REG - Red Rock Resources - Final Results <Origin Href="QuoteRef">RRR.L</Origin> - Part 3
01/12/2016 07:35
- Part 3: For the preceding part double click ID:nRSA6269Qb
Percentage ofissued capital Accounting year ended
Red Rock Zambia Limited* Zambia Ordinary 28.40% 30 June 2016
Melville Bay Limited (formerly "NAMA Greenland Limited") England Ordinary 60.00% 30 November 2015
* Financial information was not available for this company.
The Company, at 30 June 2016, 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
Mid Migori Mining Company Limited Kenya Ordinary 15.00% 30 September 2015
Summarised financial information for the Company's associates and joint
ventures, where available, as at 30 June 2016 is given below:
Company Revenue£ Loss£ Assets£ Liabilities£
Mid Migori Mining Company Limited - (58,197) 2,753,364 (3,411,111)
Melville Bay Limited - (1,760,272) 4,178,640 (223,420)
Mid MigoriMining CompanyLimited£ Red RockZambiaLimited£ Star StrikerLimited£ MelvilleBayLimited£ Total£
Cost
At 30 June 2015 1,044,766 140,596 1,709,735 6,213,207 9,108,304
Additions during the year - - - - -
Disposals during the year - - (1,709,735) - (1,709,735)
At 30 June 2016 1,044,766 140,596 - 6,213,207 7,398,569
Impairment and losses during the year
At 30 June 2015 (72,948) (140,596) (1,709,735) (3,216,147) (5,139,426)
(Losses) during the year (8,730) - - (510) (9,240)
Impairment in period - - - (1,500,000) (1,500,000)
Disposals during the year - - 1,709,735 - 1,709,735
At 30 June 2016 (81,677) (140,596) - (4,716,657) (4,938,931)
Carrying amount
At 30 June 2016 963,089 - - 1,496,550 2,459,638
At 30 June 2015 971,818 - - 2,997,060 3,968,878
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 2016 of the Company's investments in listed
associates was as follows:
2016£ 2015£
Star Striker Limited - 222,824
During the year the Company disposed of its remaining investment in Star
Striker Limited, (including options).
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 Exploration Assets
Group 2016£ 2015£
Cost
At 1 July 2015 - -
Additions 280,460 -
Disposals - -
At 30 June 2016 280,460 -
Impairment
At 1 July 2015 - -
Charge in the year - -
At 30 June 2016 - -
Net book value 280,460 -
14 Available for sale financial assets
Group and Company
2016 £ 2015£
Opening balance 1,331,766 1,583,984
Additions 487,500 -
Disposals - (10,070)
Revaluations 157,286 (242,148)
Impairment of available for sale financial assets - -
Closing balance 1,976,552 1,331,766
Market value of investments
The market value as at 30 June 2016 of the Company's available for sale listed
and unlisted investments were as follows:
2016£ 2015£
Quoted on London AIM 105,933 27,120
Unquoted investments at fair value 1,870,619 1,304,646
1,976,552 1,331,766
15 Cash and cash equivalents and restricted cash
Group 30 June2016£ Cash flow£ 30 June2015£
Cash in hand and at bank 26,564 (2,862) 29,426
26,564 (2,862) 29,426
For the purpose of the statement of cash flows, cash and cash equivalents
comprise the following at 30 June:
30 June2016 30 June2015£
£
Cash in hand and at bank 26,564 29,426
Cash in hand and at bank attributable to asset held for sale (note 8) - -
26,564 29,426
Company 30 June2016£ Cash flow£ 30 June2015£
Cash in hand and at bank 24,370 1,529 22,841
24,370 1,529 22,841
16 Non-current receivables
Group and Company
2016 £ 2015£
Amounts due from associates 2,857,810 2,228,812
FPM sale proceeds 1,980,748 1,405,458
4,838,558 3,634,270
Non-current related party receivables of £2,857,810 (2015: £2,228,812) 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, although the Judicial Review case is ongoing,
no further impairment is considered necessary (2015: £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.
