REG - Red Rock Resources - Final Results for the Year Ended 30 June 2015 <Origin Href="QuoteRef">RRR.L</Origin> - Part 3
12/11/2015 09:50
- Part 3: For the preceding part double click ID:nRSL4758Fb
Assets underconstruction£ Total£
Cost
At 1 July 2013 12,970,084 968,148 88,097 402,546 14,428,875
Reclassification to assets held for sale (12,716,945) (832,554) (51,581) (368,874) (13,969,954)
Additions - 37,487 1,943 - 39,430
Disposals - (60,385) (4,838) - (65,223)
Currency exchange (253,139) (78,089) (4,972) (33,672) (369,872)
At 30 June 2014 - 34,607 28,649 - 63,256
Disposals - - (842) - (842)
At 30 June 2015 - 34,607 27,807 - 62,414
Depreciation and impairment
At 1 July 2013 (5,926,741) (280,674) (47,935) - (6,255,350)
Reclassification to assets held for sale 6,316,400 319,335 29,913 - 6,665,648
Depreciation charge (394,145) (113,541) (14,811) - (522,497)
Disposal - 19,676 4,221 - 23,897
Currency exchange 4,486 23,224 2,436 - 30,146
At 30 June 2014 - (31,980) (26,176) - (58,156)
Depreciation charge - (2,627) (2,207) - (4,834)
Disposals - - 842 - 842
At 30 June 2015 - (34,607) (27,541) - (62,148)
Net book value
At 30 June 2015 - - 266 - 266
At 30 June 2014 - 2,627 2,473 - 5,100
Of the depreciation charge, £4,834 (2014:£14,409) is included within other expenses and £0 (2014:£508,088) within loss
after tax from discontinued operations in the income statement.
Company Fieldequipmentandmachinery£ Fixturesandfittings£ Total£
Cost
At 1 July 2013 34,607 28,649 63,256
Additions - - -
At 30 June 2014 34,607 28,649 63,256
Disposals - (842) (842)
At 30 June 2015 34,607 27,807 62,414
Depreciation
At 1 July 2013 (23,216) (20,574) (43,790)
Charge (8,764) (5,602) (14,366)
At 30 June 2014 (31,980) (26,176) (58,156)
Charge (2,627) (2,207) (4,834)
Disposals - 842 842
At 30 June 2015 (34,607) (27,541) (62,148)
Net book value
At 30 June 2015 - 266 266
At 30 June 2014 2,627 2,473 5,100
11 Investments in subsidiaries
Company 2015£ 2014£
Cost
At 1 July 2014 482 4,004,554
Investment in subsidiary 131 -
Reclassification to assets held for sale - (4,004,072)
At 30 June 2015 613 482
Impairment
At 1 July 2014 (482) (3,057,405)
Charge in the year - -
Reclassification to assets held for sale - 3,056,923
At 30 June 2015 (482) (482)
Net book value 131 -
As at 30 June 2015, the Company held interests in the following subsidiary companies:
Company Country ofregistration Class Proportionheld Nature of business
Intrepid Resources Limited Zambia Ordinary 100% Dormant
Red Rock Australasia Pty Limited Australia Ordinary 100% Mineral exploration
Red Rock Kenya Limited Kenya Ordinary 87% Mineral exploration
Red Rock Cote D'Ivoire sarl Ivory Coast Ordinary 100% Mineral exploration
Basse Terre sarl Ivory Coast Ordinary 100% Mineral exploration
12 Investments in associates and joint ventures
Group Company
2015 £ 2014£ 2015 £ 2014£
Cost
At 30 June 2014 9,108,304 5,855,672 8,951,460 5,698,828
Additions during the year - 83,897 - 83,897
Transfer from assets held for sale - 3,168,735 - 3,168,735
At 30 June 2015 9,108,304 9,108,304 8,951,460 8,951,460
Impairment
At 30 June 2014 (3,788,998) (1,819,944) (3,257,587) (525,034)
Losses during the year (1,183) (105,092) - -
Impairment in the year (1,349,245) (1,863,962) (1,394,451) (2,732,553)
At 30 June 2015 (5,139,426) (3,788,998) (4,652,038) (3,257,587)
Net book amount 3,968,878 5,319,306 4,299,422 5,693,873
The Company, at 30 June 2015, had holdings amounting to 20% or more of the issued share capital of the following companies
which amounted to significant influence or joint control:
Company Country ofincorporation Class ofshares held Percentage ofissued capital Accounting year ended
Red Rock Zambia Limited* Zambia Ordinary 28.40% 30 June 2015
Melville Bay Limited (formerly "NAMA Greenland Limited") England Ordinary 60.00% 30 November 2014
* Financial information was not available for this company.
