Updates re Colombia and Jupit

RNS Number : 8821V

Red Rock Resources plc

09 November 2010

 



RED ROCK RESOURCES PLC

Update on Colombia - Additional loan facility

Update re Jupiter Mines - Tshipi completion and additional resource

Dated: 9 November 2010

Update on Colombia

Red Rock Resources plc ("RRR", "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 scheduled progress of its Colombian operations, following a further visit to the site by Red Rock directors.

Progress as reported on 30 September 2010 and 19 October 2010 remains on schedule at El Limon and ahead of schedule at the Machuca mine. The target date for operation of all stages of the El Limon mine and plant remains 30 November. The earlier stages, the conveyors and crushing plant, are being commissioned ahead of schedule with the first 170 tonne (pre-crushing) ore bin already being filled, while the second 600 tonne (post-crushing) ore bin will start being filled next week.

Full gold production is expected to proceed as planned by the end of December 2010.

The Machuca mine is expected to be brought into production early, increasing the ore available for processing at the El Limon plant. Initial processing of ore will utilize remnant and stockpiled ore from upper levels of the El Limon mine and from current underground exploration. It is anticipated that head grades into the plant in the first month of operation will therefore be lower than the long-term average.

The Company has remitted Mineras Four Points SA ("MFP") an additional sum of USD 250,000 above the USD 2,000,000 initially budgeted. It has also offered further conditional facilities of up to USD 750,000. This short-term funding will (a) enable the second mine, Machuca, to be brought into production at the same time as El Limon, (b) finance other additional works including underground exploration and advance stockpiling of ore, and (c) provide for cost overruns including unbudgeted working capital requirements for personnel costs and other contingencies.

The plan had previously been to leave Machuca development until a later date, when it could be developed with cash flow from El Limon, in order that the requirement for simultaneous development of two mines should not overstretch local management. However it has been found operationally more efficient to conduct the development of the two mines in parallel.

The faster than budgeted development of Machuca, the transitional costs associated with conversion of existing miners from self employed contracts to full time employees (and their employment on mine development and not production), and cost overruns on other items (partly due to foreign exchange movements), have highlighted both the speed and efficiency of MFP's operational management and also a lack of financial planning personnel within MFP. An experienced chief financial officer has now been appointed to strengthen financial controls with an immediate remit to provide improved budgeting and financial information. RRR will have approval rights over current and future occupants of this position.

The Loan facilities, which have been agreed in principle but not yet executed, will be structured in two parts under a secondary funding agreement (the "Second Agreement"):

1.   The New Loan: USD 500,000 in two USD 250,000 tranches. The first tranche was advanced on 3 November 2010. The second is conditional on the receipt of a detailed budget for both tranches which is to be agreed by RRR. Repayment of the loan will include interest at 1.25% per month (or part thereof). The loan must be fully paid (plus interest) by 3 March 2011, after which a 1% per month penalty will apply.

2.   The Additional Draw Down Facility (ADF) will, if required by MFP, and conditional on compliance with the New Loan terms, consist of USD 500,000 on the same repayment terms as The New Loan but which will include warrants to RRR on the following terms:

a.   The First Warrant: the first USD 200,000 draw down from the ADF by MFP will give RRR the right for one year to subscribe for 1% of MFP's enlarged issued share capital for USD 100,000.

b.   The Second Warrant: for each USD 100,000 (or part thereof) of the second USD 300,000 draw down from the ADF by MFP, RRR will have the right for one year to subscribe for 1.5% of MFP's enlarged issued share capital for USD 100,000.

A fee of 6 per cent. on any amounts drawn down under the New Loan will be due and payable to RRR on 31 January 2011 or two months after drawdown if later.  This will reduce to 5 per cent. if all amounts under the Second Agreement are repaid before 31 January 2011.

Under the Funding and Cooperation Agreement with MFP announced on 10 June 2010, Red Rock already has options (a) exercisable for two years to acquire 50% of the issued share capital of MFP for USD 6,500,000 ("Option 1"), and (b) exercisable for three years to acquire 1% of the issued capital of MFP for USD 1,000,000 ("Option 2").

Update on Jupiter Mines Ltd's Tshipi Kalahari Manganese Project ("Tshipi")

Jupiter Mines Limited ("Jupiter"; ASX: JMS) has now completed the acquisition of a 49.9 per cent interest in Tshipi and RRR's interest in JMS has reduced to 5.23 per cent. as previously announced.

Jupiter today announced an increase in the mineral resources at Tshipi with an additional 145 million tonnes at 31.75% Manganese JORC and SAMREC compliant resource in the 17m thick "Top-Cut" directly above the existing geological sequence which hosts the previously announced mineral resource estimate of 163 million tonnes at 37.1% Manganese.

The full text of the Jupiter announcement may be accessed via http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=JMS 

Further updates will be provided on a regular basis.

Enquiries:

Andrew Bell	0207 402 4580 or 07766 474849	Red Rock Resources plc	Chairman
Sandra Spencer	0207 402 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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