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Red Rock Resources - Final Results

RNS Number : 9043X
Red Rock Resources plc
24 December 2019
 

Red Rock Resources PLC

("Red Rock" or the "Company")

Final Audited Results for the Year Ended 30 June 2019

24 December 2019

 

A copy of the Company's annual report and financial statements for 2019 - extracts from which are set out below - will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting to be held on 29 January 2020.

 

Chairman's Statement

 

Dear Shareholders,

 

Last year I began this review with the statement that it had been another exciting year. That year's successor, the year to 30th June 2019, has been by contrast most unexciting, with market conditions providing a difficult backdrop, and the Company's hopes for operational progress in Kenya and the Congo only partially fulfilled.

 

Market Conditions

 

Liquidity developments in major economies, political and geopolitical uncertainties, and the lassitude broken by occasional febrile interludes that resulted, affected both commodities and markets to an unusual degree over the period, in the absence of any strong primary trend. A short analysis of these features may help guide us to an understanding of what may now follow.

 

The overall FTSE index was down over the year, and even the U.S. Dow index, despite favourable developments in its economy, rose only slightly. The AIM Index performed worse than the broader indices, losing 15.1% over the year, and the resource component of that index showed further weakness. It appears that despite good economic growth, investors were not optimistic about future market conditions. One can adduce various factors; fears of slowing Chinese economic growth, political stalemate in the UK Parliament, an unwinding of the wealth effect as property prices in London and the south fell rather than rose, a bull market that had become tired, or fears of a radical socialist Government coming to power; but it is difficult to tell which of these are excuses for actions taken for other reasons, and which are reasons in themselves. Perhaps the one undeniable influence was the reversal or cessation of monetary inflows to most major economies from quantitative easing, which reduced the amount of money available for investment below that which had been expected, and will have had its greatest impact on less liquid marketplaces. 

 

Against that backdrop the resource sector had mixed fortunes. There were a few areas of strength among the commodities: Iron ore prices rose strongly during the 12 months to June, as did Nickel, while in the first part of the period Manganese also continued its strength, and the gold price was also higher, but against a sluggish economic growth background these rises were mistrusted by markets which feared pullbacks, and so were not reflected in share price movements; in the last six months, post year end, metal price pullbacks have come, but instead of being treated as already discounted in stock prices, have led to further falls in price. Perhaps an additional factor for the sector has been that the mineral sector has been felt to have had investor attention for many years, with generally poor reward, and other sectors now attracted new interest, while the more speculative money flowed towards cannabis and, briefly, hydrocarbons, and flowed away from recently popular sectors such as those involved in electric vehicle batteries.

 

This then was the environment in which the Company operated. Different metals followed very different paths, every upward price movement was followed by a sharp correction, wave after wave of uncertainty affected sentiment, and the depth of the market for trading in AIM companies was affected by reductions in private client broking capacity. In such an environment it was difficult to capitalise on successes, carry failures through to recovery, or articulate an overarching theme.

 

The election results on 12 December 2019, and the confidence that now exists that the UK will leave the EU on 31 January 2020, remove some of the uncertainties that were beginning to weigh on investment decisions, and if expectations that money will now come back into the property market are borne out, that factor alone is likely to see liquidity improve across all London markets in 2020. The accumulation of negative factors that affected the market in 2019 will not all exist, and provided global markets see no downturn that is likely to prove positive for the AIM market. The continued regulatory push for electric vehicles to displace petrol and diesel will in time feed through to recovery in the metals used in EV batteries and coils, with greater future visibility of demand a positive investment factor. Continued infrastructure investment in the US in an election year, and a new emphasis on renewing the UK's ageing infrastructure, will both cushion any slowing of metal demand in China and herald a new willingness to borrow and expand the monetary base at today's ultra-low interest rates. In this quiet monetary revolution, where orthodox economists have turned from deprecating to urging massive new Government borrowing to take advantage of low long term interest rates, the two leading nations of the Anglosphere may prove to be opinion leaders: liquidity conditions may be about to undergo a remarkable transformation. Relatively less liquid marketplaces such as AIM would benefit from this.

 

Operations

 

During the year the Company continued to work to confirm the status of its licenses in Kenya. Two key milestones have been passed. On 22 October 2018 Red Rock was able to confirm that it had reached a settlement in its action for judicial review against the Ministry, and that its priority applications under the new Mining Act would be dealt with expeditiously. Then on 19 September 2019 the Company was able to announce that the Mineral Rights Board had approved the issue of the licenses, and that this was now recorded on the mining cadastre. The final administrative step has been slow in coming, and to Red Rock's disappointment had not occurred as expected by the time of this report going to print. The directors have therefore taken the conservative decision not to write back in these accounts any part of the £5,280,000 impairment taken in the 30 June 2015 accounts pending resolution of the court case. The Company would naturally revisit this decision as soon as the perfected renewal documents are in its hands.

 

The Company has worked hard during the year on complying with all the requirements under the new 2016 Mining Act, and has received excellent co-operation and guidance from the Ministry and its officials. Every stage in the process over the last two years has taken considerably longer than Red Rock expected, and the Company remains confident that this final step will soon be completed. At that point the hard work starts again where it was left off in 2012.

 

In Kenya the Company made the conservative decision to delay the very substantial potential write backs. On the other hand the Company has fully impaired two assets whose poor prognosis was noted in the Statement accompanying the results for the first six months of the year, when a partial provision was made. Bosnian ferrosilicon producer Steelmin Ltd, where the Company was a minority investor, and assisted the recommissioning of the plant with commercial production beginning in July 2018, stopped production in September and did not reopen. Red Rock assisted in efforts to keep value in the plant by mothballing it, and was willing to take a significant role in management, but as the situation developed it became clear that the task was too large and the near-term value too uncertain to justify further involvement. The price of European Emission Allowances (EUAs), each allowing the purchaser to emit one ton of CO2, under the EU's Emissions Trading System, had tripled in a year to €15.05 by the beginning of the year to 30 June 2019, and rose by a further 77% by the end of it. A significant part of these rises took place around the commissioning period of the ferrosilicon plant, when due to unpredictable output volumes, no long term take-or-pay electricity contract could be entered into. One of Bosnia's few significant exports is power, 40% of which is hydrothermally generated, and with privileged access to EU markets Bosnia was able to reap the full benefit of exporting at the new higher prices. These prices could not be matched by a ferrosilicon producer. There is no residual value to Red Rock's interest.   

 

A minority investment in Botswana diamond explorer Amulet Diamond Corporation failed to bear fruit as the decline in the price of run of mine diamonds meant that ROM production would not support the economics of the project, which could only succeed in the unquantifiable event of its finding large stones. London-based diamond producers such as Petra Diamonds and Firestone Diamonds have seen share price drops of over 80% in the last year, and even the more resilient Gem Diamonds has fallen 60%: these are not the conditions in which a new producer can expect to launch successfully.   

 

In the Democratic Republic of Congo successful exploration at the Company's Luanshimba copper/cobalt license took place, identifying significant 2km by 500m and 1400m by 300m anomalies. The focus then switched to the Company's main joint venture in the Congo, where the joint venture agreement was formally signed in March 2019. The formation of the joint venture operating company, which Red Rock considers desirable as it more closely defines rights and responsibilities, has been slow to proceed but is pending. The Company was able to carry out some preliminary studies of the historic data at the Musonoi copper-cobalt license including some access to the old core in the Gécamines drill sheds at Likasi. These studies of old drilling and the pit shell when mining ceased indicated the existence of a significant and definable body of unmined mineralised material that at current economic grades and with current technologies would have been mined. A geological model of this mineral potential, which is expandable with drilling, has been produced but requires raising to the standard of the JORC 2012 Code before it can be publicly released. This requires some further access to data, or further drilling, and has been and remains a priority.

 

The Company expects to carry out further work at Luanshimba early in 2020.

 

Elsewhere, the Company's interests in the Tshipi é Ntle manganese deposit, held through its investment in ASX-listed Jupiter Mines Ltd, has been a key contributor to income, with distributions recognised as dividends rising from £243,830 in the year to 30 June 2018 to £750,430 in the year ending 30 June 2019. The strong performance continues: Jupiter has paid in November 2019 an interim dividend for its half year to 31 August 2019 of AUD$0.04, worth AUD$680,996 to Red Rock. The dividend level continues to offer a high return on Jupiter's current market price of AUD$0.28. This long-life open pit manganese mine is one of the cheapest producers and so resilient to price movements in the manganese market. The expansion capacity and the changing dynamics of the manganese market mean there is further potential in this investment.

 

Royalty revenues from the El Limon gold mine in Colombia have shown slight improvement, but have not yet achieved their full potential.  

 

Other minor interests, in Ivory Coast, Elephant Oil in Benin, iron ore royalties in Australia, and battery metal explorer Power Metal Resources plc, have made no significant impact during the period, though could prove material were they to see further progress.

 

Outlook

 

After a year governed by macro-economic and political factors, the Company should benefit in the coming period from an improving climate on these fronts. Greater certainty, and a new spirit of optimism, may amplify these effects in London markets.

 

For its real potential to be achieved, the Company requires not just a more benign environment, but achievement of the milestones that will enable Red Rock to seize the initiative in its two major projects in Kenya and the Congo. This is the focus for 2020, as well as exploration at Luanshimba and other highly prospective but earlier stage properties.

 

From so low a market capitalisation, it will be difficult to disappoint, and the opportunity for progress is considerable.

 

We thank our staff, business partners and shareholders for their support and faith in us.    

 

 

 

 

Andrew Bell

Chairman and CEO

 

20 December 2019

 

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

Tim Sohal 0203 700 2500                                                            Broker Pello Capital Limited

 

 

 

 

Consolidated Statement of Financial Position

as at 30 June 2019

 

 

Notes

30 June

2019

£

30 June

2018

£

ASSETS

 

 

 

Non-current assets

 

 

 

Investments in associates and joint ventures

12

1,583,634

1,000,374

Exploration assets

13

234,600

-

Financial instruments - fair value through other comprehensive income (FVTOCI)

14

4,210,101

4,705,386

Non-current receivables

17

5,233,542

4,901,196

Total non-current assets

 

11,261,877

10,606,956

Current assets

 

 

 

Cash and cash equivalents

16

63,828

2,265,636

Financial instruments with fair value through profit and loss (FVTPL)

15

60,345

60,345

Other receivables

18

975,341

935,407

Total current assets

 

1,099,514

3,261,388

TOTAL ASSETS

 

12,361,391

13,868,344

 

EQUITY AND LIABILITIES

 

 

 

Equity attributable to owners of the Parent

 

 

 

Called up share capital

20

2,780,861

2,766,857

Share premium account

 

26,853,337

26,016,000

Other reserves

 

2,563,093

3,392,060

Retained earnings

 

(22,668,592)

(20,941,477)

Total equity attributable to owners of the Parent

 

9,528,699

11,233,440

Non-controlling interest

 

(20,508)

(19,088)

Total equity

 

9,508,191

11,214,352

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Trade and other payables

19

1,731,808

1,645,167

Short-term borrowings

19

1,121,392

1,008,825

Total current liabilities

 

2,853,200

2,653,992

TOTAL EQUITY AND LIABILITIES

 

12,361,391

13,868,344

 

These financial statements were approved by the Board of Directors and authorised for issue on 20 December 2019 and are signed on its behalf by:

 

 

 

 

Andrew Bell                        

Chairman and CEO            

 

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

 

 

Consolidated Income Statement

for the year ended 30 June 2019

 

 

Notes

Year to

30 June

2019

£

Year to

30 June

2018

£

 

 

 

 

Gain on sales of investments before IFRS 9 adoption

 

-

1,200,050

Exploration expenses

 

(6,289)

(14,218)

Impairment of exploration assets

 

-

(280,460)

Administrative expenses

4

(591,777)

(849,518)

Business development

6

(302,597)

(82,413)

Other project costs

6

(158,689)

(306,666)

Impairment of financial assets carried at amortised cost

1.5

(1,592,815)

(217,226)

Currency gains

 

50,908

61,918

Share of profits/(losses) of associates

12

511

(23)

Other income

 

25,000

10,007

Finance income, net

5

851,867

556,669

(Loss / profit for the year before taxation

 

(1,723,881)

78,120

Tax

7

-

-

(Loss) / profit for the year

 

(1,723,881)

78,120

(Loss) / profit for the year attributable to:

 

 

 

Equity holders of the Parent

 

(1,722,461)

80,755

Non-controlling interest

 

(1,420)

(2,635)

 

 

(1,723,881)

78,120

(Loss) / profit per share attributable to owners of the Parent:

 

 

 

Basic loss per share

 

(0.29) pence

0.02 pence

Diluted loss per share

 

(0.29) pence

0.02 pence

 

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2019

 

 

Notes

30 June

2019

£

30 June

2018

£

(Loss) / profit for the year

 

(1,723,881)

78,120

Other comprehensive loss

 

 

 

Decrease in FVTOCI reserve in relation to disposals

 

9,428

(1,346,648)

(Deficit) / surplus on revaluation of FVTOCI financial assets

14

(861,602)

(62,282)

Losses on sale of FVTOCI taken directly to reserves after IFRS 9 adoption

 

(273,492)

-

Unrealised foreign currency (loss) / gain arising upon retranslation of foreign operations

 

23,207

(58,332)

Total other comprehensive (loss) / income net of tax for the year

 

(1,102,459)

(1,467,262)

Total comprehensive (loss) net of tax for the year

 

(2,826,340)

(1,389,142)

Total comprehensive (loss) net of tax attributable to:

 

 

 

Owners of the Parent

 

(2,824,920)

(1,386,507)

Non-controlling interest

 

(1,420)

(2,635)

 

 

(2,826,340)

(1,389,142)

 

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

 

 

 

Consolidated Statement of Changes in Equity

for the year ended 30 June 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

£

As at 1 July 2017

2,760,859

25,604,689

(21,022,232)

4,855,879

12,199,195

(16,453)

12,182,742

Changes in equity for 2017

 

 

 