The Company, at 30 June 2015, had significant influence by virtue other than shareholding over 20% over the following
companies:
Company Country ofincorporation Class ofshares held Percentage ofissued capital Accounting year ended
Star Striker Limited Australia Ordinary 11.03% 30 June 2015
Mid Migori Mining Company Limited Kenya Ordinary 15.00% 30 September 2014
Summarised financial information for the Company's associates and joint ventures, where available, as at 30 June 2015 is
given below:
Company Revenue£ Loss£ Assets£ Liabilities£
Mid Migori Mining Company Limited - (288) 2,200,810 (2,966,356)
Star Striker Limited 1,070 (614,833) 227,484 (60,525)
Melville Bay Limited - (1,742,607) 4,106,839 (150,769)
Mid MigoriMining CompanyLimited£ Red RockZambiaLimited£ Star StrikerLimited£ MelvilleBayLimited£ Total£
Cost
At 30 June 2014 1,044,766 140,596 1,709,735 6,213,207 9,108,304
Additions during the year - - - - -
At 30 June 2015 1,044,766 140,596 1,709,735 6,213,207 9,108,304
Impairment and losses during the year
At 30 June 2014 (72,905) (140,596) (1,709,735) (1,865,762) (3,788,998)
(Losses) during the year (43) - - (1,140) (1,183)
Impairment in period - - - (1,349,245) (1,349,245)
At 30 June 2015 (72,948) (140,596) (1,709,735) (3,216,147) (5,139,426)
Carrying amount
At 30 June 2015 971,818 - - 2,997,060 3,968,878
At 30 June 2014 971,861 - - 4,347,445 5,319,306
Mid Migori Mining Company Limited
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). The Company has entered into
an agreement whereby it manages and funds a number of MMM's development projects and has representation on the MMM board.
In accordance with IAS 28, the involvement with MMM meets the definition of significant influence and therefore has been
accounted for as an associate (note 1.5).
Red Rock Zambia Limited
The book value of Red Rock Zambia Limited was fully written off in previous years.
Star Striker Limited (formerly known as Resource Star Limited)
The market value as at 30 June 2015 of the Company's investments in listed associates was as follows:
2015£ 2014£
Star Striker Limited 222,824 112,448
Melville Bay Limited
In consideration for funding the 2012 exploration programme of North Atlantic Mining Associates Limited ("NAMA"), the
Company earned 60% interest in Melville Bay Limited ("MBL"). The Company does not have control over MBL but has joint
control along with North Atlantic Mining Associates Limited and International Media Projects Ltd through a contractual
joint venture arrangement making MBL a jointly controlled entity.
13 Available for sale financial assets
Group and Company
2015 £ 2014£
Opening balance 1,583,984 3,136,448
Additions - 232,978
Disposals (10,070) (1,705,997)
Revaluations (242,148) 390,001
Impairment of available for sale financial assets - (469,446)
Closing balance 1,331,766 1,583,984
Market value of investments
The market value as at 30 June 2015 of the Company's available for sale listed and unlisted investments were as follows:
2015£ 2014£
Quoted on London AIM 27,120 94,765
Unquoted investments at fair value 1,304,646 1,489,219
1,331,766 1,583,984
14 Cash and cash equivalents and restricted cash
Group 30 June2015£ Cash flow£ 30 June2014£
Cash in hand and at bank 29,426 (21,741) 51,167
Restricted cash - (221,846) 221,846
29,426 (243,587) 273,013
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:
30 June2015 30 June2014£
£
Cash in hand and at bank 29,426 51,167
Cash in hand and at bank attributable to asset held for sale (note 8) - 4,451
29,426 55,618
Company 30 June2015£ Cash flow£ 30 June2014£
Cash in hand and at bank 22,841 (28,128) 50,969
Restricted cash - (221,846) 221,846
22,841 (249,974) 272,815
Cash of £221,846 was held in escrow as security for the bond liability with UK Bond Network Limited which was fully repaid
during the year.
