REG - Red Rock Resources - Final Results for the Year Ended 30 June 2015 <Origin Href="QuoteRef">RRR.L</Origin> - Part 2
12/11/2015 09:50
- Part 2: For the preceding part double click ID:nRSL4758Fa
realised or the
liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to
equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other
comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and
liabilities and the deferred tax relates to income tax levied by the same tax authorities on either:
· the same taxable entity; or
· different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise
and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected
to be realised or settled.
1.4.6 Foreign currencies
Both the functional and presentational currency of Red Rock Resources plc is Sterling (£). Each Group entity determines its
own functional currency and items included in the financial statements of each entity are measured using that functional
currency.
The functional currency of the foreign subsidiaries are Australian Dollars (AUD) and Kenyan Shillings.
Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange
rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary
assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in profit
or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised
directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive
income.
On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's
presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the
average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case
the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other
comprehensive income and are transferred to the Group's foreign currency translation reserve.
1.4.7 Share-based payments
The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is
determined indirectly by reference to the fair value of the instrument granted.
The fair value of options granted to Directors and others in respect of services provided is recognised as an expense in
the statements of income with a corresponding increase in equity reserves - the share-based payment reserve.
On exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is
transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the vesting period during which the option becomes
unconditional.
The fair value of options is calculated using the Black-Scholes model taking into account the terms and conditions upon
which the options were granted. There are no market vesting conditions. The exercise price is fixed at the date of grant.
For other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis
of an observable market price.
1.4.8 Pension
The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered
fund. Contributions to the defined contribution scheme are charged to the profit and loss account as they become payable.
1.4.9 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the effective interest method.
Finance revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
1.4.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets and financial liabilities are recognised where the Group has become
party to the contractual provisions of the instrument.
Financial assets
Investments
Investments in subsidiary companies are classified as non-current assets and included in the statement of financial
position of the Company at cost at the date of acquisition less any identified impairments.
Investments in associate companies are classified as non-current assets and included in the statement of financial position
of the Company at cost at the date of acquisition less any identified impairments.
Available for sale financial assets
Equity investments intended to be held for an indefinite period of time are classified as available for sale investments.
They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other
comprehensive income and debited or credited to the available for sale trade investments reserve. Where the fair value
cannot be reliably measured, the investment is carried at cost or a lower valuation where the Directors consider the value
of the investment to be impaired.
Available for sale investments are included within non-current assets. On disposal, the difference between the carrying
amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised
directly in reserves is recognised in the statement of income.
Income from available for sale investments is accounted for in the statement of income when the right to receive it has
been established.
The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. When there is
evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that investment previously recognised in the income statement - is removed from other
comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed
through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive
income.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term
deposits.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting
period is not considered cash and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an
allowance for any uncollectable amounts.
An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts.
Bad debts are written off when identified.
After initial recognition these assets are measured at amortised cost using the effective interest method less provision
for impairment.
Financial liabilities and equity
Trade and other payables
Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided
to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. Such instruments are
subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption,
are recognised in profit or loss over the term of the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn
out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter,
with any change in the estimated liability being reflected in the income statement. Where deferred consideration is payable
after more than one year the estimated liability is discounted using an appropriate rate of interest.
Equity instruments
Equity instruments issued by the Company are recorded at fair value at initial recognition net of issue costs.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting
period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies, management has made the following judgements, which have the
most significant effect on the amounts recognised in the consolidated financial statements:
Going concern
The Group has incurred a loss of £8.4 million for the year ended 30 June 2015. At that date there was a net current
liability of £1.4 million. The loss resulted mainly from impairments of £6.6 million. Whilst the Directors have instituted
measures to preserve cash and secure additional finance, these circumstances create material uncertainties over future
trading results and cash flows.