 

 

 

 

Profit for the year

-

-

80,755

-

80,755

(2,635)

78,120

Other comprehensive income for the year

-

-

-

(1,467,261)

(1,467,261)

-

(1,467,261)

Transactions with owners

 

 

 

 

 

 

 

Issue of shares

5,355

377,614

-

-

382,969

-

382,969

Share issue costs

-

(5,000)

-

-

(5,000)

-

(5,000)

Share issue in relation to SIP

643

38,697

-

-

39,340

-

39,340

Share-based payment transfer

-

-

-

3,442

3,442

-

3,442

Total transactions with owners

5,998

411,311

-

3,442

420,751

-

420,751

As at 30 June 2018

2,766,857

26,016,000

(20,941,477)

3,392,060

11,233,440

(19,088)

11,214,352

Changes in equity for 2019

 

 

 

 

 

 

 

Loss for the year

-

-

(1,722,461)

-

(1,722,461)

(1,420)

(1,723,881)

Other comprehensive income for the year

 

 

 

 

 

 

 

Decrease in FVTOCI reserve in relation to disposals

-

-

-

9,428

9,428

-

9,428

(Deficit) / surplus on revaluation of FVTOCI financial assets

-

-

-

(861,602)

(861,602)

-

(861,602)

Losses on sale of FVTOCI taken directly to reserves after IFRS 9 adoption

-

-

(4,654)

-

(4,654)

-

(4,654)

Unrealised foreign currency (loss) / gain arising upon retranslation of foreign operations

-

-

-

23,207

23,207

-

23,207

Total Other comprehensive income for the year

-

-

(4,654)

(828,967)

(833,621)

-

(833,621)

Transactions with owners

 

 

 

 

 

 

 

Issue of shares

13,348

800,402

-

-

813,750

-

813,750

Share issue costs

-

(1,750)

-

-

(1,750)

-

(1,750)

Share issue in relation to SIP

656

38,685

-

-

39,341

-

39,341

Total transactions with owners

14,004

837,337

-

-

851,341

-

851,341

As at 30 June 2019

2,780,861

26,853,337

(22,668,592)

2,563,093

9,528,699

(20,508)

9,508,191

 

 

 

Consolidated Statement of Changes in Equity

for the year ended 30 June 2019

 

 

FVTOCI financial instruments revaluation

reserve

£

Foreign

currency

translation

reserve

£

Share-based

payment

reserve

£

Total

other

reserves

£

As at 1 July 2017

4,516,849

178,160

160,870

4,855,983

Changes in equity for 2018

 

 

 

 

Other comprehensive income for the year

 

 

 

 

Decrease in AFS reserve in relation to disposals

(1,346,647)

-

-

(1,346,647)

Change in reserve related to revaluation

(62,282)

-

-

(62,282)

Unrealised foreign currency gains on translation of foreign operations

-

(58,332)

-

(58,332)

Total Other comprehensive income for the year

(1,408,929)

(58,332)

-

(1,467,261)

Transactions with owners

 

 

 

 

Share-based payment transfer

-

-

3,442

3,442

Total transactions with owners

-

-

3,442

3,442

As at 30 June 2018

3,107,920

119,828

164,312

3,392,060

Changes in equity for 2019

 

 

 

 

Other comprehensive income for the year

 

 

 

 

Decrease in FVTOCI investments reserve in relation to disposals

9,428

-

-

9,428

Change in reserve related to revaluation

(861,602)

-

-

(861,602)

Unrealised foreign currency gains on translation of foreign operations

-

23,207

-

23,207

Total Other comprehensive income / (expense) for the year

(852,174)

23,207

-

(828,967)

As at 30 June 2019

2,255,746

143,035

164,312

2,563,093

 

See note 21 for a description of each reserve included above.

 

Consolidated Statement of Cash Flows

for the year ended 30 June 2019

 

 

Notes

Year to

30 June

2019

£

Year to

30 June

2018

£

Cash flows from operating activities

 

 

 

(Loss) / profit before tax

 

(1,723,881)

78,120

(Increase)/decrease in receivables

 

(73,566)

95,296

Increase in payables

 

96,312

209,797

Share of (profit)/losses in associates

 

(511)

23

Interest receivable and finance income, including income from MFP

5

(272,445)

(852,886)

Dividend income

5

(750,430)

(234,830)

Interest expense

5

183,809

531,046

Other income settled in shares

 

(25,000)

-

Share-based payments

 

32,227

35,669

Foreign exchange gain/loss

 

(50,908)

(61,918)

Impairment of loans and other receivables

1.5

1,592,815

217,226

Gain on sale of available for sale investments before IFRS 9 adoption

 

-

(1,200,050)

Depreciation

 

-

15,600

Impairment of exploration properties

 

-

280,460

Net cash outflow from operations

 

(991,578)

(886,447)

Corporation tax reclaimed/(paid)

 

-

-

Net cash used in operations

 

(991,578)

(886,447)

Cash flows from investing activities

 

 

 

Interest received

 

-

315,194

Proceeds from sale of FVTOCI financial assets

 

10,345

1,399,601

Dividends received

 

750,430

234,830

Loans granted

 

(1,587,751)

(892,722)

Loans re-paid by the borrower

 

-

3,513,843

Payments to acquire FVTOCI financial assets

 

(391,860)

-

Payments to acquire exploration asset

 

(234,600)

-

Payments to set up new joint ventures

 

(55,567)

 

Payments to increase interest in the assets of an associate

 

-

(37,317)

Net cash (outflow) / inflow from investing activities

 

(1,509,003)

4,533,429

Cash flows from financing activities

 

 

 

Proceeds from issue of shares

 

39,550

299,265

Transaction costs of issue of shares

 

(1,750)

(5,000)

Interest paid

 

(121,012)

(243,283)

Proceeds from new borrowings

 

699,483

967,000

Repayments of borrowings

 

(365,000)

(3,398,562)

Net cash inflow / (outflow) from financing activities

 

251,271

(2,380,580)

Net (decrease)/increase in cash and cash equivalents

 

(2,249,310)

1,266,402

Cash and cash equivalents at the beginning of period

 

2,265,636

909,094

Exchange (losses)/gains on cash and cash equivalents

 

47,502

90,140

Cash and cash equivalents at end of period

16

63,828

2,265,636

 

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

 

 

 

Company Statement of Financial Position

as at 30 June 2019

 

 

Notes

30 June

2019

£

30 June

2018

£

ASSETS

 

 

 

Non-current assets

 

 

 

Investments in subsidiaries

11

19,395

942

Investments in associates and joint ventures

12

1,664,833

1,082,083

Financial instruments - fair value through other comprehensive income (FVTOCI)

14

3,162,597

4,705,386

Exploration assets

 

234,600

-

Non-current receivables

17

5,233,542

4,901,196

Total non-current assets

 

10,314,967

10,689,607

Current assets

 

 

 

Cash and cash equivalents

16

43,243

2,263,288

Financial assets - warrants in AFS

15

60,345

60,345

Other receivables

18

1,114,790

1,083,552

Total current assets

 

1,218,378

3,407,184

TOTAL ASSETS

 

11,533,345

14,096,791

 

EQUITY AND LIABILITIES

 

 

 

Called up share capital

20

2,780,861

2,766,857

Share premium account

 

26,853,337

26,016,000

Other reserves

 

1,641,393

3,272,232

Retained earnings

 

(22,590,323)

(20,608,820)

Total equity

 

8,685,268

11,446,269

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Trade and other payables

19

1,726,684

1,641,697

Intra-group borrowings

19

122,413

-

Short-term external borrowings

19

998,980

1,008,825

Total current liabilities

 

2,848,077

2,650,522

TOTAL EQUITY AND LIABILITIES

 

11,533,345

14,096,791

 

These financial statements were approved by the Board of Directors and authorised for issue on 20 December 2019 and are signed on its behalf by:

 

 

 

Andrew Bell                           

Chairman and CEO               

 

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

 

 

 

Company Statement of Changes in Equity

for the year ended 30 June 2019

 

The movements in equity during the period were as follows:

 

Share

capital

£

Share

premium

account

£

Retained

earnings

£

Other

reserves

£

Total

equity

£

As at 1 July 2017

2,760,859

25,604,689

(20,682,534)

4,679,070

12,362,084

Changes in equity for 2018

 

 

 

 

 

Profit for the year

-

-

115,457

-

115,457

Other comprehensive income for the year

-

-

(41,743)

(1,410,280)

(1,452,023)

Transactions with owners

 

 

 

 

 

Issue of shares

5,355

377,614

-

-

382,969

Share issue costs

-

(5,000)

-

-

(5,000)

Share issues in relation to SIP

643

38,697

-

-

39,340

Share-based payment transfer

-

-

-

3,442

3,442

Total transactions with owners

5,998

411,311

-

3,442

420,751

As at 30 June 2018

2,766,857

26,016,000

(20,608,820)

3,272,232

11,446,269

Changes in equity for 2019

 

 

 

 

 

Loss for the year

-

-

(1,708,012)

-

(1,708,012)

Other comprehensive income for the year

 

 

 

 

 

Decrease in FVTOCI investments reserve in relation to disposals

-

-

-

(485,189)

(485,189)

Change in reserve related to revaluation

-

-

-

(1,145,650)

(1,145,650)

Losses on sale of FVTOCI taken directly to reserves

-

-

(273,491)

-

(273,491)

Total Other comprehensive income for the year

-

-

(273,491)

(1,630,839)

(1,904,329)

Transactions with owners

 

 

 

 

 

Issue of shares

13,348

800,402

-

-

813,750

Share issue costs

-

(1,750)

-

-

(1,750)

Share issues in relation to SIP

656

38,685

-

-

39,341

Total transactions with owners

14,004

837,737

-

-

851,341

As at 30 June 2019

2,780,861

26,853,337

(22,590,323)

1,641,393

8,685,268

 

 

 

Company Statement of Changes in Equity

for the year ended 30 June 2019

 

 

FVTOCI financial assets revaluation

reserve

£

 

Share-based

payment

reserve

£

Total

other

reserves

£

As at 1 July 2017

4,518,200

160,870

4,679,174

Changes in equity for 2018

 

 

 

Other comprehensive income for the year

4,217,753

-

4,217,753

Decrease in AFS reserve in relation to disposals

(1,389,741)

-

(1,389,741)

Change in AFS reserve in relation to revaluation

(62,282)

-

(62,282)

Transfer between reserves

41,743

-

41,743

Total Other comprehensive income

(1,410,280)

-

(1,410,280)

Transactions with owners

 

 

 

Share-based payment transfer

-

3,442

3,442

Total transactions with owners

-

3,442

3,442

As at 30 June 2018

3,107,920

164,312

3,272,232

Changes in equity for 2019

 

 

 

Other comprehensive income for the year

 

 

 

Decrease in FVTOCI investments reserve in relation to disposals

(485,189)

-

(485,189)

Change in reserve related to revaluation

(1,145,650)

-

(1,145,650)

Total Other comprehensive income

(1,630,839)

-

(1,630,839)

As at 30 June 2019

1,477,081

164,312

1,641,393

 

See note 21 for a description of each reserve included above.
 

Company Statement of Cash Flows

for the year ended 30 June 2019

 

 

30 June

2019

£

30 June

2018

£

Cash flows from operating activities

 

 

(Loss) /profit before taxation

(1,708,012)

115,457

(Increase)/decrease in receivables

(46,494)

70,045

Increase in payables

95,357

209,797

Dividend income

(750,430)

(234,830)

Interest income and other finance income

(285,779)

(852,886)

Interest expense

183,912

530,637

Share-based payments

32,227

35,669

Other income settled in shares

(25,000)

-

(Gain) on sale of investments before IRS 9 adoption

-

(1,200,050)

Impairment of loans and receivables

1,592,815

217,226

Foreign exchange loss / (gain)

(50,909)

17,770

Impairment of exploration assets

-

280,460

Depreciation

-

15,600

Net cash outflow from operations

(962,313)

(795,105)

Corporation tax

-

-

Net cash used in operations

(962,313)

(795,105)

Cash flows from investing activities

 

 

Interest received

-

315,194

Dividends received

750,430

234,830

Loans granted

(1,587,751)

(892,722)

Loans re-paid by the borrower

-

3,513,843

Payments to increase interest in assets of an associate

-

(37,317)

Proceeds from sale of FVTOCI financial assets

10,345

1,399,601

Payments to acquire exploration asset

 

(234,600)

-

Payments to set up new joint ventures

 

(55,567)

 

Payments to acquire FVTOCI financial assets

(391,860)

-

Net cash outflow from investing activities

(1,509,003)

4,533,429

Cash flows from financing activities

 

 

Proceeds from issue of shares

39,550

299,265

Transaction costs of issue of shares

(1,750)

(5,000)

Interest paid

(121,012)

(242,874)

Proceeds from new borrowings

699,483

967,000

Re-payments of borrowings

(365,000)

(3,398,562)

Net cash inflow from financing activities

251,271

(2,380,171)

Net increase/(decrease) in cash and cash equivalents

(2,220,045)

1,358,153

Cash and cash equivalents at the beginning of period

2,263,288

905,135

Cash and cash equivalents at end of period

43,243

2,263,288

           

 

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

 

 

 

 

Notes to the Financial Statements

 

1.   Principal Accounting Policies

1.1 Authorisation of Financial Statements and Statement of Compliance with IFRS

The Group financial statements of Red Rock Resources plc for the year ended 30 June 2019 were authorised for issue by the Board on 20 December 2019 and the statement of financial position signed on the Board's behalf by Andrew Bell. Red Rock Resources plc is a public limited company incorporated and domiciled in England and Wales. The Company's Ordinary shares are traded on AIM.

 

1.2 Basis of Preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.

The financial statements have been prepared on the cost basis, except for certain financial instruments, which are carried as described in the respective sections in the policies below. The principal accounting policies adopted are set out below.

