Further re Acquisition

RNS Number : 2560Z

Red Rock Resources plc

17 September 2009

 

RED ROCK RESOURCES PLC 

Completion of acquisition of interest in Mid-Migori Mining Company Ltd

Dated: 17 September 2009 

Red Rock Resources plc ('Red Rock' or the 'Company') the mining exploration and mineral investment company with interests in iron ore, manganese and gold exploration in Australia, manganese in Zambia, and uranium investments in Africa and Australia, is pleased to announced that, further to the notification released on 14 August 2009, it has completed its due diligence in connection with the agreement (the 'SPA') with Kansai Mining Corporation Limited ('Kansai'). Under the agreement Red Rock may acquire up to 60 per cent of the issued share capital of Kansai's wholly owned subsidiary company Mid-Migori Mining Company Ltd ('MMM'), a company incorporated in Kenya which owns the beneficial title and mining rights to the Migori Gold Project.  The Company will accordingly be allotted 15 per cent of the issued share capital of MMM and has paid the first tranche consideration amounting to US$75,000 cash and US$80,000 satisfied by the issue on 16 September of 3,505,661 new ordinary shares in Red Rock, fully paid.  Additional consideration of US$570,000, of which US$275,000 is to be settled in cash, is due in two further tranches over six months as detailed below.

The Migori Gold Project has an Indicated Resource of 1,172,000 ounces gold, with an expectation that this figure could be raised significantly on resumption of the incomplete 2007 drill programme or with other exploration work.

In summary the 1,172,000 ounces of Indicated Resource to date, together with tailings from the old Macalder mine of 67,000 ounces seemingly measured, together with over thirty other gold shows either scout drilled or as yet untested, indicates potential for development of a significant gold field of several million ounces of recoverable gold, analogous to recent discoveries across the border in Tanzania, and the possibility of further volcanic massive sulphide ore-bodies similar to Macalder.

Payment and Nature of Consideration

The second and third tranches are due to be paid three and six months after completion. The number of shares to be issued will be calculated by reference to the volume-weighted average share price of Red Rock in the three trading days before each payment is due. The total cash element of the consideration is US$350,000 and the amount payable in each tranche is as below:

	Cash	Shares
Tranche 1 (paid)	$75,000	$80,000
Tranche 2	$125,000	$135,000
Tranche 3	$150,000	$160,000

Red Rock is now the manager of the mining tenements and related information and intellectual property rights and will be responsible for the cost of exploration of the mining tenements until completion of a bankable feasibility study. Provided that Red Rock has not terminated the SPA on the giving of six month's notice and that a bankable feasibility study has been completed within six years of the SPA, Kansai will issue or transfer a further 45 per cent of the issued share capital of MMM to Red Rock.

Any net income generated by sale of minerals from the mining tenements will be applied, first, to offset consideration amounts; secondly, to finance exploration up to completion of a bankable feasibility study; and finally, to payment of dividends to the shareholders for the time being of MMM.

At 30 September 2008, MMM's unaudited management accounts showed total assets of KES 83.54 million (approximately £670,000) and net liabilities of KES 30.67 million (approximately £246,000). 

Following the issue of the Tranche 1 consideration shares the Company's total issued ordinary share capital will be 468,349,048 ordinary shares of 0.1p. Application has been made to the London Stock Exchange for the shares, which rank pari passu with the Company's existing issued ordinary shares, to be admitted to trading on AIM. Dealings are expected to commence at 8.00 a.m. on 23 September 2009.

All figures for Resources stated herein are compiled in accordance with the standards of Canadian National Instrument 43-101. The technical information in this announcement has been prepared and approved for release by Bruce Walsham, BSc, FIM, CEng., FIMM, FSEG, the President of Kansai Mining Corporation. He is a qualified person in terms of National Instrument 43-101 and as defined in the Note for Mining and Oil & Gas Companies, June 2009, of the London Stock Exchange.

Enquiries:

Red Rock Resources plc
Andrew Bell, Chairman	0207 402 4580 07766 474849
John Watkins	07768 512404
Nominated Adviser
Blomfield Corporate Finance Ltd
Peter Trevelyan-Clark/ Ben Jeynes	020 7489 4500
Broker
Simple Investments Ltd
Nick Emerson	01483 413500
Public Relations
Lothbury Financial Limited
Ron Marshman	020 7011 9411

Updates on the Company's activities are regularly posted on its website, www.rrrplc.com.

 

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