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RRR - Red Rock Resources News Story

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Basic Materials
Size
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Market Cap £11.2m
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Revenue £n/a
Position in Universe 1578th / 1819

Red Rock Resources - Unaudited half-yearly results period ended 31 Dec - Part 1

Thu 31st March, 2016 7:00am
RNS Number : 6182T
Red Rock Resources plc
31 March 2016



31 March 2016

Red Rock Resources plc ("Red Rock" or the "Company"), the oil and mineral exploration and development company with interests in oil production in Louisiana, manganese production in South Africa, and gold production in South America, announces its unaudited half-yearly results for the six months ended 31 December 2015.

Chairman's statement

We present the Company's interim report for the six months to 31st December 2015.

The repositioning and restructuring of the company have continued during the period and since. Operating off a low cost base, cost outflows have been minimised, while management has concentrated on developing streams of income, as the company moves from a typical exploration company model to a cash flow-generative model.

In December 2015 a capital reorganisation was carried out and reduced the number of ordinary shares outstanding by consolidating every 25 old shares into one new share. While it is too early to be definitive, the indications so far are that the exercise may be succeeding in its purpose of reducing trading spreads and increasing tradability of the shares.

After a prolonged period of study of potential cash-flow generative oil opportunities in 2014 and 2015, the company acquired a 20% working interest in the Shoats Creek Oil Field in Louisiana in late 2015, initially by an agreement to participate in the drilling of two future wells, Lutcher More 21 and Lutcher More 22. Subsequently an equivalent interest in the Lutcher More 20 (LM 20) well, already drilled and coming into production, was purchased. On 7 March 2016 the coming into full production and first stable production rates from LM 20 (at over 200 barrels per day) were announced, and so as of that date Red Rock became an oil producer.

This investment was stress-tested for a number of different scenarios before it was made. On the basis of $30 a barrel oil, an 18% discount rate (rather than the normal 10% assumption), and first year production figures 40% below operator forecasts, Red Rock modelled a satisfactorily positive net present value. Currently, comparable oil prices are over $40 a barrel, while first year production appears likely to exceed operator forecasts.

The company expects to participate in drilling LM 21 and LM 22 over the course of the Summer, which access the same shallow Frio horizon as the nearby LM 20, and then LM 23 in the Fall. The consortium, with Red Rock participating, also intends to re-enter a well that accesses the deeper but economically important Cockfield horizon with a view to re-establishing production, to extend the held acreage, and to negotiate a natural gas contract in order to sell, rather than flare off, the gas production from these wells. Red Rock will meet its share of costs, and its net programme exposure will peak at around US$393,000 in the third quarter of 2016.

It is therefore hoped that the year will end with the Company holding interests in five producing wells at Shoats Creek. Given success this year, another substantial programme at Shoats Creek is projected for next year.

Elsewhere, the Company received in February the next tranche due of proceeds from the sale of Colombia, with another US$225,000 due in July. From May Red Rock also expects to start receiving royalty payments from gold production in Colombia.

Jupiter Mines Ltd, where the Company retains a holding of 27,324,375 shares (c. 1.2%) and which operates the Tshipi Borwa manganese mine in South Africa, has benefitted from the recent sharp rise in the manganese price and as one of the most efficient and significant operators in the global manganese market is operating profitably off a carefully controlled cost base.

The Company is now providing accommodation to other businesses within its leased premises and expects to receive significant rental income over the coming months.

Exploration and development interests in Kenya, Ivory Coast and Greenland are being maintained. In Kenya, in order to protect its interests and those of its local partner, the Company is pursuing an action for judicial review on behalf of itself and its local partner, and until that is resolved is restricted in its activities.

The traditional exploration model for smaller companies listed on junior markets has been heavily dependent on access to funding through new issues of stock, but has not in the recent years of declining commodity prices offered a satisfactory return on monies raised. The consequence is that there is much less public and corporate money available for exploration. In order to control its destiny Red Rockhas set the objective of moving towards cash breakeven and then cash generation within this year. Once this is achieved, the intention is that any further external funding can be clearly linked to the acquisition and development of projects with projected rates of return and present values that can be seen to add shareholder value. This is a work in progress, but Red Rock is on course so far and has every hope of achieving these objectives.

