,401	(7,783,544)	243,716	14,298,342	130,137	14,428,479

	Available for sale trade investments reserve £	Associate investments reserve £	Foreign currency translation reserve £	Share-based payment reserve £	Total other reserves £
As at 30 June 2011	2,667,162	(126,226)	(56,367)	267,047	2,751,616
Changes in equity for 2012
Other comprehensive (expense)/income for the year	(10,723,982)	-	82,915	-	(10,641,067)
Transactions with owners
Share-based payment charge	-	-	-	104,434	104,434
Share-based payment transfer	-	-	-	(87,903)	(87,903)
Total transactions with owners	-	-	-	16,531	16,531
As at 30 June 2012	(8,056,820)	(126,226)	26,548	283,578	(7,872,920)
Changes in equity for 2013
Other comprehensive income/(expense) for the year	8,050,777	126,226	(60,367)	-	8,116,636
As at 30 June 2013	(6,043)	-	(33,819)	283,578	243,716

Consolidated statement of cash flows

for the year ended 30 June 2013

	Notes	Year to 30 June 2013 £	Year to 30 June 2012 £
Cash flows from operating activities
Loss before tax		(24,488,003)	(4,316,646)
Decrease/(increase) in receivables		17,231	(3,177,032)
Increase/(decrease) in payables		2,003,737	(1,056,292)
Share of losses in associates		326,240	312,043
Write-off of associate asset reserve		126,226	-
Interest receivable and finance income		(298,752)	(847,912)
Dividend income		-	(22,889)
Interest payable		730,612	768,126
Impairment of exploration properties		-	7,077
Share-based payments		122,067	184,114
Unrealised foreign exchange loss		2,661	114,159
Impairment of associate		-	358,188
Impairment of available for sale investment		12,667,999	716,605
Impairment of fixed assets		3,947,609	-
Gain on dilution of interest in associates		(17,942)	(12,204)
Loss on sale of investments		2,468,814	619,313
Non-cash proceeds on sale of royalty interest		-	(1,315,901)
Financial assets at fair value through profit and loss		150,413	3,945,283
Depreciation		928,853	682,200
Net cash outflow from operations		(1,312,235)	(3,041,768)
Corporation tax reclaimed/(paid)		219,592	(110,723)
Net cash used in operations		(1,092,643)	(3,152,491)
Cash flows from investing activities
Interest received		316,736	378,254
Dividend income		-	22,889
Proceeds of sale of investments		1,110,706	1,919,338
Payments to acquire associate company and joint venture investments		(2,632,673)	(2,914,950)
Payments to acquire available for sale investments		(200,000)	(387,603)
Exploration expenditure		-	(769,413)
Payments to acquire property, plant and equipment		(104,629)	(464,083)
Net cash outflow from investing activities		(1,509,860)	(2,215,568)
Cash flows from financing activities
Proceeds from issue of shares		4,103,795	4,441,844
Transaction costs of issue of shares		(210,276)	(464,047)
Interest paid		(730,612)	(768,126)
Proceeds of new borrowings		1,405,445	5,503,252
Repayments of borrowings		(2,297,606)	(3,260,814)
Net cash inflow from financing activities		2,270,746	5,452,109
Net (decrease)/increase in cash and cash equivalents		(331,757)	84,050
Cash and cash equivalents at the beginning of period		352,838	268,788
Cash and cash equivalents at end of period		21,081	352,838

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:

	30 June 2013 £	30 June 2012 £
Cash in hand and at bank	21,081	347,925
Cash in hand and at bank attributable to asset held for sale	-	4,913
	21,081	352,838

1 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 £18,869,856 (2012: £1,469,209). The Company's other comprehensive income for the financial year was £8,050,777 (2012: loss of £10,723,982).

Amendments to published standards effective for the year ended 30 June 2013

The following standards have been adopted during the year:

·      IAS 12 "Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets"; and

·      IAS 1 "Amendment - Presentation of Items of Other Comprehensive Income".

Although the adoption of these amendments has had no impact on the financial position and performance of the Group, additional disclosures have been provided to comply with the revised standards.

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 2013:

·      IFRS 13 "Fair Value Measurement";

·      IAS 19 "Employee Benefits (revised)"; and

·      IAS 28 "Investments in Associates and Joint Ventures".