17 Other receivables
Group Company
2016 £ 2015£ 2016 £ 2015£
Current trade and other receivables
Prepayments 236,765 270,110 170,313 231,290
Related party receivables:
- due from subsidiaries - - 404,747 82,978
- due from associates 225 715 225 715
- due from key management - - - -
Other receivables 702,563 390,327 698,211 388,189
Total 939,553 661,152 1,273,496 703,172
Other receivables are stated after full provision of £600,000 relating to an
amount due from North Atlantic Mining Associates Limited (2015: £600,000).
18 Trade and other payables
Group Company
2016 £ 2015£ 2016 £ 2015£
Trade and other payables 1,368,746 1,410,726 1,347,803 1,406,238
Accruals 335,663 302,397 335,663 302,397
Related party payables:
- due to associates 86,966 317,882 86,966 317,882
- due to key management 62,629 67,265 62,629 67,265
Trade and other payables 1,854,004 2,098,270 1,833,061 2,093,782
Short-term borrowings 57,490 - 57,490 -
1,911,494 2,098,270 1,890,551 2,093,782
Long-term borrowings - - - -
Total 1,911,494 2,098,270 1,890,551 2,093,782
YA Global Master SPV Limited
A short-term loan of £57,490 (2015: £nil) with YA Global Master SPV Limited
("YAGM") remains outstanding as at the end of the year.
19 Share capital of the Company
The share capital of the Company is as follows:
Issued and fully paid 2016£ 2015£
2,371,116,172 deferred shares of £0.0009 each - 2,134,005
4,662,024,541 ordinary shares of £0.0001 each - 466,202
241,354,445 ordinary shares of £0.01 each 24,135
2,371,116,172 deferred shares of £0.09 each 2,134.005
6,033,861,125 A deferred shares of £0.0096 each 579,251
150,971,295 ordinary shares of £0.01 each 15,097
As at 30 June 2,752,488 2,600,207
Movement in share capital Number Nominal£
Ordinary shares of £0.001 each
As at 30 June 2014 1,934,587,543 1,934,588
Shares issued in the year to 30 June 2015 2,727,436,998 665,619
As at 30 June 2015 - ordinary shares of £0.0001 each 4,662,024,541 2,600,207
Issued 07 July 2015 at 0.0475 pence per share 421,052,632 42,105
Issued 07 July 2015 at 0.0475 pence per share 268,421,074 26,842
Issued 08 July 2015 at 0.0475 pence per share 107,894,948 10,789
Issued 13 July 2015 at 0.475 pence per share 157,894,800 15,789
Issued 09 October 2015 at 0.0183 pence per share 416,573,115 41,657
As at 21 December 2015, pre-share re-organisation 6,033,861,110 2,737,389
21 December 2015, Share Re-organisation (see below)
Issue of A deferred shares of £0.0096 each (6,033,861,110) (579,251)
Issue of new ordinary shares of £0.0004 each (6,033,861,110) (24,135)
Share consolidation: 1 new ordinary share of £0.01 for 25 ordinary shares of £0.0004 241,354,445 603,388
Issued 21 January 2016 at 0.375 pence per share 3,750,000 375
Issued 01 April 2016 at 0.375 pence per share 5,072,000 507
Issued 28 April 2016 at 0.52777 pence per share 21,315,971 2,132
Issued 29 April 2016 at 0.42 pence per share 97,023,801 9,702
Issued 29 April 2016 at 0.42 pence per share 23,809,523 2,381
As at 30 June 2016 - ordinary shares of £0.01 each 392,325,740 2,752,488
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 21 December 2015, the Company's shareholders approved
a re-organisation of the company's shares which resulted in the creation of
three 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
· A Deferred shares with a value of 0.0096 pence
Subject to the provisions of the Companies Act 2006, the deferred shares may
be cancelled by the company, or bought back for £1 and then cancelled. The
deferred shares are not quoted and carry no rights whatsoever.