 

Going Concern

The Group has recorded a loss of £1,723,881 for the year ended 30 June 2019 (2018: profit of £78,120). At that date there were net current liabilities of £1,753,687 (2018: net current assets of £607,396). The loss resulted mainly from the impairment of financial assets of £1,592,815.  Cash and cash equivalents were £63,828 (2018: £2,265,636) at year end.

 

During the reporting year the Company has continued to receive proceeds from the sale of its gold interests in Colombia.  Payments of up to US$2.0m are to be paid in the form of a 3% net smelter royalty payable quarterly on gold production and these payments continued in 2018-19 and totalled US$124,922 to 30 June 2019.  The Company estimates that approximately US$250,000 will be paid out towards the US$2m royalty during the next four quarters based on the most recent projections from the operator in Colombia. A final royalty stream of up to US$1.0m will be paid following the payment in full of the initial net smelter royalty in the form of a 0.5% net smelter royalty.

 

On 19 February 2019 Jupiter Mines, a company in which Red Rock owns 17,024,914 shares, approximately 0.87% of Jupiter, announced that it would pay an unfranked dividend of AUD$0.025 per share.  Jupiter further indicated that this would constitute a dividend yield of approximately 24% for the current fiscal year, and that the business had paid out approximately 50% of Jupiter's market cap, or over AUD$300m over the past three years.  On 31 October 2019 the Company announced that Jupiter Mines would pay a dividend equivalent to AUD$0.04 per Jupiter share, and that Red Rock would receive approximately £363,447.  This dividend amount represented a six-month yield of 12.3%.  At present the value of the Company's holdings in Jupiter Mines are £2.42m, equating to a large proportion of the market capitalization of the business.    

 

On 17 December 2019, the Company announced that holders of £830,000 of principal value of convertible loan notes, first announced on 10 November 2017 and again on 2 January 2019, had applied to renew the notes with a new final redemption date of 19 December 2020.  These renewed notes would carry an interest rate of 12% and a conversion price of £0.006 per share.

 

On 23 April 2019 the Company announced that it had raised £323,750 by way of a placing of 63,480,391 shares at a price of £0.0051 per share. 

 

The Group retains a lean operating structure, with three employees and both accounting and geological services outsourced.  The Company has continued to control operating costs through the use of part-time consultants and a minimal permanent footprint and cost basis in London.      

 

The Directors are confident in the Company's ability to fund its basic operations from the ongoing stream of dividends from Jupiter Mines expected to continue on a biannual basis, with the last twelve months seeing a total of US$784,000 paid out to the Company.  This dividend stream is expected to cover the Company's basic overhead costs and allow for additional investment in the Company's projects.

 

Over the longer term the Company expects to receive additional revenue from any transaction involving the Company's gold licenses in Kenya, which are expected to be restored in the near-term.  Beyond this, the Company expects to receive an ongoing royalty stream from Colombia, as the operator of the gold assets there continues to work to increase production on site. 

 

The Company has demonstrated the repeated ability to raise new finance as required, either in the form of debt or equity as deemed appropriate  The Directors have concluded that the combination of these circumstances means that preparation of the Group's financial statements on a going concern basis is appropriate  The Directors further believe that they will be able to largely fund the business internally and will be able to access external capital as required during 2019-20. 

 

Company statement of comprehensive income

As permitted by Section 408 Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income. The Company's loss for the financial year was £1,708,012 (2018: profit £115,457). The Company's other comprehensive loss for the financial year was £3,612,342 (2018: £1,410,280 loss).

 

Amendments to published standards effective for the year ended 30 June 2019

 

New Standards, Amendments and Interpretations Effective for the Periods from 1 July 2018

The following new standards, amendments and interpretations are effective for the first time in these financial statements. However, none have a material effect on the Group and Company:

 

IFRS 9 "Financial Instruments" impact both the measurement and disclosures of financial instruments. The group has not retrospectively re-stated prior period. All investments into equity instruments, that were held by the Group at 30 June 2018, which were included into Available for sale financial assets line in the Statement of financial position at 30 June 2018, are held by the Group with a long-term view and are not held for trading. The Group has analysed its investments into equity instruments on investment-by-investment basis and took a decision to designate all of its Available for sale investments held at the date of IFRS 9 adoption as fair value through other comprehensive income financial assets (FVTOCI). For equity instruments designated at FVTOCI under IFRS 9, only dividend income will be recognised in profit or loss, all other gains and losses will be recognised in OCI without reclassification on derecognition. More details are disclosed in the note 12.

 

IFRS 15 "Revenue from Contracts with Customers" - the Group is pre-revenue hence the adoption had no impact on the reported results or opening reserves.

 

There were no new standards or interpretations effective for the first time for periods beginning on or after 1 July 2018 that had a significant effect on the Group's financial statements.

 

New Standards, Amendments and Interpretations not yet Adopted

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective for the year presented:

 

 

Issued Date

IASB mandatory effective date, for the periods beginning on or after

New Standards and interpretations

 

 

IFRS 16 Leases

13-Jan-16

01-Jan-19

IFRIC 23 Uncertainty over Income Tax Treatments

07-Jun-17

01-Jan-19

IFRS 17 Insurance contracts*

18-May-17

01-Jan-21

Amendments to Existing Standards

 

 

Amendments to IAS 28: Long-term interests in associates and joint ventures

12-Oct-17

01-Jan-19

Annual improvements to IFRSs (2015-2017 Cycle)

12-Dec-17

01-Jan-19

Amendments to IAS 19: Plan amendment, curtailment or settlement

07-Feb-18

01-Jan-19

Amendments to References to the conceptual framework in IFRSs*

29-Mar-18

01-Jan-20

Amendment to IFRS 3 Business Combinations*

22-Oct-2018

01-Jan-20

Amendments to IAS 1 and IAS 8: Definition of Material*

31-Dec-18

01-Jan-20

 

* Not yet endorsed for use in the EU at the time these accounts were authorised for issue.

 

The Directors do not expect that the adoption of these standards will have a material impact on the financial information of the Group in future periods.

 

Adoption of IFRS 16 will result in the group recognising right of use of assets and lease liabilities for all contracts that are, or contain, a lease. For leases currently classified as operating leases, under current accounting requirements the group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment. Due to the fact that the Group currently only has short term (less than 12 months) operating leases, IFRS 16 will not have a material impact on the results or balance sheet of the Group. All the exploration areas land lease agreements that the Company has for its areas of interest are outside of IFRS16 scope.

 

IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of Insurance contracts within the scope of the Standard. The Group does not have any contract that fall within the scope of this standard and therefore it would have no impact on the reported results.

 

IFRIC 23 is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. This interpretation is unlikely to have a material effect of the reported results.

 

Standards Adopted Early by the Group

The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.

 

1.3 Basis of Consolidation

The consolidated financial statements of the Group incorporate the financial statements of the Company and subsidiaries controlled by the Company made up to 30 June each year.

 

Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, up until the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.

Non-controlling interests in subsidiaries are measured at the proportionate share of the fair value of their identifiable net assets.

Intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.

 

At 30 June 2019, the consolidated financial statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd, RRR Coal Ltd, Red Rock Resources Congo S.A.U., RedRock Kenya Ltd and Red Rock Resources (HK) Ltd.

The Group's dormant subsidiary Intrepid Resources Ltd, Red Rock Resources Inc., RRR Kenya Ltd., Ivory Coast, Red Rock Cote D'Ivoire sarl and Basse Terre sarl, have been excluded from consolidation on the basis of the exemption provided by Section 405(2) of the Companies Act 2006 that their inclusion is not material for the purpose of giving a true and fair view.

 

Non-controlling interests

Profit or loss and each component of other comprehensive income are allocated between the aims of the Parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in equity.

 

1.4 Summary of Significant Accounting Policies

 

1.4.1    Property, plant and equipment

Assets in the course of construction are stated at cost, less any identified impairment loss. Depreciation of these assets commences when the assets are ready for their intended use.

Field equipment and fixtures and fittings are stated at cost less accumulated depreciation and any recognised impairment loss.

 

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method, on the following bases:

 

Mines                                        5% per annum
Field equipment                      33% per annum
Fixtures and fittings                10% per annum
Assets under construction     not depreciated until brought into use

 

1.4.2       Investment in associates

An associate is an entity over which the Group has the power to exercise significant influence, but not controlled or jointly controlled by the Group, through participation in the financial and operating policy decisions of the investee.

Investments in associates are recognised in the consolidated financial statements using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income is recognised directly in other comprehensive income. The carrying value of the investment, including goodwill, is tested for impairment when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised unless the Group has incurred obligations or made payments on behalf of the associate.

 

Where a Group company transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.

 

In the Company accounts investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment when there is objective evidence of impairment.

 

1.4.3       Interests in joint ventures

The Group recognises its interest in the jointly controlled entity's assets and liabilities using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group income statement reflects the share of the jointly controlled entity's results after tax.

Any goodwill arising on the acquisition of a jointly controlled entity is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.

Where necessary, adjustments are made to bring the accounting policies in line with those of the Group's and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.

 

1.4.4       Taxation

Corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax relates to income tax levied by the same tax authorities on either:

·      the same taxable entity; or

·      different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected to be realised or settled.

 

1.4.5    Foreign currencies

Both the functional and presentational currency of Red Rock Resources plc is Sterling (£). Each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

The functional currency of the foreign subsidiaries are Australian Dollars (AUD) and Kenyan Shillings.

Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on translation are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income.

On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.

 

1.4.6    Share-Based Payments

Share options

The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted.

The fair value of options granted to Directors and others in respect of services provided is recognised as an expense in the income statement with a corresponding increase in equity reserves - the share-based payment reserve until the award has been settled and then make a transfer to share capital.

On exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.

The fair value is measured at grant date and charged over the vesting period during which the option becomes unconditional.

The fair value of options is calculated using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. The exercise price is fixed at the date of grant.

Non-market conditions are performance conditions that are not related to the market price of the entity's equity instruments. They are not considered when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period based on the best available estimate of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date based on factors such as a shortened vesting period, and the cumulative expense is 'trued up' for both the change in the number expected to vest and any change in the expected vesting period.

Market conditions are performance conditions that relate to the market price of the entity's equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is accelerated in the period that the entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period.

 

For other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price.

 

Warrants or options issued to parties other than employees are valued based on the value of the service provided.

 

Share Incentive Plan

Where shares are granted to employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date, and is recognised as an expense in the income statement on the date of the grant. For the partnership shares the charge is calculated as the excess of the mid-market price on the date of grant over the employee's contribution.

 

1.4.7    Pension

The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered fund. Contributions to the defined contribution scheme are charged to the profit and loss account as they become payable.

 

1.4.8    Exploration assets

Exploration assets comprise exploration and development costs incurred on prospects at an exploratory stage. These costs include the cost of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects. These costs are carried forward in the Statement of Financial Position as non-current intangible assets less provision for identified impairments.

Recoverability of exploration and development costs is dependent upon successful development and commercial exploitation of each area of interest and will be amortised over the expected commercial life of each area once production commences. The Group and the Company currently have no exploration assets where production has commenced.

The Group adopts the "area of interest" method of accounting whereby all exploration and development costs relating to an area of interest are capitalised and carried forward until abandoned. In the event that an area of interest is abandoned, or if the Directors consider the expenditure to be of no value, accumulated exploration costs are written off in the financial year in which the decision is made. All expenditure incurred prior to approval of an application is expensed with the exception of refundable rent which is raised as a receivable.

Upon disposal, the difference between the fair value of consideration receivable for exploration assets and the relevant cost within non-current assets is recognised in the Income Statement.

 

1.4.9    Impairment of non-financial assets

The carrying values of assets, other than those to which IAS 36 "Impairment of Assets" does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is recognised immediately in the consolidated statement of comprehensive income.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

1.4.10 Finance income/expense

Finance income and expense is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts or re-payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

 

1.4.11 Financial instruments

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Fair value through profit or loss (FVTPL)

This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

 

Amortised cost

These assets comprise the types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.

During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

 

Fair value through other comprehensive income (FVTOCI)

The Group has a number of strategic investments in listed and unlisted entities which are not accounted for as subsidiaries, associates or jointly controlled entities. For those investments, the Group has made an irrevocable election to classify the investments at fair value through other comprehensive income rather than through profit or loss as the Group considers this measurement to be the most representative of the business model for these assets. They are carried at fair value with changes in fair value recognised in other comprehensive income and accumulated in the fair value through other comprehensive income reserve. Upon disposal any balance within fair value through other comprehensive income reserve is reclassified directly to retained earnings and is not reclassified to profit or loss.

Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which case the full or partial amount of the dividend is recorded against the associated investments carrying amount.

Purchases and sales of financial assets measured at fair value through other comprehensive income are recognised on settlement date with any change in fair value between trade date and settlement date being recognised in the fair value through other comprehensive income reserve.

 

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired:

 

Fair value through profit or loss (FVTPL)

This category comprises out-of-the-money derivatives where the time value does not offset the negative intrinsic value or any liabilities held for trading. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income. The Group did not hold any such liabilities at the date of IFRS 9 adoption or at the end of the reporting year.

 

Other financial liabilities

Other financial liabilities include

-       Borrowings, which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

-       Liability components of convertible loan notes are measured as described further below.

-       Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

1.4.12     Investments in the Company accounts

Investments in subsidiary companies are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairments.

For acquisitions of subsidiaries or associates achieved in stages, the Company re-measures its previously held equity interests in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses previously recognised in other comprehensive income are transferred to profit and loss.

Investments in associates and joint ventures are classified as non-current assets and included in the statement of financial position of the Company at cost at the date of acquisition less any identified impairment.

 

1.4.13     Dividend income

Dividends received from strategic investments are recognised when they become legally receivable. In case of interim dividends, this is when declared. In case of final dividends, this is when approved by the shareholders at the AGM.

 

1.4.14     Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments.

1.4.15     Convertible debt

The proceeds received on issue of the Group's convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Convertible debt option reserve" within shareholders' equity, net of income tax effects.

