REG - Red Rock Resources - Final Results
29/12/2022 12:15
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RNS Number : 2283L Red Rock Resources plc 29 December 2022
Red Rock Resources PLC
("Red Rock" or the "Company")
Final Audited Results for the Year Ended 30 June 2022
29 December 2022
A copy of the Company's annual report and financial statements for 2022 -
extracts from which are set out below - will be made available on the
Company's website www.rrrplc.com (http://www.rrrplc.com/) shortly.
Chairman's Statement
Dear Shareholders,
There were three key developments that we expected in 2022.
KEY EXPECTED DEVELOPMENTS IN 2022
AFRICA
The first of these, though one we cautiously underplayed in our public
statements in order not to alert too many potential adversaries, is the
expected successful conclusion of our efforts in the Democratic Republic of
Congo ("DRC") to obtain recompense for the sale of our interest in a
copper-cobalt joint venture. We told you last year that once we discovered
what had occurred, we had moved promptly to obtain a freezing order. We later
obtained judgment in our favour for 50.1% of the US$5m consideration already
paid. This judgment is executory and cannot now be appealed. We obtained a
further judgment from the Congolese courts for US$2m for costs and damages.
This judgment is being appealed. Finally, in relation to the US$15m
consideration not yet paid, we went to arbitration to claim 50.1% of this
amount. Our case is of overwhelming strength, and there is a draft award, but
up to the time of writing our former partners have not attended a meeting
where they would sign the Minutes of the Arbitration.
This playing for time cuts both ways. Parties acting for our former partners
were trying to get us to agree to US$2.5m in the arbitration, rather than the
US$7.5m to which we are entitled, and the prospect of receiving US$12.5m of
the US$15m subject to the arbitration is obviously enticing. But without our
signature they too get nothing, and we think we should sign for what the
Arbitrators we believe are minded to award, not some much lesser amount. The
contract was quite clear, and the principle that foreign investors should not
be unjustly deprived of their property is accepted by enough people that we
feel confident that we will prevail. This is not only in the interests of
justice, but in the interests of the Congo.
Despite recent frustrations - we spent a total of some nine recent weeks in
two spells in Kinshasa for the arbitration and in waiting for the result - the
year is one that has seen great progress on this front, if not a conclusion.
The relationships we have built may enable us to proceed with a new joint
venture, also of substantial value, should we wish. Our willingness to do this
depends on our demonstrating to our shareholders and potential partners that
investors in the DRC can be treated justly, as they have not always been in
the past.
The second key development was to be the listing of Elephant Oil, where we
have a small but longstanding shareholding, on the NASDAQ in the U.S. It has
always been part of our strategy that we retain some of the listed shares we
obtain in the process of divestment or sale of assets as a liquidity reserve.
In general, the listed assets have been ones we know well and have been
involved with for some time. We have generally remained positive on the
outlook for the acquiring entity, because the underlying assets themselves are
good, and so have often preferred the shareholdings to cash. We have sold our
remaining holdings in Jupiter Mines Ltd and Juno Mines Ltd in Australia, as
well as shares in Power Metal Resources Plc for total proceeds of
approximately £2.54m during the period, and the delays in obtaining a listing
for Elephant Oil this year have therefore left a gap in our equity holdings
buffer. We currently expect Elephant Oil to be listed in early 2023 at a
listing price of between US$4.15 and US$5.15 a share, indicating our holding
of 397,874 shares may be valued (at the mid-point) at US$1.85 million,
although subject to a six-month hold period post IPO after which we would be
in a position to realise all or part of this holding.
AUSTRALIA
The third key development we anticipated to be the pre-IPO fundraising and
then the listing of our Australian joint venture subsidiary Red Rock
Australasia Pty Ltd ("RRAL"), or its holding entity New Ballarat Gold
Corporation Plc. Market conditions during the year created a poor environment
for a gold float, and therefore by extension for pre-IPO funding. Much time
was spent by the partners considering which market, in the changed
circumstances, offered the best prospects. Towards the end of 2022 there was a
consensus on London, but then a further downward movement in prices made us
decide to first complete the year-end drill programme, which we expect to add
material value, as a private company.
