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RRR - Red Rock Resources News Story

0.94p 0.1  7.4%

Last Trade - 06/05/21

Sector
Basic Materials
Size
Micro Cap
Market Cap £10.4m
Enterprise Value £10.5m
Revenue £n/a
Position in Universe 1593rd / 1821

Red Rock Resources - Right to acquire loans and arbitration funding

Mon 21st December, 2020 7:00am
RNS Number : 2515J
Red Rock Resources plc
21 December 2020
 

Red Rock Resources PLC

("Red Rock" or the "Company")

 

Right to Acquire Loans

Funding of an Arbitration

 

21 December 2020

 

Red Rock Resources Plc, the natural resource development company with interests in gold, copper, cobalt, manganese, and other minerals, has entered into:

1)   A deed agreement with the Administrators of an Australian company (Vector Resources Limited (Administrators Appointed)) ("VEC") under which Red Rock will support (a) the institution of arbitration proceedings by VEC in respect of a contested notice of default served by their partner in the Democratic Republic of Congo ("DRC") and (b) the application for a continuance of injunctive relief by VEC (the "Funding Deed"), and

 

2)   A deed agreement with the creditors holding security over VEC's principal asset, a majority holding in Mongbwalu Goldfields Investment Holding 6 Limited ("MGIH") (the "Deed of Agreement"). MGIH is the joint venture holding company in the BVI for a majority holding in the Adidi-Kanga gold project in the DRC.

 

The effect of the Funding Deed is to create conditions (as to repayment and uplift, exchange of information, and access to attorneys) in which the Company was ableto fund the institution on 18 December 2020 of arbitration proceedings at the International Chamber of Commerce in Paris to support the continuation of an injunction in the BVI which prevents the transfer of shares in MGIH away from VEC. The obligation on Red Rock is US$90,000.

The effect of the Deed of Agreement is to give Red Rock the right for two years to acquire the loans of the secured creditors of VEC, MEF I, L.P., and Riverfort Global Opportunities PCC Ltd ("Creditors"), for a consideration equal to their net book cost at the time of such acquisition ("Loans"), with half the consideration to be paid in Red Rock shares at the then current price, and to assist Red Rock at its request (acting reasonably) in enforcing or obtaining rights over the secured assets. The quantum of the Loans is approximately US$5.2m, which may be reduced by any successful claims by the secured lenders.

The purpose of the Deeds taken together is the commencement of arbitration proceedings in Paris, the continuation of the existing injunction in the BVI,, and the creation of an ability for Red Rock to engage counter-parties in discussions regarding a mediated outcome, with the support of creditors.

Further details of VEC including announcements, may be found on the website of the Australian Stock Exchange, and on that company's website: http://www.vectorres.com.au

Red Rock Chairman Andrew Bell comments: "Our familiarity with VEC, as well as its assets in the DRC, its principal lenders, its local partner, and its local agent, mean that we are well positioned to play a constructive role and look forward to seeing the situation develop.

Should arbitration and litigation have to continue, we have experience and have shown resolve in pursuing disputes in sub-Saharan Africa to a necessary conclusion and are, we believe, good partners."     

Background Information on VEC and MGIH

VEC is a company listed on the Australian Stock exchange ("ASX"). On 21 December 2017 VEC announced heads of agreement for the acqusition of a 60% stake in the Adidi-Kanga Gold Project in the Democratic Republic of Congo. Since 31 December 2018 the VEC stock has, except for two brief periods, been suspended from trading on the ASX as a result of issues connected with this acquisition.

On 21 September 2020 the Congolese partner of VEC served a notification of breach of conditions on VEC. VEC disputes this notice. On 5 October 2020 that partner's two representatives on the VEC board resigned.

On 23 November 2020 VEC obtained in the BVI the extension of an injunction preventing the escrow agent from transferring to the Congolese partner the shares held by VEC in MGIH, which  constitute a majority interest in the Adidi-Kanga project, pending further order of the court.

On 10 December 2020 VEC went into voluntary administration. 

MGIH is a company incorporated in the BVI that serves as the joint venture company of VEC and its Congolese partner. MGIH controls a local subsidiary in the DRC, Adidi-Kanga Resources SA, which owns the Adidi-Kanga project. On 5 February 2018 VEC announced to the ASX an Inferred and Indicated gold Mineral Resource (under the JORC 2012 mineral code) at Adidi-Kanga of 15 million tons at 6.66 g/t, amounting to 3.2 m oz. 

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information, please contact:

Andrew Bell 0207 747 9990                                                       Chairman Red Rock Resources Plc

Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396           NOMAD Beaumont Cornish Limited

Mark Treharne 0203 700 2500                                                      Broker Pello Capital Limited

 

Note:

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Nominated Adviser ("Nomad") to the Company in connection with the matters set out in this announcement and will not be acting for any other person or otherwise be responsible to any person for providing the protections afforded to clients of Beaumont Cornish or for advising any other person in respect of the matters set out in this announcement or any transaction, matter or arrangement referred to in this announcement. Beaumont Cornish's responsibilities as the Company's Nomad are owed solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his or her decision to acquire any shares in the Company.

 

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