Update

RNS Number : 2573C

Red Rock Resources plc

28 September 2018

 

Red Rock Resources PLC

("Red Rock" or the "Company")

Update

28 September 2018

Red Rock Resources Plc, the natural resource development company with interests in gold and steel feed materials, announces an update on certain of its operations and interests.

Jupiter Mines

Jupiter Mines Limited (ASX:JMS)("Jupiter") has announced its results for the second quarter of its financial year, a period ending on 31 August 2018.

Jupiter states that manganese production and sales from its 49.9% owned Tshipi mine remained on track during the quarter, with sales of 1.785mt in the first half year exceeding the 3.5mtpa target on an annualised basis (compared to 3.34mt in the year to 28 February 2018). Net profit after tax at Tshipi rose 13.6% from the previous quarter, to AUD 128.1m, despite marginally lower manganese prices at USD 5.98 per DMTU FOB Port Elizabeth.

The current manganese price is USD 6.01 per DMTU FOB Port Elizabeth.

Jupiter's attributable cash was AUD 146m at the end of the quarter, and on 17 September Jupiter announced an AUD 98m (or AUD 0.05 per share) interim dividend, to be paid on 10^th October 2019. Red Rock has 18,514,914 shares in Jupiter, (0.95%) and Jupiter closed at AUD 0.33 a share ex dividend on 26^th September 2018.

The full announcement of the results may be read at www.jupitermines.com

Colombia   

Para Resources Inc ("Para") which owns the El Limon gold mine previously majority-owned by Red Rock, and other gold assets in Colombia and Arizona, announced on 6 September 2018 completion of the commissioning of the upgraded mill at El Limon, besides other improvements. Para aims at processing 200 tpd by the end of 2018 with recoveries of 87.5%, after levels of 35.8 tpd reported between June and August. Underground mining at El Limon is stated to have recommenced with daily production at 45 tpd ramping up to 70 tpd with the completion of the hoist upgrade and new face development. Para states that Government approvals have been received for three small miners operating on Para ground, with applications for a further six, so that small miner deliveries are expected to increase to 125 tpd by the end of the year. Initial deliveries from the small miners are reported at 8-15 gpt gold.

Para also reports the closing of a USD 14.5m financing for the reopening of the Gold Road mine in Arizona, and expects production to begin at 250 tpd in the fourth quarter, ramping up by mid 2019 to 500 tpd.

Red Rock holds 2,500,000 Para shares with 2021 warrants execiseable at CAN 0.30 per share. Red Rock holds a 3% royalty over the Colombian production up to USD 2m and a subsequent 0.5% royalty up to $1m. The closing price of Para on the TSX Venture Exchange in Canada was CAN 0.18 per share on 26^th September 2018.

The full announcement by Para may be read online at www.pararesourcesinc.com 

Steelmin

The ferrosilicon plant in Jajce, Bosnia recommissioned and brought back into production earlier this year by Steelmin Limited ("Steelmin), in which Red Rock has a 22% stake, was closed in September for some work to increase capacity of the cooling system. This was initially planned as a short suspension of production as part of the commissioning process, but the management have now decided, in the light of exceptionally high spot electricity prices offered to Steelmin, to extend the shutdown. An assessment of how the plant may be optimised is being carried out, and the plan is to lock in a long term electricity supply contract once prices adjust.

Various sale options also exist, and these are being investigated.

Due to the structure of the financing arrangements entered into by Red Rock to finance the plant, and the repayment to Red Rock of the loans made, the book cost at 30^th June 2018 year end of Red Rock's holding in Steelmin is de minimis.

Congo

A fuller announcement will be made in due course on various opportunities that are arising in the Congo, but further to the announcement of 30^th August 2018, Red Rock has received indications that make it prudent to qualify the guidance in that announcement that it expected to receive a part of the Luilu tailings as a part of the asset package in its agreement to form a joint venture company for the exploitation of copper/cobalt tailings and dumps. This asset cannot, it is believed, any longer be relied on. Red Rock draws attention to its statement in that announcement that the precise details of the assets the Company will be buying into will only be clarified in the definitive agreements.  

Kenya

Further to the announcement of 15^th June 2018, the Company is in discussion with the Kenyan Government of the terms on which the Company will settle the judicial review proceedings it instituted in 2015 in order to achieve the restoration of the licenses, which contain a 1.2m oz JORC gold Resource, based on exploration up to 2011.

Red Rock Chairman Andrew Bell comments: "We continue to see progress on most fronts. The Jupiter interim dividend of about £508,000 will be received shortly, and Para is at last moving to a production level that should give us a significant flow of royalty payments. There is a broad consensus among the parties on how to move forward in Kenya, which could open up opportunities, and the steady and persistent work we have put into getting to know the Congo may still generate opportunities.

At Steelmin, the process of commissioning, generally a difficult time, has faced some additional headwinds, as the plant was buying spot electricity at a time when its requirement was so variable so it could not enter into longer term take or pay contracts, against a background where European electricity prices were rising sharply over the Summer, reflecting both immediate pressures and the seasonal cycle.

Red Rock has some potential upside but almost no downside at Steelmin, where it remains the largest shareholder, and will as in the past seek outcomes that maximise our result while minimising any additional risk.

In other parts of its business, the Company continues to perform in line with expectations, and retains a good level of liquidity."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

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

Jason Robertson 0207 374 2212                                               Broker First Equity Limited

 

END

 

 

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