Andrew Bell

Executive Chairman

30 March 2016






Consolidated statement of financial position

as at 31 December 2015


Notes

31 December 2015


31 December 2014


30 June 2015


30 June 2014



Unaudited


Unaudited


Audited


Audited










ASSETS









Non-current assets









Property plant and equipment

6

-


2,027


266


5,100

Investments in associates and joint ventures


3,924,891


5,316,585


3,968,878


5,319,306

Available for sale financial assets

7

1,606,766


1,412,088


1,331,766


1,583,984

Exploration assets


-


140,000


-


-

Non-current receivables


3,692,538


7,356,595


3,634,270


7,148,560

Total non-current assets


9,224,195


14,227,295


8,935,180


14,056,950










Current assets









Cash and cash equivalents


132,760


2,216


29,426


51,167

Restricted cash


-


191,722


-


221,846

Trade and other receivables


765,863


656,959


661,152


579,145

Total current assets




690,578


852,158

Assets classified as held for sale

5

-


6,463,056


-


6,994,468

TOTAL ASSETS




9,625,758


21,903,576



















EQUITY AND LIABILITIES









Equity attributable to owners of the parent









Called up share capital

8

2,737,390


2,371,117


2,600,207


1,934,588

Share premium account


24,678,302


23,077,122


24,285,503


22,663,691

Other reserves


307,448


488,202


394,899


604,064

Retained earnings


(19,769,046)


(12,415,568)


(19,747,630)


(11,671,669)





7,532,979


13,530,674










Non-controlling interest


(6,100)


(256,370)


(5,491)


60,461

Total equity


7,947,994


13,264,503


7,527,488


13,591,135










LIABILITIES









Current liabilities









Trade and other payables


2,094,202


2,612,451


2,098,270


2,493,289

Short term borrowings


80,622


820,542


-


755,889

Total current liabilities




2,098,270


3,249,178

Liabilities directly associated with assets classified as held for sale

5

-


4,843,752


-


4,744,285

Non-current liabilities









Long-term borrowings


-


-


-


318,978

Deferred tax liabilities


-


-


-


-

Total non-current liabilities




-


318,978










TOTAL EQUITY AND LIABILITIES




9,625,758


21,903,576










The accompanying notes form an integral part of these financial statements.



Consolidated statement of income

for the period ended 31 December 2015


Notes

6 months to 31 December 2015


6 months to 31 December 2014



Unaudited


Unaudited











Gain on sale of investments


-


4,308

Administrative expenses


(482,520)


(459,112)

Fundraising costs


-


(19,419)

Depreciation


(267)


(3,073)

Exploration expenses


(26,591)


(37,700)

Share of losses of associates and joint ventures


-


(2,721)

Other income


420,587


30,033

Foreign exchange loss


72,214


(161,541)

Finance income/(costs), net


(5,448)


256,648

Loss for the period before taxation from continuing operations


(22,025)


(392,577)






Tax credit


-


-






Loss for the period from continuing operations


(22,025)


(392,577)

Discontinuing operations





(Loss)/profit after tax for the period from discontinuing operations


-


(684,143)

Loss for the period


(22,025)


(1,076,720)






(Loss)/profit for the period attributable to:





Equity holders of the parent


(21,417)


(759,889)

Non-controlling interest


(608)


(316,831)



(22,025)


(1,076,720)






Loss per share





Loss per share - basic

3

(0.00) pence


(0.04) pence

Loss per share - diluted

3

(0.00) pence


(0.04) pence

The accompanying notes form an integral part of these financial statements.



Consolidated statement of comprehensive income

for the period ended 31 December 2015



6 months to 31 December 2015


6 months to 31 December 2014



Unaudited


Unaudited











Loss for the period


(22,025)


(1,076,720)

Revaluation of available for sale investments


-


(161,826)

Deferred taxation on revaluation of available for sale investments


-


-

Unrealised foreign currency gain /(loss) arising upon retranslation of foreign operations


(87,452)


61,954

Total comprehensive loss for the period


(109,477)


(1,176,592)











Total comprehensive (loss)/income for the period attributable to:





Equity holders of the parent


(108,869)


(859,761)

Non-controlling interest


(608)


(316,831)



(109,477)


(1,176,592)






The accompanying notes form an integral part of these financial statements.