Equity subscription arrangements
On 7 July 2015 the Company agreed to subscribe for 1,086,956 new ordinary
shares in Elephant Oil Limited at a price per share of 25.3 pence, for an
aggregate consideration of £275,000. The Company issued a total of 689,473,706
ordinary shares of 0.01p each in the Company at a price of 0.0475 pence per
Share. The gross proceeds of the Subscription were £327,500. For every two
Subscription Shares, each subscriber was issued with one warrant exercisable
at 0.065p per Share and expiring on 7 July 2017.
421,052,632 new Shares represent a £200,000 subscription by Elephant Oil
Limited, who following the Subscription will hold 7.87% of the enlarged issued
capital of the Company. The remaining 268,421,074 new Shares have been placed
with institutional and private investors.
On 28 April 2016 the Company co-ordinated the acquisition of 12,013,173 shares
of Goldstone Resources Ltd by itself and Metal Tiger plc.
The consideration for the acquisition was £225,000, paid half in cash and half
in new shares of the Company issued at a price of 0.52777328 pence per Red
Rock share, being the VWAP (volume-weighted average price) at which Red Rock
shares traded on the AIM market in the five trading days to 26 April. On
completion the Company issued and allotted to the vendor, Unity Mining Ltd
(ASX:UML), a company listed on the Australian Stock Exchange, 21,315,971 new
Red Rock shares credited as fully paid as the Share Consideration. The Cash
Consideration was paid by Metal Tiger plc.
In addition, Red Rock issued to the vendor 21,315,971 options giving the right
within two years to exercise each option into a new Red Rock share at a price
of 0.66 pence per share.
On 29 April 2016 Metal Tiger plc ("MTR") agreed to subscribe £100,000 for a
further 23,809,523 new ordinary shares in the Company of 0.01p each but
without attached warrants. Red Rock has agreed to accept payment in the form
of 1,818,182 MTR shares based on a price per MTR share of 5.5 pence per MTR
share. MTR and the Company have agreed not to dispose of the New Shares or the
Payment Shares received through this equity exchange for a period of three
months from issue without the agreement of the other party, such agreement not
to be unreasonably withheld.
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. 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.
At 30 June 2016, the Company had outstanding options to subscribe for Ordinary
shares as follows:
Options issued14 June 2016exercisable at0.45 pence pershare expiring29 January 2022Number
A R M Bell 5,760,000
S Kaintz 4,680,000
M C Nott 900,000
S Quinn 900,000
Employees 1,080,000
Total 13,320,000
Company and Group
2016 2015
Number ofoptions Weightedaverageexercise price pence Number ofoptions Weightedaverageexercisepricepence
Outstanding at the beginning of the period 7,000,000 3.20 8,000,000 3.20
Expired (7,000,000) 3.20 (1,000,000) 3.20
Issued 13,320,000 0.45
Outstanding at the end of the period 13,320,000 0.45 7,000,000 3.20
Exercisable at the end of the period 13,320,000 0.45 7,000,000 3.20
The remaining options in issue at 30 June expired on 21 September 2015. During
the financial year 13,320,000 options were issued at an exercise price of 0.45
pence (2015: nil) and they expire on 29 January 2022. A credit of £111,929 was
posted to the income statement in respect of the cancelled share options and a
charge of £63,270 was posted to the income statement in respect of the share
options issued during the year. Therefore, a net credit of £48,659 was posted
to the income statement during the year.
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 7,398,000 free and matching shares were
awarded with a fair value of 0.375 pence resulting in a share-based payment
charge of £27,743 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 2016£ 2015£
30 June 2016
Financial assets
Available for sale financial assets at fair value through OCI
Unquoted equity shares 1,870,619 1,304,646
Quoted equity shares 105,933 27,120
Total available for sale financial assets at fair value through OCI 1,976,552 1,331,766
Loans and receivables
Non-current receivables 4,838,559 3,634,270
Other receivables - current 1,217,425 391,042
Total loans and receivables 6,055,984 4,025,312
Total financial assets 8,032,536 5,357,078
Total current 1,217,425 391,042
Total non-current 6,815,111 4,966,036
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:
Group 2016£ 2015£
30 June 2016
Financial liabilities
Loans and borrowings
Trade and other payables 1,854,003 2,098,270
Short-term borrowings 57,490 -
Total loans and borrowings 1,911,493 2,098,270
Total financial liabilities 1,911,493 2,098,270
Total current 1,911,493 2,098,270
Total non-current - -
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 2016
Available for sale financial assets at fair value through OCI
- Unquoted equity shares - 1,870,619 - 1,870,619
- Quoted equity shares 105,933 - - 105,933
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
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 (2015: £nil) 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.