 

1.4.16     Warrants

Derivative contracts that only result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity's own equity instruments are classified as equity instruments. When warrants are issued attached to specific loan notes, the Company estimates the fair value of the issued warrants using the Black-Scholes pricing model taking into account the terms and conditions upon which the warrants were issued, value of such warrants is deducted from the balance of loan notes a directly attributable transaction cost. Warrants relating to equity finance and issued together with ordinary shares placement are valued by residual method and treated as directly attributable transaction costs and recorded as a reduction of share premium account based on the fair value of the warrants. Warrants classified as equity instruments are not subsequently re-measured.

1.5    Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

 

Significant Judgements in Applying the Accounting Policies

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

 

Recognition of Holdings less than 20% as an Associate

The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider this, and the input of resource by the Company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the standard. As such, MMM has been recognised as an associate for the years ended 30 June 2019 and 30 June 2018.

The effect of recognising MMM as an FVTOCI financial asset would be to decrease the profit by £511 (2018: increase the profit by £23).

 

Significant Accounting Estimates and Assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period include the impairment determinations, the useful lives of property, plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities.

 

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

·      In the principal market for the asset or liability; or

·      In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

·      Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

·      Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

·      Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

Share-Based Payment Transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model. The model has its strengths and weaknesses and requires six inputs as a minimum: 1. The share price; 2. The exercise price; 3. The risk-free rate of return; 4. The expected dividends or dividend yield; 5. The life of the option; and 6. The volatility of the expected return. The first three inputs are normally, but not always, straightforward. The last three involve greater judgement and have the greatest impact on the fair value.

 

Impairment of Financial Assets

A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.

 

In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.

 

The Company conducted a review of the loans made to Steelmin Ltd in order to facilitate the restarting of ferrosilicon production in Bosnia, totalling £1.01m, and determined that due to the UK business going into administration and the Bosnian assets being sold off to a third party, that these loans would not likely be recovered and should be impaired in full. 

 

The Company further reviewed shareholder loans totalling £306,106 made as part of an investment into Amulet Diamond Corporation in 2018.  The board of Amulet reported that following activities onsite in 2018 their updated financial models have indicated that under most scenarios, the BK11 asset is not an economically viable mine.  As a consequence, various options have been considered, mostly with a focus to repaying a portion of an outstanding loan Amulet Diamond Corporation owes secured on the processing plant located in Botswana.  In the Company's view none of the options considered were likely to provide any value to unsecured creditors and lenders or equity holders, and as such the Board believes that a full impairment of the Company's shareholder loans is the most appropriate course of action. 

 

The Company also reviewed an outstanding loan of £267,983 made to Legacy Hill Resources Inc, a US based operator of metallurgical coal assets.  Following discussions with Legacy Hill Resources, the view was taken that the Omega metallurgical coal mine, the sole asset of Legacy Hill Resources Inc, had ceased coal production and was unlikely to have residual value sufficient to pay off the loan, and so the decision was made to impair this loan in full.    

 

Impairment of Non-Financial Assets

The Group follows the guidance of IAS 36 to determine when a non-financial asset is impaired. The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

 

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

 

The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These projections generally cover a period of five years with a terminal value or salvage value applied.

 

Impairment losses of continuing operations are recognised in the income statement in expense categories consistent with the function of the impaired asset.

 

For investments in associates and joint ventures, the Group assesses impairment after the application of the equity method.

 

Amounts Due from Associates

The Company conducted a review of the carrying value of the amount receivable from Mid Migori Mining Company Limited in relation to its Kenya assets. For the purpose of impairment review, the Company views this receivable as part of its net investment in the associate and hence followed the guidance of IAS 36.  On 22 October 2018 the Company announced that outstanding litigation concerning these assets had been settled and that the administrative process for restoration of the licenses was underway.  On 19 September 2019 the Company announced that the Kenyan mining cadastre showed the license renewal application under S225(6) pf the Mining Act 2016 as "Approved by the Mineral Rights Board".     

 

2.   Segmental Analysis     

The Group considered its mining and exploration activities as separate segments. These are in addition to the investment activities which continue to form a significant segment of the business. Its mining segment, which has now been sold, is currently presented as discontinued operations on the face of the income statement and is excluded from the continuing operations segmental analysis below.

The Group has made a strategic decision to concentrate on several commodities ranging from gold to manganese and ferrosilicon, and as such further segmental analysis by commodity has not been considered useful or been presented. 

 

 

 

 

 

Investment

 

Exploration

 

Other

 

Year to 30 June 2019

Jupiter

Mines

Limited

£

Other

investments

£

 

Australian

exploration

£

Kenyan

exploration

£

 

Democratic Republic of Congo Exploration

£

Corporate

and

unallocated

£

Total

£

 

 

 

 

 

 

 

 

 

 

Exploration expenses

-

-

 

-

(6,289)

 

-

-

(6,289)

Administration expenses*

-

-

 

(2,502)

(4,202)

 

(2,954)

(581,119)

(591,777)

Project development

-

-

 

-

-

 

(302,597)

-

(302,597)

Other project costs

-

-

 

-

(20,665)

 

-

(138,024)

(158,689)

Currency gain

-

-

 

-

-

 

-

50,908

50,908

Other income

-

-

 

-

-

 

-

25,000

25,000

Impairment of loans and other receivables

-

-

 

-

-

 

-

(1,592,815)

(1,592,815)

Share of profit in associates

-

-

 

-

-

 

-

511

511

Finance income, net

750,430

-

 

-

-

 

(430)

101,867

851,867

Net profit before tax from continuing operations

750,430

-

 

(2,502)

(31,156)

 

(305,981)

(2,134,672)

(1,723,881)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

Exploration

 

Other

 

Year to 30 June 2018

Jupiter

Mines

Limited

£

Other

investments

£

 

Australian

exploration

£

Kenyan

exploration

£

 

Democratic Republic of Congo Exploration

£

Corporate

and

unallocated

£

Total

£

 

 

 

 

 

 

 

 

 

 

Gain on sale of available for sale investments

1,196,780

3,270

 

-

-

 

-

-

1,200,050

Exploration expenses

-

-

 

(1,173)

(13,045)

 

-

-

(14,218)

Impairment of exploration properties

-

-

 

-

-

 

-

(280,460)

(280,460)

Administration expenses*

-

-

 

(931)

(11,303)

 

-

(837,284)

(849,518)

Project development

-

-

 

-

-

 

(82,413)

-

(82,413)

Other project costs

-

-

 

-

-

 

-

(306,666)

(306,666)

Currency gain

-

-

 

(10,454)

-

 

-

72,372

61,918

Other income

-

-

 

-

-

 

-

10,007

10,007

(Provision for)/Reversal of provision for bad debts

-

-

 

-

-

 

-

(217,226)

(217,226)

Share of losses in associates

-

-

 

-

-

 

-

(23)

(23)

Finance income, net

234,830

-

 

-

(410)

 

-

322,249

556,669

Net profit before tax from continuing operations

1,431,610

3,270

 

(12,558)

(24,758)

 

(82,413)

(1,237,031)

78,120

                           

 

* Included in administration expenses is a depreciation charge of £nil (2018: £15,600).

 

 

Information by Geographical Area

Presented below is certain information by the geographical area of the Group's activities. Revenue from investment sales and the sale of exploration assets is allocated to the location of the asset sold.

 

Year ended 30 June 2019

UK

£

Africa

£

Canada

£

Bosnia

£

Total

£

Revenue

-

-

-

-

-

Total segment revenue and other gains

-

-

-

-

-

Non-current assets

 

 

 

 

 

Investments in associates and joint ventures

-

1,583,634

-

-

1,583,634

FVTOCI financial assets

296,017

3,659,415

254,669

-

4,210,101

Exploration assets

-

234,600

-

-

234,600

Non-current receivables

1,346,108

3,887,434

-

-

5,233,542

Total segment non-current assets

1,642,125

9,365,083

254,669

-

11,261,877

 

 

Year ended 30 June 2018

UK

£

Africa

£

Canada

£

Bosnia

£

Total

£

Revenue

-

-

-

-

-

Gain on sale of available for sale investments

3,270

1,196,780

-

-

1,200,050

Total segment revenue and other gains

3,270

1,196,780

-

-

1,200,050

Non-current assets

 

 

 

 

 

Investments in associates and joint ventures

-

1,000,374

-

-

1,000,374

Available for sale financial assets

284,322

4,050,887

259,284

110,894

4,705,387

 

Exploration assets

-

-

-

-

-

Non-current receivables

1,301,757

3,599,439

-

-

4,901,196

 

Total segment non-current assets

1,586,679

8,650,700

259,284

110,894

10,606,956

 

                   

 

 

3.   Loss for the Year Before Taxation           

Loss for the year before taxation is stated after charging:             

 

2019

£

2018

£

Auditor's remuneration:

 

 

-  fees payable to the Company's auditor for the audit of consolidated and Company financial statements

21,000

21,600

 

 

 

Directors' emoluments (note 9)

259,273

330,047

-   Share-based payments - Directors

28,627

31,184

 -  Share-based payments - staff

3,600

4,485

Depreciation

-

15,600

Currency gain

50,908

61,918

 

 

 

4.   Administrative Expenses

 

 

 

 

 

 

Group

2019

£

Group

2018

£

Company

2019

£

Company

2018

£

Staff costs

 

 

 

 

Payroll

248,132

321,169

248,132

321,169

Pension

16,087

15,443

16,087

15,443

Consultants

15,000

15,000

15,000

15,000

HMRC / PAYE

16,712

17,654

16,712

17,654

Professional services

 

 

 

 

Accounting

67,210

75,714

63,389

69,548

Legal

17,594

97,824

14,652

97,824

Marketing

17,542

28,300

17,542

28,300

Other

12,952

28,336

12,952

28,336

Regulatory compliance

71,342

57,842

71,342

57,842

Travel

23,876

37,885

23,876

37,885

Office and Admin

 

 

 

 

General

10,249

61,823

7,698

55,973

IT related costs

4,796

8,423

4,796

8,423

Rent

61,241

75,914

60,896

75,696

Insurance

9,044

8,191

9,044

8,191

Total administrative expenses

591,777

849,518

582,118

837,284

                   

 

5.   Finance Income/(Costs), Net

Group

2019

£

2018

£

Interest income (other than MFP finance income)

323,279

863,411

Dividend income

750,430

234,830

Interest expense

(183,912)

(529,612)

Total finance income (other than MFP finance income)

889,797

568,629

MFP finance expense / (income)

(37,930)

(11,960)

Total finance income

851,867

556,669

 

Interest income (other than MFP finance income) comes from non-current receivables from an associate. Please refer to note 17 and note 18 respectively. Dividend income represents the money received from the Group's 0.95% holding in Jupiter Mines (2018: holding in Jupiter Mines of 1.2%).

6.   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. 

 

 

Group and Company

 

 

2019

£

2018

£

Project development expenses

 

 

 

VUP (Congo)

 

256,134

82,413

Galaxy (Congo)

 

46,463

-

Total project development expenses

 

302,597

82,413

 

 

 

 

Other project costs

 

 

 

Mid Midori Mines (Kenya)

 

20,655

-

Greenland

 

136,998

306,666

Others

 

1,036

-

Total other project expenses

 

158,689

306,666

 

 

 

7.   Taxation

 

 

2019

£

2018

£

Current period taxation on the Group

 

 

 

UK corporation tax at 19.00% (2018: 19.00%) on profits for the period

 

-

-

 

 

-

-

Deferred tax

 

 

 

Origination and reversal of temporary differences

 

-

-

Deferred tax assets not recognised

 

-

-

Tax credit

 

-

-

Factors affecting the tax charge for the year

 

 

 

(Loss) / profit on ordinary activities before taxation

 

(1,723,881)

78,120

(Loss) / profit on ordinary activities at the average UK standard rate of 19.00% (2018: 19.00%)

 

(327,537)

14,843

Income not taxable

 

(151,607)

(44,618)

Effect of expenditure not deductible

 

14,958

10,013

Indexation allowance on gains

 

-

(575)

Tax losses carried forward

 

464,186

20,337

Tax charge

 

-

-

 

 

 

 

No deferred tax asset relating to the Group's investments was recognised in the statement of comprehensive income (2018: £nil). No deferred tax charge has been made due to the availability of trading losses. Unutilised tax losses arising in the UK amount to £461,171 (2018 £13,247).

 

8.   Staff Costs

The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:

 

2019

£

2018

£

Wages and salaries

214,957

285,500

Pension

16,087

15,443

Social security costs

16,712

29,853

Employee share-based payment charge

32,227

35,669

Total staff costs

279,983

366,465

 

The average number of Group employees (including Directors) during the year was:

 

2019

Number

2018

Number

Executives

4

4

Administration

1

1

Exploration

-

-

 

5

5

 

The key management personnel are the Directors and their remuneration is disclosed within note 9.

 

600,000 (2018: 576,000) free shares were issued to each employee, including Directors, making a total of 3,000,000 (2018: 2,880,000) free shares issued during the year.

1,185,600 partnership and 2,371,200 matching shares, making the total of 3,556,800, were issued in the year ended 30 June 2019 (2018: 1,185,600 partnership, 3,808,000 matching, 4,993,600 total).

 

 

9.   Directors' Emoluments              

 

2019

Directors'

fees

£

Directors' discretionary bonus

£

Consultancy

fees

£

 

Share

Incentive Plan

£

Share based Payments                         

 

£

Pension

contributions

£

Social

security costs

£

Total

£

Executive Directors

 

 

 

 

 

 

 

 

 

A R M Bell

82,000

-

15,000

 

7,200

-

6,518

8,688

119,406

S Kaintz

65,000

-

-

 

7,200

-

4,883

6,813

83,896

Other Directors

 

 

 

 

 

 

 

 

 

M C Nott

18,000

-

-

 

7,056

-

1,294

1,048

27,398

S Quinn

18,000

-

-

 

7,171

-

1,190

2,211

28,572

 

183,000

-

15,000

 

28,627

-

13,885

18,760

259,272

 

 

 

 

 

 

 

 

 

 

2018

Directors'

fees

£

Directors' discretionary bonus

£

Consultancy

fees

£

 

Share

Incentive Plan

£

Share based Payments                         

 

£

Pension

contributions

£

Social

security costs

£

Total

£

Executive Directors

 

 

 

 

 

 

 

 

 

A R M Bell

82,000

20,000

15,000

 

7,200

1,180

6,504

11,081

142,965

S Kaintz

65,000

20,000

-

 

7,200

1,082

4,618

9,602

107,501

Other Directors

 

 

 

 

 

 

 

 

 

M C Nott

18,000

10,000

-

 

7,056

-

1,179

2,463

38,698

S Quinn

18,000

10,000

-

 

7,171

295

1,100

4,317

40,883

 

183,000

60,000

15,000

 

28,627

2,557

13,401

27,462

330,047

 

The number of Directors who exercised share options in the year was nil (2018: nil). During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors' Report. 

