Half-year Report

RNS Number : 0388V
Red Rock Resources plc
03 April 2023
 

A drawing of a face Description automatically generated

 

31 March 2023

 

 

Red Rock Resources plc

Unaudited half-yearly results for the six months ended  

31 December 2022

 

Red Rock Resources plc ("Red Rock" or "the Company"), the natural resources exploration and development company with interests in gold, copper, cobalt, lithium and other minerals, announces its half-yearly results for the six months ended 31 December 2022.

 

Chairman's Statement

 

We have pleasure in presenting our financial results for the six months to 31st December 2022. The figures are not materially changed from the previous year, other than an increase in current liabilities as the Company has sought to avoid dilution while waiting for what were expected to be material positive developments in the DRC and in the listing of Elephant Oil. Both these developments have been slower than expected to eventualise.

 

DRC Legal Action

 

Much time over the last months has been spent on dealing with one important matter. In December 2019 our 50.1% owned joint venture assets in the Democratic Republic of Congo were signed away behind our backs for $20 million to an initial buyer and then immediately sold on for several hundred million dollars to a further party, although these transactions were carefully hidden from us at the time. In our efforts to restore every dollar of this lost value to the Company, we first took advice from UK counsel as to our course of action, and then litigated in the DRC in relation to the $20m. We obtained a final and executory judgment early in 2022 for 50.1% of $5m, which was the part of the $20m that had already been paid to VUP by the initial buyer, and then went to arbitration on the $15m balance which had not yet been paid out by the initial buyer. We were awarded a further $2m costs and damages in relation to the initial action on the $5m. We had not been able up to now to enforce the first $2.5m judgment against third parties that might hold VUP funds, since it was argued that the continuing appeal on costs and damages meant that the matter was not yet resolved. We believe that we are now able to do so, in relation to both the $2.5m and the $2m awards.

 

The arbitration in relation to the $15m, of which we again claim 50.1%, finished its hearings in July 2022 and awaits formal signature of the Minutes and Acte Transactionnel, which we expect at any time.

 

We will vigorously pursue payment of sums due in the DRC, but as a result of the undertakings given by the buyer, a parastatal company, in the course of the arbitration process, our expectation is that payments will be made promptly. This would be so significant an event for our cash flow outlook that anticipation of it has influenced our actions to date, and so were there likely to be any delay, we would need to accelerate alternative measures, whether by fund-raising or sale of non-core assets, to strengthen our balance sheet.

 

Given that we have established our rights as 50.1% owners of the JV property under Congolese law, we are turning our attention to those remedies available to us in other jurisdictions or from other parties, and in connection with this will be seeking further advice from counsel.

 

The long and gruelling process in the DRC that appears now to be ending has required patience, perseverance, and discretion on our part, and at times great courage on the part of our coadjutors in the DRC. The Administration has evidenced, though discreetly, its concern that foreign investors' rights should be respected and has made clear that it wishes to provide a better environment for foreign investment, particularly from the UK, than has sometimes in the past been the case.

 

We look forward to building on the strong relationships we have built in the DRC and to seeing many other investors follow our lead in a country that is rapidly developing. We have dealt with highly competent officials and professionals willing to work diligently and honestly to see their country progress, and those we have dealt with are not the only ones.

 

Other Assets

 

Besides copper and cobalt in the Congo, we have pursued new lithium opportunities in Zimbabwe, Africa's largest lithium producer. Our first project at Tin Hill has seen the final stage of the permitting process begin with the submission of a full Environment Impact Assessment, and we expect to be in production within weeks. Further projects are following the same process, and our object is to have production from more than one location and so to increase both production volume and the longevity of our operations.

 

Elsewhere, our portfolio consists of a spread of gold activities, ranging from our joint venture company New Ballarat Gold Corporation Plc, with gold exploration assets in Victoria, to our 723,000 ounce Resource in Kenya, that  is capable of being enlarged by drilling, to our royalty in Colombia at El Limon where we expect payments to resume following the conclusion of an investment programme by the operator, to drilling in Burkina Faso with strong intercepts including 20m at 3.19 g/t gold from 22m depth, to some high quality and prospective applications in Côte d'Ivoire now very near grant, and to an application to joint venture with the Government a large formerly mined gold project in Algeria.

 

A six hole, 988 metre, diamond drill programme has been carried out in Victoria over the Australian Summer months by New Ballarat Gold Corporation , and encountered visible gold in four of the six holes. Final sample results are awaited but it is already obvious that the programme was a technical success, intersecting structures where anticipated, confirming the presence of gold mineralisation in the target zones, and identifying one new area of mineralisation.