15 Non-current receivables
Group and Company
2015 £ 2014£
Amounts due from associates 2,228,812 7,148,560
FPM sale proceeds 1,405,458 -
3,634,270 7,148,560
Non-current related party receivables of £2,228,812 (2014: £7,148,560) is recoverable from Mid Migori Mining Company
Limited under the terms of the joint venture, purchase and sale agreement entered into in August 2009 as detailed in note
26. The amount is unsecured and has no fixed repayment date. Interest is charged at 8% per annum. Management have
considered the recoverability of this debt and due to the ongoing licence dispute, have impaired the asset by £5,280,000.
More details are given in note 1.5, Significant accounting judgements, estimates and assumptions.
The FPM sale proceeds represents the fair value of the deferred consideration receivable for the sale of FPM. The fair
value was estimated based on the consideration offered by the buyer adjusted to its present value based on the timing for
which the consideration is expected to be received. The most significant inputs are the offer price per tranches, discount
rate and estimated royalty stream. The estimated royalty stream takes into account current production level, estimates of
future production level and gold price forecasts.
16 Other receivables
Group Company
2015 £ 2014£ 2015 £ 2014£
Current trade and other receivables
Prepayments 270,110 272,322 231,290 272,322
Related party receivables:
- due from subsidiaries - - 82,978 -
- due from associates 715 49,251 715 49,251
- due from key management - 5,687 - 5,687
Other receivables 390,327 251,885 388,189 250,710
Total 661,152 579,145 703,172 577,970
Other receivables are stated after full provision of £600,000 relating to an amount due from North Atlantic Mining
Associates Limited (2014: £600,000).
17 Trade and other payables
Group Company
2015 £ 2014£ 2015 £ 2014£
Trade and other payables 1,410,726 1,855,719 1,406,238 1,855,426
Accruals 302,397 318,394 302,397 318,394
Related party payables:
- due to associates 317,882 289,941 317,882 289,941
- due to key management 67,265 29,235 67,265 29,235
Trade and other payables 2,098,270 2,493,289 2,093,782 2,492,996
Short-term borrowings - 755,889 - 755,889
2,098,270 3,249,178 2,093,782 3,248,885
Long-term borrowings - 318,978 - 318,978
Total 2,098,270 3,568,156 2,093,782 3,567,863
YA Global Master SPV Limited
A short-term loan of £nil (2014: £321,850) with YA Global Master SPV Limited ("YAGM") remains outstanding as at the end of
the year.
UK Bond Network
In December 2013, the Company issued a £500,000 secured bond, arranged by the UK Bond Network Limited. The bond had a term
of 2 years and a coupon of 14% per annum and was to be 50% amortised with payments that started in June 2014 and continuing
on a semi-annual basis. The loan could be repaid at any time following the first anniversary of the date of issuance at no
additional cost to the Company. The loan was fully repaid during the year and as at 30 June 2015 the outstanding bond
liability was nil (2014: £443,693).