During the fiscal year the Board of Directors has completed the sale of its gold interests in Colombia for a total
consideration of US$5.0m. Fixed cash payments are to occur in three tranches, with the US$0.450m having been paid at
closing, US$0.225m payable 9 months after closing, and a third tranche of $US0.225 payable 15 months after closing. In
addition the Company has received a three year convertible promissory note of US$1.0m secured over the assets of the gold
mine and associated plant and bearing interest of 5% per annum. Additional payments of up to $2.0m will be paid in the
form of a 3% net smelter royalty payable quarterly on gold production and commencing at the earlier of 9 months or 100 tons
per day processing and production at the plant in Colombia for 30 consecutive days. A final royalty stream of up to $1.0m
will be paid following the payment in full of the initial net smelter royalty in the form of a 0.5% net smelter royalty.
The Company has in September 2015 announced the raising of a convertible loan note of £250,000 from YA Global Master SPV,
Ltd and is currently in discussions regarding additional fundraising options expected to complete prior to the end of the
calendar year. The Directors feel that sales of non-core assets and/or a fundraising associated with a current or new
project development plan will be the most likely scenario at this time.
In March 2015 the Company paid off the entirety of its outstanding term loans with YA Global and UK Bond Network, removing
£882,974 of corporate debt from the balance sheet and largely completing the deleveraging efforts begun in the prior year.
The Group has further implemented plans to minimise its cash outflows by reducing its fixed costs and overheads by such
measures as staff reductions both in the form of redundancies and natural employee attrition, as well as minimizing
marketing costs and other office and corporate expenditure. The decision was made during the year to close the geology and
accounting departments and instead to rely on outsourced contractors on an ad hoc basis to perform residual functions,
giving the Company a
much lower level of fixed costs and much greater operational flexibility. As currently proposed total headcount is
expected to fall to under three full time employees by January 2016,
The Directors are confident in the Company's ability to raise new finance from stock markets if this is required during
2016 and the Group has demonstrated a consistent ability to do so. This includes recent share issues of 1.5 billion shares
for a total consideration of £1.0 million as well as the issuance of 689 million shares for a total consideration of
£0.327m. Furthermore the Company retains liquid investments in the form of Star Striker Limited and Regency Mines Plc, as
well as a substantial stake in Jupiter Mines Limited, all of which may be sold or disposed of if required during the course
of the year. Currently the firm is in discussions with major stakeholders of Star Striker Limited regarding a complete
disposal of its stake in this non-core business.
The Directors have concluded that the combination of these circumstances represents a material uncertainty that casts
significant doubt upon the Group's ability to continue as a going concern. Nevertheless after making enquiries, and
considering the uncertainties described above, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Assets classified as held for sale
On 14 April 2015 the Company executed a Sale Agreement with Colombia Milling Limited ("CML"), a private company registered
in Belize. CML is the nominee of Nicaragua Milling Company ("NML"), with which Red Rock signed a Letter of Intent on 12 May
2014. CML is represented by James Randall Martin, an experienced mining executive who was the CEO of Colombia Goldfields
Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco. Under the Sale Agreement, the Company sells, and
CML buys, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in Four Points Mining
SAS ("FPM"), the owner of the El Limón mine, and (b) its loans to FPM, for a total consideration of USD5,000,000. CML will
also purchase an 11.2% stake from a minority shareholder in the business. Payment of the unchanged consideration of
USD5,000,000 will occur in tranches. The initial payment of USD100,000, was previously made in respect of the CML's due
diligence review. The first tranche of USD450,000 was paid at the closing of the transaction ("Completion") on 13 May 2015.
The second tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of
USD225,000 will be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be
satisfied by the issuance by CML to Red Rock at Completion of a three year convertible 5% promissory note ("PN"), secured
on the acquired shares in AGM and providing that during its currency the CML will procure that AGM does not alienate or
dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and
conversion is possible following any listing of CML or vend of the assets into a public vehicle. Additional payments of up
to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly on gold
production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold
production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. A final
royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net
smelter return royalty ("Second NSR") payable quarterly on gold production from FPM.