 

In the months ahead, we expect to make progress towards listing of New Ballarat, and will be entering the process of licence renewal in Kenya.

 

Our longstanding investment in Elephant Oil Corporation, which has filed a form S-1/A with the SEC with the intention of listing on the U.S. markets, takes us into what has become one of the most interesting oil exploration provinces, in Namibia, as well as onshore Benin on the Nigerian border. The listing has been delayed beyond our expectation, but we are still anticipating this proceeding this year and after the six-month lock-in we will have the opportunity of realizing our investment.

 

Although the market environment may not be strong currently, gold has investment attractions as an alternative and safe currency, battery metal demand continues strong, and our projects are we believe good ones so we do not see why we should be held back from achieving a higher valuation, more reflective of the Company's exceptional potential. From DRC we expect a return of capital, and from Zimbabwe we expect some positive cash flows from sales of lithium, which will be a significant alteration to our prospects. Longer term we look for liquidity events in Australia and at Elephant Oil, as well as potentially in Kenya, to improve the balance sheet further, but in the short term the Company's financial projections are highly dependent on assumptions of progress in the DRC.

 

Working Capital Requirements

 

As noted above, whilst the Company remains confident that it will receive funds pursuant to the judgments and arbitration in the DRC, it is appropriate to consider how the immediate cashflow needs of the Company can be met in the short-term were these funds not to be forthcoming. The Company has received indications of equity and loan-note funding which it is confident will meet these short-term needs. If the anticipated funds from the DRC remain outstanding beyond that period, then there will clearly be a longer-term funding gap and the Company will seek to realize assets, a process which has already started with a number of parties who have made approaches to the Company in this regard. The Company has always worked on the basis that every asset is for sale at a price, and no serious approach is rejected out of hand.

 

 

 

Andrew Bell

Chairman

 

31 March 2023

 

 

 

Consolidated statement of financial position

as at 31 December 2022

 


Notes

31 December

2022


31 December

2021


30 June 2022



Unaudited,

£'000


Unaudited,

£'000


Audited,

£'000

ASSETS







Non-current assets







Investments in associates and joint ventures


1,030


1,699


1,030

Financial instruments

8

736


748


736

Exploration assets

9

13,287


13,653


13,265

Mineral tenements


525


180


511

Property, Plant & Equipment


2


-


-

Non-current receivables


2,320


1,344


2,320

Total non-current assets


17,900


17,624


17,862

Current assets







Cash and cash equivalents


242


182


66

Financial assets - investment in derivatives


-


-


-

Loans and other receivables


770


508


824

Total current assets


1.012


690


890

TOTAL ASSETS


18,912


18,314


18,752

 

EQUITY AND LIABILITIES







Equity attributable to owners of the parent







Called up share capital

10

2,847


2,835


2,839

Share premium account


31,270


30,924


31,077

Other reserves


1,565


652


1,434

Retained earnings


(20,984)


(18,314)


(19,812)

Total equity attributable to owners of the parent


14,698


16,097


15,538

 

Non-controlling interest


 

(537)


 

(319)


 

(420)

Total equity


14,161


15,778


15,118

 

LIABILITIES







Non-current liabilities







Trade and other payables


540


316


415

Borrowings


822


-


822

Total non-current liabilities


1,362


316


1,237

Current liabilities







Trade and other payables


1,461


1,231


1,355

Short term borrowings

11

1,928


989


1,042

Total current liabilities


3,389


2,220


2,397

TOTAL EQUITY AND LIABILITIES


18,912


18,314


18,752

 

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

 

 

 

Consolidated statement of income

for the period ended 31 December 2022

 


Notes

6 months to 31 December

2022


6 months to 31

December 2021



Unaudited,

£'000


Unaudited,

£'000

 

Administrative expenses

 

4

 

(633)


 

(620)

Project development costs

5

(261)


(411)

Exploration expenses


(204)


(271)

Other income


-


44

Share of losses of associates and joint ventures


-


-

Foreign exchange gain/(loss)


55


(4)

Finance income/(expenses), net

6

(267)


(206)

(Loss)/profit for the period


(1,310)


(1,468)

Tax credit


-


-

(Loss)/profit for the period

7

(1,310)


(1,468)

 

(Loss)/profit for the period attributable to:





Equity holders of the parent


(1,172)


(1,348)

Non-controlling interest


(138)


(120)



(1,310)


(1,468)

 

