Update

RNS Number : 3721E

Red Rock Resources plc

09 May 2013

 



Red Rock Resources plc

("Red Rock" or the "Company")

Update  

9 May 2013

Red Rock Resources Plc, the mining and exploration company with an iron ore project in Greenland, a producing gold mine in Colombia, and advanced gold and copper exploration in Kenya, announces an update on operations and developments.

·     Kenya- pit optimisation study received

·     Offer for Greenland still progresses

·     Possible additional offer for Colombia gold assets

·     Proactive role taken to protect value of investment holdings

·     Cost cutting and debt reduction programme

Kenya

The area in which the Company's licenses are situated was a focus of communal strife at the last, closely fought, Presidential Election in 2007. The Presidential Election fought this year was also close, but it is pleasing to record that there was a universal desire to avoid the breakdown in order seen in 2007 and the only challenge to the results was through the courts.

The business of the new Administration will include passage of a new draft Mining Bill. Much is therefore undergoing change in Kenya, and the Company and its partners are working closely with the new Kenyan government and other stakeholders to play its part.

A draft of the pit optimisation study the Company commissioned following the definition of new Mineral Resources in 2012 has just been received and is under review by Red Rock, following which a further detailed announcement will be made. The pit optimisation is a necessary preliminary to the feasibility studies Red Rock intends to carry out.       

In Kenya, as in all its operations, Red Rock has been carrying out a continuous review of costs and is progressively reducing its cost level.

Offer for 51% interest in Nama Greenland Limited ("NGL")

Further to the Company's on 28 November 2012, 8 February 2013 and in the Interim Report on 28 March 2013, in relation to an offer by a third party for a 51% interest in NGL, a company 60% owned by Red Rock (the "Offer"), the Company has been advised that the delays are occasioned by a key investor having held significant cash balances in Cyprus  but that the intention to proceed with the Offer remains.

The parties are working actively to progress the transaction towards the earliest possible completion. As previously stated, there can be no certainty the Offer will complete.

A work programme has been submitted to the authorities in Greenland, but the extent to which this programme is able to be implemented will depend on the timing of receipt of funding from the prospective joint venture partners. Without timely receipt of such funding, the Company might not  be able to do more in Greenland this year than conduct essential maintenance activities.

Colombia       

Production of gold at the El Limon mine in Colombia continues from levels seven and eight. Performance remains satisfactory, and cost saving measures at the mine and in head office have improved margins, absorbing the effect of a lower gold price. Mine development work on both levels  is being carried out, and the ability to control grade and production is increasing as a result.

The sale process  with Ashmont continues although delays have been experienced. As a result of these delays the Company has opened the window to a second potential buyer who is about to start conducting due diligence.

Jupiter Mines

The Company's significant investment in Jupiter Mines Ltd (ASX:JMS) has shown poor price performance despite bringing a major manganese mine into production and having strong cash holdings. That Jupiter is trading so far below what Red Rock believes to be its true value, although not an uncommon predicament in the current market, is a matter of considerable concern and a Company representative will be in Perth, WA next week to address this matter with Jupiter  colleagues.  

Other Investments

Ascot Mining plc, in which Red Rock has a convertible loan stock interest, is a company listed on the ISDX but currently suspended following a loan default. Red Rock has pursued its interests vigorously and effectively in co-operation with the other significant lender and will continue to do so, with the view that this will lead to a stabilisation of the situation and a resumption of trading of Ascot's securities.

Resource Star Ltd (ASX:RSL) in Australia has seen radical cost-cutting and a change in management. The new management is working rapidly to move the focus away from uranium with a number of significant opportunities under review.

Future

Red Rock Chairman Andrew Bell comments: "An environment in which overall equity markets are setting new highs at the same time as junior explorers are seeing their prices set new lows sets a number of challenges to the Company. We will meet them proactively and appropriately, cutting costs and reducing debt.

In 2008, market weakness at the time of the Global Financial Crisis created conditions in which the seeds could be sown for growth, and though it was hard to find the opportunities Red Rock recovered vigorously. In 2013, the same can apply. Our weakness now is the delay to transactions. On the other hand a great strength compared to 2008 is that we have these transactions in progress. We shall work diligently to complete them." 

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	Press Relations
Gerry Beaney / Daniela Amihood	020 7383 5100	Grant Thornton Corporate Finance	Nominated Adviser
Nick Emerson	01483 413500	Simple Investments Ltd	Broker

 

END

 

 

MSCLLFLVERIAIIV