Based on this and in accordance with IFRS 5, FPM is classified as a disposal group held for sale in the Company & Group's
accounts as at 30 June 2014. The AGM results up to the completion date of 13 May 2015 have been included in the
Consolidated Income Statement.
Recognition of holdings less than 20% as an associate
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). Andrew Bell is a member of
the board of MMM. In accordance with IAS 28, the Directors of the Company consider this, and the input of resource by the
Company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the
standard. As such, MMM has been recognised as an associate for the year ended 30 June 2015.
The effect of recognising MMM as an available for sale financial asset would be to decrease the loss by £43.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period include the impairment determinations,
the selling price of assets held for sale, the useful lives of property plant and equipment, the bad debt provision and the
fair values of our financial assets and liabilities.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
For unquoted equity investments, we have based our valuation on the weighted average share price of actual sale
transactions which we consider as level 2 of the fair value hierarchy as they are based on indirectly observable inputs. In
the absence of a quoted liquid market for Jupiter shares directly determining their value, the Company applied two
different methodologies to estimate the fair value of its holding. These included an Adjusted Net Asset Method and a Market
Approach. Under the Adjusted Net Asset method, the final results of Jupiter for the year ended 28 February 2015 announced
on 26th June 2015, as well as the independent business valuation on the Tshipi asset by Venmyn Deloitte were used to
provide relevant data points. Taking the net asset value, an adjusted hard asset only net asset value, and a further
adjusted asset value modified using figures from Venmyn Deloitte, management arrived at an average value of 19.8 cents per
share and a total valuation of AUD 5.40m (£2.63m). Applying a discount of 40% to this for illiquidity would reduce the fair
value to 11.88 cents per share or AUD 3.24m (£1.58m). Under the Market Approach, the Company considered all the
transactions involving Jupiter shares since de-listing. A total of thirty five transactions occurred between the de-listing
date in January 2014 and the financial year-end, at an average price of 9.8 cents per share. This period is determined to
be representative of the fair value at year end since there were no significant changes to the business and the
transactions were considered orderly. After careful consideration of all the facts and circumstances that existed at the
year-end date, Management believes that greater weight should be given to the actual transactions between buyers and
sellers rather than the net asset value figures. Thus, the market value approach was determined to be more suitable, and
the corresponding 9.8 cents per share value implies that the Company's holding in Jupiter Mines is valued at AUD 2.68m
(£1.30m).
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes
model.
Impairment of financial assets
The Group follows the guidance of IAS 39 to determine when a financial asset or a group of financial assets is impaired. A
financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred
"loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of
financial assets that can be reliably estimated. This determination requires significant judgement. In making this
judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less
than its cost.
In the case of equity investments classified as available for sale, objective evidence would include a significant or
prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost
of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share
prices typically have more volatility than most other shares and this is taken into account by management when considering
if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is
a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to
beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the
company development cycle of the investment.
As a result of the Group's evaluation, no impairment on available for sale financial assets was recognised in the income
statement for the year ended 30 June 2015.
Impairment of non-financial assets
The Group follows the guidance of IAS 36 to determine when a non-financial asset is impaired. The Group assesses, at each
reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can
be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted
share prices for publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group's
CGUs to which the individual assets are allocated. These projections generally cover a period of five years with a terminal
value or salvage value applied.
Impairment losses of continuing operations are recognised in the income statement in expense categories consistent with the
function of the impaired asset.
For investments in associates and joint ventures, the Group assesses impairment after the application of the equity
method.