(Loss)/profit per share





(Loss)/profit per share - basic, pence

3

(0.10)


(0.111)

(Loss)/profit per share - diluted, pence

3

(0.10)


(0.111)

 

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

 

 

 

Consolidated statement of comprehensive income

 for the period ended 31 December 2022

 


6 months to 31

December 2022


6 months to 31

December 2021


Unaudited, £'000


Unaudited, £'000

 

(Loss) /profit for the period

 

(1,310)


 

(1,468)

Transfer to revaluation reserve in relation to revaluation of FVTOCI

investments

-


183

Gain on transfer of FVTOCI financial assets on disposal

-


1,005

Unrealised foreign currency loss arising upon retranslation of foreign

operations

38


(85)

Total comprehensive income/(loss) for the period

(1,272)


(365)

 

Total comprehensive income/(loss) for the period attributable to:




Equity holders of the parent

(1,133)


(245)

Non-controlling interest

(138)


(120)


(1,271)


(365)

 

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

 

 

 

Consolidated statement of changes in equity

 for the period ended 31 December 2022

 

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

Unaudited

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

As at 30 June 2022 (audited)

 

2,839

 

31,077

 

(19,812)

 

1,434

 

15,538

 

(420)

 

15,118

Changes in equity for the six- month period ending 31

December 2021








Loss for the period

-

-

(1,172))

-

(1,172)

(138)

(1,310)

Unrealised foreign currency gains on translation of foreign operations

-

-

-

38

38

21

59

Total comprehensive

income/(loss) for the period

-

-

(1,172)

38

(1,134)

(117)

(1,251)

Transactions with shareholders








Issue of shares

8

193

-

-

201

-

201

Grant of warrants

-

-

-

93

93

-

93

Total transactions with

shareholders

8

193

-

93

294

-

294

As at 31 December 2022

(unaudited)

2,847

31,270

(20,984)

1,565

14,698

(537)

14,161

 

 

 

As at 30 June 2021 (audited)

 

 

 

2,835

 

 

 

30,924

 

 

 

(18,741)

 

 

 

1,627

 

 

 

16,645

 

 

 

(199)

 

 

 

16,446

Changes in equity for the six- month period ending 31

December 2020








Loss for the period

-

-

(1,348)

-

(1,348)

(120)

(1,468)

Transfer of FVTOCI relating to disposals

-

-

-

(1,073)

(1,073)

-

(1,073)

Transfer of FVTOCI relating to revaluations

-

-

-

183

183

-

183

Gains on disposal of FVTOCI taken

directly to reserves

-

-

1,775

-

1,775

-

1,775

Unrealised foreign currency gains on translation of foreign operations

-

-

-

(85)

(85)

-

(85)

Total comprehensive

income/(loss) for the period

2,835

30,924

(18,314)

652

16,097

(319)

15,778

As at 31 December 2021

(unaudited)

2,835

30,924

(18,314)

652

16,097

(319)

15,778

 

 

 


FVTOCI

financial

assets

reserve

Foreign currency translation

reserve

Share- based payment

reserve

Warrants reserve

Total other reserves

Unaudited

£'000

£'000

£'000

£'000

£'000

 

As at 30 June 2022 (audited)

 

402

 

(19)

 

230

 

821

 

1,434

Changes in equity for six months ended 31 December 2021






Unrealised foreign currency loss on translation of foreign

operations

-

38

-

-

38

Total other comprehensive income for the period

-

38

-

-

38

Transactions with shareholders






Grant of warrants

-

-

-

93

93

Total transactions with shareholders

-

-

-

93

93

As at 31 December 2022 (unaudited)

402

19

230

914

1,565

 

 

 

As at 30 June 2021 (audited)

 

 

 

426

 

 

 

158

 

 

 

230

 

 

 

813

 

 

 

1,627

Changes in equity for six months ended 31 December 2021






Transfer of FVTOCI reserve in relation to revaluation of FVTOCI

investments

183

-

-

-

183

Decrease in FVTOCI reserve in relation to disposals

(1,073)

-

-

-

(1,073)

Unrealised foreign currency loss on translation of foreign

operations

-

(85)

-

-

(85)

Total other comprehensive income for the period

(890)

(85)

-

-

(975)

Transactions with shareholders

 

 

 


 

Total transactions with shareholders

-

-

-

-

-

As at 31 December 2021 (unaudited)

(464)

73

230

813

652

 

 

 

Consolidated statement of cash flows

for the period ended 31 December 2022

 