As long as we can continue to increase the value of RRAL, we should endeavour
to wait as in volatile markets (and the mining and exploration sector is
always volatile) the difference between floating into a strong gold share
market and floating into a poor one is so great. In poor markets, it has
always been Red Rock's policy to try to build or maintain its positions, so
that it is able to crystallise value at times when markets are in an uptrend
and prospects look good. The Company did this with Jupiter pre-privatisation;
it did it with Resource Star Ltd post-Fukushima, and it did it with the Kenyan
assets when litigation arose involving our local partner. The first two of
these positions were successfully liquidated; Kenya still remains in the
portfolio, but the Company hopes to find partners so that progress can
accelerate in what we believe will be better times ahead.
There are a number of different options for taking Australia forward. We could
sell or buy to consolidate control in one partner, and we could float, or we
could retain our interest as a bedrock asset in a safe jurisdiction to balance
the well-defined and exciting, but risky potential in Congo. All these
possibilities are under constant review and discussion, and the optimal choice
may be different if we get an early award in the DRC, when we will be cashed
up as few other companies will be. Currently we continue with our partners to
fund the well-staffed, carefully managed, and active Australian company as a
privately-held joint venture, which would not have been our first choice, but
which is appropriate for the circumstances. Some Red Rock shareholders may
regret that we have not already listed, as we had indicated that this was
likely to happen, but our aim is to secure the best eventual outcome for Red
Rock stakeholders, not the quickest, and we and our partners believe we have
our finger on the pulse of the market and have made the right decisions.
Fortunately, the next phase of exploration - the drill programme about to
start on one or both of the former mines in our portfolio, both high grade
300,000 oz producers historically - is likely in our view to produce results
that will evidence the potential that remains down the dip or along the line
of strike of these old mines. It should be noted that when we refer for
example to the Berringa Mine, this was in fact exploited as a number of
different operations, but proximal and contemporaneous and along the same
strike, so that it is convenient to think of these efforts as one mine. This
piecemeal exploitation is one of a number of factors that lead our analysts to
identify significant mineralised targets at shallow depth within the project
area.
A further factor we consider important in evaluating the prospects for
production from these key initial targets is that they are within easy reach
of currently underutilised processing facilities.
During or after the drill programme we will re-evaluate our options and
consider which alternative will be best for Red Rock.
KEY EXPECTED DEVELOPMENTS IN THE NEXT YEAR
We expect to be able to conclude our arbitration and litigation in the DRC,
and to identify a new quality project that will add value as Musonoi has done.
That Musonoi and the other JV projects with Gécamines in the DRC were without
our knowledge and consent sold for US$20m a few months after we had started
work there, and then according to our information sold on by a simultaneous or
near-simultaneous contract for some hundreds of millions of dollars, shows
that we had identified and obtained a first-rate project, and our shareholders
were entitled to the benefit, which they have not to date received.
Our pursuit of the lost benefit and of compensation for the damage done does
not end with victory in the cases fought in the DRC. We therefore also expect
to be initiating further actions to make whole and compensate the Company and
its shareholders, and these we shall announce in due course. We based the
decision to start by getting a result in the Congo that would confirm we had
rights there and that these rights had not been respected on legal advice.
Having laid these foundations, we are now looking at other remedies that may
be pursued outside the DRC.
We also expect to bring into test production one or more of the lithium assets
held by our Zimbabwe subsidiary. An Environmental Impact Assessment has
already been initiated and in January 2023 we will be focused on advancing
these assets into small-scale production, initially into the local market and
then, upon arrival of a flotation unit, starting sale of concentrated material
into export markets. The margin on this production at current sale prices,
either into the local market for unconcentrated grades, or into the export
market after concentration by a flotation unit, has the capacity to generate
significant positive cashflow. Our capable local staff, who have developed
small scale mining operations in the past, are already working on this, and
during the final development stage and as we start production, we will have
one of our colleagues from London continually on site to oversee the process.
In Burkina Faso, and prospectively in Ivory Coast, our model is that our
subsidiaries are funded in part by external investors. We expect to continue
exploration, the early stages of which will be geochemistry or geophysics, and
which will lead to drilling of our prime targets. The Company considers that
it has high quality projects and staff in both jurisdictions, but does not
want to run the risk of early stage exploration in these countries diverting
investment from the core projects. Of course, a lucky result in either country
could convert a prospect into a core Red Rock project for the future, but that
is not where we start.