 

10. Earnings Per Share

The basic earnings / (loss) per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue. Diluted earnings / (loss) per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of Ordinary shares that would be issued on conversion of all dilutive potential Ordinary shares into Ordinary shares.

 

 

2019

£

 

2018

£

 

(Loss) / profit attributable to equity holders of the parent company

(1,722,461)

 

80,755

 

Adjusted for interest accrued on the convertible notes

-

 

60,030

 

Adjusted (loss) / profit attributable to equity holders of the parent company used for diluted EPS calculation

(1,722,461)

 

140,785

 

 

 

 

 

 

Weighted average number of Ordinary shares of £0.0001 in issue, used for basic EPS

586,325,688

 

498,552,731

 

Effect of all dilutive potential ordinary share, consisting of:

-

 

81,632,170

 

(a)   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 or at the inception of the instrument, whichever is later

-

 

75,808,152

 

(b)   effect from all potentially dilutive options in issue

-

 

3,556,188

 

 

 

 

 

 

 

 

2019

£

 

 

2018

£

 

(c)   Effect from all potentially dilutive warrants in issue

-

 

2,267,829

 

Weighted average number of Ordinary shares of £0.0001 in issue, including potential ordinary shares, used for diluted EPS

586,325,688

 

580,184,901

 

 

 

 

 

 

(Loss) / earnings per share - basic

(0.29) pence

 

0.02 pence

 

(Loss) / earnings per share - fully diluted

(0.29) pence

 

0.02 pence

 

 

 

 

 

 

 

At 30 June 2019, the effect of all the instruments (fully vested and in the money) is anti-dilutive as it would lead to a further reduction of loss per share, therefore they were not included into the diluted loss per share calculation

 

 

Options and warrants, that could potentially dilute basic EPS in the future, but were not included in the calculation of diluted EPS for the periods presented:

 

 

 

 

 

 

 

2019

£

 

2018

£

 

Share options granted to employees - not vested and/or out of the money

41,660,000

 

24,160,000

 

Number of warrants given to shareholders as a part of placing equity instruments - out of the money

109,552,695

 

214,432,432

 

Share options granted to employees - vested and in the money 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

157,872,695

 

238,592,432

               

 

 

 

There were no ordinary share transactions after 30 June 2019, that that could have changed the EPS calculations significantly if those transactions had occurred before the end of the reporting period.

 

 

11. Investments in Subsidiaries

Company

2019

£

2018

£

Cost

 

 

At 1 July

1,424

1,423

Investment in subsidiary

18,453

1

At 30 June

19,877

1,424

Impairment

 

 

At 1 July

(482)

(482)

Charge in the year

-

-

At 30 June

(482)

(482)

 

 

 

Net book value

19,395

942

 

As at 30 June 2019 and 30 June 2018, the Company held interests in the following subsidiary companies:

 

Company

Country of

registration

Class

Proportion

Held

At 30 June 2019

Proportion

Held

At 30 June 2018

Nature of business

Red Rock Australasia Pty Ltd

Australia

Ordinary

100%

100%

Mineral exploration

RedRock Kenya Ltd

Kenya

Ordinary

87%

87%

Mineral exploration

RRR Kenya Ltd

Red Rock Resources Inc.

Kenya

USA

Ordinary

Ordinary

100%

100%

100%

100%

Dormant

Natural resources

Red Rock Cote D'Ivoire sarl

Ivory Coast

Ordinary

100%

100%

Dormant

Basse Terre sarl

Ivory Coast

Ordinary

100%

100%

Dormant

Red Rock Resources (HK) Ltd

Hong Kong

Ordinary

100%

100%

Holding company

Red Rock Resources Congo S.A.U.

DRC

Ordinary

100%

-

Holding company

RRR Coal Ltd

UK

Ordinary

100%

-

Holding company

 

12.    Investments in Associates and Joint Ventures  

 

Group

 

Company

 

2019

£

2018

£

 

2019

£

2018

£

Cost

 

 

 

 

 

At 1 July

1,222,679

7,398,569

 

1,085,533

7,241,725

Additions during the year

582,750

37,317

 

582,750

37,317

Disposals during the year

-

(6,213,207)

 

-

(6,193,509)

At 30 June

1,805,429

1,222,679

 

1,668,283

1,085,533

Impairment

 

 

 

 

 

At 1 July

(222,305)

(6,435,489)

 

(3,450)

(6,193,509)

Profit/ (loss) during the year

511

(23)

 

-

-

Disposals during the year

-

6,213,207

 

-

6,190,059

Impairment in the year

-

-

 

-

-

At 30 June

(221,795)

(222,305)

 

(3,450)

(3,450)

 

 

 

 

 

 

Net book amount at 30 June

1,583,634

1,000,374

 

1,664,833

1,082,083

 

 

The Company, at 30 June 2019 and at 30 June 2018, had significant influence by virtue other than shareholding over 20% over Mid Migori Mining Company Limited. During the year ended 30 June 2018 the Group acquired the remaining 25% of interest in net assets of Mid Migori and from 15 June 2018 it has 100% interest in Mid Migori's net assets.

Company

Country of

incorporation

Class of

shares held

Percentage of

issued capital

Accounting year ended

Mid Migori Mining Company Limited

Kenya

Ordinary

15.00%

30 September 2018

 

Summarised financial information for the Company's associates and joint ventures, where available, is given below:

For the year as at 30 June 2019:

Company

Revenue

£

Profit

£

Assets

£

Liabilities

£

Mid Migori Mining Company Limited

-

3,404

2,540,093

(2,613,847)

 

For the year as at 30 June 2018:

Company

Revenue

£

Loss

£

Assets

£

Liabilities

£

Mid Migori Mining Company Limited

-

(31)

2,534,645

(3,207,445)

 

Mid Migori Mining Company Limited

The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). The Company has entered into an agreement whereby it manages and funds a number of MMM's development projects and has representation on the MMM board. On 15 June 2018, the Company purchased the remaining interest in the assets of MMM for the consideration of US$50,000, bringing its overall interest in MMM's assets to 100%. In accordance with IAS 28, the involvement with MMM meets the definition of significant influence and therefore has been accounted for as an associate (note 1.5).

 

VUP Musonoi Mining SA

On 2 March 2019, Vumilia Pendeza S.A. ("VUP") and Bring Minerals S.A.U. ("B.Min"), the joint venture partners, Red Rock Resources Congo S.A.U. ("RRRC"), a wholly owned local subsidiary of the Company, signed the "Statutes of VUP Musonoi Mining SA" ("VMM S.A."), the joint venture company through which the JV Project will be pursued. RRRC owns 50.1% of VMM S.A.

 

 

 

Mid Migori

Mining Company

Limited

£

VUP Musonoi Mining SA

£

Total

£

Cost

 

 

 

 

At 1 July 2018

 

1,082,083

-

1,082,083

Additions during the year

 

-

582,750

582,750

At 30 June 2019

 

1,082,083

582,750

1,664,833

 

Impairment and losses during the year

 

 

 

 

At 1 July 2018

 

(81,709)

-

(81,709)

The Group's share of profit during the year

 

511

-

511

At 30 June 2019

 

(81,198)

-

(81,198)

 

Carrying amount

 

 

 

 

At 30 June 2019

 

1,000,885

582,750

1,583,635

At 30 June 2018

 

1,000,374

-

1,000,374

 

13. Exploration Assets

Group and company

 

2019

£

2018

£

At 1 July

-

280,460

Additions

234,600

-

Impairment

-

(280,460)

Disposals

-

-

At 30 June

234,600

-

 

Exploration assets were capitalised

-       for the Galaxy (DRC) project since 17 October 2018, when exploration commenced at the project license in the DRC;

-       for the VUP (DRC) project since 22 November 2018 when the joint venture agreement was finalised.

 

14.    Financial Instruments with Fair Value Through Other Comprehensive Income (FVTOCI)

 

 

      Group

 

     Company

 

2019

£

2018

£

 

2019

£

2018

£

Opening balance

4,705,386

6,080,146

 

4,705,386

6,080,146

Additions

391,860

287,236

 

391,860

287,236

Disposals

(25,543)

(1,599,714)

 

(788,999)

(1,599,714)

Change in fair value

(861,602)

(62,282)

 

(1,145,650)

(62,282)

 

 

-

 

 

-

At 30 June

4,210,101

4,705,386

 

3,162,597

4,705,386

 

Market Value of Investments

The market value as at 30 June 2019 of the Company's available for sale listed and unlisted investments was as follows:

 

      Group

 

     Company

 

2019

£

2018

£

 

2019

£

2018

£

Quoted on London AIM

152,267

9,323

 

152,267

9,323

Quoted on other foreign stock exchanges

3,782,834

4,310,170

 

2,735,331

4,310,170

Unquoted investments at fair value

275,000

385,893

 

275,000

385,893

 

4,210,101

4,705,386

 

3,162,598

4,705,386

 

Jupiter Mines

During the reporting year Jupiter has made distributions recognised as dividends and included into the Dividend line in the Consolidated Income Statement in the amount of £750,430 (2018: £243,830).

At 30 June 2019, Red Rock retains a 0.95% stake in the post IPO share capital of Jupiter.    

 

Para Resources, Inc.

On 4 June 2018, the Company paid CAN$500,000 to subscribe for 2,500,000 shares in Para Resources, Inc.("Para") a private placement at CAN$0.20 per Para share, representing approximately 1.57% of the Para enlarged issued share capital. Each Para placement share subscribed for has an attached three-year warrant exercisable at CAN$0.30 per Para share. Para is a Canadian gold explorer and producer listed on the Toronto Venture Exchange. Details on the warrants are presented in the note 15 below.

 

Steelmin Limited

After failing to secure the funding to restart ferrosilicon production in 2018, Steelmin Ltd went into administration and its assets were subsequently sold by the administrator.  As such, the decision was made to impair the investment in Steelmin in full.  

 

15.  Financial Instruments with Fair Value Through Profit and Loss

Group

30 June

2019

£

30 June

2018

£

Warrants in Para Resources, Inc. ordinary shares

60,345

60,345

 

60,345

60,345

 

At 30 June 2019, the Company was holding 2,500,000 warrants in Para Resources, Inc. (2018: 2,500,000).

 

Warrant exercise price

 

CAD$

Number of warrants granted

Grant date

Expiry date

Fair value of individual warrant

CAD$

Total value of warrants held

 

CAD$

Total Value of the warrants held

£

0.30

2,500,000

4 June 2018

4 June 2021

0.042

105,000

60,345

 

 

 

 

 

 

 

The following information is relevant in the determination of the fair value of the warrants granted during the year:

 

 

Valuation model

Black-Scholes model

Warrant exercise price, CAD$            

0.30

Weighted average share price at grant date, CAD$

0.2

Weighted average contractual life, years

3

Expected volatility, %

47.57%

Expected dividend growth rate, %

0

Risk-free interest rate (Canadian Government three-year bond), %             

2.017

 

Calculation of volatility involves significant judgement by the Directors and it is based on the Para Resources, Inc trading data directly preceding the grant date.

 

16.    Cash and Cash Equivalents

Group

30 June

2019

£

30 June

2018

£

Cash in hand and at bank

63,828

2,265,636

 

63,828

2,265,636

 

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash at bank and in hand.

 

Company

30 June

2019

£

30 June

2018

£

Cash in hand and at bank

43,243

2,263,288

 

43,243

2,263,288

 

17.    Non-Current Receivables

 

Group and Company

 

2019

£

2018

£

Amounts due from associates

3,887,434

3,599,439

MFP sale proceeds

1,346,108

1,301,757

 

5,233,542

4,901,196

 

Non-current related party receivables of £3,887,434 (2018: £3,599,439) are recoverable from Mid Migori Mining Company Limited under the terms of the joint venture, purchase and sale agreement entered into in August 2009 as detailed in note 29. The amount is unsecured and has no fixed repayment date. Interest is charged at 8% per annum, and it was accrued in the reporting year the amount of £287,995 (2018: £359,539). Management have considered the recoverability of this debt and have considered the recent announcement regarding approval for the grant of licenses by the Mining Rights Board (MRB) of Kenya on the mining cadastre website. Upon receipt of official confirmation of the intended grant, the Company will be invited to fulfil fee payment and registration requirements. The grant of the licences then remains subject to the approval of the Cabinet. More details are given in note 1.5, Significant accounting judgements, estimates and assumptions.

 

The MFP sale proceeds represent the fair value of the deferred consideration receivable for the sale of MFP. The fair value was estimated based on the consideration offered by the buyer adjusted to its present value based on the timing for which the consideration is expected to be received. The most significant inputs are the offer price per tranches, discount rate and estimated royalty stream. The estimated royalty stream takes into account current production levels, estimates of future production levels and gold price forecasts.