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.
Foreign currency risk
The Groups transactions are carried out in a variety of currencies, including
Sterling, Australian Dollar, 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£ USD£ Total£
30 June 2016
Available for sale investments 218,432 1,483,120 275,000 1,976,552
Group and Company GBP£ AUD£ USD£ Total£
30 June 2015
Available for sale investments 27,120 1,304,646 - 1,331,766
Exposures to foreign exchange rates vary during the year depending on the
volume and nature of overseas transactions.
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 24
November 2016. For the sake of completeness and of clarity, some events after
the reporting period are included here and in note 25.
Four Points Mining
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 and Geoff
Hampson, and the entire share capital of CML has as of early 2016 been vended
into Para Resources Ltd, a public vehicle listed on the TSX Venture Exchange.
Completion ("Completion") of the Sale Agreement took place on 13 May 2015.
Under the Sale Agreement, the Company sold, and CML bought, (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 also purchased a
11.2% stake from a minority shareholder in the business. Payment of the
consideration of USD5,000,000 occurs in tranches. The initial payment of
USD100,000, was made in respect of the CML's due diligence review and was
considered part of the first tranche. The balance of the first tranche of
USD400,000 and second tranche of USD225,000 have been paid as of year-end.
The third tranche of USD225,000 was made after the year-end in August 2016,
completing the fixed payments of USD1,000,000. 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. A further payment of USD1,000,000 was 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 CML will procure that AGM does not alienate or
dispose of its interest in FPM. Security for the PN is 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. As of 1 July 2016
the Company has informed Colombia Mining Limited and it's 100% owner Para
Resources that it believes that its right to convert its USD1,000,000 note
into share of the listed vehicle, Para Resources Ltd, has been triggered. As
of September 2016 the Company has announced that both parties were in
discussion on the matter of conversion and that resolution prior to
arbitration was being sought.
Convertible loan notes
On 4 September 2015 the Company announced that it had agreed to issue an
unsecured convertible loan note of £250,000 with YA Global Master SPV. The
notes yield 10% per annum, have a maturity of 12 months, and are able to be
converted into ordinary shares at any time up until maturity. The conversion
price on each conversion will be the determined by a formula equal to 94% of
the three lasted daily volume weighted average prices during 15 consecutive
trading days beginning on the first day immediately following the delivery of
a notice of conversion by the note holder. The conversion of the notes is to
have a price cap of £0.01. The notes fall due on 31 August 2016 if not
previously converted. The Company will issue warrants over the shares in the
capital of the Company exercisable at a price of 0.036 pence and freely
transferable for a period of 3 years
On 9 October 2015, the Company announced that YA Global Master SPV Ltd had
converted £75,000 of its outstanding balance of £250,000 unsecured Convertible
Notes and £1,233 of accrued interest, into 416,573,115 ordinary shares in the
Company at a price of 0.0183 pence per share.
On 11 December 2015, the Company repaid £94,378 of the outstanding convertible
loan and interest balance due to YA Global Master SPV Limited. On 5 May 2016,
the Company repaid £26,320 of the outstanding convertible loan and interest
balance due to YA Global Master SPV Limited. On 19 August 2016, the Company
repaid $26,102 of the outstanding convertible loan and interest balance due to
YA Global Master SPV Limited. Finally, on 8 September 2016, the Company
repaid in full the outstanding convertible loan and interest balance due to YA
Global Master SPV Limited of £39,571.
