Half Yearly Report

RNS Number : 0182A

Red Rock Resources plc

26 March 2012

 

RED ROCK RESOURCES PLC

("Red Rock" or the "Company")

Half-yearly report for the period ended 31 December 2011

26 March 2012

Red Rock Resources plc ("Red Rock" or the "Company") the mineral exploration and development company focused on iron ore and manganese, and gold, and operating in Greenland, Colombia, and East Africa, announces its unaudited half-yearly results for the six months ended 31 December 2011.

Chairman's statement

Dear Shareholders We present the Company's interim report for the six months to 31 December 2011.  Two milestones were achieved in the period; sales of minerals from operations for the first time rose to a significant sum, as we consolidated Mineras Four Points SA for the whole period; and the segment results for that company's Colombian gold mining activities showed a pre-tax and finance profit of £798,756 for the six months as production volumes reached a profitable level. This was not the most significant factor impacting these results, however. That was the result of a less welcome development, the substantial though we believe temporary decline in the carrying value of our 74,200,832 shares in Jupiter Mines Ltd ("Jupiter")(ASX:JMS).    At 31 December 2010 the Jupiter price per share was 76.5c, at 30 June 2011 it was 44.5c, and at 31 December 2011 it was 27c. At one point in the first quarter of the current calendar year it fell below 20c. We expect confidence in Jupiter to return, as 2012 will see the results of the three important projects on which that company has been quietly engaged over the last year: the imminent completion of the bankable feasibility study on the Mt Mason haematite project, the opening of the large open-pit manganese mine at Tshipi in the second half of the year, and the completion of the bankable feasibility study on the Mt Ida magnetite project at year end. The Tshipi mine we expect to be one of the world's most important and lowest cost sources of metallurgical grade manganese for decades to come . The quality and strategic importance of this asset is not in our view reflected in the Jupiter share price. As a result principally of the decline in the Jupiter share price, Available for sale financial assets declined from £46,207,258 at end 2010 to £24,472,120 at end June 2011, and to £14,703,416 at the end of 2011. In consequence of this, and after writing back some associated deferred tax provision, total equity declined from £49,812,064 at 31 December 2010 to £32,843,858 at 30 June 2011 and £23,520,952 at 31 December 2011. A pre-tax loss of £3,807,704 was booked for the period. The principal factor in this loss is a fair value adjustment of the holding in Ascot Mining plc ("Ascot") convertible loan notes and options, which reverses the profit previously booked under IFRS accounting. None of the Ascot convertible loan notes and options were sold during the period, and the trading price of Ascot was above the relevant conversion and exercise prices at the end of the period. Ascot has announced its intention to obtain a listing on the AIM market. Our project pipeline contains advanced iron ore and manganese assets, held through Jupiter and through a royalty interest, and early stage exploration in Greenland. Since the end of 2011 we have announced a partial sale (subject to due diligence) of our royalty, and our intention to continue with our farm-in exploration in Greenland, where we are preparing for a new field season when we shall drill some of the iron ore bodies identified by exploration last year, with a view to identifying a resource. 2012 is likely to be a critical and exciting year for our Greenland project. Our gold pipeline consists of production with exploration potential in Colombia, and resource delineation and expansion in Kenya, where we expect to announce new mineral resources and are applying for a mining licence. In Colombia we hope to increase production levels and lower cash costs and total costs per ounce through operating efficiencies and increased production. As with Jupiter, so with Red Rock, we expect the remainder of 2012 and early 2013 to be a period where the Company can show the results, and gain the reward, for many months of solid effort. We continue to search for strong partnerships that can accelerate our growth and the development of our projects.

Andrew Bell

Executive Chairman

26 March 2012 Enquiries: Andrew Bell 020 7099 5840 or 07766 474849 Red Rock Resources plc Chairman Sandra Spencer 020 7099 5840 or 07757 660 798 Red Rock Resources plc Public and Investor Relations Philip Davies/David Porter 020 7444 0800 Religare Capital Markets Nominated Adviser Nick Emerson 01483 413500 Simple Investments Ltd Broker

