Red Rock Resources (LON:RRR) shares advanced 6 percent as its associate Jupiter Mines (ASX:JMS) secured A$150 million to develop the Tshipi Borwa and Mt Ida manganese projects.
Jupiter has earmarked A$100 million for Tshipi, which is located in the Kalahari Manganese Field in South Africa, and A$40 million to fast-track the Mt Ida manganese magnetite project in Australia. It will also fund the smaller Mt Mason direct shipping iron project, in the Central Yilgarn Region of Western Australia.
In addition to its equity stake in Jupiter - currently 5.2 percent - Red Rock will also benefit directly from the fast-tracking of Mt Ida.
The company sold Mt Ida to Jupiter back in 2007 and it retains a 1.5 percent gross production royalty for the project. As such it is now set to receive its share of production revenues faster than before.
Until recently Red Rock owned just over 25 percent of Jupiter’s shares, then last year the ASX-listed firm agreed a transformational deal to acquire a 49.9 percent stake in the Tshipi Manganese from Pallinghurst Resources (JSE:PGL) and its associates through the issue of 1.1 billion new shares.
The deal valued Tshipi - which has a SAMREC mineral resource of 163.23 million tonnes grading 37.1 percent manganese - at A$490 million.
While the deal diluted Red Rocks equity stake to 5.2 percent the massive new project has increased the overall value of the investment.
In this new fundraising Jupiter will issue just over 114 million new shares to a mix of institutional investors and Pallinghurst (and its associated investors), at 70 pence per share.
As a result of this latest dilution Red Rock will own 4.6 percent of Jupiter Mines.
Red Rocks stake in Jupiter Mines represents a valuable, albeit non-core, asset. The company’s current strategy is primarily focused on gold, and more specifically acquiring interest in near-term gold production.
It currently has interests in 3 producing gold mines - two in Colombia and one in Puerto Rico - through separate arrangements with Mineras Four Points SA (Colombia) and Ascot Mining (PLUS:ASMP). It also has its own exploration and mine development assets in Kenya.