As a result of the Group's evaluation of its non-financial assets, an impairment loss of £1,349,245 on investments in
associates and joint ventures was recognised in the income statement (2014: £1,863,962) This relates to the Company's iron
ore assets in Greenland. Management recognises that the declines in the price of iron ore and the general decline in global
growth rates, are all factors which indicate a further impairment may be required in the Greenland asset. In estimating the
level of this impairment, management have considered factors such as the outlook for the iron ore market and the
infrastructure which would be required to produce iron ore for the Greenland asset. It was decided that a valuation based
on the income approach would not be appropriate due to the relative infancy of the project, and an inability to accurately
project cash-flows in a meaningful way. Particular attention was also paid to the Baffinland Iron Mines Corporation and its
operations at the Nunavut based Mary River Project in NE Canada. Long considered the closest known comparator to Melvile
Bugt, Mary River announced an expansion to its shipping schedule to 10 months a year, further validating the Company's
underlying investment thesis regarding the viability of iron exploration and development in nearby Greenland.. After
extensive review and analysis, a final impairment value of £1.349m for the year was thus determined to be most
appropriate.
Amounts due from associates
The Company conducted a review of the carrying value of the amount receivable from Mid Migori Mining Company Limited in
relation to the Kenya asset. For the purpose of impairment review, the company views this receivable as part of its net
investment in the associate and hence followed the guidance of IAS 36. Management recognise that the recent variability in
gold prices, change in market fundamentals based on demand from key consumers, concerns around the global macroeconomic
environment in general, and the key uncertainty relating to the renewals of licences can all have an effect on the value of
this project. . As of mid-2015 the Company was currently engaged via its local partner in Kenya, Mid Migori Mining, in a
legal challenge of the purported termination of its Special License numbers 122 and 202, and in May 2015 was granted a
leave to institute judicial review proceedings and a stay on the implementation of the Ministry of Mines revocation
decision. Red Rock has also applied via a local affiliate, Red Rock Kenya, for the same ground covered by the existing
licenses. While the Company feels it has a strong and quite valid case for retention of the licenses and the existing JORC
resource the ongoing legal process makes the timing of any resolution unclear and difficult to project As a result of the
uncertainties associated with the project the Company felt it prudent to further impair the value of the Kenya project by
£5.28m..
2 Segmental analysis
The Group considered its mining and exploration activities as separate segments. These are in addition to the investment
activities which continue to form a significant segment of the business. Its mining segment, which has now been sold, is
currently presented as discontinued operations on the face of the income statement and is excluded from the continuing
operations segmental analysis below.
The Group has made a strategic decision to concentrate on two commodities, gold and iron ore. However, as the Group was
only in the production phase of gold during the year, a further segmental analysis by commodity has not been presented.
Investment Exploration Other
Year to 30 June 2015 JupiterMinesLimited£ Otherinvestments£ Australianexploration£ Africanexploration£ Corporateandunallocated£ Total£
Gain on sales of investments - 4,308 - - - 4,308
Impairment of amounts due from associates and ventures - - - (5,280,000) - (5,280,000)
Impairment of investments in associates and joint ventures - (1,349,245) - - - (1,349,245)
Exploration expenses - (65,960) 16,710 (81,409) (8,562) (139,221)
Other expenses (excl currency loss)* - - (2,895) (11,677) (937,613) (952,185)
Currency loss - - (35,648) - (346,571) (382,219)
(Provision for)/Reversal of provision for bad debts - (222,830) - - - (222,830)
Shares of losses in associates - - - - (1,183) (1,183)
Other income - - - - 30,033 30,033
Finance (cost)/income, net - - - (1,872) 567,042 565,170
Net profit/(loss) before tax from continuing operations - (1,633,727) (21,833) (5,374,958) (696,854) (7,727,372)
* Included in other expenses is a depreciation charge of £4,834.
Investment Exploration Other
Year to 30 June 2014 JupiterMinesLimited£ Otherinvestments£ Australianexploration£ Africanexploration£ Corporateandunallocated£ Total£
Gain on sales of investments 6,994 - - - - 6,994
Impairment of available for sale investments - - - (469,446) - (469,446)
Impairment of investments in associates and joint ventures - (1,863,962) - - - (1,863,962)
Exploration expenses - (31,865) (871) (1,838) (365) (34,939)
Other expenses (excl currency loss)* - - (2,337) - (1,377,853) (1,380,190)
Currency loss - - (18,983) - (164,635) (183,618)
(Provision for)/Reversal of provision for bad debts - (600,000) - - 327 (599,673)
Shares of losses in associates - (85,696) - (19,396) - (105,092)
Other income - - - - 375,643 375,643
Finance income, net - - - - 485,725 485,725
Net profit/(loss) before tax from continuing operations 6,994 (2,581,523) (22,191) (490,680) (681,158) (3,768,558)
* Included in other expenses is a depreciation charge of £14,409.