Consolidated statement of financial position

as at 31 December 2011

	Notes	31 December 2011		31 December 2010		30 June 2011		30 June  2010
		Unaudited £		Unaudited £		Audited £		Audited £
				As restated
ASSETS
Non current assets
Property plant and equipment	6	13,059,824		13,561,968		13,327,546		5,100
Investments in associates		815,616		1,214,217		975,732		7,332,533
Available for sale financial assets	7	14,703,416		46,207,258		24,472,120		1,373,680
Other financial assets		1,386,819		5,184,472		4,095,696		-
Exploration assets		1,263,399		335,182		501,062		295,616
Total non current assets		31,229,074		66,503,097		43,372,156		9,006,929
Current assets
Cash and cash equivalents		58,964		111,251		268,788		563,198
Trade and other receivables		9,157,962		2,735,301		6,658,183		1,126,897
Inventories		115,496		294,287		-		-
Total current assets		9,332,422		3,140,839		6,926,971		1,690,095
TOTAL ASSETS		40,561,496		69,643,936		50,299,127		10,697,024
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital	8	738,658		682,439		723,983		583,908
Share premium account		13,441,921		9,971,707		13,041,125		6,347,920
Other reserves		(3,915,375)		17,115,115		2,751,616		(350,069)
Retained earnings		10,604,577		14,680,656		13,988,004		2,017,768
		20,869,781		42,449,917		30,504,728		8,599,527
Non controlling interest		2,651,171		7,362,147		2,339,130		-
Total equity		23,520,952		49,812,064		32,843,858		8,599,527
LIABILITIES
Current liabilities								-
Trade and other payables		3,588,577		2,028,016		4,032,785		235,058
Short term borrowings		3,164,736		1,740,388		1,750,450		760,323
Current tax liabilities		113,102		909,030		84,085		909,030
Total current liabilities		6,866,415		4,677,434		5,867,320		1,904,411
Non current liabilities
Long-term borrowings		4,557,919		-		2,817,500		-
Deferred tax liabilities		5,616,210		15,154,438		8,770,449		193,086
Total non current liabilities		10,174,129		15,154,438		11,587,949		193,086
TOTAL EQUITY AND LIABILITIES		40,561,496		69,643,936		50,299,127		10,697,024

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

Consolidated statement of income

for the period ended 31 December 2011

	Notes	6 months to 31 December 2011		6 months to 31 December 2010
		Unaudited £		Unaudited £
				As restated
Revenue
Management services		-		1,002
Sale of minerals		2,997,634		507,472
Total revenue		2,997,634		508,474
Net gains from other sales
(Losses)/gains on sales of investments		(22,343)		54,291
Financial assets at fair value through profit and loss		(2,708,877)		4,867,279
Profit on transfer of investment from/to associate		-		13,978,109
Total net (loss)/gains from other sales		(2,731,220)		18,899,679
Total revenue and net gains from sales		266,414		19,408,153
Cost of sale of minerals		(1,330,755)		(588,297)
Gain on dilution of interest in associate		-		257,159
Impairment of investment in associate		-		(70,298)
Impairment of available-for-sale investments		(501,847)		-
Impairment of exploration assets		(29,030)		-
Exploration expenses		(175,515)		(157,916)
Administrative expenses		(1,507,673)		(1,769,026)
Share of losses of associates		(160,116)		(163,195)
Finance costs (net)		(369,182)		(439,910)
(Loss)/profit for the period before taxation		(3,807,704)		16,476,670
Tax credit/(expense)		714,001		(4,630,231)
(Loss)/profit for the period		(3,093,703)		11,846,439
(Loss)/profit for the period attributable to:
Equity holders of the parent		(3,405,744)		12,625,022
Non controlling interest		312,041		(778,583)
		(3,093,703)		11,846,439
(Loss)/earnings per share
(Loss)/earnings per share - basic	3	(0.47) pence		1.96 pence
(Loss)/earnings per share - diluted	3	(0.46) pence		1.87 pence

All of the operations are considered to be continuing.

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

Consolidated statement of comprehensive income

for the period ended 31 December 2011

		6 months to 31 December 2011		6 months to 31 December 2010
		Unaudited £		Unaudited £
				As restated
(Loss)/profit for the period		(3,093,703)		11,846,439
Revaluation of available for sale investments		(9,272,849)		23,852,353
Deferred taxation on revaluation of available for sale investments		2,410,941		(6,440,135)
Other comprehensive effects of investments transferred to the income statement on sale or reclassification		-		(5,867)
Group's share of associates' other comprehensive income		-		51,801
Deferred tax on group's share of associates other comprehensive income		-		(12,402)
Exchange gains on subsidiary's converting to presentational currency		-		212,906
Unrealised foreign currency gain/(loss) arising upon retranslation of foreign operations		130,793		(123,114)
Total comprehensive (loss)/income for the period		(9,824,818)		29,381,981
Total comprehensive (loss)/income for the period attributable to:
Equity holders of the parent		(9,824,818)		29,947,658
Non controlling interest		-		(565,677)
		(9,824,818)		29,381,981