18 Deferred tax
The movement in the Company's and Group's net deferred tax position is as follows:
Group Company
2015 £ 2014£ 2015 £ 2014£
Deferred tax liabilities as at 30 June 2014 - (3,164,001) - -
Deferred tax credit recognised in the statement of income - - - -
Deferred tax charge recognised in the statement of comprehensive income - - - -
Transferred from liabilities associated with assets held for sale - - - -
Transferred to liabilities associated with assets held for sale - 3,164,001 - -
Deferred tax liabilities as at 30 June 2015 - - - -
The following are the major deferred tax liabilities and assets recognised by the Group and Company and the movements
thereon during the period:
Group Depreciation£ Investments£ Employeebenefits£ Total£
Deferred tax liabilities as at 30 June 2013 - (3,164,001) - (3,164,001)
Transferred to liabilities associated with assets held for sale - 3,164,001 - 3,164,001
Deferred tax liabilities as at 30 June 2014 and 30 June 2015 - - - -
Company Depreciation£ Investments£ Employeebenefits£ Total£
Deferred tax liabilities as at 30 June 2013 - - - -
Charge to the statement of income for the year - - - -
Charge to the statement of comprehensive income - - - -
Deferred tax liabilities as at 30 June 2014 - - - -
Charge to the statement of income for the year - - - -
Charge to the statement of comprehensive income - - - -
Deferred tax liabilities as at 30 June 2015 - - - -
19 Share capital of the Company
The share capital of the Company is as follows:
Issued and fully paid 2015£ 2014£
2,371,116,172 deferred shares of £0.0009 each 2,134,005 -
1,934,588 ordinary shares of £0.001 each - 1,934,588
4,662,024,541 ordinary shares of £0.0001 each 466,202 -
As at 30 June 2,600,207 1,934,588
Movement in share capital Number Nominal£
Ordinary shares of £0.001 each
As at 30 June 2013 1,279,769,102 1,279,769
Shares issued in the year to 30 June 2014 654,818,441 654,819
As at 30 June 2014 1,934,587,543 1,934,588
Issued 11 August 2014 at 0.2257 pence per share 97,363,903 97,364
Issued 29 August 2014 at 0.20 pence per share 100,000,000 100,000
Issued 18 September 2014 at 0.22 pence per share 76,056,779 76,056
Issued 25 November 2014 at 0.1686 pence per share 163,107,947 163,108
As at 23 December 2014, pre-share re-organisation 2,371,116,172 2,371,116
23 December 2014, Share Re-organisation (see below)
Issue of deferred shares of £0.0009 each (2,371,116,172) (2,134,005)
Issue of new ordinary shares of £0.0001 each 2,371,116,172 237,112
Issued 2 March 2015 at 0.08 pence per share 87,500,000 8,750
Issued 6 March 2015 at 0.0798 pence per share 15,140,011 1,514
Issued 19 March 2015 at 0.065 pence per share 1,538,461,538 153,846
Issued 19 March 2015 at 0.066554 pence per share 7,598,784 760
Issued 25 March 2015 at 0.0666 pence per share 200,000,000 20,000
Issued 1 April 2015 at 0.0665 pence per share 121,703,854 12,170
Issued 2 April 2015 at 0.085 pence per share 102,652,904 10,265
Issued 15 April 2015 at 0.06837 pence per share 99,654,527 9,965
Issued 23 April 2015 at 0.06837 pence per share 118,196,751 11,820
Total shares issued in the year 2,727,436,998 665,619
As at 30 June 2015 - ordinary shares of £0.0001 each 4,662,024,541 466,202
Change in Nominal Value / share re-organisation
The nominal value of shares in the company was originally 0.1 pence. At a shareholders meeting on 23 December 2014, the
Company's shareholders approved a re-organisation of the company's shares which resulted in the creation of two classes of
shares, being:
· Ordinary shares with a nominal value of 0.01 pence, which will continue as the company's listed securities.
· Deferred shares with a value of 0.09 pence which, subject to the provisions of the Companies Act 2006, may be
cancelled by the company, or bought back for £1 and then cancelled. These deferred shares are not quoted and carry no
rights whatsoever.
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 (note
22).
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 year.
20 Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above their nominal value net
of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen from the retranslation of overseas
operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Available for sale trade investments reserve
The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of
available for sale trade investments.
Associate investment reserve
The associate investments reserve represents the cumulative share of gains and losses of associates recognised in the
statement of other comprehensive income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.
21 Share-based payments
Employee share options
In prior years, the Company established employee share option plans to enable the issue of options as part of the
remuneration of key management personnel and Directors to enable them to purchase Ordinary shares in the Company. All
options have expired as at 30 June 2015 except for those issued for an exercise price of 3.2 pence. Under the plan, the
options were granted for no consideration, vested immediately, expiring on 21 Sept 2015 and carry no dividend or voting
rights.
Under IFRS 2 "Share-based Payments", the Company determines the fair value of the options issued to Directors and employees
as remuneration and recognises the amount as an expense in the statement of income with a corresponding increase in equity.
The expense was charged in full during the previous years. There is no charge during the year.