Financing
On 7 July 2015, the Company raised £327,500 by way of an issue of 689,473,706
new ordinary shares of 0.01 pence each in the Company at a price of 0.0475
pence per share. Elephant Oil Limited participated in £200,000 of the placing.
For every two shares, each subscriber will be issued with one warrant
exercisable at 0.065 pence per share and expiring on 7 July 2017. The proceeds
of the placing will fund the Company's investment in Elephant Oil and general
working capital.
On 8 July 2015, the Company raised £51,250 by way of an issue of 107,894,948
new ordinary shares of 0.01 pence each in the Company at a price of 0.0475
pence per share. The Directors, Andrew Bell, Michael Nott and Sam Quinn
participated in £41,250 of this placing. For every two shares, each subscriber
will be issued with one warrant exercisable at 0.065 pence per share and
expiring on 7 July 2017.
On 13 July 2015, the Company raised £75,000 by way of an issue of 157,894,800
new ordinary shares of 0.01 pence each in the Company at a price of 0.0475
pence per share. For every two shares, each subscriber will be issued with one
warrant exercisable at 0.065 pence per share and expiring on 7 July 2017. The
proceeds of the placing were applied towards funding exploration activities in
West Africa.
On 29 April 2016, the Company raised £407,500 by way of an issue of 97,023,801
new ordinary shares of 0.01 pence each in the Company at a price of 0.42 pence
per share. Metal Tiger plc participated in £125,000 of the placing. For every
one share, each subscriber will be issued with one warrant exercisable at a
price of 0.84 pence per share and expiring on 13 November 2018. The proceeds
of the placing were applied towards funding the Company's participation in
Shoat's Creek oil development and advancement of the Company's gold
interests.
On 29 April 2016, the Company participated in a strategic equity exchange
agreement for £100,000 by way of an issue of 23,809,523 new ordinary shares of
0.01 pence each in the Company at a price of 0.42 pence per share. Metal Tiger
plc participated in the full £100,000 of the exchange agreement and the
Company has agreed to accept payment in the form of 1,818,182 new ordinary
shares of 0.01 pence each Metal Tiger plc at a price of 5.5 pence per share.
Kenya
On 7 May 2015, the Company announced that its partner, Mid Migori Mining Ltd
("MMM"), has 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.
During the year under review the Company continued to work to protect its
interests and those of its local partner in Kenya via its application for
judicial review in relation to its Kenyan licenses.
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.
On 7 July 2015, the Company agreed to subscribe for 1,086,956 new ordinary
shares in Elephant Oil Limited, at a price per share of 25.3 pence, for an
aggregate consideration of £275,000. The Company has also been granted the
right to invest a further £412,500 in to Elephant Oil Limited within a
six-month period, also at 25.3 pence per share. This right was not utilized
and lapsed in January 2016.
Shoats Creek
On 28 October 2015, the Company announced it had entered into an option
agreement with Shoats Creek Development Corporation Inc, to take a 20% Working
Interest in the planned development of the LM#21 and LM#22 wells at the Shoats
Creek Field, Beauregard Parish, Louisiana. The Operator will be an affiliate
of Northcote Energy plc, later renamed Mayan Energy Plc. The 20% Working
Interest is to be achieved at an aggregate cost of up to US$500,000 -
US$600,000.
On 27 November 2015, the Company announced that it has exercised its option to
take a 20% working interest / 14.4% net revenue interest in the planned LM#21
and LM#22 wells at Shoats Creek. The Company received an interest in
associated common tank and production facilities as well as in two salt water
disposal wells. Shoats Creek Development Corporation Inc will have a 18.75%
back-in-after-payout so that once the Company has received payments for oil
and gas sales minus operating expenses equal to the investment required to
drill the wells and associated facilities, the Company's working interest will
reset to 16.25% with a 11.7% net revenue interest.
