Half-year Report

RNS Number : 1147I

Red Rock Resources plc

31 March 2020

 

31 March 2020 Red Rock Resources plc Unaudited half-yearly results for the six months ended 31 December 2019 Red Rock Resources plc ("Red Rock" or "the Company"), the natural resources investment, exploration, and development company with interests in manganese, gold, copper and cobalt, and other materials, announces its half-yearly results for the six months ended 31 December 2019. Chairman's Statement It is three months since the Company reported its Final Results for the year to 30 June 2019, and normally we might be reporting that nothing had changed greatly since then. In some respects this is true, in that no major initiatives have been undertaken by, or developments occurred within, Red Rock in this short period. We have continued our work towards restoration of the Kenyan licenses, and been preparing a programme for renewed exploration at our Luanshimba copper/cobalt license in the Democratic Republic of Congo, as well as at our other licenses in the Congo, but these tasks for the early part of 2020 were prefigured in the statement in the Annual Report. Yet everything has changed. The COVID-19 coronavirus pandemic declared on 11 March 2020 has shaken up the kaleidoscope so effectively as to change every market and every part of the world economy: today they all look different. The impact of these changes has been almost universally negative in the short term, with the strength in the gold market a rare exception. The Company has announced in a recent update the response to COVID-19 in the principal countries where it operates, and the effects on Red Rock, which are limited so far. The Company will continue to review, and if necessary announce, further Covid-related developments. Red Rock's current assumption is that although there are short term effects on the world economy, human ingenuity will find solutions and the successes of Taiwan, South Korea, Japan, Singapore, and even China in controlling the outbreaks while limiting the damage to economic activity and people's livelihoods will provide some lessons that can be adapted to apply in the Western economies. Nearer home, the templates of Iceland, Norway and Germany may already offer directly applicable lessons in testing, tracing, and reducing mortality.  Should this be correct, the bounce back will be rapid, and the extra liquidity being pumped into economies may assist this. Red Rock believes its positioning in gold and battery metals will be well-adapted for this environment. The holding in Jupiter Mines Ltd, a very low-cost major manganese producer, will in the view of the Company continue to provide support for its asset value as well as providing ongoing cash flow. Red Rock will however prepare itself for a less benign environment by ensuring that it can turn off a significant proportion of its costs at short notice. In the six-month period ending 31 December 2019 the profit before tax from continuing operations was £337,000 compared with a loss of £283,000 in the comparable period of the previous year. Net finance income was at similar levels to that in the comparable period of the previous financial year, at £524,000, but this was not offset as in the previous period by impairments and project development costs. Diluted earnings per share were 0.047p for the half year. Total comprehensive loss for the period was £227,000 compared with a total comprehensive loss of £2,085,000 for the previous year, the loss arising as a result of revaluation of available for sale investments. Payroll and other administrative expenses were held almost unchanged from the previous year's period. In the Annual Report in December 2019 it was noted that the directors had, despite passing two key milestones, taken the conservative decision to delay writing back any part of the £5,280,000 impairment which had been taken in relation to the Kenyan assets in the 30 June 2015 accounts, while awaiting resolution of the then pending court case. Although further progress towards a conclusion has been made in the first quarter of 2020, the directors have once again deferred any write back of previous impairments, feeling that to do this at a moment when COVID-19 has created such global uncertainty might be inappropriate. The Company's value continues to be underwritten by its 17.02m share holding in Jupiter Mines Ltd (ASX:JMS). On 24 March 2020 Jupiter announced the results for the fourth quarter to 29 February 2020. Tshipi had fulfilled its targets for the 2020 financial year, exporting 3.4 million tons of Manganese ore, and had announced a ZAR265m dividend. Jupiter held cash of AUD84m at the end of the quarter, and had begun a feasibility study into mine expansion. Red Rock notes that the manganese price for 37% Mn FOB Port Elizabeth has increased from $2.70 per DMTU in late 2019 to $3.34 per DMTU. This must reflect a degree of restocking as China, post the Chinese New Year and post the high point of the coronavirus epidemic, starts to resume large scale industrial activity and steel production.  The Company thanks shareholders for their resilience and support at this extraordinary time, and wishes them good health and a safe passage through the current turmoil. It will in the coming days keep shareholders informed of any significant developments it sees occurring, either in the markets or in its own affairs.    Andrew Bell Chairman 31 March 2020

