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Red Rock Resources - Jupiter Mines:Equal Access Buy Back

RNS Number : 8138U
Red Rock Resources plc
23 January 2017
 

Red Rock Resources plc

 

("Red Rock" or the "Company")

 

Jupiter Mines: Equal Access Buy Back

 

23 January 2017

 

Further to the announcement of 21st November 2016, and the Annual Report released 1st December 2016, Red Rock announces that Jupiter Mines Ltd ("Jupiter"), an Australian unlisted public company in which Red Rock owns 27,324,375 shares, has given further details of its planned USD 55m distribution to shareholders.

 

Highlights:

 

·     US$55m distribution by Jupiter will be by an equal access share buy-back

·     All Jupiter shareholders will be made an equal offer to buy back 6% of their shares

·     Buy-back price will be US$0.40 per Jupiter share

·     Payment is expected to be Monday 13th March 2017

·     Further distributions might follow in due course

·     Payment to Red Rock would be US$655,785 (c£530,000)

·     Value of Red Rock's post-distribution holding at buy-back price is c£8.3m

•     Production target for 2017/18 revised up to 3m tons of manganese ore

·     Jupiter to consider strategic options, which may include relisting, and is appointing advisors

Red Rock Chairman Andrew Bell comments: "The distribution, by way of an equal access share buy-back, is being accepted by directors and we expect it to be accepted by the other significant shareholders. Our percentage shareholding will then remain unchanged. At the buy-back price our holding is valued at £8.83m, compared with the carrying value in our books of £1.5m. The expectation of a further increase in manganese sales, and the possibility of further distributions, sale of the asset or a relisting later in the year, mean that we expect value to continue to increase."    

 

Notes

 

The manganese mine owned by Jupiter's 49.9% owned associate Tshipi é Ntle Manganese Mining Proprietary Ltd ("Tshipi") is in the Kalahari Manganese Basin of South Africa, thought to contain some 80% of the world's metallurgical grade manganese. Tshipi is one of the five largest manganese operations globally, and one of the three largest in South Africa.

 

The Tshipi mine has been in operation as an open pit mine over three full years. In these years, to February 2016, the average manganese price for the 37% ore that Tshipi is producing has been US$3.06 per DMTU (Dry Metric Tonne Unit). The manganese price has been in decline over the period, reaching lows of US$1.32 per DMTU towards the end of the last financial year. There has been a recovery since, with the price trading for much of this year between US$2 and US$3 per DMTU and recently at levels often exceeding US$6 per DMTU. 

 

The Tshipi mine is in the lowest cost quartile of global manganese producers. Classified Resources of the Bottom Cut, which is currently being mined, were stated to be 163m tons at 37.1% in the Independent Technical Report announced by Jupiter on 6 July 2010. It was noted that down dip from the open pit design, the Resource was open and there was scope for significant increase in the Classified Resource base. Resources in the Upper Cut, currently mainly being stockpiled, were stated to be 145m tons at 31.75%.

 

Production capacity was 2.4m tons per annum and is increasing to 3.6m tons per annum. Production in the three years to 28 February 2016 was 0.94m t, 2.11m t and 1.54m t respectively, with the target for the current year initially set at just under 2m t but now expected to be comfortably exceeded. The target for next year is 3m t.

 

On 21 November 2016 Jupiter announced that Tshipi had resolved to distribute ZAR 1 billion to its shareholders in respect of the year ending 28 February 2017. Jupiter has resolved on receipt of its portion of this payment to distribute US$55m to its own shareholders.

 

Red Rock holds 27,324,374 shares in Jupiter, equivalent to approximately 1.2% of the issued share capital. The carrying cost of this investment in the books of Red Rock at the date of the last audited accounts, 30 June 2016, was £1,483,119.

 

Further details of the distribution planned are available on Jupiter's website at www.jupitermines.com 

 

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

 

For further information, please contact:

 

Andrew Bell 0207 747 9990                                                       Chairman Red Rock Resources Plc

Scott Kaintz 0207 747 9990                                                        Director Red Rock Resources Plc

Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396            NOMAD Beaumont Cornish Limited

Jason Robertson 0129 351 7744                                                Broker Dowgate Capital Stockbrokers Ltd


This information is provided by RNS
The company news service from the London Stock Exchange
 
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