On 20 January 2016 the Company announced that its wholly owned subsidiary Red
Rock Resources Inc, has agreed to acquire a 20% working interest / 14.4% net
revenue interest from Shoats Creek Development Corporation in the LM#20 well
for an immediate payment of US$120,000 and a US$80,000 promissory note payable
in monthly instalments between July 2016 and December 2018 and bearing 4.5%
interest. In the event that cumulative production from the LM#20 well exceeds
100,000 barrels of oil within three years, a further payment of US$40,000
becomes due. Shoats Creek Development Corporation receives a
back-in-after-payout so that once the Company has received payments for oil
and gas sales minus operating expenses equal to the investment required to
drill the wells and associated facilities, the Company's working interest will
reset to 16.25% with a 11.7% net revenue interest. The Company further
acquired the option but not the obligation to invest in additional wells and
re-entry opportunities that might be proposed from time to time on a heads-up
basis.
On 8 June 2016 the Company announced that it had agreed to participate in the
re-entry and recompletion of the LM#19 well at Shoats Creek, Louisiana. The
work on the well was expected to cost US$40,000, US$8,000 net to the Company
in exchange for a 20% working interest and 14.4% net revenue interest.
Goldstone Resources Investment
On 28 April 2016, the Company announced a joint acquisition of 12,013,173 new
ordinary shares of Goldstone Resources Ltd ("GRL") by the Company and Metal
Tiger plc ("MTR") for a total consideration of £225,000. The acquired shares
amount to 19.29% of the issued share capital of GRL, and upon completion of
the acquisition the Company will own 6,006,587 or 9.645% of GRL. The total
consideration will be payable half in cash (the "Cash Consideration") and half
in new shares (the "Share Consideration"). On completion, the Company will
issue and allot to Unity Mining Ltd 21,315,971 new ordinary shares of 0.01
pence each in the Company at a volume-weighted average price of 0.52777328
pence per share. For every one share, Unity Mining Ltd will be issued with one
option exercisable at exercisable at 0.66 pence per share and expiring on 28
April 2018. These shares were credited as fully paid as the Share
Consideration while the Cash Consideration will be paid by MTR.
Share Incentive Plan
On 22 January 2016, the Board of Directors approved the issue of 3,750,000
ordinary shares of 0.01 pence each in the Company under the Company's Share
Incentive Plan ("SIP") for the 2015/16 tax year. 3,750,000 Free Shares have
been awarded with reference to the mid-market closing price of 0.4 pence on 20
January 2016.
On 7 April 2016, the Board of Directors approved the issue of 5,072,000
ordinary shares of 0.01 pence each in the Company under the Company's Share
Incentive Plan ("SIP") for the 2015/16 tax year. 800,000 Free Shares,
1,424,000 Partnership Shares and 2,848,000 Matching Shares have been awarded
with reference to the mid-market closing price of 0.375 pence on 31 March
2016.
Consolidation of Shares
On 21 December 2015, the Company announced that each of the existing
6,033,861,125 issued ordinary shares of 0.01 pence each in the capital of the
Company ("Existing Ordinary Shares") will be subdivided into one A deferred
share of 0.0096 pence each ("A Deferred Shares") and one new ordinary share of
0.0004 pence each. Furthermore, every 25 ordinary shares of 0.0004 pence each
in the capital of the Company will be consolidated into one new ordinary
shares of 0.01 pence each ("New Ordinary Shares") and accordingly the Company
will have 241,354,445 New Ordinary Shares in issue post consolidation. The New
Ordinary Shares will have the same rights and be subject to the same
restrictions as the Existing Ordinary Shares in the Company's Articles of
Association and the A Deferred Shares will have the rights and be subject to
the restrictions attached to A Deferred Shares as set out in the Articles of
Association.
24 Related party transactions
· On 5 April 2013, Regency Mines plc, Red Rock Resources plc where
Andrew Bell currently is a Director and Greatland Gold plc, where Andrew Bell
previously was a Director, entered into a joint lease at Ivybridge House, 1
Adam Street, London WC2N 6LE. The total cost to the Company for these
expenses during the year was £110,918 (2015: £151,632), of which £44,949
represented the Company's share of the office rent and the balance services
provided (2015: £48,725).