At 30 June 2015, the Company had outstanding options to subscribe for Ordinary shares as follows:
Options issued22 September 2010exercisable at3.2 pence pershare expiring21 September 2015Number
A R M Bell 3,250,000
M C Nott 2,000,000
J Watkins 1,000,000
Employees 750,000
Total 7,000,000
Company and Group
2015 2014
Number ofoptions Weightedaverageexercise price pence Number ofoptions Weightedaverageexercisepricepence
Outstanding at the beginning of the period 8,000,000 3.20 24,250,000 2.21
Expired (1,000,000) 3.20 (16,250,000) 1.72
Outstanding at the end of the period 7,000,000 3.20 8,000,000 3.20
Exercisable at the end of the period 7,000,000 3.20 8,000,000 3.20
The options outstanding at 30 June 2015 have an exercise price of 3.2 pence and a contractual life of 0.23 years.
During the financial year no options were exercised (2014: nil). During the financial year 1,000,000 options expired due to
staff leaving the Company (2014: 16,250,000 due to the expiry date being reached).
The fair value of services received in return for options granted is measured by reference to the fair value of options
granted. The estimate of the fair value of the services received is measured based on the Black-Scholes option-pricing
model. The contractual life of the options is used as an input into the model. The model assumes that an option is only
capable of exercise at expiry.
Fair valueper optionpence Exercisepricepence Price ofshares ongrantpence Estimatedvolatility% Risk freeinterest% Dividend%
22 September 2010 1.60 3.20 3.20 50% 1.84% -
The expected volatility is based on the historic volatility of the Company and peer group entities (calculated on the
weighted average remaining life of the share options), adjusted for any expected changes to volatility due to publicly
available information and other factors indicating that expected future volatility might differ from past volatility.
Risk free interest rates are based on five year government bonds.
Share Incentive Plan
In January 2012 the Company implemented a tax efficient Share Incentive Plan, a government approved scheme, the terms of
which provide for an equal reward to every employee, including Directors, who have served for three months or more at the
time of issue. The terms of the plan provide for:
· each employee to be given the right to subscribe any amount up to £150 per month with Trustees who invest the monies
in the Company's shares;
· the Company to match the employee's investment by contributing an amount equal to double the employee's investment
("matching shares"); and
· the Company to award free shares to a maximum of £3,600 per employee per annum.
The subscriptions remain free of taxation and national insurance if held for five years.
The fair value of services provided is recognised as an expense in the income statement at grant date and is determined
indirectly by reference to the fair value of the free and matching shares granted. Fair value of shares is measured on the
basis of an observable market price, i.e. share price as at grant date.
During the financial year, a total of 84,905,853 free and matching shares were awarded with a fair value of 0.085 pence
resulting in a share-based payment charge of £72,170 in the income statement.
22 Financial instruments
22.1 Categories of financial instruments
The Group and Company hold a number of financial instruments, including bank deposits, short-term investments, loans and
receivables and trade payables.
The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the
accounting policies, are as follows:
Group 2015£ 2014£
30 June 2015
Financial assets
Available for sale financial assets at fair value through OCI
Unquoted equity shares 1,304,646 1,489,219
Quoted equity shares 27,120 94,765
Total available for sale financial assets at fair value through OCI 1,331,766 1,583,984
Loans and receivables
Non-current receivables 3,634,270 7,148,560
Other receivables - current 391,042 306,823
Total loans and receivables 4,025,312 7,455,383
Total financial assets 5,357,078 9,039,367
Total current 391,042 306,823
Total non-current 4,966,036 8,732,544
The carrying value of non-current financial assets in the Company equals that of the Group.
The carrying value of current financial assets in the Company is not materially different from that of the Group.
Other receivables and trade payables
Management assessed that other receivables and trade and other payables approximate their carrying amounts largely due to
the short-term maturities of these instruments.
Non-current receivables
Long-term fixed-rate receivables are evaluated by the Group based on parameters such as interest rates, recoverability and
risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for any expected
losses on these receivables.
Financial instruments held at cost can be reconciled from beginning to ending balances as follows:
Available for sale financial assets at cost
Unlisted investments at cost
Group and Company 2015£ 2014£
Brought forward - 469,445
Impairment - (469,445)
Carried forward - -
Group 2015£ 2014£
30 June 2014
Financial liabilities
Loans and borrowings
Trade and other payables 2,098,270 2,174,895
Short-term borrowings - 755,889
Long-term borrowings - 318,978
Total loans and borrowings 2,098,270 3,249,762
Total financial liabilities 2,098,270 3,249,762
Total current 2,098,270 2,930,784
Total non-current - 318,978
The carrying value of non-current financial liabilities in the Company equals that of the Group.