In Kenya, 2023 will be a critical year where our licences come up for renewal,
and after a second half of 2022 when little activity was undertaken in the run
up to the Kenyan elections and then as new Ministers and ministry staff were
installed, it will be essential now to develop a new approach that enables
sufficient resources to be deployed so that our exploration operations can
begin to match the performance of Shanta to the north and Barrick to the
south. Market conditions in the second half of 2022, and our expectation that
funds would be available from realisations in the Congo, mean that Kenya
operations recently have been lagging behind our schedule and as our search
for a suitable partner has not yet borne fruit, these are issues we ourselves
need to address. We are doing so as a matter of urgency. The remaining
liability to the vendor of our Kenya operations, to which reference is made in
the accounts, is expected to be satisfied as DRC or Elephant Oil proceeds
arrive.
EXPLORATION
We are always exploring, but the best indicator of our progress for an
outsider is the nature, scope and purposes of our drill activity.
In the year 2021-2, we drilled, first and successfully in the Congo for copper
and cobalt; next for gold in Kenya, and then in Australia in a couple of our
second order sites with high potential.
In the recent period, we have drilled seven holes in Burkina Faso on two
prospects, with extremely promising intersections at Bilbale, where we
encountered in one hole, 20m of 3.19 g/t gold from 22m depth, a further 8m at
2.28 g/t at 62m, and ended in renewed over 1 g/t mineralisation at 120m
depth.
We now begin a jointly funded three-hole diamond drill programme in Australia
at a former mine, Berringa, where we have a strong target at shallow depth,
and this programme should roll into further holes on a nearby target.
Given sufficient financial resources, we could justify a major programme
including some deep holes in Kenya to intersect higher grade mineralisation.
We also expect to be doing joint or partner-funded drilling in Burkina Faso
and Ivory Coast later in 2023.
OTHER
We continue to anticipate the imminent listing of Elephant Oil, which we now
hope will occur on the US markets early in the New Year. We would then look to
further corporate announcements from Elephant and will decide whether to keep
or sell our shares at the expiry of the hold period in July 2023.
The Company's policy is to retain royalties on all assets passing through its
hands. Royalties are held on iron ore in Australia, gold in Colombia, multiple
gold and metal licences in Australia, lithium licences in Zimbabwe, gold
licences in Kenya, and gold licences in Burkina Faso and Ivory Coast. The
Company expects to add royalties over its DRC assets, and is in the process of
putting the royalties together in a dedicated royalty-holding subsidiary,
after which a further announcement about the Company's intentions will be
made.
FINANCIAL RESULTS
The nature of Red Rock's business currently, as a company not generating
revenue from operations, means that profit and loss is a metric of less
utility than in many other businesses. Pre-tax loss for the year ended 30 June
2022 was £2,800,000 (2021 loss of £1,699,000). This increased loss reflected
principally higher administration costs, which in turn reflected higher costs
of staff at subsidiaries, increased accounting costs, and increased travel
costs.
OUTLOOK
In 2022, the Company saw a falling share price, as did its peer group; this
was disappointing in a year in which, operationally, a lot of progress was
made, and this price weakness prevented us from taking advantage of all our
opportunities to work on the existing project portfolio. The delays in
announcing the arbitration result in Congo were a particularly frustrating,
and unnecessary, impediment, and sometimes a distraction. We will vigorously
pursue our claims in DRC and, on the basis of a successful realisation, we
will deploy the funds into our projects and working capital as well as
reducing our creditor balances. What we have at times to remind ourselves is
that we are cracking the code of operating successfully in mineral rich but
historically troubled countries. The game is worth the candle, but it is
sometimes a long game. When a gap appears in the clouds, the sun can suddenly
shine, and then the opportunities are realised.
In our budgeting for 2023, we have placed considerable reliance on the receipt
of judgement and arbitration proceeds from the DRC. Funds from the realisation
of our shares in Elephant Oil, and funds generated from mining operations, are
expected to make an important contribution from mid-year or earlier, but
significant delay in receipt of DRC monies will require a reassessment of
priorities by the Board and either additional funding or the sale of non-core
assets in order to meet loan and deferred consideration obligations.