6 months to 31

December 2022


6 months to 31

December 2021


Unaudited,

£'000


Unaudited,

£'000

Cash flows from operating activities




(Loss)/profit before tax

(1,288)


(1,468)

Decrease/(Increase) in receivables

55


51

Increase/(Decrease) in payables

103


354

Share-based payments

94


-

Depreciation

-


-

Finance income, net

173


205

Currency adjustments

-


4

Net cash outflow from operations

(863)


(854)

 

Cash flows from investing activities




Purchase of property, plant and equipment

(2)


-

Proceeds from sale of investments

-


1,808

Payments for capitalised exploration costs

(22)


(138)

Payments to increase interest in tenements

(14)


(56)

Payments to increase interest in associate

-


(114)

Net cash (outflow)/inflow from investing activities

(38)


1,500

 

Cash flows from financing activities




Proceeds from issue of shares

201


-

Interest paid

(173)


(205)

Proceeds from new borrowings

1,011


100

Repayments of borrowings

-


(811)

Net cash inflow/(outflow) from financing activities

1,039


(916)

 

Net increase in cash and cash equivalents

 

138


 

(270)

Cash and cash equivalents at the beginning of period

66


457

Exchange losses on cash and cash equivalents

38


(5)

Cash and cash equivalents at end of period

242


182

 

 

 

Half-yearly report notes

for the period ended 31 December 2022

 

 

1

Company and group

 

As at 31 December 2022, 30 June 2022 and 31 December 2021 the Company had one or more operating subsidiaries and has therefore prepared full and interim consolidated financial statements respectively.

 

The Company will report again for the year ending 30 June 2023.

 

The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the year ended 30 June 2022 has been extracted from the statutoryaccountsfortheGroupfor that year. Statutory accounts for the year ended 30 June 2022, upon which the auditors gave an unqualified audit report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies.

 

2

Accounting Polices

 

 

Basis of preparation

 

The consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting.' The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2022, which have been prepared in accordance with IFRS.

3

Earnings per share




 


The following reflects the loss and number of shares data used in the basic and diluted loss per share computations:

 

 


6 months to

31 December 2022


6 months to

31 December 2021

 



Unaudited


Unaudited

 


Profit/(loss) attributable to equity holders of the parent company, Thousand pounds Sterling

(1,310)


(1,348)

 


 

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

 

1,279,734,195


 

1,216,708,801

 


Effect of all dilutive potential ordinary shares 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

 

-


 

 

-

 


 

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

 

1,279,734,195


 

1,216,708,801

 


 

Profit/(loss) per share - basic, pence

 

(0.10)


 

(0.111)

 


 

Profit/(loss) per share - diluted, pence

 

(0.10)


 

(0.111)

 

 

 

 

At 31 December 2022 and 31 December 2021, the effect of the following the instruments is anti-dilutive, therefore they were not included into the diluted earnings per share calculation.

6 months to

31 December 2022


6 months to

31 December 2021


Unaudited


Unaudited

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

50,000,000


62,820,000

Number of warrants given to shareholders as a part of placing

equity instruments - out of the money

 

426,892,441


 

380,197,618

Total number   of   contingently issuable shares   that   could

potentially dilute basic earnings per share in future

 

476,892,441


 

443,017,618

 

Number of warrants - vested and in the money at year end but

not included into diluted EPS calculation due to their effect being anti-dilutive

 

 

-


 

-

Number of share options granted to employees - vested and in the money at year end but not included into diluted EPS calculation due to their effect being anti-dilutive

-


-

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

 

476,892,441


 

443,017,618

 

There were no ordinary share transactions after 31 December 2022, that that could have changed the EPS calculations significantly if those transactions had occurred before the end of the reporting period.

 

 

Administrative expenses

 


6 months to

31 December 2022


6 months to

31 December 2021


Unaudited

£'000


Unaudited

£'000

Staff Costs:




Payroll

329


273

Pension

28


22

Consultants

8


8

HMRC / PAYE

20


21

Professional Services:




Accounting

49


36

Legal

8


15

Marketing

10


25

Other

1


-

Regulatory Compliance

46


58

Travel

11


47

Office and Admin:




General

19


43

IT costs

35


6

Rent

44


46

Insurance

25


20

Total administrative expenses

633


620

 

Included in the above admin costs for the year are £230,000 (2021: £174,000) in costs related to the administration of subsidiary project undertakings.

 

 

Project development 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.