Information by geographical area
Presented below is certain information by the geographical area of the Group's activities. Revenue from investment sales
and the sale of exploration assets is allocated to the location of the asset sold.
Year ended 30 June 2015 UK£ Australia£ Greenland£ Africa£ Total£
Revenue
Gain on sales of investments 4,308 - - - 4,308
Total segment revenue and other gains 4,308 - - - 4,308
Non-current assets
Property, plant and equipment 266 - - - 266
Investments in associates and joint ventures - - 2,997,060 971,818 3,968,878
Total segment non-current assets 266 - 2,997,060 971,818 3,969,144
Available for sale financial assets 1,331,766
Non-current receivables 3,634,270
Total non-current assets 8,935,180
Year ended 30 June 2014 UK£ Australia£ Greenland£ Africa£ Total£
Revenue
Gain on sales of investments 6,994 - - - 6,994
Total segment revenue and other gains 6,994 - - - 6,994
Non-current assets
Property, plant and equipment 5,100 - - - 5,100
Investments in associates and joint ventures - - 4,347,446 971,860 5,319,306
Total segment non-current assets 5,100 - 4,347,446 971,860 5,324,406
Available for sale financial assets 1,583,984
Non-current receivables 7,148,560
Total non-current assets 14,056,950
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
2015£ 2014£
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of consolidated and Company financial statements 20,000 79,659
Directors' emoluments 157,169 218,566
Share-based payments - Directors 24,000 24,000
Share-based payments - staff 48,170 68,712
Depreciation - continuing operations 4,834 14,409
Depreciation - discontinued operations - 508,088
Currency losses 382,219 183,618
4 Finance income/(costs), net
2015£ 2014£
Interest income 668,438 596,416
Interest expense (103,267) (141,832)
Other finance income - 31,141
565,171 485,725
Interest income comes mainly from non-current receivables from an associate. Please refer to note 15.
5 Taxation
Note 2015£ 2014£
Current period taxation on the Group
UK corporation tax at 20.75% (2014: 22.50%) on profits for the period - -
- -
Deferred tax
Origination and reversal of temporary differences - (2,279,276)
Deferred tax assets not recognised - 82,022
Tax credit - (2,197,254)
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation (8,411,542) (6,310,714)
Loss on ordinary activities at the average UK standard rate of 20.75% (2014: 22.50%) (1,745,395) (1,419,911)
Impact of subsidiaries and associates 74,738 (1,304,135)
Effect of expenditure not deductible 1,358,309 41,298
Effect of non-taxable income - (84,799)
Effect of losses carried forward not recognised 312,348 570,293
Tax credit - (2,197,254)
Tax credit arising from continuing operations - -
Tax credit arising from discontinued operations 8 (2,197,254)
Total tax credit - (2,197,254)
Deferred tax amounting to £nil (2014: £nil) relating to the Group's investments was recognised in the statement of
comprehensive income. In 2014 the deferred tax credit of £2,197,254 relates to discontinued operations and is included in
the loss after tax for the year from discontinued operations in the income statement.
Finance Act 2013 set the main rate of corporation tax at 21% from 1 April 2014 and at 20% from 1 April 2015. Therefore
deferred tax assets/(liabilities) are calculated at 20% (2014: 21%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:
2015£ 2014£
Wages and salaries 546,749 750,628
Pension 19,083 28,588
Social security costs 60,174 76,654
Employee share-based payment charge 72,170 92,712
Total staff costs 698,176 948,582
The average number of Group employees (including Directors) during the year was:
2015Number 2014Number
Executives 4 4
Administration 12 16
Exploration 5 8
21 28
The Company's staff also work for Regency Mines plc and staff costs of £44,031 (2014: £82,500) were recharged during the
year. Such charges are offset against administration expenses in the income statement.