Consolidated statement of financial position

as at 31 December 2019

	Notes	31 December 2019		31 December 2018		30 June 2019
		Unaudited,  '000		Unaudited, £'000		Audited,   £'000
ASSETS
Non-current assets
Investments in associates and joint ventures		1,584		1,490		1,584
Financial instruments	8	3,103		3,127		4,210
Exploration assets		278		62		235
Non-current receivables		5,473		5,150		5,234
Total non-current assets		10,438		9,829		11,263
Current assets
Cash and cash equivalents		139		27		64
Financial assets - investment in derivatives		56		60		60
Loans and other receivables		795		2,438		975
Total current assets		990		2,525		1,099
TOTAL ASSETS		11,428		12,354		12,362
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital	9	2,781		2,774		2,781
Share premium account		26,853		26,499		26,853
Other reserves		1,623		1,591		2,563
Retained earnings		(22,169)		(21,223)		(22,668)
Total equity attributable to owners of the parent		9,088		9,641		9,529
Non-controlling interest		(22)		(20)		(21)
Total equity		9,066		9,621		9,508
LIABILITIES
Current liabilities
Trade and other payables		1,283		1,681		1,733
Short term borrowings	10	1,079		1,052		1,121
Total current liabilities		2,362		2,733		2,854
TOTAL EQUITY AND LIABILITIES		11,428		12,354		12,362

The accompanying notes form an integral part of these financial statements.

 

Consolidated statement of income

for the period ended 31 December 2019

	Notes		6 months to 31 December 2019		6 months to 31 December 2018
			Unaudited, £'000		Unaudited, £'000
Administrative expenses		4	(282)		(269)
Project development costs		5	-		(303)
Other project expenses		5	(126)		(95)
Exploration expenses			(6)		(3)
Other income			246		-
Impairment of loans and receivables			-		(257)
Share of losses of associates and joint ventures			-		-
Foreign exchange gain/(loss)			(19)		106
Finance income/(expenses), net		6	524		538
Profit/(loss) for the period			337		(283)
Tax credit			-		-
Profit/(loss) for the period		7	337		(283)
Profit/(loss) for the period attributable to:
Equity holders of the parent			338		(282)
Non-controlling interest			(1)		(1)
			337		(283)
Profit/(loss) per share
Profit/(loss) per share - basic, pence		3	0.050		(0.053)
Profit/(loss) per share - diluted, pence		3	0.047		(0.053)

The accompanying notes form an integral part of these financial statements.

 

Consolidated statement of comprehensive income

for the period ended 31 December 2019

		6 months to 31 December 2019		6 months to 31 December 2018
		Unaudited, £'000		Unaudited, £'000
Profit/(loss) for the period		337		(283)
Revaluation of FVTOCI investments		(713)		(1,825)
(Loss) on sale of FVTOCI investments taken directly to reserves		161		-
Unrealised foreign currency gain arising upon retranslation of foreign operations		(12)		23
Total comprehensive (loss)/profit for the period		(227)		(2,085)
Total comprehensive (loss)/income for the period attributable to:
Equity holders of the parent		(226)		(2,084)
Non-controlling interest		(1)		(1)
		(227)		(2,085)

The accompanying notes form an integral part of these financial statements.

 

Consolidated statement of changes in equity

for the period ended 31 December 2019

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
Unaudited	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 30 June 2019 (audited)	2,781	26,853	(22,668)	2,563	9,529	(21)	9,508
Changes in equity for the six-month period ending 31 December 2019
Profit for the period	-	-	338	-	338	(1)	337
Other comprehensive income for the period	-	-	161	(940)	(779)	-	(779)
Total comprehensive income/(loss) for the period	-	-	499	(940)	(441)	(1)	(442)
As at 31 December 2019 (unaudited)	2,781	26,853	(22,169)	1,623	9,088	(22)	9,066
As at 30 June 2018 (audited)	2,767	26,016	(20,941)	3,392	11,234	(19)	11,215
Changes in equity for the six-month period ending 31 December 2018
Loss for the period	-	-	(282)	-	(282)	(1)	(283)
Other comprehensive income for the period	-	-	-	(1,801)	(1,801)	-	(1,801)
Total comprehensive income/(loss) for the period	-	-	(282)	(1,801)	(2,083)	(1)	(2,084)
Transactions with owners
Issue of shares	7	483	-	-	490	-	490
Total Transactions with owners	7	483	-	-	490	-	490
As at 31 December 2018 (unaudited)	2,774	26,499	(21,223)	1,591	9,641	(20)	9,621