Red Rock is in the right places for a world which should begin to value gold
more highly and has an increasing need for battery metals. We have teams that
can take projects through to production in several of the countries in which
we operate, and are starting to do this. A year ago we would never have
supposed that our first new production project of the 2020s might be in
Zimbabwe, but we are delighted that it is so, and that a country with a long
and continuous mining history is coming back into favour and we are helping
that process.
Andrew Bell
Chairman and CEO
28 December 2022
Results and Dividends
The Group made a loss after taxation of £2.8 million (2021 Loss of £1.699
million). The Directors do not recommend the payment of a dividend. The
following financial statements are extracted from the audited financial
statements, which were approved by the Board of Directors and authorised for
issuance on 28 December 2022.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
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
Jason Robertson 0207 374
2212
Broker First Equity Limited
Thomas Smith 0207 392
1568
Joint Broker OvalX
Financial Statements
Independent Auditor's Report
to the Members of Red Rock Resources Plc
Opinion
We have audited the Financial Statements of Red Rock Resources Plc (the
"Company" or the "Parent Company") and its subsidiaries (the "Group") for the
year ended 30 June 2022, which comprise the Consolidated Statement of
Financial Position, the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows, the Parent Company Statement
of Financial Position, the Parent Company Statement of Changes in Equity, the
Parent Company Statement of Cash Flows and notes to the Financial Statements,
including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK-adopted
international accounting standards and as regards the Parent Company Financial
Statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
· The Financial Statements give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 30 June 2022 and of
the Group's loss for the year then ended;
· The Group Financial Statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· The Parent Company Financial Statements have been properly
prepared in accordance with UK-adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act 2006; and
· The Financial Statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the Financial Statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the Financial Statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to note 1.2 in the Financial Statements, which indicates
that the Group is required to raise funds within the going concern period. As
stated in note 1.2, these events or conditions, along with the other matters
as set forth in note 1.2, indicate that a material uncertainty exists that may
cast significant doubt on the Group's and Parent Company's ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
In auditing the Financial Statements, we have concluded that the Director's
use of the going concern basis of accounting in the preparation of the
Financial Statements is appropriate. Our evaluation of the Directors'
assessment of the Group's and Company's ability to continue to adopt the going
concern basis of accounting included:
· Challenging the forecasts prepared by the directors in their
assessment of the Group's and Parent Company's ability to meet their financial
obligations as they fall due for a period of at least 12 months from the date
of approval of the financial statements. The forecasts demonstrated that the
Group and Parent Company will require additional funding, or will need to
dispose of investments, to meet their liabilities as and when they fall due.
· The forecasts also indicated that the current funding will not
be sufficient to meet the planned additional investments and exploration
activities.
Our responsibilities and the responsibilities of the Directors, with respect
to going concern, are described in the relevant sections of this report.
Our Application of Materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we consider gross assets to be most
significant determinant of the group's financial performance and most relevant
to investors and shareholders for an exploration group with a number of
investments and early-stage projects. Materiality of the parent company was
based upon the loss before tax in order to achieve sufficient coverage of
expenditure in our testing.
We also determine a level of performance materiality which we use to assess
the extent of testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole. In determining
our overall audit strategy, we assessed the level of uncorrected misstatements
that would be material for the financial statements as a whole.
We determined the group and parent company materiality for the financial
statements as a whole to be £187,000 and £168,300 (2021: £209,000 and
£106,000) respectively. Performance materiality was set at 60% of overall
materiality for the group and parent company at £112,200 and £100,980 (2021:
£125,400 and £63,600) respectively, whilst the threshold for reporting
unadjusted differences to those charged with governance was set at £9,350 for
the group and £8,415 (2021: £10,450 and £5,300) for the parent company. We
also agreed to report differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
The component materiality was set at group performance materiality.
