Red Rock Resources plc – Half-year Report

Red Rock Resources plc – Half-year Report

 Red Rock Resources plc (“Red Rock” or “the Company”), the natural resources investment, exploration, and development company with interests in manganese, gold, copper and cobalt, and other materials, announces its half-yearly results for the six months ended 31 December 2019.

 

Chairman’s Statement

 

It is three months since the Company reported its Final Results for the year to 30 June 2019, and normally we might be reporting that nothing had changed greatly since then. In some respects this is true, in that no major initiatives have been undertaken by, or developments occurred within, Red Rock in this short period. We have continued our work towards restoration of the Kenyan licenses, and been preparing a programme for renewed exploration at our Luanshimba copper/cobalt license in the Democratic Republic of Congo, as well as at our other licenses in the Congo, but these tasks for the early part of 2020 were prefigured in the statement in the Annual Report. Yet everything has changed.

 

The COVID-19 coronavirus pandemic declared on 11 March 2020 has shaken up the kaleidoscope so effectively as to change every market and every part of the world economy: today they all look different. The impact of these changes has been almost universally negative in the short term, with the strength in the gold market a rare exception.

 

The Company has announced in a recent update the response to COVID-19 in the principal countries where it operates, and the effects on Red Rock, which are limited so far. The Company will continue to review, and if necessary announce, further Covid-related developments.

 

Red Rock’s current assumption is that although there are short term effects on the world economy, human ingenuity will find solutions and the successes of Taiwan, South Korea, Japan, Singapore, and even China in controlling the outbreaks while limiting the damage to economic activity and people’s livelihoods will provide some lessons that can be adapted to apply in the Western economies. Nearer home, the templates of Iceland, Norway and Germany may already offer directly applicable lessons in testing, tracing, and reducing mortality. 

 

Should this be correct, the bounce back will be rapid, and the extra liquidity being pumped into economies may assist this. Red Rock believes its positioning in gold and battery metals will be well-adapted for this environment. The holding in Jupiter Mines Ltd, a very low-cost major manganese producer, will in the view of the Company continue to provide support for its asset value as well as providing ongoing cash flow.

 

Red Rock will however prepare itself for a less benign environment by ensuring that it can turn off a significant proportion of its costs at short notice.

 

In the six-month period ending 31 December 2019 the profit before tax from continuing operations was £337,000 compared with a loss of £283,000 in the comparable period of the previous year. Net finance income was at similar levels to that in the comparable period of the previous financial year, at £524,000, but this was not offset as in the previous period by impairments and project development costs. Diluted earnings per share were 0.047p for the half year.

 

Total comprehensive loss for the period was £227,000 compared with a total comprehensive loss of £2,085,000 for the previous year, the loss arising as a result of revaluation of available for sale investments.

 

Payroll and other administrative expenses were held almost unchanged from the previous year’s period.

 

In the Annual Report in December 2019 it was noted that the directors had, despite passing two key milestones, taken the conservative decision to delay writing back any part of the £5,280,000 impairment which had been taken in relation to the Kenyan assets in the 30 June 2015 accounts, while awaiting resolution of the then pending court case. Although further progress towards a conclusion has been made in the first quarter of 2020, the directors have once again deferred any write back of previous impairments, feeling that to do this at a moment when COVID-19 has created such global uncertainty might be inappropriate.

 

The Company’s value continues to be underwritten by its 17.02m share holding in Jupiter Mines Ltd (ASX:JMS). On 24 March 2020 Jupiter announced the results for the fourth quarter to 29 February 2020. Tshipi had fulfilled its targets for the 2020 financial year, exporting 3.4 million tons of Manganese ore, and had announced a ZAR265m dividend. Jupiter held cash of AUD84m at the end of the quarter, and had begun a feasibility study into mine expansion. Red Rock notes that the manganese price for 37% Mn FOB Port Elizabeth has increased from $2.70 per DMTU in late 2019 to $3.34 per DMTU. This must reflect a degree of restocking as China, post the Chinese New Year and post the high point of the coronavirus epidemic, starts to resume large scale industrial activity and steel production.  

 

The Company thanks shareholders for their resilience and support at this extraordinary time, and wishes them good health and a safe passage through the current turmoil. It will in the coming days keep shareholders informed of any significant developments it sees occurring, either in the markets or in its own affairs.     

 

 

Andrew Bell

Chairman

31 March 2020

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