The carrying value of current financial liabilities in the Company is not materially different from that of the Group.
Loans and borrowings
The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting
date, using the issuer's borrowing rate.
22.2 Fair values
22.2.1 Fair values of financial assets and liabilities
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into
three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to
the measurement, as follows:
· 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; and
· Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
The carrying amount of the Company's financial assets and liabilities is not materially different to their fair value. The
fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale. Where a quoted price in an active
market is available, the fair value is based on the quoted price at the end of the reporting period. In the absence of a
quoted price in an active market, 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.
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.
Group and Company Level 1£ Level 2£ Level 3£ Total£
30 June 2015
Available for sale financial assets at fair value through OCI
- Unquoted equity shares - 1,304,646 - 1,304,646
- Quoted equity shares 27,120 - - 27,120
Group and Company Level 1£ Level 2£ Level 3£ Total£
30 June 2014
Available for sale financial assets at fair value through OCI
- Unquoted equity shares - 1,489,219 - 1,489,219
- Quoted equity shares 94,765 - - 94,765
The valuation techniques used for instruments categorised in Levels 2 and 3 are described below:
Unquoted available for sale financial assets (Level 2)
A significant portion of the Group's available for sale financial asset is an investment in equity shares of a non-listed
company. The fair value of unquoted ordinary shares has been estimated using the weighted average share price of actual
sale transactions that happened between de-listing date and the year-end.
22.3 Financial risk management policies
The Directors monitor the Group's financial risk management policies and exposures and approve financial transactions.
The Directors' overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets,
while minimising potential adverse effects on financial performance. Its functions include the review of credit risk
policies and future cash flow requirements.
Specific financial risk exposures and management
The main risks the Group are exposed to through its financial instruments are credit risk and market risk consisting of
interest rate risk, liquidity risk, equity price risk and foreign exchange risk.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the
approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the
financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and
counterparties to transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for
impairment.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in
entities that the Directors have otherwise cleared as being financially sound.
Other receivables which are neither past due nor impaired are considered to be of high credit quality.
There are no amounts of collateral held as security in respect of trade and other receivables.
The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Limited, an associate of
the Company. Management have impaired this asset by £5.28m. See note 1.5, 'Significant accounting judgements, estimates and
assumptions' and note 15 for further details.
The Group has no outstanding pledges (2014: 19,666,540) of its shares in Jupiter Mines Limited as security.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
· monitoring undrawn credit facilities;
· obtaining funding from a variety of sources; and
· maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to finance operations for commercial exploration and that
controls over expenditure are carefully managed.
As at 30 June 2015, the Group's non-derivative financial liabilities of £2,315,904 have contractual maturities of 0-6
months.
Management intend to meet obligations as they become due through the sale of assets, the issuance of new shares, the
collection of debts owed to the Company and the drawing of additional credit facilities.
Market risk
Interest rate risk
The Company is not exposed to any material interest rate risk.
Equity price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices largely due to demand and supply factors for commodities, but also include political, economic,
social, technical, environmental and regulatory factors.
The Group's exposure to price risk on listed investments is as follows:
Group and Company 2015£ 2014£
Change in profit:
- increase in listed investments by 10% - -
- decrease in listed investments by 10% - -
Change in equity:
- increase in listed investments by 10% 2,712 9,477
- decrease in listed investments by 10% (2,712) (9,477)
Foreign currency risk
The Groups transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, Colombian Peso,
US Dollar, Kenyan Shilling, Canadian Dollar and Danish Krone.
To mitigate the Group's exposure to foreign currency risk, non-Sterling cash flows are monitored. The Group does not enter
into forward exchange contracts to mitigate the exposure to foreign currency risk as amounts paid and received in specific
currencies are expected to largely offset one another and the currencies most widely traded in are relatively stable.
The Directors consider the balances most susceptible to foreign currency movements to be the available for sale financial
assets.
These assets are denominated in the following currencies:
Group and Company GBP£ AUD£ Total£
30 June 2015
Available for sale investments 27,120 1,304,646 1,331,766
Group and Company GBP£ AUD£ Total£
30 June 2014
Available for sale investments 94,765 1,489,219 1,583,984
The following table illustrates the sensitivity of the value of investments in regards to the relative Sterling and
Australian Dollar, and Sterling and Canadian Dollar exchange rates.