 

	FVTOCI financial assets reserve	Foreign currency translation reserve	Share-based payment reserve	Total other reserves
Unaudited	£'000	£'000	£'000	£'000
As at 30 June 2019 (audited)	2,256	143	164	2,563
Changes in equity for six months ended 31 December 2018
Decrease in FVTOCI reserve in relation to disposals	(215)	-	-	(215)
Change in reserves related to FVTOCI investments revaluations	(713)	-	-	(713)
Unrealised foreign currency loss on translation of foreign operations	-	(12)	-	(12)
Total comprehensive income for the period	(928)	(12)	-	(940)
As at 31 December 2019 (unaudited)	1,328	131	164	1,623
As at 30 June 2018 (audited)	3,108	120	164	3,392
Changes in equity for six months ended 31 December 2018
Change in reserves related to FVTOCI investments revaluations	(1,825)	-	-	(1,825)
Unrealised foreign currency loss on translation of foreign operations	-	24	-	24
Total comprehensive income for the period	(1,825)	24	-	(1,801)
As at 31 December 2018 (unaudited)	1,283	144	164	1,591

 

Consolidated statement of cash flows for the period ended 31 December 2019

		6 months to 31 December 2019		6 months to 31 December 2018
		Unaudited, £'000		Unaudited, £'000
Cash flows from operating activities
Profit/(loss) before tax		337		(283)
(Increase)/decrease in receivables		(19)		(232)
(Decrease)/increase in payables		(8)		118
Share of losses in associates and joint ventures		-		-
Finance income, net		(524)		(538)
Currency adjustments		19		(106)
Other income		(246)		-
Impairment of loans and receivables		-		257
Net cash inflow/(outflow) from operations		(441)		(784)
Cash flows from investing activities
Dividends received		357		499
Loans granted during the period		-		(1,550)
Proceeds from sale of investments		306		-
Payments for capitalised exploration costs		(43)		(61)
Payments to acquire FVTOCI investments		-		(247)
Net cash (outflow)/inflow from investing activities		620		(1,359)
Cash flows from financing activities
Proceeds from issue of shares		-		-
Interest paid		(26)		(84)
Proceeds from new borrowings		-		325
Repayments of borrowings		(83)		(290)
Net cash (outflow)/inflow from financing activities		(109)		(49)
Net (decrease)/increase in cash and cash equivalents		70		(2,192)
Cash and cash equivalents at the beginning of period		64		2,266
Exchange losses on cash and cash equivalents		5		(47)
Cash and cash equivalents at end of period		139		27

 

Half-yearly report notes

for the period ended 31 December 2019

1	Company and group

As at 31 December 2019, 30 June 2019 and 31 December 2018 the Company had one or more operating subsidiaries and has therefore prepared full and interim consolidated financial statements respectively.

The Company will report again for the year ending 30 June 2020. The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the year ended 30 June 2019 has been extracted from the statutory accounts for the Group for that year. Statutory accounts for the year ended 30 June 2019, upon which the auditors gave an unqualified audit report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies.

2	Accounting Polices

	Basis of preparation
	The consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting.'  The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2018, which have been prepared in accordance with IFRS.
	During the period the following new standards were adopted. The adoption of these standards has not had a material impact on the financial information of the Group in future periods.
	IFRS 16 is effective for periods beginning on or after 1 January 2019. The Group has elected to apply paragraph C5(b) and adopt IFRS 16 retrospectively with the cumulative effect of initially applying IFRS 16 recognised at the date of initial application (1 July 2019). Consequently, the comparative period has not been restated. Under IFRS 16 lessees may elect not to recognise assets and liabilities for leases with a lease term of 12 months or less. The Company's offices premises are currently under a rolling monthly lease and are short-term leases, so the Company took IFRS 16 scope exemption and chose to recognise the lease payments in profit or loss on a straight-line basis over the lease term.
	IFRIC 23 is effective for periods beginning on or after 1 January 2019. The Group elected to adopt IFRIC 23 retrospectively with the cumulative effect of initially applying the Interpretation recognised at the date of initial application (1 July 2019). Consequently, the comparative period has not been restated.