 

18.    Other Receivables

 

Group

 

Company

 

2019

£

2018

£

 

2019

£

2018

£

Current trade and other receivables

 

 

 

 

 

Prepayments

21,574

56,353

 

21,574

56,353

Related party receivables:

 

 

 

 

 

- due from subsidiaries

-

-

 

270,906

236,136

- due from associates

225

225

 

225

225

- due from Regency Mines plc

134,434

203,498

 

134,434

203,498

- due from key management

4,100

3,096

 

4,100

3,096

Short-term loan to related party:

 

 

 

 

 

- due from a Director of a JV partner

37,397

37,397

 

37,397

37,397

Other receivables

777,611

634,838

 

646,154

Total

975,341

935,407

 

1,114,790

1,083,552

 

19.    Trade and Other Payables       

 

      Group

 

     Company

 

2019

£

2018

£

 

2019

£

2018

£

Trade and other payables

1,440,924

1,237,089

 

1,435,800

1,233,619

Accruals

290,885

408,078

 

290,885

408,078

Total trade and other payables

1,731,808

1,645,167

 

1,726,685

1,641,697

Intra-group borrowings

-

-

 

122,413

-

Short-term borrowings

1,121,392

1,008,825

 

998,980

1,008,825

Total

2,853,200

2,653,992

 

2,848,078

2,650,522

 

During the year ended 30 June 2018, the Company issued 1,000,Convertible Loan Notes ("CLN") for the total amount of £1,000,000. The Notes were issued at par and are convertible into the Company's ordinary shares at a price of 0.8 pence per share. Each Note has a denomination of £1,000 and is thus convertible into 125,000 new ordinary shares in the Company. Conversion may take place at any time up to the final redemption date. Each Note holder also received 62,500 Warrants for each Note subscribed. Each Warrant entitles the holder to subscribe for Shares at any time up to the date of expiry at a price of 1.4 pence per Share. The interest rate on the Notes is 10% per annum, accruing monthly. The Notes were due for redemption or conversion into the Company's new ordinary shares with a final redemption date of 19 December 2018. The Warrants were issued on the basis of 1 Warrant for every 2 Shares to be issued on conversion, with an exercise price of 1.4 pence per Share and a life to 30 April 2019.

 

During the 2018, 50 CLNs for the total value of £50,000 and accumulated interest of £1,205 have been converted by the holders and in consequence the Company issued 6,400,624 new ordinary shares of £0.0001 each in the Company at a price of £0.008 per Ordinary Share.

 

On 2 November 2018, the Company announced that Holders of £575,000 principal value of Notes, out of £950,000 of Notes still outstanding, have to date applied to renew the Notes for twelve months to a new final redemption date of 19 December 2019 on the same terms. The Warrants of renewing Noteholders have similarly been extended on the same terms by one year to expire on 30 April 2020.  

On 2 January 2019 the Company announced that a holder of a further £10,000 of convertible loan notes had elected to renew on the same terms, and that subscriptions for £325,000 of new series 2 notes had been issued on the same terms and to a maximum principal value of £500,000.  £50,000 of the series 1 notes were exercised during the year and £365,000 had been redeemed.  Therefore £585,000 of the original series 1 notes and £325,000 of series 2 notes were therefore outstanding and due 19 December 2019.

 

On 17 December 2019, the Company announced that holders of £830,000 of principal value of convertible loan notes, first announced on 10 November 2017 and again on 2 January 2019, had applied to renew the notes with a new final redemption date of 19 December 2020.  These renewed notes would carry an interest rate of 12% and a conversion price of £0.006 per share.

 

On 11 April 2019 The Company's 100% owned subsidiary, RRR Coal Limited, agreed a loan facility of up to US$1,000,000 with Riverfort Global Opportunities PCC Limited and YA II PN Limited.  The terms of the loan call for US$400,000 to be transferred to the borrower, with additional tranches available to the lenders at their absolute discretion.  The notes are secured by 5,500,000 shares in Jupiter Mines Limited, which were transferred from the Company to the borrowers as well as by a corporate guarantee executed by Red Rock Resources plc.  The notes carry an interest rate of 10% and come with a 7.5% implementation fee and are repayable over a period ending in April 2020.  A total of US$200,000 has been drawn down on the facility to date. 

 

20.    Share Capital of the Company

The share capital of the Company is as follows:

Issued and fully paid

2019

£

2018

£

676,049,662 (2018: 536,012,471) ordinary shares of £0.0001 each

67,605

53,601

2,371,116,172 deferred shares of £0.0009 each

2,134,005

2,134,005

6,033,861,125 A deferred shares of £0.000096 each

579,251

579,251

As at 30 June

2,780,861

2,766,857

 

 

 

Movement in ordinary shares

Number

Nominal

£

 

As at 30 June 2017 - ordinary shares of £0.0001 each

476,037,740

47,603

 

Issued 6 October 2017 at 0.625 pence per share (non-cash, SIP shares)

2,880,000

288

 

Issued 30 October 2017 at 0.6 pence per share (cash)

4,500,000

450

 

Issued 21 December 2017 at 0.8 pence per share (cash)

15,625,000

1,563

 

Issued 20 February 2018 at 0.65 pence per share (non-cash, liability settlement)

4,615,384

461

 

Issued 9 March 2018 at 0.8 pence per share (non-cash, loan conversion)

6,400,624

640

 

Issued 3 April 2018 at 0.6 pence per share (non-cash, SIP shares)

3,556,800

356

 

Issued 13 April 2018 at 0.66 pence per share (cash, warrants exercised)

21,315,971

2,132

 

Issued 20 April 2018 at 0.84 pence per share (cash, warrants exercised)

1,080,952

108

 

As at 30 June 2018 - ordinary shares of £0.0001 each

536,012,471

53,601

 

Issued 19 December 2018 at 0.7 pence per share (non-cash, settlement of investment in a JV in Congo)

70,000,000

7,000

 

Issued 9 April 2019 at 0.6 pence per share (non-cash, SIP shares)

6,556,800

656

 

Issued 23 April 2019 at 0.51 pence per share (£275,000 non-cash, loan liabilities settlement; the rest in cash)

63,480,391

6,348

 

As at 30 June 2019 - ordinary shares of £0.0001 each

676,049,662

67,605

 

           

 

Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the company, or bought back for £1 and then cancelled. The deferred shares are not quoted and carry no rights whatsoever.

 

Warrants

 

At 30 June 2019, the Company had 109,552,695 warrants in issue (2018: 289,432,432) with a weighted average exercise price of 1.18 pence (2018: 1.10 pence). Out of those, 3,125,000 (2018: 123,599,099) have market performance conditions that accelerate the expiry date. Weighted average remaining life of the warrants at 30 June 2019 was 433 days (2018: 186 days). All the warrants were issued by the Group to its shareholders in the capacity of shareholders and therefore are outside of IFRS 2 scope.

 

Group and Company

2019

number of warrants

 

 

2018

number of warrants

Outstanding at the beginning of the period

289,432,432

 

 

240,778,371

Granted during the period

101,740,195

 

 

90,156,250

Exercised during the period

-

 

 

(22,396,923)

Lapsed during the period

(281,619,932)

 

 

(19,105,266)

Outstanding at the end of the period

109,552,695

 

 

289,432,432

 

 

During the year ended 30 June 2019 the Company had the following warrants to subscribe for shares in issue:

 

Grant date

Expiry date

Warrant exercise price, £

Number of warrants

21 Dec 2017

20 Dec 2019

0.016

7,812,500

30 Oct 2018

30 Apr 2020

0.014

36,562,500

3 Dec 2018

30 Apr 2020

0.014

17,187,500

18 Dec 2018

30 Apr 2020

0.014

3,125,000

4 Apr 2019

30 Apr 2020

0.014

625,000

19 Feb 2019

21 Feb 2021

0.010

12,500,000

23 Apr 2019

23 Apr 2012

0.075

31,740,195

Total warrants in issue at 30 June 2019

109,552,695

 

The aggregate fair value related to the share warrants granted during the reporting period was £nil (2018: £nil).

 

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 (note 23).

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 year.

 

21. Reserves

 

Share Premium

The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.

 

Foreign Currency Translation Reserve

The translation reserve represents the exchange gains and losses that have arisen from the retranslation of overseas operations.

 

Retained Earnings

Retained earnings represent the cumulative profit and loss net of distributions to owners.

 

Available for Sale Trade Investments Reserve

The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments.

 

Associate Investment Reserve

The associate investments reserve represents the cumulative share of gains and losses of associates recognised in the statement of other comprehensive income.

 

Share-Based Payment Reserve

The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.

 

22.    Share-Based Payments

 

Employee Share Options

In prior years, the Company established employee share option plans to enable the issue of options as part of the remuneration of key management personnel and Directors to enable them to purchase Ordinary shares in the Company. Under IFRS 2 "Share-based Payments", the Company determines the fair value of the options issued to Directors and employees as remuneration and recognises the amount as an expense in the statement of income with a corresponding increase in equity.

 

At 30 June 2019 and June 2018, the Company had outstanding options to subscribe for Ordinary shares as follows:

 

 

Options issued

14 June 2016

exercisable at

0.45 pence per

share expiring

29 January 2022

Number

Options issued 13 January 2017 exercisable at 0.8p per share, expiring on 13 January 2023,

Number

Total,

Number

A R M Bell

5,760,000

12,000,000

17,760,000

S Kaintz

4,680,000

11,000,000

15,680,000

M C Nott

900,000

-

900,000

S Quinn

900,000

3,000,000

3,900,000

Employees

1,080,000

9,000,000

10,080,000

Total

13,320,000

35,000,000

48,320,000

 

 

 

 

Company and Group

 

2019

 

 

2018

 

Number of

options

Weighted

average

exercise

price

pence

 

 

Number of

options

Weighted

average

exercise

price

pence

Outstanding at the beginning and the end of the year

48,320,000

0.70

 

 

48,320,000

0.70

Of them vested and exercisable

24,160,000

0.70

 

 

24,160,000

0.70

                     

 

No share options were granted by the Company in the reporting year (2018: none). The weighted average fair value of each option granted during the year was nil pence (2018: nil). The exercise price of options outstanding at 30 June 2019 ranged between £0.0045 and £0.008 (2018: £0.0045 and £0.008). Their weighted average contractual life was 3.28 years (2018: 4.28 years).

 

Share-based remuneration expense related to the share options grant is included in the administration expenses line in the consolidated income statement in the amount of £nil (2018: £3,442).

 

Share Incentive Plan

In January 2012 the Company implemented a tax efficient Share Incentive Plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including Directors, who have served for three months or more at the time of issue. The terms of the plan provide for:

·      each employee to be given the right to subscribe any amount up to £150 per month with Trustees who invest the monies in the Company's shares;

·      the Company to match the employee's investment by contributing an amount equal to double the employee's investment ("matching shares"); and

·      the Company to award free shares to a maximum of £3,600 per employee per annum.

The subscriptions remain free of taxation and national insurance if held for five years.

All such shares are held by SIP Trustees and the Ordinary shares cannot be released to participants until five years after the date of the award.

 

During the financial year, a total of 6,556,800 free, matching and partnership shares were awarded (2018: 6,436,800) with a fair value of £0.006 (2018: £0.006 - £0.00625) resulting in a share-based payment charge of £32,227 (2018: £32,227), included in the administration expenses line in the income statement.

 

23. Financial Instruments

23.1 Categories of Financial Instruments

The Group and Company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables, borrowings and trade payables. The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies, are as follows:

 


30 June

Group

2019

£

Group 

 2018

£

Company

2019

£

Company

  2018

£

Financial assets

 

 

 

 

Available for sale financial assets at fair value through OCI

 

 

 

 

Unquoted equity shares

275,000

385,894

275,000

385,894

Quoted equity shares

3,935,101

4,319,492

2,887,597

4,319,492

Total available for sale financial assets at fair value through OCI

4,210,101

4,705,386

3,162,597

4,705,386

 

 

 

 

 

Financial assets FVTPL (Para warrants)

60,345

60,345

60,345

60,345

Total financial assets carried at fair value through profit and loss

60,345

60,345

60,345

60,345

 

 

 

 

 

Cash and cash equivalents

63,828

2,265,636

43,243

2,263,288

 

 

 

 

 

Loans and receivables

 

 

 

 

Non-current receivables

5,233,542

4,901,196

5,233,542

4,901,196

Other receivables - current

975,341

935,407

1,114,790

1,083,553

Total loans and receivables carried at amortised cost

6,208,883

5,836,603

6,348,332

5,984,748

 

 

 

 

 

Total financial assets

10,543,157

12,867,970

9,614,518

13,013,767

 

 

 

 

 

Total current financial assets

1,099,514

3,261,388

1,218,378

3,407,185

Total non-current financial assets

9,443,643

9,606,582

8,396,140

9,606,582

 

Financial liabilities

 

 

 

 

Short-term borrowings, including intra-group

1,121,392

1,008,825

1,121,392

1,008,825

Trae and other payables, excluding accruals

1,440,924

1,237,089

1,435,800

1,233,618

Total current financial liabilities

2,562,316

2,245,914

2,557,192

2,242,444

               

 

Other receivables and trade payables

Management assessed that fair values of other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

 

Non-current receivables

Long-term fixed-rate receivables are evaluated by the Group based on parameters such as interest rates, recoverability and risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for any expected losses on these receivables.

 

Loans and borrowings

The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer's borrowing rate.

 

The carrying value of current financial liabilities in the Company is not materially different from that of the Group.

 

23.2 Fair Values

23.2.1 Fair Values of Financial Assets and Liabilities

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

·      Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

·      Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

·      Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The carrying amount of the Company's financial assets and liabilities is not materially different to their fair value. The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Where a quoted price in an active market is available, the fair value is based on the quoted price at the end of the reporting period. In the absence of a quoted price in an active market, the Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.

 

Group
30 June 2019

Level 1

£

Level 2

£

Level 3

£

Total

£

FVTOCI financial assets

 

 

 

 

- Unquoted equity shares

-

-

275,000

275,000

- Quoted equity shares

3,935,101

-

-

3,935,101

FVTPL (Para warrants)

-

-

60,345

60,345

 

Company
30 June 2019

Level 1

£

Level 2

£

Level 3

£

Total

£

FVTOCI financial assets

 

 

 

 

- Unquoted equity shares

-

-

275,000

275,000

- Quoted equity shares

2,887,597

-

-

2,887,597

FVTPL (Para warrants)

-

-

60,345

60,345

 

 

 

 

 

Group and Company

30 June 2018

Level 1

£

Level 2

£

Level 3

£

Total

£

FVTOCI financial assets

 

 

 

 

- Unquoted equity shares

-

-

385,894

385,894

- Quoted equity shares

4,319,492

-

-

4,319,492

FVTPL (Para warrants)

-

-

60,345

60,345

 

23.3 Financial Risk Management Policies

The Directors monitor the Group's financial risk management policies and exposures and approve financial transactions.