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

Consolidated statement of changes in equity

for the period ended 31 December 2011

The movements in equity during the period were as follows:

	Share capital	Share premium account	Retained earnings	Non controlling interest	Other reserves	Total equity
Unaudited	£	£	£	£	£	£
			As restated	As restated	As restated	As restated
As at 30 June 2010	583,908	6,347,920	2,017,768	-	(350,069)	8,599,527
Changes in equity for 2010
On acquisition of subsidiary	-	-	-	7,927,824	-	7,927,824
Total comprehensive income/(loss) for the period	-	-	12,625,022	(565,677)	17,322,636	29,381,981
Transactions with owners
Issue of shares	98,531	3,974,335	-	-	-	4,072,866
Share issue and fundraising costs	-	(350,548)	-	-	-	(350,548)
Share based payments	-	-	37,866	-	142,548	180,414
Total Transactions with owners	98,531	3,623,787	37,866	-	142,548	3,902,732
As at 31 December 2010	682,439	9,971,707	14,680,656	7,362,147	17,115,115	49,812,064
As at 30 June 2011	723,983	13,041,125	13,988,004	2,339,130	2,751,616	32,843,858
Changes in equity for 2011
Total comprehensive income/(loss) for the period	-	-	(3,405,744)	312,041	(6,731,115)	(9,824,818)
Transactions with owners
Issue of shares	14,675	588,575	-	-	-	603,250
Share issue and fundraising costs	-	(187,779)	-	-	-	(187,779)
Share based payments charge	-	-	-	-	86,441	86,441
Share based payments transfer	-	-	22,317	-	(22,317)	-
Total Transactions with owners	14,675	400,796	22,317	-	64,124	501,912
As at 31 December 2011	738,658	13,441,921	10,604,577	2,651,171	(3,915,375)	23,520,952

	Available for sale trade investments reserve	Associate investments reserve	Foreign currency translation reserve	Share based payment reserve	Total other reserves
Unaudited	£	£	£	£	£
As at 30 June 2010	(353,517)	(126,226)	(2,589)	132,263	(350,069)
Changes in equity for 2010
Total comprehensive income/(loss) for the period	17,412,218	33,532	(123,114)	-	17,322,636
Transactions with owners
Share based payments	-	-	-	142,548	142,548
As at 31 December 2010	17,058,701	(92,694)	(125,703)	274,811	17,115,115
As at 30 June 2011	2,667,162	(126,226)	(56,367)	267,047	2,751,616
Changes in equity for 2011
Total comprehensive income/(loss) for the period	(6,861,908)	-	130,793	-	(6,731,115)
Transactions with owners
Share based payments charge	-	-	-	86,441	86,441
Share based payments transfer	-	-	-	(22,317)	(22,317)
As at 31 December 2011	(4,194,746)	(126,226)	74,426	331,171	(3,915,375)

Consolidated statement of cash flows

for the period ended 31 December 2011

		6 months to 31 December 2011		6 months to 31 December 2010
		Unaudited £		Unaudited £ As restated
Cash flows from operating activities
Profit before taxation		(3,807,704)		16,476,670
Increase in receivables		(2,499,779)		(508,903)
(Decrease)/increase in payables		(444,207)		665,312
Increase in inventories		(115,496)		(294,287)
Share of losses in associates		160,116		163,195
Interest receivable		(208,273)		(1,012)
Interest payable		212,820		52,307
Finance costs		-		388,615
Exploration expenses		-		157,916
Share based payments		86,441		180,414
Currency adjustments		209,842		94,679
Impairment of associate		-		70,298
Impairment of available-for-sale investments		501,847		-
Gain on dilution of interest in associates		-		(257,159)
Loss/(gains) on sales of investments		22,343		(54,291)
Profit on transfer of available for sale investment to associate		-		(13,978,109)
Financial assets at fair value through profit and loss		2,708,877		(4,867,279)
Depreciation		352,801		420,731
Exploration properties written-off		(2,342)		-
Income taxes paid		(281)		(1,741)
Net cash flows from operations		(2,822,995)		(1,292,644)
Cash flows from investing activities
Interest received		208,273		1,012
Interest paid		(212,820)		(52,307)
Proceeds of sale of investments		160,005		385,462
Payments to acquire investments		(188,340)		(2,514,972)
Exploration expenditure		(762,336)		(160,884)
Net cash acquired on gain of control of subsidiary		-		4,974
Payments to acquire property plant and equipment		(130,887)		(1,136,356)
Net cash flows from investing activities		(926,105)		(3,473,071)
Cash flows from financing activities
Proceeds from issue of shares		603,250		4,072,866
Transaction costs of issue of shares		(187,779)		(350,548)
Finance costs		-		(388,615)
Proceeds of new borrowings		3,934,775		980,065
Repayments of borrowings		(810,970)		-
Net cash flows from financing activities		3,539,276		4,313,768
Net decrease in cash and cash equivalents		(209,824)		(451,947)
Cash and cash equivalents at the beginning of period		268,788		563,198
Cash and cash equivalents at end of period		58,964		111,251