Consolidated statement of changes in equity

for the period ended 31 December 2015

The movements in equity during the period were as follows:


Share capital

Share premium account

Retained earnings

Non- controlling interest

Other reserves

Total equity

Unaudited








As at 30 June 2014

1,934,588

22,663,691

(11,671,669)

60,461

604,064

13,591,135

Changes in equity for 2014







Total comprehensive (loss)/income for the period

-

-

(759,889)

(316,831)

(99,872)

(1,176,592)

Transactions with owners







Issue of shares

436,529

425,547

-

-

-

862,076

Share issue and fundraising costs

-

(12,116)

-

-

-

(12,116)

Share-based payment transfer

-

-

15,990

-

(15,990)

-

Total Transactions with owners

436,529

413,431

15,990

-

(15,990)

849,960

As at 31 December 2014

2,371,117

23,077,122

(12,415,568)

(256,370)

488,202

13,264,503








As at 30 June 2015

2,600,207

24,385,501

(19,747,629)

(5,491)

394,900

7,627,488

Changes in equity for 2015







Total comprehensive (loss)/income for the period

-

-

(21,417)

(608)

(87,452)

(109,477)

Transactions with owners







Issue of shares

137,184

392,799

-

-

-

529,983

Share issue and fundraising costs

-

-

-

-

-

-

Share-based payment transfer

-

-

-

-

-

-

Total Transactions with owners

137,184

392,799

(21,417)

-

-

508,566

As at 31 December 2015

2,737,390

24,778,301

(19,769,046)

(6,100)

307,448

7,100,975


Available for sale trade investments reserve

Foreign currency translation reserve

Share based payment reserve

Total other reserves

Unaudited






As at 30 June 2014

383,958

92,187

127,919

604,064

Changes in equity for 2014





Total comprehensive income for the period

(161,826)

61,954

-

(99,872)

Transactions with owners





Share-based payment transfer

-

-

(15,990)

(15,990)

As at 31 December 2014

222,132

154,141

111,929

488,202






As at 30 June 2015

141,810

141,161

111,929

394,900

Changes in equity for 2015





Total comprehensive income for the period

-

(87,452)

-

(87,452)

Transactions with owners





Share-based payment transfer

-

-

-

-

As at 31 December 2015

141,810

53,709

111,929

307,448








Consolidated statement of cash flows

for the period ended 31 December 2015


Notes

6 months to 31 December 2015


6 months to 31 December 2014



Unaudited


Unaudited

Cash flows from operating activities





Loss before tax from continuing operations


(22,025)


(392,577)

(Loss)/Profit before tax from discontinuing operations


-


(714,234)

Loss before tax


(22,025)


(1,106,811)

Decrease/(increase) in receivables


(302,760)


88,379

Increase/(decrease) in payables


4,070


232,040

Share of losses in associates and joint ventures


-


2,721

Interest receivable


(34)


(317,758)

Interest payable


5,481


61,110

Impairment of assets held for sale


-


40,636

Currency adjustments


96,354


527,054

Impairment of available-for-sale investments


-


-

Gain on sale of investments


-


(4,308)

Financial assets at fair value through profit and loss


-


-

Depreciation


231


3,073

Bad debt expense


-


-

Loss on write-off of fixed assets


-


-

Income taxes reclaimed


-


16,681

Net cash outflow from operations


(226,823)


(457,183)






Cash flows from investing activities





Interest received


34


59

Proceeds of sale of investments


-


14,378

Payments to acquire associate company and joint venture investments


(275,000)


-

Exploration expenditure


-


(140,000)

Payments to acquire property plant and equipment


-


-

Net cash (outflow)/inflow from investing activities


(274,967)


(125,563)






Cash flows from financing activities





Proceeds from issue of shares


529,983


862,075

Transaction costs of issue of shares


-


(12,116)

Interest paid


(5,481)


(61,110)

Proceeds of new borrowings


250,000


-

Repayments of borrowings


(169,378)


(254,154)

Net cash inflow from financing activities


605,124


534,695






Net (decrease)/increase in cash and cash equivalents


103,334


(48,051)






Cash and cash equivalents at the beginning of period


29,426


55,618

Cash and cash equivalents at end of period


132,760


7,567






Cash and cash equivalents


132,760


2,216

Cash and cash equivalents attributable to asset classified as held for sale

5

-


5,351



132,760


7,567



Half-yearly report notes

for the period ended 31 December 2015

1

Company and group


As at 30 June 2015 and 31 December 2015 the Company had one or more operating subsidiaries and has therefore prepared full and interim consolidated financial statements respectively.