It assumes a +/-8% (2013: +/-7%) change in the AUD/GBP exchange rate for the year ended 30 June 2015. These percentages
have been based on the average market volatility in exchange rates in the previous twelve months.
Impact on available for sale financial assets
2015£ 2014£
8% (2014: 8%) increase in AUD fx rate against GBP 104,372 119,138
8% (2014: 8%) decrease in AUD fx rate against GBP (104,372) (119,138)
Exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions.
Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.
23 Significant agreements and transactions
The following are the significant agreements and transactions recently undertaken having an impact in the year under review
and for the period to 12 November 2015. For the sake of completeness and of clarity, some events after the reporting period
are included here and in note 25.
Board change
· On 30 June 2015, Scott Kaintz was appointed an executive director of the Company and Sam Quinn was appointed a
non-executive director of the Company. The Company also accepted the resignation of John Watkins as a non-executive
director of the Company.
FPM
· 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 will be payable 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 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. 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 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.
Completion took place on 13 May 2015.
Convertible loan notes
· On 11 August 2014, YA Global Master SPV Limited has converted £149,324 of its £550,000 unsecured Convertible Bonds,
which are due for repayment in April 2015, into 66,160,425 ordinary shares of 0.1 pence each in the Company under the terms
of the Convertible Bond Instrument as announced on 30 April 2014, at a price of £0.002257 per share. Simultaneously,
£11,126, representing fees accrued on the Company's outstanding term loan, were converted into 4,929,663 shares of 0.1
pence each at a price of £0.002257 per share. On 1 April 2015, the Company repaid in full the outstanding convertible loan
balance due to YA Global Master SPV Limited of US$110,000.
· On 6 January 2015 the Company announced that it had agreed to issue an unsecured convertible loan note of US$550,000
to MG Partners II Limited. The notes yield 4% per annum, have a maturity of 12 months, and are able to be converted into
ordinary shares from 60 days after issue. The conversion price on each conversion will be the lower of a 10% discount to
the average of the three lowest VWAPs over the 15 trading days immediately preceding the date of the conversion, or a price
per share of 0.5p at the option of MG Partners II Limited. The notes fall due on 1 January 2016 if not previously
converted. On 6 March 2015, MG Partners II Limited converted US$7,500 unsecured convertible notes into 6,117,455 ordinary
shares of 0.01 pence each at a price of £0.000798 per share. On 19 March 2015, they converted a further US$7,500 unsecured
convertible notes into 7,598,784 ordinary shares of 0.01 pence each at a price of £0.00066554 per share. On 25 March 2015,
they converted a further US$200,000 unsecured convertible notes into 200,000,000 ordinary shares of 0.01 pence each at a
price of £0.000666 per share. On 1 April 2015, they converted a further US$120,000 unsecured convertible notes into
121,703,854 ordinary shares of 0.01 pence each at a price of £0.000665 per share. On 15 April 2015, they converted a
further US$100,000 unsecured convertible notes into 99,654,527 ordinary shares of 0.01 pence each at a price of £0.0006837
per share. On 23 April 2015, they converted the outstanding US$115,000 unsecured convertible notes into 118,196,751
ordinary shares of 0.01 pence each at a price of £0.0006837 per share.
Financing
· On 19 March 2015 the Company completed a placing with clients of Cornhill Capital Limited ("Cornhill") of
1,538,461,538 ordinary shares of 0.01p each ("Shares") in the Company at a price of 0.065p per Share (the "Placing"). The
gross proceeds of the Subscription are £1,000,000. The proceeds of the Placing were applied towards funding exploration
activities in Ivory Coast, and fully settling existing debt facilities with Yorkville and UKBN. The settlement amount of
the Yorkville debt facility was approximately £442,128, and the final settlement amount of the UKBN facility was £400,109
gross (£208,387 net of cash escrow).
Share Incentive Plan
On 13 April 2015, the Board of Directors approved the issue of 102,652,904 ordinary shares of 0.01p each in the Company
under the Company's Share Incentive Plan ("SIP") for the 2014/15 tax year. 49,411,754 Free Shares, 17,747,050 Partnership
Shares and 35,494,100 Matching Shares have been awarded with reference to the mid-market closing price of 0.085p on 31
March 2015.