Half-yearly report notes

for the period ended 31 December 2011

1	Company and group

As at 30 June 2011 and 31 December 2011 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 2012. 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 2011 has been extracted from the statutory accounts for the Group for that year. Statutory accounts for the year ended 30 June 2011, 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 2011, which have been prepared in accordance with IFRS.

3	Earnings per share	6 months to  31 December  2011		6 months to  31 December  2010
		Unaudited £		Unaudited £
				As restated

	These have been calculated on (loss)/profit for the period after taxation of:	(3,405,744)		12,625,022
	Weighted average number of Ordinary shares of £0.001 in issue	726,477,115		644,355,471
	(Loss)/earnings per share - basic	(0.47) pence		1.96 pence
	Weighted average number of Ordinary shares of £0.001 in issue inclusive of outstanding options	742,419,040		674,805,743
	(Loss)/earnings per share fully diluted	(0.46) pence		1.87 pence

The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:

		2011		2010
		Number		Number
	Earnings per share denominator	726,477,115		644,355,471
	Weighted average number of exercisable share options	15,941,925		30,450,272
	Diluted earnings per share denominator	742,419,040		674,805,743

Half-yearly report notes

for the period ended 31 December 2011, continued

4	Segmental analysis

Since the last annual financial statements the group has added an additional segment to its operations. This segment relates to its operational mine in Columbia held by its newly acquired subsidiary Mineras Four Points S.A.

		Ascot Mining plc	Other investments	Australian exploration	Columbian mining	African exploration	Corporate and unallocated	Total
	For the 6 month period to 31 December 2011	£	£	£	£	£	£	£
	Revenue
	Total segment external revenue	-	-	-	2,997,634	-	-	2,997,634
	Result
	Segment results	(3,045,842)	(187,225)	(177,265)	798,756	(22,741)	(804,204)	(3,438,521)
	Loss before tax and finance costs							(3,438,521)
	Interest receivable							208,273
	Interest payable							(212,820)
	Finance costs							(364,636)
	Loss before taxation							(3,807,704)
	Taxation credit							714,001
	Consolidated loss for the period							(3,093,703)

		Jupiter Mines Limited	Other investments	Australian exploration	Columbian mining	Corporate and unallocated	Total
	For the 6 month period to 31 December 2010 As restated	£	£	£	£	£	£
	Revenue
	Total segment external revenue	-	-	-	507,472	1,002	508,474
	Result
	Segment results	14,047,613	4,739,896	(16,646)	(871,850)	(982,433)	16,916,580
	Profit before tax and finance costs						16,916,580
	Interest receivable						1,012
	Interest payable						(52,307)
	Finance costs						(388,615)
	Profit before taxation						16,476,670
	Taxation expense						(4,630,231)
	Consolidated profit for the period						11,846,439

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

Half-yearly report notes

for the period ended 31 December 2011, continued

5	Prior period adjustment

Ascot Mining plc In the interim financial statements for the period to 31 December 2010 the Group's investment in Ascot Mining plc ("Ascot") had been treated as an available for sale asset. At the year end in accordance with IAS 39 it was concluded that this investment should be separately classified as Other Financial Asset and accounted for at fair value through profit and loss. The interim financial statements for the year ended 31 December 2010 have been restated to correct this.  The effect of the restatement on those financial statements is summarised below:

