Update - Colombia and Migori

RNS Number : 7312H

Red Rock Resources plc

02 June 2011

 



RED ROCK RESOURCES PLC

Update - Colombia and Migori

Dated: 2 June 2011

Red Rock Resources plc ("Red Rock" or the "Company"), the gold mining and exploration company with projects in Kenya and Colombia, and interests in steel feed, uranium, and rare earths reports on developments.

Colombian operations

Production

Ore mined from the El Limon mine in Antioquia, Colombia in the week to 28 May 2011  fell to 47.2 tons per day, while ore processed through the plant fell to 38.4 tonnes per day. A principal reason was the death of an employee in a local incident apparently unrelated to his work, and the custom of all employees being given a day off for the funeral, which also led to 5 day working. After selling 707.3 grams of gold in the week to 7 May 2011, 727.32 grams of gold in the week to 14 May 2011, and 758.9 grams in the week to 21 May 2011, 1,069 grams were sold in the week. Further dore bars being delivered to the refinery are expected to result in a June total gold production of approximately 4.4 kg.

The Company's head of mining operations and development, the chief technology officer, and other executives are at the mine planning and implementing changes towards more efficient working practices, to include seven day working, better dilution control, partial mechanisation, improvements in metallurgical test work at each stage of production, and recruitment of mine geologists.

Delivery of the first of two hydraulic shovels during June, and opening of new stopes, are expected to lead to significant short-term improvements over the coming weeks. The Company's 51 per cent. owned local subsidiary achieved operational break-even for part of the month of May, and the Company is now planning on the basis of cash flow break-even in June and operational profitability in July. Reports of gold production will now move from a weekly to a fortnightly basis.

Further US$1,000,000 consideration deferral

On 8 March 2011 the Company announced that it had exercised its option to take a 51 per cent. shareholding in Mineras Four Points SA ("MFP"), the company operating and owning the El Limon mine in Colombia for a total cash consideration of up to US$7,500,000, of which US$5,502,000 (the "Initial Consideration") was paid or payable on completion of a loan guarantee by the vendors, with US$1,000,000 deferred until MFP had an average ore production of 150 tonnes per day for a continuous 90 day period and a further US$998,000 payable only when MFP achieved a net operating profit of US$10,000,000 in one year. Red Rock has now agreed with the vendors to defer a further US$1,000,000 of the initial US$5,502,000 consideration pending resolution of an issue in relation to availability of areas for eventual expansion of the second mine at Machuca. These areas are not required for near-term operations at Machuca. Red Rock has now made full payment of the balance of the Initial Consideration.

Migori

Advanced exploration

Final metallurgical results from the Macalder tailings at Migori, Kenya have been  analysed by the Company's and the possibility of a new Resource calculation is being investigated. The Company considers the results of the assessment to be positive and a full report will be issued shortly.

Drilling continues at Migori West and Migori East licenses.

Enquiries:

Enquiries:

Andrew Bell	020 7402 4580 or 07766 474849	Red Rock Resources plc	Chairman
Sandra Spencer	020 7402 4580 or 07757 660 798	Red Rock Resources plc	Public and Investor Relations
Peter Trevelyan-Clark/  Ben Jeynes	020 7444 0800	Religare Capital Markets	Nominated Adviser
Nick Emerson	01483 413500	Simple Investments Ltd	Broker

Updates on the Company's activities are regularly posted on its website, www.rrrplc.com.

 

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