Effective for annual periods beginning on or after 1 January 2014:

·      IFRS 10 "Consolidated Financial Statements";

·      IFRS 11 "Joint Arrangements"; and

·      IFRS 12 "Disclosure of Interests in Other Entities".

Effective for annual periods beginning on or after 1 January 2015:

·      IFRS 9 "Financial Instruments: Classification and Measurement".

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, other than the introduction of IFRS 10 which could affect the financial position and performance, and IFRS 11, IFRS 12 and IAS 28 which are likely to change or increase the level of disclosure required in respect of the Group's investments. The Group intends to adopt these standards when they become effective.

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 will be 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 financial effect of such changes on the Group has not yet been reliably estimated. However, it is widely expected, irrespective of industry sector and without specific reference to the Group that the adoption of IFRS 10 is likely to result in more entities being consolidated.

Standards, amendments and interpretations in issue but not effective continued

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. A number of new disclosures are also required. The adoption of IFRS 12 is likely to change or increase the level of disclosure required in respect of the Group's investments.

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 "Investments in Associates and Joint Ventures" and describes the application of the equity method to investments in joint ventures in addition to associates. The application of this new standard will not impact the financial position of the Group.

Going concern

The Group has incurred a loss of £22.1million for the year ended 30 June 2013, at that date there was a net current liability of £7.2 million. The loss resulted mainly from impairments of available for sale investments and fixed assets of £16.6 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.

The Group has been able to improve the operating efficiencies at its Colombian gold mine asset, reducing costs, boosting production and becoming more cash generative. The Group has also implemented plans to minimise its cash outflows by reducing its cost base by such measures as reducing staff numbers, marketing costs and other overheads. And, subsequent to year end, the Group has paid off £1.6 million of its borrowings through the sale of Jupiter shares and renegotiated the terms of its remaining borrowings of £0.7million, extending the repayments to November 2014.

As explained on the Chairman's statement, the directors are seeking to sell approximately half of its Greenland asset for £6.6 million to provide the necessary working capital. The group is in negotiations with a potential purchaser, but there can be no certainty that a sale will proceed. Based on negotiations conducted to date the directors have a reasonable expectation that it will proceed successfully, but if not the group will need to secure additional finance facilities. The group has a facility of approximately £4.8 million available under their SEDA backed facility with YA Global.

The Directors do not anticipate any difficulty in raising new finance from stock markets if this is required during 2014 and the Group has demonstrated a consistent ability to do so in the recent past. This includes the recent issue of £1.1 million in convertible bonds subsequent to year end and an additional public offering of 54 million shares for a total consideration of £0.35 million. Furthermore, the Group expects to confirm additional debt facilities of £0.5m shortly.

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.

2 Loss per share

The basic (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue.

Diluted (loss)/earnings per share is derived by dividing the (loss)/profit 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)/profit and share data used in the basic and diluted earnings per share computations:

	2013	2012
Loss attributable to equity holders of the Parent	£(19,676,289)	£(2,183,162)
Weighted average number of Ordinary shares of £0.001 in issue	1,076,285,074	786,916,478
Loss per share - basic	(1.83) pence	(0.28) pence
Weighted average number of Ordinary shares of £0.001 in issue inclusive of outstanding dilutive options*	1,076,285,074	786,916,478
Loss per share - fully diluted	(1.83) pence	(0.28) 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:

	2013	2012
Earnings per share denominator	1,076,285,074	786,916,478
Weighted average number of exercisable share options	-	-
Diluted earnings per share denominator*	1,076,285,074	786,916,478

*The Group's weighted average share options of 24,250,000 (2012: 12,121,198) are non-dilutive because their conversion to Ordinary shares would decrease loss per share.

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.

3 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 2013 and the consolidated income statement, 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 2013 statutory financial statements.  The auditors have reported on the 2013 financial statements; their report was unqualified but did contain an emphasis of matter paragraph on going concern. It contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2013 will be delivered to the Registrar of Companies by 31 December 2013.

4 A copy of the Company's annual report and financial statements for 2013 will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting on 30 December 2013; in addition the Annual Report will be posted to the Shareholders.

 

END

 

 

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