The Directors' overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements.

 

Specific financial risk exposures and management

The main risks the Group are exposed to through its financial instruments are credit risk and market risk, consisting of interest rate risk, liquidity risk, equity price risk and foreign exchange risk.

 

Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss for the Group.

Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and counterparties to transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for impairment.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Directors have otherwise cleared as being financially sound.

 

Other receivables which are neither past due nor impaired are considered to be of high credit quality.

 

The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Limited, an associate of the Company. See note 1.5, 'Significant accounting judgements, estimates and assumptions' and note 17 for further details. 

 

Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:

·      monitoring undrawn credit facilities;

·      obtaining funding from a variety of sources; and

·      maintaining a reputable credit profile.

The Directors are confident that adequate resources exist to finance operations for commercial exploration and development and that controls over expenditure are carefully managed.

 

Management intend to meet obligations as they become due through ongoing revenue streams, the sale of assets, the issuance of new shares, the collection of debts owed to the Company and the drawing of additional credit facilities

 

Market risk

Interest rate risk

The Company is not exposed to any material interest rate risk.

Equity price risk

Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities, but also include political, economic, social, technical, environmental and regulatory factors.

Foreign currency risk

The Group's transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, US Dollar, Kenyan Shilling and Euro.

To mitigate the Group's exposure to foreign currency risk, non-Sterling cash flows are monitored. The Group does not enter into forward exchange contracts to mitigate the exposure to foreign currency risk as amounts paid and received in specific currencies are expected to largely offset one another and the currencies most widely traded in are relatively stable.

The Directors consider the balances most susceptible to foreign currency movements to be financial assets with FVTOCI.

 

These assets are denominated in the following currencies:

 

Group
30 June 2019

GBP

£

AUD

£

USD

£

EUR

£

CAD

£

Other

£

Total

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

20,977

268

37,628

-

-

4,955

63,828

Amortised cost financial assets - Other receivables

665,353

-

199,936

-

-

110,051

975,341

FVTOCI financial assets

152,267

3,528,166

275,000

-

254,669

-

4,210,101

FVTPL financial assets - warrants

-

-

-

-

60,345

-

60,245

Amortised costs financial assets - Non-current receivables

3,887,434

-

1,346,108

-

-

-

5,233,542

Trade and other payables, excluding accruals

372,282

3,993

76,583

437

964,440

23,189

1,440,924

Short-term borrowings

998,980

-

122,412

-

-

-

1,121,392

 

 

 

 

 

 

 

 

 

Group
30 June 2018

GBP

£

AUD

£

USD

£

EUR

£

CAD

£

Other

£

Total

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

460,575

2,803

1,799,774

-

-

2,484

2,265,636

Amortised cost financial assets - Other receivables

578,421

-

255,630

-

-

101,355

935,407

FVTOCI financial assets

9,323

4,050,886

275,000

110,894

259,284

-

4,705,386

FVTPL financial assets - warrants

-

-

-

-

60,345

-

60,345

Amortised costs financial assets - Non-current receivables

3,599,439

-

1,301,757

-

-

-

4,901,196

Trade and other payables, excluding accruals

384,256

2,460

46,283

432

779,704

23,953

1,237,089

Short-term borrowings

1,008,825

-

-

-

-

-

1,008,825

 

 

 

 

 

 

 

 

                     

 

 

Company
30 June 2019

GBP

£

AUD

£

USD

£

EUR

£

CAD

£

Other

£

Total

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

20,977

-

22,130

-

-

135

43,243

Amortised cost financial assets - Other receivables

665,353

-

199,936

-

-

249,501

1,114,790

FVTOCI financial assets

152,267

2,480,662

275,000

-

254,669

-

3,162,597

FVTPL financial assets - warrants

-

-

-

-

60,345

-

60,345

Amortised costs financial assets - Non-current receivables

3,887,434

-

1,346,108

-

-

-

5,233,542

Trade and other payables, excluding accruals

372,282

3,295

76,583

437

964,440

18,763

1,435,800

Short-term borrowings, including intra-group

998,980

-

122,412

-

-

-

1,121,392

 

 

 

 

 

 

 

 

 

Company
30 June 2018

GBP

£

AUD

£

USD

£

EUR

£

CAD

£

Other

£

Total

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

460,575

2,803

1,799,773

-

-

135

2,263,288

Amortised cost financial assets - Other receivables

578,421

-

255,631

-

-

249,501

1,083,553

FVTOCI financial assets

9,322

4,050,886

275,000

110,894

259,284

-

4,705,386

FVTPL financial assets - warrants

-

-

-

-

60,345

-

60,345

Amortised costs financial assets - Non-current receivables

3,599,439

-

1,301,757

-

-

-

4,901,196

Trade and other payables, excluding accruals

384,256

2,460

46,283

432

779,704

20,555

1,233,691

Short-term borrowings

1,008,825

-

-

-

-

-

1,008,825

 

 

 

 

 

 

 

 

                       

 

Exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions.

 

24. Reconciliation of Liabilities Arising from Financing Activities

 

 

30 June 2018

Cash flow loans received

Cash flow loans re-payment

Cash flow

Interest paid

Non-cash flow Forex movement

Non-cash flow Conversion

Non-cash flow Interest and arrangement fee accreted

Non-cash flow

Introducers fee settled in shares

Non-cash flow

Introducers fee accrued

30 June 2019

Loan from institutional investors

-

114,483

-

-

3,936

-

3,995

-

-

122,414

Convertible notes

1,008,825

585,000

(365,000)

(121,012)

-

(275,000)

130,405

(13,750)

49,513

998,980

Total

1,008,825

699,483

(365,000)

(121,012)

3,936

(275,000)

143,400

(13,750)

49,513

1,121,394

 

 

25.    Operating Lease Commitments

On 21 August 2017, the Company entered into a new lease agreement for office space with WeWork Aldwych House.  The initial lease runs from 1 October 2017 through 30 September 2019 and is non-cancellable during this period.  Thereafter the lease can be terminated by giving one full calendar month notice.

 

The Group and Company's total of future minimum lease payments under non-cancellable operating leases are as presented in the table below:

 

 


 

Group

2019

£

Group   2018

£

Company

2019

£

Company   2018

£

Not later than one year

7,560

30,114

7,560

30,114

Later than one year and not later than five years

-

7,560

-

7,560

Later than five years

-

-

-

-

Total non-cancellable operating lease commitments at 30 June

7,560

37,674

7,560

37,674

 

 

26. Significant Agreements and Transactions

The following are the significant agreements and transactions recently undertaken having an impact in the year under review. For the sake of completeness and of clarity, some events after the reporting period are included here and in note 28.

 

Financing

On 2 November 2018 the Company announced that holders of £575,000 of principal value of convertible loan notes, out of £950,000 still outstanding, have to date applied to renew the notes for twelve months to a new final redemption date of 19 December 2019 on the same terms.  Further, the warrants outstanding to these noteholders have similarly been extended on the same terms to 30 April 2020. 

 

On 2 January 2019 the Company announced that a holder of a further £10,000 of convertible loan notes had elected to renew on the same terms, and that subscriptions for £325,000 of new series 2 notes had been issued on the same terms and to a maximum principal value of £500,000.  £50,000 of the series 1 notes were exercised during the year and £365,000 had been redeemed.  Therefore £585,000 of the original series 1 notes and £325,000 of series 2 notes were therefore outstanding and due 19 December 2019. 

 

On 23 April 2019 the Company announced that it had raised £323,750 by way of a placing of 64,480,391 new ordinary shares at a price of £0.0051 per share with 1 for 2 warrants exerciseable at a price of £0.0075 per share for a period of twenty-four months.

 

On 17 December 2019, the Company announced that holders of £830,000 of principal value of convertible loan notes, first announced on 10 November 2017 and again on 2 January 2019, had applied to renew the notes with a new final redemption date of 19 December 2020.  These renewed notes would carry an interest rate of 12% and a conversion price of £0.006 per share.  The warrants associated with renewing note holders were extended and will not expire on 19 December 2022 and carry a strike price of £0.009 per share.   

 

Power Metal Resources (AIM:POW) (Ex African Battery Metals)

The Company announced on 30 January 2019 that it had been able to assist with the refinancing and planned resumption of trading at African Battery Metals, a holder of exploration licenses in Ivory Coast, Cameroon, and Congo.  ABM made a loss of £3.945m in the year to 30 September 2017 and was suspended from trading on 11 December 2018 pending clarification of its financial position.

 

Red Rock sees common interests to be developed, and possible synergies to be unlocked, through a relationship with ABM, and welcomes the opportunity to broaden its network of contacts in the promising and strategic African mineral and battery metal markets.

 

Should ABM shareholders approve the refinance at their general meeting on 15 February 2019, and trading resume in ABM's securities on AIM, Red Rock will receive 20,000,000 ABM shares at a price of £0.005 per ABM share and a total cost of £100,000, and will receive 5,000,000 fee shares for its services in connection with the refinancing proposals, giving it a 6.89% holding in the capital of ABM post-transaction.

 

Andrew Bell, a director of the Company, will participate in the £1,000,000 conditional placing announced by ABM and will upon fulfilment of all conditions including resumption of trading join the board of ABM as Chairman. Any remuneration received by him in relation to this role will be published on the ABM website and will be performance-based.

 

Steelmin

On 23 July 2018 the Company announced that commissioning of the ferrosilicon smelter in Bosnia had progressed and was building to full power while ongoing checks on material were being conducted.  As of July 2018, the plant was operating at 24MW and had achieved commercial production.   

 

On 28 September 2019 the Company announced that the ferrosilicon plant in Jajce, Bosnia recommissioned and brought back into production earlier this year by Steelmin Limited, 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 were believed to exist, and these were being investigated.

 

Jupiter Mines

On 17 September 2018 the Company announced that Jupiter Mines Limited, a company in which Red Rock held 18,524,914 shares had released an announcement in which it indicated that it would issue an interim unfranked dividend of AUD$0.05 per share.  This equated to a near 100% payout ratio post South African withholding tax and Jupiter's own income tax payment.  The dividend record date is 24 September 2018 and will be paid on 10 October 2018.  

 

On 12 October 2018 further to the announcement of 17 September 2018 the Company announced that it had received a US$658,545.69 dividend from Jupiter Mines Limited, in respect of the first half of Jupiter's financial year, which ran from 1st March 2018.

 

On 19 February 2019 the Company announced, based on an announcement made on 19 February 2019 by Jupiter Mines Limited, a company in which Red Rock holds 18,524,914 shares (0.95%), that it would receive AUD$462,122.85 or approximately US$329,140, as a final dividend from its holding in Jupiter Mines in May 2019.  This followed on a US$658,545.69 interim payment in October 2018.   

 

Investment in and Loan to Amulet Diamond Corporation

On 19 July 2018 the Company agreed to subscribe for 35,519 common shares in Amulet Diamond Corporation at a subscription price of US$2.76 per common share.  The Company further subscribed to US$401,961 of shareholder loans.  These shareholder loans are unsecured, non-interest bearing and have no fixed maturity or repayment date.  These loans must be repaid by Amulet Diamond Corporation before any distributions are made to common shares, including any dividend payment or return of capital.

 

Amulet Diamond Corporation holds an option to acquire 100% of a kimberlite mining operation and license in Botswana.  An existing processing plant is in place with 100tph capacity and a bulk sampling programme is planned for H2 2018.  The resource is an open pit of up to 9MT of kimberlite and Amulet aims to produce 100kcpa with minimal further investment.         

 

Democratic Republic of Congo Copper-Cobalt VUP JV

On the 27th of September 2017 the Company announced that it has entered into a conditional agreement with Cobalt Blue Limited, a private Isle of Man company ("COB"), to acquire an interest in a Joint Venture company ("JVCo") to be newly formed for the exploitation of four or five copper/cobalt tailings near Kolwezi in the Democratic Republic of Congo ("Agreement" and "DRC"). RRR had 40 days for due diligence and an exclusivity period of 45 days. In the event that RRR elected to proceed with the transaction following due diligence and fulfilment or waiver of the conditions, it will acquire 26.25% of JVCo for:

 

·      Cash payment of US$700,000

·      £490,000 payable in RRR shares ("Shares") at £0.0065 a share, with attached 5 for 3 three-year warrants to subscribe for new Shares at 1p ("Warrants")

·      Commitment by RRR to fund US$1.2m of exploration expenditure over 18 months to produce a bankable feasibility study ("BFS") on Kamirombe, and thereafter pro rata.

·      Following completion of a BFS, Red Rock will have six months within which to elect to pay US$1m to farm into a further 26.25% of the JVCo bringing its interest to 52.5%

 

On 3 November 2017 the Company announced that the due diligence period had been extended by 30 days to allow additional time to complete the planned drilling and laboratory analysis in order to determine whether to proceed with the investment and JVCo. 

 

On 31 January 2018 the due diligence period was further extended until 16 March 2018.

 

On 29 March 2018 the Company announced that its prospective joint Venture partners have engaged a drilling contractor to conduct work on the three copper/cobalt tailings dams not tested so far. Drilling and sampling work scheduled by Cobalt Blue to be completed by 30 April 2018, with the objective of defining a JORC (2012) resource report and final due diligence report to be received in May 2018 following laboratory analysis of the auger and bulk samples and receipt of assays. The due diligence period was further extended to 31 May 2018 to allow sufficient time for this work to be completed

 

On 30 August 2018 Red Rock announced progress in relation to the conditional agreement first announced on 27 September 2017, and supplemented most recently by further announcements dated 29 March 2018 and 15 June 2018, to acquire an interest in a Joint Venture company to be formed for the exploitation of copper/cobalt tailings and dumps near Kolwezi in the Democratic Republic of Congo.  Pursuant to the Agreement Red Rock made the initial payment of US$50,000, and conducted due diligence, including drilling and testwork.