Our Approach to the Audit
In designing our audit, we determined materiality and assessed the risk of
material misstatement in the Financial Statements. In particular, we looked at
areas involving significant accounting estimates and judgement by the
Directors and considered future events that are inherently uncertain. We also
addressed the risk of management override of internal controls, including
among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
The accounting records of the Parent Company and all subsidiary undertakings
are centrally located and audited by us based upon materiality or risk. The
key audit matters, and how these were addressed, are outlined below.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the Financial Statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial
Statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How Our Scope Addressed This Matter
Recoverability of exploration assets (see notes 1.5 and 13)
Exploration assets have a carrying value in the Financial Statements of Our work in this area included the following:
£13,265,000 at 30 June 2022 (2021: £13,515,000).
· Obtaining and challenging management's impairment review,
We identified an audit risk that exploration assets are incorrectly valued together with evaluating announcements and progress on the license areas,
because an impairment exists that has not been recognised, and additions including exploration results and updated mineral resource estimates;
expenditure had been capitalised which do not meet the eligibility criteria
under IFRS 6. · Obtaining copies of the exploration licenses to ensure good title
and check, where applicable, that any specific terms or conditions therein
have been adequately met;
This was assessed to be a key audit matter because exploration assets · Performed an independent assessment for indicators of impairment
represent 71% of the Group's total assets and management are required to use in accordance with the requirements of IFRS 6;
their judgement in assessing their recoverability.
· Assessing the appropriateness of the disclosures made in respect
of management's judgement on whether impairment indicators exist; and
· Testing additions in the period to ensure they meet the
eligibility criteria under IFRS 6.
Recoverability of non-current receivables for MFP sales proceeds (see notes
1.5 and 17)
Non-current receivables for MFP sales proceeds have a carrying value in the Our work in this area included the following:
Financial Statements of £1,224,000 at 30 June 2022 (2021: £1,344,000).
· Obtaining management's working for the valuation of the MFP sales
Non-current assets represent amounts expected to be receivable through a net proceeds and ensuring arithmetical accuracy of the workings;
smelter royalty, following the sale of MFP in a previous accounting period.
The asset is measured at fair value based on the net present value of future · Evaluating publicly available information on production
cash flows expected to be received in respect of the royalty proceeds. activities at the mine;
· Reviewing all model inputs and assumptions and ensuring they are
reasonable and appropriate;
We identified an audit risk that these assets are not recoverable and,
therefore, are incorrectly valued in the Financial Statements. · Considering whether management have included all possible factors
which could impact the valuation; and
· Considering whether there are indications of impairment in the
This was assessed to be a key audit matter because non-current assets are valuation or whether there are indications that the balance is not
financially significant and management are required to use their judgement and recoverable.
estimation in preparing the net present value of future cash flows from the
royalty stream.
Key Observations
In reviewing the calculations prepared by management, we noted the following
assumptions as key:
• Estimate production rate;
• Discount rate; and
• Gold price.
Commissioning and initial production at the mine commenced during 2021 with
production expected to ramp up to commercial levels during the forthcoming
year. Management anticipate significant growth rates in production from 2023
onwards.
We draw to the users attention the disclosure in note 1.5, which lists the key
assumptions in the calculation of fair value of non-current assets. The
Financial Statements do not include the adjustments that would be required if
the assumptions used are not accurate.
Other Information
The other information comprises the information included in the annual report,
other than the Financial Statements and our auditor's report thereon. The
Directors are responsible for the other information, contained within the
annual report. Our opinion on the Financial Statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the Financial
Statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required
to determine, whether this gives rise to a material misstatement in the
Financial Statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on Other Matters Prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· The information, given in the Strategic Report and the
Directors' Report for the financial year for which the Financial Statements
are prepared, is consistent with the Financial Statements; and
· The Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
Matters on Which We are Required to Report by Exception
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or the Directors'
Report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement
with the accounting records and returns; or
· certain disclosures of Directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors' responsibilities, the
Directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the Directors
are responsible for assessing the group's and parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the group or parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial
Statements, as a whole, are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these Financial Statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the Group and Parent Company
and the sector, in which they operate, to identify laws and regulations that
could reasonably be expected to have a direct effect on the Financial
Statements. We obtained our understanding in this regard through discussions
with management and our cumulative audit knowledge and experience of the
sector.