Kenya
· On 7 May 2015 the Company announced that its partner, Mid Migori Mining Ltd ("MMM"), has today been advised by the
Ministry of Mining of the termination of its Special Licenses numbers 122 and 202 ("the SLs"). MMM intends to challenge
this purported termination. MMM also continues to have an application for a Mining License over a part of the SLs,
submitted in 2012 pending at the Ministry. Meanwhile Red Rock through its local affiliate Red Rock Kenya Limited is
applying for the ground covered by the SLs. The Ministry has indicated that in considering this application the work and
expenditure of the Company since 2009 will be taken into account.
· On 26 June 2015 the Company announced that it has been granted leave to institute judicial review proceedings and a
stay in relation to the purported termination of the Special Licenses covering the Migori Gold Project of its partner Mid
Migori Mining Ltd ("MMM"). Red Rock has now executed an agreement with Kansai Mining Corporation Ltd ("Kansai"), the other
shareholder in MMM, pursuant to which Red Rock's farm-in agreement is replaced by arrangements under which any interest in
the Migori Gold Project or the other assets of MMM that may be retained by or granted to MMM or Red Rock shall be shared in
the ratio 75% to Red Rock and 25% to Kansai. Kansai's interest will be carried up to the point of an Indicated Mineral
Resource of 2m oz gold. Red Rock is to have full management rights and the conduct of legal proceedings on behalf of both
MMM and itself. Red Rock at the same time surrenders all its share interest in Kansai and pays £25,000 to Kansai, with a
further £25,000 due upon recovery of the Migori Gold Project.
Ivory Coast
On 18 September 2014 the Company announced that it has entered into an agreement whereby the right to acquire the entire
issue share capital of Nemex Resources CI SARL and Barclay Resources SARL ("the IC Companies") is assigned to Red Rock for
a cash consideration of £140,000. The IC Companies are special purpose vehicles which solely own three exploration licences
totalling 1,200km2 and four exploration permits in the Ivory Coast. All licence areas are underlain by West Africa's highly
gold prospective Birimian and Tarkwaian Greenstone belts, in a fast growing region for gold exploration and production.
Elephant Oil
On 26 June 2015 the Company announced that it has entered into an option agreement ("the Option") with Elephant Oil Limited
("Elephant"), an oil and gas exploration company focused on West Africa. The Option if exercised requires Red Rock to
subscribe for 1,086,956 new ordinary shares in Elephant, at a price per share of 25.3 pence, for an aggregate consideration
of £275,000. Further, the Option if executed, includes the right to invest an additional £412,500 in to Elephant within a
six month period, also at 25.3 pence per share. The Option is exercisable within seven days, unless extended by Elephant.
The last audited accounts of Elephant Oil were to 31 January 2014, and show total assets of £1,618,007 and total
comprehensive loss for the year of £46,668.
24 Related party transactions
· On 5 April 2013, Regency Mines plc, Red Rock Resources plc and Greatland Gold plc, companies of which Andrew Bell
and John Watkins are also directors, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The
total cost to the Company for these costs during the year was £151,632 (2014: £178,327), of which £48,725 represented the
Company's share of the office rent and the balance services provided (2014: £55,784).
· 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 Company's staff are also sub-contracted to Regency Mines plc to work on specific assignments as necessary. During
the year, staff costs of £44,031 (2014: £82,500) were recharged to Regency Mines plc. Such charges are offset against
administration expenses in the income statement.
· The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled as soon
as may be possible. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at
each month end until they are settled. The total charge for the year was £16,865 (2014: £11,602).
· The Company has no amount outstanding to Star Striker Limited (formerly Resource Star Limited), an associate as at 30
June 2015. At 30 June 2014, there was an amount outstanding of £18,472, included in trade and other payables.
· Related party receivables and payables are disclosed in notes 15 to 17.
· The Company held 33,900,000 shares (1.65%) in Regency Mines plc as at 30 June 2015 and 33,900,000 (1.36%) as at 12
November 2015.
· On 29 August 2014, Regency Mines plc subscribed for 37,500,000 shares of the Company at £0.002 in settlement of
shared costs and obligations. Following the issuance, Regency Mines plc held 227,119,006 shares representing 10.65% of the
Company's total voting rights.
· The key management personnel are the Directors and their remuneration is disclosed within
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