 


6 months to

31 December 2022


6 months to

31 December 2021


Unaudited

£'000


Unaudited

£'000

Project development expenses




VUP (Congo)

15


35

Zlata Bana (Slovakia)

-


-

Galaxy (Congo)

-


31

Luanshimba (Congo)

47


106

Kinsevere (Congo)

-


3

Mid Migori Mines (Kenya)

-


10

Zimbabwe Lithium

15


-

Greenland

80


69

Others

104


157

Total project development expenses

261


411

 

 

Finance income/(expenses), net

 


6 months to

31 December 2022


6 months to

31 December 2021


Unaudited

£'000


Unaudited

£'000

Interest income

-


-

Share based payments

(94)


-

Interest expense

(173)


(206)

Total Finance income/(expenses), net

(267)


206

 

 

7

Segmental analysis

 

 

Kenyan exploration

 

Australian exploration

 

DRC

exploration

Other exploration

Corporate

and unallocated

 

 

Total

For the six-month period to 31 December 2022

£'000

£'000

£'000

£'000

£'000

£'000

Revenue







Total segment external revenue

-

-

-

-

-

-

Result







Segment results

(258)

(146)

(64)

(201)

(374)

(1,043)

Loss before tax and finance costs







 

Interest income






-

Interest expense






(267)

Loss before tax






(1,310)

Tax






-

Loss for the period






(1,310)

 

 

 

 

Kenyan exploration

 

Australian exploration

 

DRC

exploration

Jupiter Mines Limited

Corporate

and unallocated

 

 

Total

For the six-month period to 31 December 2021

£'000

£'000

£'000

£'000

£'000

£'000

Revenue







Total segment external revenue

-

-

-

-

-

-

Result







Segment results

(271)

(163)

(174)

(241)

(413)

(1,262)

Loss before tax and finance costs






(1,262)

 

Interest income






 

-

Interest expense






(206)

Loss before tax






(1,468)

Tax






-

Profit for the period






(1,468)

 

 

A measure of total assets and liabilities for each segment is not readily available and so this information has not been presented.

 

8

Financial instruments - Fair value through other comprehensive income





31 December

2022

Unaudited

£'000

31 December

2021

Unaudited

£'000

30 June

2022

Audited

£'000


At the beginning of the period

736

1,755

1,755


Additions

-

223

223


Disposals

-

(1,413)

(1,693)


Change in fair value

-

183

451


At the end of the period

736

748

736

 

 

9

Exploration assets







31 December

2022

Unaudited

£'000

31 December

2021

Unaudited

£'000


30 June

2022

Audited

£'000


At the beginning of the period

13,265

13,515


13,515


Additions

22

138


150


Reclassification from non-current financial assets

-

-


(400)


At the end of the period

13,287

13,653


13,265

 

 

10

 

 

Share Capital of the company








Number


Nominal,

£'000


 

Deferred shares of £0.0009 each


 

2,371,116,172


 

2,134


A deferred shares of £0.000096 each


6,033,861,125


579


Ordinary shares of £0.0001 each


1,341,147,238


134


As at 31 December 2022




2,847

 

 

11

Short-term borrowings




 

Reconciliation of Liabilities Arising from Financing Activities

 

 

 

 

Group

 

 

30 June

2022

 

Cash flow

loans received

 

Non - cash flow

Conversions

 

Non - cash flow

Interest accrued

 

Non-cash

flow Reclassification

 

Non-cash

flow Forex movement

 

 

31 Dec

2022


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Loan from institutional

investors

577

410

(577)

40

-

5

455

Convertible notes

317

47

577

3

-

-

944

Other loans

100

384

-

45

-

-

529

Total

994

841

-

88

-

5

1,928

 

 

12 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. 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 period.

 

13   Subsequent Events

 

On 24 February 2023, the Company announced that it had issued 26,753,616 new ordinary shares to an investor at a price of £0.0025 per share, under the funding agreement originally announced on 15 December 2022.  The Company further announced that the Company had agreed with this investor that the investor may elect that up to $274,000 of the initial subscription amount could now be subscribed at this same price of £0.0025 per share.  In addition, the Company agreed to pay the investor a variation fee of $78,000 within the next thirty days, or at its election, this amount would be added to the outstanding subscription amount. 

 

On 15 March 2023, the Company announced that it had issued 56,487,601 new ordinary shares to an investor at a price of £0.0018 per share, under the funding agreement originally announced on 15 December 2022 and later amended on 24 February 2023. 

 

 

 

For further information, please contact:

 

Andrew Bell  0207 747 9990 Chairman Red Rock Resources Plc

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

Jason Robertson 0207 374 2212  Broker First Equity Limited

 

 

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