 

In accordance with the terms of the Agreement, an adjustment is being made by our local partner, Vumilia Pendenza S.A.("VUP") to ensure that the areas comprising the Project have acceptable quantities and grades of mineralisation. This may involve, as noted in the announcement of 26 September 2017, adding areas; it may also involve dropping certain of the areas and substituting others. 

 

Minor adjustments have been made to the Agreement to reflect the passage of time and the opportunity cost borne by Red Rock which have the effect of slightly reducing the overall cost and simplifying the transaction. The immediate counterparty has been changed from an Isle of Man company to a Congolese company, Bring Minerals SAU ("BRO").

 

Highlighted changes:       

   

·      Red Rock now acquires 50.1% on completion instead of 26.25% of JVCo for:

Cash payment of US$700,000 (unchanged) upon BRO providing proof of it Rights over the VUP Project

£490,000 payable in Red Rock shares  at £0.007 a share (revised from £0.0065), with attached 1-for-1 (revised from 5-for-3) three year warrants to subscribe for new Shares at £0.01

 

·      The obligation by Red Rock to fund US$1.2m of exploration expenditure over 18 months to produce a bankable feasibility study  disappears

 

·      Instead of Red Rock having six months within which to elect to pay US$1m to farm in to a further 26.25% of JVCo, bringing its interest to 52.5%, after a BFS is completed, Red Rock holds 50.1% immediately on completion and US$1m will be paid as a post-completion obligation if and when commercial production begins.

 

·      Whereas before a 0.4% royalty was due to a partner but could be bought out, the buyout provision has been deleted but Red Rock will also enjoy a 0.4% royalty.

 

On 28 September 2018 the Company announced that it has received indications that make it prudent to qualify the guidance in the announcement of 30 August 2018  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.  

 

On 22 November 2018 the Company announced that it considers that key conditions precedent noted as remaining in the announcement of 30 August 2018, being defining and outlining the final areas comprising the JV as well as remaining legal and technical due diligence, have now been fulfilled, and it was therefore proceeding to completion with Bring Minerals SAU, its counterparty under the terms of the agreement.  Under these terms Red Rock has made the initial cash payment of US$250,000.  Cash payments of a further US$250,000 and £490,000, the latter payable in Red Rock shares at a price of £0.007 per share with attached 1 for 1 three year warrants to subscribe for new shares at £0.01 will be made upon execution of certain detailed documents governing the conduct of the joint venture.  

 

Post Completion Obligations:

 

Further payments will be made in accordance with the announcement of 30 August 2018, being US$200,000 upon the earliest of (a) confirmation of economic mineralisation to the satisfaction of the parties (b) definition of a compliant Resource at Indicated or above status or of a Reserve (c) decision to mine and US$1m as a post-completion obligation if and when commercial production begins.  Formation of a joint venture company between Red Rock, Bring Minerals, and local partner Vumilia Pendeza SA in the proportions 50.1/29.9/20 percent. 

 

On 19 December 2019 the Company announced that payment of the £490,000 tranche of consideration for the copper-cobalt joint venture had been made.  The joint venture parties have organised a local company, Musonoi Mining SA, to be owned 50.1% by Red Rock and to hold the joint venture interests of the parties.  The vendors have been issued 70,000,000 Red Rock shares at £0.007 per share with attached 1 for 1 three-year warrants to subscribe for new shares at an exercise price of £0.01 per share, as settlement of the £490,000 tranche of consideration.  A further $250,000 payment will be made upon completion of the remaining documentation, which is expected early in 2019.  A report and plan is scheduled to be submitted to local partner La Générale des Carrières et des Mines ("Gécamines") by the end of the year, and the Company has been preparing this, collating a large quantity of historic data and working with its consultant geologists Minex Consulting SA to ensure timely submission.      

 

On 6 March 2019 the Company announced that at a meeting with representatives of Vumilia Pendeza S.A. and Bring Minerals S.A.U. the joint venture partners, Red Rock Resources Congo S.A.U, a wholly owned local subsidiary of the Company, signed on Friday 2 March 2019, the joint venture contract formalising the relationship of the parties, and the statutes of VUP Musonoi Mining SA, the joint venture company through which the JV project will be pursued.  Red Rock Resources Congo owns 50.1% of Vumilia Pendeza S.A.  Red Rock Resources Congo, Vumilia Pendeza S.A. and Bring Minerals executed a joint venture contract relating to the exploitation of the PEs no. 4962 (2 carrés), no. 2360 (4 carrés) and no. 663 (6 carrés) in the Provinces of Haut-Katanga and Lualaba, which formalises the relationship of the parties.  With the execution, notarisation, and registration of these documents the joint venture would become fully effective.

 

On 26 June 2019 the Company announced that it had carried out work identifying and assessing the old drill core from previous exploration activities at its Musonoi joint venture asset.  This work was part of a process of validating the results from historic drilling in order to bring the historic non-compliant resource to the modern disclosure standard so that the Company can announce a JORC Resource (a Resource compliant with the standards established by the Australasian Joint Ore Reserves Committee under the JORC Code 2012).  These works are expected to continue in the coming quarter.  Of the US$250,000 final payment to the project vendors upon completion of documentation, stated in the announcement of 19 December 2018 as expected to be payable early in 2019, US$150,000 has been paid to date reflecting the degree of accomplishment.

 

Democratic Republic of Congo - Congo Galaxy JV

On 17 October 2018 the Company announced commencement of a soil sampling programme on a new license in the Copperbelt in the south of the Democratic Republic of Congo ("DRC") near the Zambian border. The license is considered prospective for copper and cobalt mineralisation, and was recently acquired from a private seller.  80% of license PR13513 was acquired together with a nearby license and a gold-prospective license in the northern DRC adjacent to the licenses containing Randgold's Kibali mine, at a cost of US$60,000. The balance of 20% of the licenses is retained by the vendor, Congo Geologist Galaxy.

 

Gold Exploration Licenses in Kenya

On 7 May 2015, the Company announced that its partner, Mid Migori Mining Ltd ("MMM"), has been advised by the Ministry of Mining of the termination of its Special Licenses numbers 122 and 202 ("the SLs"). MMM intends to challenge this purported termination. MMM also continues to have an application for a Mining License over a part of the SLs, submitted in 2012 pending at the Ministry.

 

On 26 June 2015, the Company announced that it has been granted leave to institute judicial review proceedings and a stay in relation to the purported termination of the Special Licenses covering the Migori Gold Project of its partner Mid Migori Mining Ltd ("MMM"). Red Rock has now executed an agreement with Kansai Mining Corporation Ltd ("Kansai"), the other shareholder in MMM, pursuant to which Red Rock's farm-in agreement is replaced by arrangements under which any interest in the Migori Gold Project or the other assets of MMM that may be retained by or granted to MMM or Red Rock shall be shared in the ratio 75% to Red Rock and 25% to Kansai. Kansai's interest will be carried up to the point of an Indicated Mineral Resource of 2m oz gold. Red Rock is to have full management rights and the conduct of legal proceedings on behalf of both MMM and itself. Red Rock at the same time surrenders all its share interest in Kansai and pays £25,000 to Kansai, with a further £25,000 due upon recovery of the Migori Gold Project. 

On 15 June 2018 the Company announced that a revision to earlier agreements with Kansai Mining Corporation was executed, and that the effect of the revision is that Kansai exchanges its 25% carried interest in the mineral assets of Mid Migori Mining in exchange for a US$50,000 payment, leaving Red Rock with a 100% interest in the assets.  In the event of a renewal or reissue of the licenses Red Rock will make within three months further payments of US$2.5m in cash, a US$1.0m promissory note payable 15 months after issue, and £500,000 of warrants in Red Rock shares at a price 20% above the average closing prices three days prior to issue. 

On 28 September 2018 the Company announced that it was in discussion with the Kenyan Government regarding the terms on which the Company would settle the judicial review proceedings it instituted in 2015 in order to achieve the restoration of its licenses, which contain a 1.2m oz JORC gold resource, based on exploration through 2011. 

On 22 October 2018 the Company announced that a consent had been signed on behalf of the attorney general and the Company and was to be filed with the court.  Under the terms of the consent the parties agreed that the case by marked as withdrawn with no order as to costs and that the Company would be at liberty to apply for licenses under section 225(6) of the Mining Act 2016, and that pervious decisions will not be prejudicial to such applications. 

27. Related Party Transactions

·       The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled on a quarterly basis. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charge for the year was £58,329 (2017: £45,699). Of this, £2,342 was outstanding at 30 June 2019 (2018: £14,096).

·       The costs incurred by the Company on behalf of Regency Mines plc were £49,135 (2018: £42,200) in relation to shared services during the year.  Of this, £31,372 was outstanding at 30 June 2019 (2018: £13,376).

·       Related party receivables and payables are disclosed in notes 18 and 19.

·       The Company held 1,695,000 shares (2.31%) in Regency Mines plc as at 30 June 2019 (2018: 1,695,000 (1.26%)).

·       The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2019 and at 30 June 2018 are shown in the Director's Report.

·       The key management personnel are the Directors and their remuneration is disclosed within note 9.

 

28.  Events After the Reporting Period

On 19 of September 2019 the Company announced that following the termination in October 2018 by a Consent Order between the parties of the legal proceedings instituted by Red Rock and its local partner, the Company caused the appropriate applications under section 225(6) of the Mining Act 2016 to be made.  Red Rock is pleased to note the approval for the grant of licenses by the Mining Rights Board on the mining cadastre website. Upon receipt of official confirmation of intended grant, the Company will be invited to fulfil fee payment and registration requirements. The grant of the licences remains subject to the approval of the Cabinet Secretary and a further announcement will be made as and when the licences are confirmed.

 

On 30 October 2019 the Company announced that it had appointed Pello Capital Limited as joint broker to the Company with immediate effect. 

 

On 31 October 2019 the Company announced that Jupiter Mines Limited, an Australian public company in which Red Rock holds 17,024,914 shares (0.87%) and which owns 49.9% of the Tshipi Borwa manganese mine in South Africa, has released its interim results for the six months to 31 August 2019, and declared a AUD$78,359,641.32 interim dividend.  This dividend is equivalent to AUD$0.04 per Jupiter share and will be paid on 21 November. Red Rock will receive AUD$680,996 (approximately US$467,980 or £363,447).  The trading price for Jupiter shares in the market is AUD$0.325 per share, and the dividend represents a six-month yield of 12.3%.

 

On 5 December Regency Mines plc ("Regency") announced that, subject to the passage of relevant resolutions at a general meeting to be held on 23 December 2019, it had agreed to issue 530,030,036 subscription shares in Regency, representing obligations of £145,758.30, in full extinguishment of such obligations.

 

On 17 December 2019, the Company announced that holders of £830,000 of principal value of convertible loan notes, first announced on 10 November 2017 and again on 2 January 2019, had applied to renew the notes with a new final redemption date of 19 December 2020.  These renewed notes would carry an interest rate of 12% and a conversion price of £0.006 per share.  The warrants associated with renewing note holders were extended and will not expire on 19 December 2022 and carry a strike price of £0.009 per share.   

 

Annual General Meeting

The Company intends to issue a notice of Annual General Meeting of shareholders to be held on 29 January 2020 for the purpose of dealing with the usual business applicable at such a meeting.

 

29.  Commitments

As at 30 June 2018, the Company had entered into the following commitments:

·      Exploration commitments: no ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits in Kenya pending regrant/renewal. No provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of operations of the Group.

·      On 26 June 2015 the Company announced an agreement with Kansai Mining Corporation Ltd pursuant to which Red Rock's farm in agreement was replaced by agreements under which any interest in the Migori Gold Project or the other assets of Mid Migori Mines that may be retained or granted to Mid Migori Mines or Red Rock would be shared 75% to Red Rock and 25% to Kansai.  Kansai's interest was to be carried up the point of an Indicated Mineral Resource of 2m oz of gold.  Red Rock was to have full management rights of the operations and of the conduct of legal proceedings on behalf of both Mid Migori Mines and itself. On 15 June 2018 Red Rock announced a revision to this agreement. The effect of the revision is that Kansai exchanged its 25% carried interest under the 2015 agreement for a US$50,000 payment, leaving Red Rock with a 100% interest. In the event of a renewal or reissue of licenses covering the relevant assets the Company will within three months make further payments, subject to such renewal or resissue not being on unduly onerous terms, as follows: (1) US$2.5m payable in cash, (2) a US$1m promissory note payable 15 months after issue, and (3) £500,000 of warrants into Red Rock shares at a price 20% above their average closing price on the three trading days prior to issue.   

·      On 21 September 2019 the Company entered into a new lease agreement for office space with WeWork Aldwych House.  The initial lease runs from 1 October 2019 through 30 October 2019.  The lease can be terminated by giving one full calendar month's notice. More details are disclosed in note 25.  

 

30.    Assets Pledged as Collateral

On 11 April 2019, RRR Coal Limited, a company 100% owned by Red Rock Resources plc, agreed to a standby Loan Facility of up to US$1,000,000.  The maximum amount drawn down under this facility has been US$200,000. As security for any funds drawn down, RRR Coal Limited has agreed to maintaining a value of shares in Jupiter Mines Ltd equal to three times the amount outstanding on the loan facility as calculated by the value weighted average price for the proceeding five days prior.  At the time of completion 5,500,000 shares of Jupiter Mines were pledged to the noteholders and a Corporate Guarantee was also executed.     

 

31.    Control

There is considered to be no controlling party.

 

32.    These results are audited, however the information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006.  The consolidated statement of financial position at 30 June 2019 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2019 statutory financial statements.  Their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2019 will be delivered to the Registrar of Companies by 31 December 2019.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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