 

Half-yearly report notes

for the period ended 31 December 2019, continued

3			Earnings per share
			The following reflects the loss and number of shares data used in the basic and diluted loss per share computations:
				6 months to  31 December 2019				6 months to  31 December 2018
				Unaudited				Unaudited
				£'000				£'000
	Profit/(loss) attributable to equity holders of the parent company, Thousand pounds Sterling			338				(282)
	Adjusted for interest accrued on convertible loan notes, Thousand pounds Sterling			34				-
	Adjusted profit/(loss) attributable to equity holders of the parent company, Thousand pounds Sterling			372				(282)
	Weighted average number of Ordinary shares of £0.0001 in issue, used for basic EPS			676,049,662				535,699,971
	Effect of all dilutive potential ordinary shares from potential ordinary shares that would have to be issued, if all loan notes convertible at the discretion of the noteholder converted at the beginning of the period			115,980,823				-
	Weighted average number of Ordinary shares of £0.0001 in issue, including potential ordinary shares, used for diluted EPS			792,030,485				535,699,971
	Profit/(loss) per share - basic, pence			0.050				(0.053)
	Profit/(loss) per share - diluted, pence			0.047				(0.053)

 

	Half-yearly report notes for the period ended 31 December 2019, continued 3 Earnings per share, continued At 31 December 2019 and 31 December 2018, the effect of the following the instruments is anti-dilutive, therefore they were not included into the diluted earnings per share calculation.
		6 months to  31 December 2019		6 months to  31 December 2018
		Unaudited £'000		Unaudited £'000
	Share options granted to employees - not vested and/or out of the money	48,320,000		41,660,000
	Number of warrants given to shareholders as a part of placing equity instruments - out of the money	101,740,195		118,489,582
	Total number of contingently issuable shares that could potentially dilute basic earnings per share in future	150,060,195		160,149,582
	Number of warrants - vested and in the money at year end but not included into diluted EPS calculation due to their effect being anti-dilutive	-		-
	Number of potential ordinary shares that would have to be issued if all loan notes convertible at the discretion of the noteholder converted	-		131,538,908
	Number of share options granted to employees - vested and in the money at year end but not included into diluted EPS calculation due to their effect being anti-dilutive	-		6,660,000
	Total number of contingently issuable shares that could potentially dilute basic earnings per share in future and anti-dilutive potential ordinary shares that were not included into the fully diluted EPS calculation	150,060,195		298,348,490
	There were no ordinary share transactions after 31 December 2019, that that could have changed the EPS calculations significantly if those transactions had occurred before the end of the reporting period.

 

Half-yearly report notes

for the period ended 31 December 2019, continued

4

Administrative expenses 6 months to  31 December 2019 6 months to  31 December 2018 Unaudited £'000 Unaudited £'000 Staff Costs: Payroll 114 110 Pension 9 8 Consultants 8 8 HMRC / PAYE 13 11 Professional Services: Accounting 21 21 Legal 1 11 Marketing 15 (1) Other - 9 Regulatory Compliance 38 33 Travel 16 16 Office and Admin: General 16 9 IT related costs 2 2 Rent 26 30 Insurance 3 2 Total administrative expenses 282 269

5

Project development and Other project expenses Project development expenses include costs incurred during the assessment and due diligence phases of a project, when material uncertainties exist regarding whether the project meets the Company's investment and development criteria and whether as a result the project will be advanced further.  Other Project Expenses include costs associated with current and previous projects and include remediation and administration expenses.  6 months to  31 December 2019 6 months to  31 December 2018 Unaudited £'000 Unaudited £'000 Project development expenses VUP (Congo) - 256 Galaxy (Congo) - 46 Total project development expenses - 302 Other project expenses Mid Migori Mines (Kenya) 26 12 Greenland 97 82 Others 1 1 Total other project expenses 126 95

 

	Half-yearly report notes for the period ended 31 December 2019, continued
6	Finance income/(expenses), net 6 months to  31 December 2019 6 months to  31 December 2018 Unaudited £'000 Unaudited £'000 Interest income 238 131 Dividend income 357 499 Interest expense (71) (92) Total Finance income/(expenses), net 524 538