· 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
£24,687 (2015: £44,031) 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 £15,869 (2015: £16,865).
· Related party receivables and payables are disclosed in notes 16 to
18.
· The Company held 1,695,000 shares (0.52%) in Regency Mines plc as at
30 June 2016 and the same figures at 24 November 2016.
· The direct and beneficial interests of the Board in the shares of the
Company as at 30 June 2016 are shown in the Director's Report.
· The key management personnel are the Directors and their remuneration
is disclosed within note 7.
25 Events after the reporting period
Issue of new shares
· On 28 July 2016, the Company agreed to acquire a further 3,857,400 new
ordinary shares in Goldstone Resources Ltd, at a price per share of 2.5 pence,
for an aggregate consideration of £96,435. For every one share, the Company
will also receive one warrant exercisable at 5 pence per share and expiring on
28 July 2018.
· On 24 August 2016, the Company raised £300,000 by way of an issue of
75,000,000 new ordinary shares of 0.01 pence each in the Company at a price of
0.4 pence per share. Metal Tiger plc participated in £100,000 of this placing.
The Company has also granted Metal Tiger plc the option to nominate a
non-executive director to the board of the Company. For every one share, each
subscriber will be issued with one warrant exercisable at 0.8 pence per share
and expiring on 24 August 2018.
El Limon
· On 1 July 2016, Colombia Milling Limited, a 100% owned subsidiary of
Para Resources Inc, informed the Company that they do not agree that the
Company's conversion right of its $1,000,000 Promissory Note into new ordinary
shares of Para Resources Inc, has been triggered. The Company has set in
motion the arbitration process provided for in its Letter Agreement with
Colombia Milling Limited and is in discussions with Para Resources Inc
regarding a solution that would avoid arbitration.
Jupiter Mines
· On 21 November 2016, Jupiter announced that its 49.9% owned associate
Tshipi é Ntle Manganese Mining Proprietary Ltd has resolved to distribute
ZAR1,000,000,000 to its shareholders in respect of the year ending 28 February
2017, subject to there being no material change in production and market
conditions for the rest of the financial year. Jupiter has resolved on receipt
of its portion of this payment to distribute $55,000,000 to its own
shareholders. This distribution would equate to a $658,350 payment to the
Company.
Annual General Meeting
The Company intends to issue a notice of Annual General Meeting of
shareholders to be held on 30 December 2016 for the urpose of dealing with the
usual business applicable at such a meeting.
26 Commitments
As at 30 June 2015, the Company had entered into the following commitments:
· Exploration commitments: ongoing exploration expenditure is required to
maintain title to the Group mineral exploration permits in Kenya and
Greenland. No provision has been made in the financial statements for these
amounts as the expenditure is expected to be fulfilled in the normal course of
the operations of the Group.
· Under the terms of the joint venture, purchase and sale agreement
entered into in August 2009 between the Company and Kansai Mining Corporation
Limited, the Company is required to act as manager of the tenements held by
Mid Migori Mining Company Limited in Kenya, pay the costs of exploration and
other costs except for the costs of licence renewal and rents, and keep the
tenements in good standing.
· On 5 April 2013, Red Rock Resources plc entered into a joint lease
agreement with Regency Mines plc and Greatland Gold plc at Ivybridge House, 1
Adam Street, London WC2N 6LE. The lease is non-cancellable until 1 December
2017. Future minimum annual rental and service charges payable by the Company
is £38,850.
27 Control
There is considered to be no controlling party.
28 These results are audited, however the information does not constitute
statutory accounts as defined under section 434 of the Companies Act 2006.
The consolidated statement of financial position at 30 June 2016 and the
consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity and the consolidated cash flow
statement for the year then ended have been extracted from the Group's 2016
statutory financial statements. Their report was unqualified and contained no
statement under sections 498(2) or (3) of the Companies Act 2006, The
financial statements for 2016 will be delivered to the Registrar of Companies
by 31 December 2016.
This information is provided by RNS
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