The Company will report again for the year ending 30 June 2016.

The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the year ended 30 June 2015 has been extracted from the statutory accounts for the Group for that year. Statutory accounts for the year ended 30 June 2015, upon which the auditors gave an unqualified audit report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies.

2

Accounting Polices


Basis of preparation


The consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting.' The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2015, which have been prepared in accordance with IFRS.

3

Loss per share


The following reflects the loss and share data used in the basic and diluted loss per share computations:



6 months to

31 December 2015


6 months to

31 December 2014



Unaudited


Unaudited







Loss attributable to equity holders of the parent company

(21,417)


(759,889)







Weighted average number of Ordinary shares of 0.0001 in issue

5,756,628,685


2,153,207,572


Loss per share - basic

(0.00) pence


(0.04) pence







Weighted average number of Ordinary shares of 0.0001 in issue inclusive of outstanding dilutive options

5,756,628,685


2,153,207,572


Loss per share - fully diluted

(0.00) pence


(0.04) pence







The weighted average number of shares issued for the purposes of calculating diluted loss per share reconciles to the number used to calculate basic loss per share as follows:



2015


2014



Number


Number







Loss per share denominator

5,756,628,685


2,153,207,572


Weighted average number of exercisable share options

-


-


Diluted loss per share denominator

5,756,628,685


2,153,207,572




In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 7,265,753 for the current period. These were not included in the calculation of diluted earnings per share because all the options are not likely to be exercised given that even the lowest exercise price is substantially higher than the market price and are therefore non-dilutive for the period presented.



Half-yearly report notes

for the period ended 31 December 2015, continued

4

Segmental analysis



Jupiter Mines

Limited

Other investments

Australian exploration

African

exploration

Corporate and unallocated

Total


For the 6 month period to 31 December 2015










Revenue








Total segment external revenue

-

-

-

-

-

-










Result








Segment results

-

(47,607)

(1,261)

(4,677)

(166,881)

(220,426)


Loss from continuing operations before tax and finance costs
















Interest receivable






33


Interest payable






(5,481)


Loss from continuing operations before tax






(225,874)










Tax






-


Loss from continuing operations for the period






(225,874)



Jupiter Mines

Limited

Other investments

Australian exploration

African

exploration

Corporate and unallocated

Total


For the 6 month period to 31 December 2014










Revenue








Total segment external revenue

-

-

-

-

-

-










Result








Segment results

-

(33,591)

(23,435)

(2,522)

(589,677)

(649,225)


Loss from continuing operations before tax and finance costs






(649,225)










Interest receivable






317,758


Interest payable






(61,110)


Loss from continuing operations before tax






(392,577)










Tax






-


Loss from continuing operations for the period






(392,577)


A measure of total assets and liabilities for each segment is not readily available and so this information has not been presented.



Half-yearly report notes

for the period ended 31 December 2015, continued

5

Discontinued operations

On 27 May 2015 the Company completed the sale to Colombia Milling Company Limited ("CML"), a private company registered in Belize, of (a) its 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 Limon mine, and (b) its loans to FPM, for a total consideration of up to US$5m payable in cash tranches, loan and royalty on annual net gold sales, and received the first tranche of consideration amounting to US$450,000. In the event that gold production at any stage ceases at El Limon, the total paid under the royalty tranche may fall short of this amount.

Based on this, FPM was classified as a disposal group held for sale in the Company and Group's accounts as at 31 December 2014.:



31 December

31 December



2015

2014



Revenue


-

941,997

Cost of sales


-

(726,932)

Gross profit


-

215,065

Expenses


-

(803,143)

Finance costs, net


-

(85,520)

Impairment of assets held for sale


-

(40,636)

(Loss)/profit before tax from a discontinued operation


-

(714,234)

Tax credit


-

30,091

(Loss)/profit after tax from a discontinuing operation


-

(684,143)

(Loss)/profit from a discontinued operation attributable to:




Owners of the parent


-

(367,312)

Non-controlling interest


-

(316,831)



-

(684,143)

(Loss)/profit per share attributable to owners of the parent:




Basic


-

(0.02) pence

Diluted


-

(0.02) pence

Half-yearly report notes

for the period ended 31 December 2015, continued

5 Discontinued operations continued

The major classes of assets and liabilities classified as held for sale are as follows:

31 December

31 December


2015

2014

Group

Assets



Property, plant and equipment

-

4,453,278

Investment in joint venture

-

-

Inventory

-

72,499

Trade and other receivables

-

1,931,928

Cash and cash equivalents

-

5,351

Assets classified as held for sale

-

6,463,056




Liabilities



Trade and other payables

-

1,466,043

Borrowings

-

2,443,318

Deferred tax liabilities

-

934,391

Liabilities directly associated with assets classified as held for sale

-

4,843,752

Net assets classified as held for sale

-

1,619,304

Non-controlling interest directly associated with disposal group held for sale

-

256,369

Net assets classified as held for sale attributable to owners of the parent

-

1,875,673

The net cash flows of discontinued operations are as follows:


31 December

31 December


2015

2014


Operating

-

207,660

Investing

-

(18,319)

Financing

-

(188,441)

Net cash inflows

-

900

Half-yearly report notes

for the period ended 31 December 2015, continued

6

Property plant and equipment


Mines

Field equipment

and machinery

Fixtures and

fittings

Assets under

construction

Total







31 December 2014






Cost






At 1 July 2014

-

34,607

28,649

-

63,256

Additions

-

-

-

-

-

Disposals

-

-

(842)

-

(842)

Currency exchange

-

-

-

-

-

At 31 December 2014

-

34,607

27,807

-

62,414

Depreciation and impairment






At 1 July 2014

-

(31,980)

(26,176)

-

(58,156)

Depreciation charge

-

(1,970)

(1,103)

-

(3,073)

Disposals

-

-

842

-

842

Currency exchange

-

-

-

-

-

At 31 December 2014

-

(33,950)

(26,437)

-

(60,387)

Net book value






At 31 December 2014

-

657

1,370

-

2,027

31 December 2015






Cost






At 1 July 2015

-

34,607

28,649

-

63,256

Additions

-

-

-

-

-

Disposals

-

-

-

-

-

Currency exchange

-

-

-

-

-

At 31 December 2015

-

34,607

28,649

-

63,256

Depreciation and impairment






At 1 July 2015

-

(34,607)

(28,382)

-

(62,989)

Depreciation charge

-

-

(267)

-

(267)

Disposals

-

-

-

-

-

Currency exchange

-

-

-

-

-

At 31 December 2015

-

(34,607)

(28,649)

-

(63,256)

Net book value






At 31 December 2015

-

-

-

-

-

7

Available for sale financial assets



31 December 2015

31 December

2014


At 1 July 2015

1,331,766

1,583,984


Additions

275,000

-


Disposals

-

(10,070)


Revaluation adjustment

-

(161,826)


Impairment

-

-


At 31 December 2015

1,606,766

1,412,088

Half-yearly report notes

for the period ended 31 December 2015, continued

8
Share Capital of the company

Number
Nominal
Allotted and fully paid during the period
As at 30 June 2015
4,662,024,541
2,600,207
Issued 10 July 2015 at 0.475 pence per share
797,368,443
79,737
Issued 13 July 2015 at 0.475 pence per share
157,864,800
15,789
Issued 09 October 2015 at 0.183 pence per share
416,573,115
41,657
As at 31 December 2015
6,033,830,899
2,737,391

9

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.

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 period.

10 Subsequent events

On 20 January 2016, the company acquired a 20% Working Interest in the Lutcher More 20 well at the Shoats Creek Field, Beauregard Parish, Louisiana, for a consideration of US$200,000, of which US$120,000 was paid and $80,000 is to be paid under a 4.5% promissory note in equal monthly instalments between July 2016 and December 2018.

In the course of January 2016 the company sold the remaining 13,055,134 shares held in Star Striker Ltd (ASX:SRT), as well as 500,000 options, for a consideration of AUD 295,432.

On 29 January 2016, the company granted 13,320,000 employee options exercisable at 0.45p per share for a period of six years, and vesting in four equal tranches, one immediately, and the other three after 6, 12 and 18 months respectively and subject to performance conditions. The grants other than those to non-executive directors were made under the company's Enterprise Management Incentive scheme.

For further information, please contact:

Andrew Bell 0207 747 9990 Chairman Red Rock Resources Plc

Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc

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

Jason Robertson 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd


This information is provided by RNS
The company news service from the London Stock Exchange
END
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