In addition, professional staff employed by Regency Mines plc are sub-contracted to the Company to work on specific
assignments as necessary. During the year, the total charge was £105,848 (2014: £174,863).
The average number of employees includes 5 (2014: 6) administration employees of the Four Points Mining SAS, a subsidiary
company until 13 May 2015, which runs its own payroll for administrative staff. The key management personnel are the
Directors and their remuneration is disclosed within note 7.
7 Directors' emoluments
2015 Directors'fees£ Consultancyfees£ ShareIncentive Plan£ Pensioncontributions£ Socialsecurity costs£ Total£
Executive Directors
A R M Bell 61,750 15,000 6,000 3,361 5,384 91,495
Other Directors
J F Ladner 16,500 8,500 6,000 - 956 31,956
M C Nott 16,500 8,500 6,000 795 905 32,700
J Watkins 16,500 1,500 6,000 - 1,018 25,018
111,250 33,500 24,000 4,156 8,263 181,169
2014 Directors'fees£ Consultancyfees£ ShareIncentive Plan£ Pensioncontributions£ Socialsecurity costs£ Total£
Executive Directors
A R M Bell 100,833 15,000 6,000 7,321 9,854 139,008
Other Directors
M G R Yannaghas 12,500 - - - 1,548 14,048
J F Ladner 16,000 9,000 6,000 - 930 31,930
M C Nott 16,000 9,000 6,000 808 842 32,650
J Watkins 16,000 2,000 6,000 - 930 24,930
161,333 35,000 24,000 8,129 14,104 242,566
On 30 June 2015, Mr Scott Kaintz was appointed an executive Director, Mr Sam Quinn was appointed a non-executive Director
and Mr John Watkins resigned as a Director. Neither Mr Scott Kaintz nor Mr Sam Quinn received any emoluments for their
roles as a Director in the year under review.
The number of Directors who exercised share options in the year was nil (2014: nil).
During the year, the Company contributed to a Share Incentive Plan. 3,529,411 (2014: 631,578) free shares were issued to
each employee, including Directors, making a total of 14,117,644 (2014: 2,526,312) to Directors.
In addition to Director's fees, consultancy fees in respect of Mike Nott were payable to Woodridge Associates, a business
which provided his services.
In addition to Director's fees, consultancy fees in respect of John Watkins were payable to his business as a chartered
accountant in practice.
8 Assets classified as held for sale
Four Points Mining SAS
On 14 April 2015 the Company executed a Sale Agreement with Colombia Milling Limited ("CML"), a private company registered
in Belize. CML is the nominee of Nicaragua Milling Company ("NML"), with which Red Rock signed a Letter of Intent on 12 May
2014. CML is represented by James Randall Martin, an experienced mining executive who was the CEO of Colombia Goldfields
Ltd and was the founder and Chairman of Nicaraguan gold producer Hemco. Under the Sale Agreement, the Company sells, and
CML buys, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in Four Points Mining
SAS ("FPM"), the owner of the El Limón mine, and (b) its loans to FPM, for a total consideration of USD5,000,000. CML will
also purchase an 11.2% stake from a minority shareholder in the business. Payment of the unchanged consideration of
USD5,000,000 will occur in tranches. The initial payment of USD100,000 was previously made in respect of CML's due
diligence review. The first tranche of USD450,000 was paid at the closing of the transaction ("Completion"). The second
tranche of USD225,000 will be payable on the date that is 9 months from Completion. The third tranche of USD225,000 will
be payable on the date that is 15 months from Completion. A further payment of USD1,000,000 will be satisfied by the
issuance by CML to Red Rock at Completion of a three year convertible 5% promissory note ("PN"), secured on the acquired
shares in AGM and providing that during the duration of the loan, CML will procure that AGM does not alienate or dispose of
its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion
is possible following any listing of CML or transfer of the assets into a public vehicle.
Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable
quarterly on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of
commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive
calendar days. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in
the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM. Completion took
place on 13 May 2015. . A 7% commission is payable to Ariel Partners on the transaction.
Based on this, FPM is classified as a disposal group held for sale in the Company and Group's accounts as at 30 June 2014.
The results of FPM for the period to completion, 13 May 2015, and for the prior year are presented below:
30 June 30 June
2015 2014
Note £ £
Revenue 1,682,567 2,424,539
Cost of sales (1,210,993) (1,673,479)
Gross profit 471,574 751,060
Expenses (960,068) (790,783)
Finance costs, net (168,326) (114,275)
Impairment of assets held for sale (64,406) (2,388,158)
Loss before tax from a discontinued operation (721,226) (2,542,156)
Tax credit 37,056 2,197,254
Loss after tax from a discontinued operation (684,170) (344,902)
Loss from a discontinued operation attributable to:
Owners of the parent (370,071) (275,226)
Non-controlling interest (314,099) (69,676)
(684,170) (344,902)
Loss per share attributable to owners of the parent:
Basic 9 (0.01) pence (0.02) pence
Diluted 9 (0.01) pence (0.02) pence
The major classes of assets and liabilities classified as held for sale as at 30 June 2015 are as follows:
Group 30 June 2015£ 30 June2014£
Assets
Property, plant and equipment - 4,916,147
Inventory - 77,750
Other receivables - 1,996,120
Cash and cash equivalents - 4,451
Assets classified as held for sale - 6,994,468
Liabilities
Trade and other payables - 1,530,130
Borrowings - 2,266,354
Deferred tax liabilities - 947,801
Liabilities directly associated with assets classified as held for sale - 4,744,285
Net assets directly associated with disposal group - 2,250,183
Non-controlling interest - (60,461)
Net assets directly associated with disposal group attributable to owners of the Parent - 2,189,722
Company 30 June 2015£ 30 June2014£
Assets
Investment in subsidiary - 947,149
Amounts due from subsidiary - 1,115,248
Other receivables - 1,521,280
Impairment of assets classified as held for sale - (1,393,955)
Assets classified as held for sale - 2,189,722
The net cash flows of discontinued operations are as follows:
30 June 2015£ 30 June2014£
Operating 286,751 996,491
Investing (45,699) (39,241)
Financing (245,503) (964,644)
Net cash outflows (4,451) (7,394)
9 Loss per share
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent
by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by
the weighted average number of shares in issue plus the weighted average number of Ordinary shares that would be issued on
conversion of all dilutive potential Ordinary shares into Ordinary shares.
The following reflects the loss and share data used in the basic and diluted earnings per share computations:
2015 2014
Loss attributable to equity holders of the parent from continuing operations £(7,721,880) £(3,768,558)
Loss attributable to equity holders of the parent from discontinued operations £(370,071) £(275,226)
Loss attributable to equity holders of the Parent £(8,091,951) £(4,043,784)
Weighted average number of Ordinary shares of £0.0001 (2014: £0.001) in issue 2,884,093,532 1,518,425,648
Loss per share - basic (0.28) pence (0.27) pence
Weighted average number of Ordinary shares of £0.0001 (2014: £0.001) in issue inclusive of outstanding dilutive options* 2,884,093,532 1,518,425,648
Loss per share - fully diluted (0.28) pence (0.27) 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:
2015 2014
Loss per share denominator 2,884,093,532 1,518,425,648
Weighted average number of exercisable share options - -
Diluted loss per share denominator* 2,884,093,532 1,518,425,648
In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average
market price of Ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group
has weighted average share options of 7,265,753 (2014: 20,590,411). These were not included in the calculation of diluted
earnings per share because all the options are not likely to be exercised given that even the lowest exercise price is
substantially higher than the market price and are therefore non-dilutive for the period presented.
10 Property, plant and equipment
Group Mines£ Field equipmentand machinery£ Fixtures andfittings£
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