7	Segmental analysis

		Jupiter Mines Limited	Kenyan exploration	DRC exploration	Corporate and unallocated	Total
	For the six-month period to 31 December 2019	£'000	£'000	£'000	£'000	£'000
	Revenue
	Total segment external revenue	-	-	-	-	-
	Result
	Segment results	357	(34)	-	(153)	170
	Loss before tax and finance costs
	Interest income					238
	Interest expense					(71)
	Loss before tax					337
	Tax					-
	Loss for the period					337

		Jupiter Mines Limited	Kenyan exploration	DRC exploration	Corporate and unallocated	Total
	For the six-month period to 31 December 2018	£'000	£'000	£'000	£'000	£'000
	Revenue
	Total segment external revenue	-	-	-	-	-
	Result
	Segment results	499	(17)	(306)	(497)	(321)
	Loss before tax and finance costs					(321)
	Interest income					131
	Interest expense					(92)
	Loss before tax					(283)
	Tax					-
	Loss for the period					(283)

A measure of total assets and liabilities for each segment is not readily available and so this information has not been presented.

 

Half-yearly report notes

for the period ended 31 December 2019, continued

8	Financial instruments - Fair value through other comprehensive income
		31 December 2019 Unaudited £'000	31 December 2018 Unaudited £'000	30 June 2019 Audited £'000
	At the beginning of the period	4,210	4,705	4,705
	Additions	146	247	392
	Disposals	(540)	-	(25)
	Change in fair value	(713)	(1,825)	(862)
	At the end of the period	3,103	3,127	4,210

9	Share Capital of the company
		Number		Nominal, £'000
	Deferred shares of £0.0009 each	2,371,116,172		2,134
	A deferred shares of £0.000096 each	6,033,861,125		579
	Ordinary shares of £0.0001 each	676,049,662		68
	As at 30 June 2019 and at 31 December 2019			2,781

10		Short-term borrowings
			31 December 2019 Unaudited £'000	31 December 2018 Unaudited £'000	30 June 2019 Audited £'000
	Loan from institutional investors		46	-	122
	Convertible loan notes		1,033	1,052	999
	At the end of the period		1,079	1,052	1,121

11

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. 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 period.

 

12	Subsequent events

Half-yearly report notes

for the period ended 31 December 2019, continued

Jupiter Mines

On 7 January 2020 the Company announced that Jupiter Mines Limited (ASX:JMS), an Australian public company in which Red Rock holds 17,024,914 shares, and which owns 49.9% of the Tshipi Borwa manganese mine in South Africa, has announced that it has completed a concept study regarding the expansion of the Tshipi Borwa mine, and that  subsequent feasibility study will shortly commence. The feasibility study will be based on a production profile of 4.5m tonnes, a 50% increase on the current 3m tonne production level.  Total capital expenditure required for this scenario was estimated to be 1.025bn Rand.  Subject to the completion of this feasibility study and commercial process, expected to be approximately 1 year, Tshipi would expect to reach steady state exports of 4.5m tonnes in 3 years, which an increase is manganese ore exports in year 2 and year 3, via a stepped approach. 

DRC Exploration

On 25 February 2020 the Company announced an update on its exploration license PR13513 in the Copperbelt in the south of the Democratic Republic of Congo ("DRC").  The Company announced that it had identified two open ended areas strongly anomalous for copper and cobalt.  Based on these results the Company's consultants have recommended a second phase of exploration, that will consist of pitting on north-south lines spaced at 100m intervals with pits 40m apart.  Follow up trenching will be undertaken between pits where mineralisation is encountered or further lithostratigraphical information can be obtained.  Geophysics will be undertaken over the north-west sector to be followed by pitting once geophysical results have been interpreted. 

On 10 March 2020 the Company announced that following the announcement of 25 February 2020 planning discussions had been held with the Company's technical advisors to create a cost-effective exploration programme.  Additionally, the Company announced that in relation to the Company's other concessions in the DRC, the final $US100,000 of payments to the vendors have been made, with $50,000 of cash paid in December 2018 and through the subsequent issuance of 6,000,000 new ordinary shares of the Company at a price of £0.006 per share.  These new shares issued to the vendors are subject to a hold period ending 3 June 2020. 

For further information, please contact:

Andrew Bell 0207 747 9990                                                                 Chairman Red Rock Resources Plc

Scott Kaintz 0207 747 9990  Director Red Rock Resources Plc

Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396               NOMAD Beaumont Cornish Limited

Tim Sohal 0203 700 2500      Broker Pello Capital Limited

 

END

 

 

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