				Effect on  the 6 month period to 31 December 2010
				£
	Decrease in gains from sale of investments			(20,203)
	Increase in financial assets at fair value through profit and loss			4,867,279
	Decrease in gain on recognition of Ascot contracts			(950,135)
	Increase in deferred tax charge			(1,052,174)
	Increase in profit for the period			2,844,767
	Decrease in available for sale investments			(5,189,125)
	Increase in other financial assets			5,184,472
	Increase in trade and other receivables			602,816
	Decrease in other reserves			2,408,108
	Decrease in deferred tax liabilities			(161,504)
	Decrease in equity			2,844,767
	Mineras Four Points SA In the interim financial statements for the period to 31 December 2010 the Group recognised the subsidiary Mineras Four Points SA ("MFP") that has been acquired in that period. At the interim date, the fair value of the MFP mine had not been determined and this was included in the financial statements for the year to 30 June 2011. An adjustment is needed to account for the fair value of this mine and the resulting deferred tax liability. The interim financial statements for the year ended 31 December 2010 have been restated to correct this.  The effect of the restatement on those financial statements is summarised below:
				Effect on  the 6 month period to 31 December 2010
				£
	Increase in depreciation charge			(287,903)
	Decrease in deferred tax charge			95,008
	Decrease in profit for the period			(192,895)
	Attributable to non-controlling interest			192,895
	Profit effect on equity holders of the parent			-
	Increase in property, plant and equipment			11,228,233
	Increase in deferred tax liability			(3,785,317)
	Increase in non-controlling interest			(7,442,916)
	Decrease in equity			-

6	Property plant and equipment

		Mines	Field equipment and machinery	Fixtures and fittings	Assets under construction	Total
		£	£	£	£	£
	Cost
	As at 1 July 2011	12,855,012	669,905	95,140	435,039	14,055,096
	Additions in the period	-	97,912	11,201	21,774	130,887
	Exchange differences	(21,775)	11,943	(29,031)	(4,775)	(43,638)
	At 31 December 2011	12,833,237	779,760	77,310	452,038	14,142,345
	Depreciation
	As at 1 July 2011	657,213	61,504	8,834	-	727,551
	Charge for the period	321,375	27,387	4,039	-	352,801
	Exchange differences	(6,498)	13,084	(4,417)	-	2,169
	At 31 December 2011	972,090	101,975	8,456	-	1,082,521
	Net book value
	At 31 December 2011	11,861,147	677,785	68,854	452,038	13,059,824
	At 30 June 2011	12,197,799	608,401	86,306	435,039	13,327,545

Depreciation expense of £352,801 (2010: £420,731) has been charged to administration expenses.

7	Available for sale financial assets

		31 December 2011 £	31 December 2010 £
	At 1 July	24,472,120	1,373,680
	Additions	188,340	499,336
	Disposals	(182,348)	-
	Revaluation	(9,272,849)	23,852,353
	Transfer from associate	-	20,481,889
	Impairment	(501,847)	-
	At 31 December	14,703,416	46,207,258

8	Share Capital of the company

The authorised share capital and the called up and fully paid amounts were as follows:

	Authorised	Number		Nominal £
	At incorporation on 8 September 2004 and as at 31 December 2011, Ordinary shares of £0.001 each	10,000,000,000		10,000,000
	Called up, allotted and fully paid during the period
	As at 30 June 2011	723,983,283		723,983
	Issued 15 November 2011 at 4.62 pence per share	6,777,690		6,778
	Issued 5 December 2011 at 3.50 pence per share	1,150,000		1,150
	Issued 14 December 2011 at 3.71 pence per share	6,746,910		6,747
	As at 31 December 2011	738,657,883		738,658

Half-yearly report notes

for the period ended 31 December 2011, continued

9

Capital Management

Management controls the capital of the group in order to maintain a good debt to equity ratio, 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.

10     Subsequent events

As at 31 December 2011, the Company has an existing Earn-in agreement with North Atlantic Mining Associates Limited ("NAMA") wherein it funded the 2011 exploration programme of NAMA's subsidiary, NAMA Greenland Limited ('NGL'), in exchange for 25% interest in NGL. Under the agreement, it may elect to continue funding the 2012 exploration programme for a further 35% interest in NGL. On 6th January 2012 the Company executed the option to fund the 2012 exploration programme. In addition, the Company and NGL entered into certain new agreements regarding the conduct of joint venture business activities ('JV') relating to the Melville Bugt Project, including a joint venture agreement that supplements the provisions of the March 2011 Agreement as amended. The objectives of the JV include to (a) undertake the exploration, delineation and definition of resources to NI 43-101 or JORC standard for the purposes of undertaking development studies, (b) commission a scoping study, pre-feasibility study, bankability study, or other relevant assessment as appropriate, and (c) other activities as agreed.

 

END

 

 

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