· We determined the principal laws and regulations relevant to
the Group and Parent Company in this regard to be those arising from
UK-adopted international accounting standards, the Companies Act 2006 and the
local laws and regulations in the jurisdictions in which the Group operates.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the Group
and Parent Company with those laws and regulations. These procedures included,
but were not limited to, enquiries of management, review of Board minutes and
a review of legal or regulatory correspondence.
· We also identified the risks of material misstatement of the
Financial Statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the risk of fraud related to the estimates, judgements and
assumptions applied by management in their assessment of impairment of
intangible assets, the valuation of unlisted investments and the
recoverability of non-current receivables. Refer to the Key Audit Matters
section above on how our audit scope addressed these matters.
· We addressed the risk of fraud arising from management override
of controls by performing audit procedures which included, but were not
limited to: the testing of journals, reviewing accounting estimates for
evidence of bias, and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the Financial Statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the Financial
Statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the Financial
Statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of Our Report
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the Company and the Company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Senior Statutory Auditor)
15
Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14
4HD
28 December 2022
Consolidated Statement of Financial Position
as at 30 June 2022
Notes 30 June 30 June
2022 2021
£'000 £'000
ASSETS
Non-current assets
Investments in associates and joint ventures 12 1,030 1,585
Exploration assets 13 13,265 13,515
Mineral tenements 511 124
Financial instruments - fair value through other comprehensive income (FVTOCI) 14 736 1,755
Non-current receivables 16 2,320 1,344
Total non-current assets 17,862 18,323
Current assets
Cash and cash equivalents 15 66 457
Loans and receivables 164 161
Other receivables 17 660 399
Total current assets 890 1,017
TOTAL ASSETS 18,752 19,340
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent
Called up share capital 19 2,839 2,835
Share premium account 31,077 30,924
Other reserves 1,434 1,627
Retained earnings (19,812) (18,741)
Total equity attributable to owners of the Parent 15,538 16,645
Non-controlling interest (420) (199)
Total equity 15,118 16,446
LIABILITIES
Non-current liabilities
Trade and other payables 18 415 119
Borrowings 18 822 731
Total non-current liabilities 1,237 850
Current liabilities
Trade and other payables 18 1,355 1,075
Short-term borrowings 18 1,042 969
Total current liabilities 2,397 2,044
TOTAL EQUITY AND LIABILITIES 18,752 19,340
These Financial Statements were approved by the Board of Directors and
authorised for issue on 28 December 2022 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these Financial Statements.
Consolidated Income Statement
for the year ended 30 June 2022
Continuing operations Notes Year to Year to
30 June 30 June
2022 2021
£'000 £'000
Administrative expenses 4 (1,225) (699)
Exploration expenses (256) (105)
Project development 6 (676) (559)
Other project costs 6 (211) (305)
Share based payments (16) (350)
Currency gains (183) 34
Other gains 5 52 290
Dividend income 5 - 126
Finance costs 5 (285) (131)
Profit/(loss) for the year before taxation (2,800) (1,699)
Tax 7 - -
Profit/(loss) for the year (2,800) (1,699)
Profit/(loss) for the year attributable to:
Equity holders of the Parent (2,615) (1,625)
Non-controlling interest (185) (74)
(2,800) (1,699)
Earnings per share attributable to owners of the Parent:
Basic loss per share, pence 10 (0.23) (0.18)
Diluted loss per share, pence 10 (0.23) (0.18)
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
Notes 30 June 30 June
2022 2021
£'000 £'000
Profit/(loss) for the year (2,800) (1,699)
Other comprehensive income
Items that will not be reclassified to profit or loss 418 (330)
(Deficit) / surplus on revaluation of FVTOCI financial assets
Losses and transfer of FVTOCI financial assets on disposal (442) (330)
Items that may be reclassified subsequently to profit or loss (177) 19
Unrealised foreign currency (loss) / gain arising upon retranslation of
foreign operations
Total other comprehensive income net of tax for the year (201) (641)
Total comprehensive income, net of tax for the year (3,001) (2,340)
Total comprehensive income net of tax attributable to:
Owners of the Parent (2,816) (2,266)
Non-controlling interest (185) (74)
(3,001) (2,340)
The accompanying notes form an integral part of these Financial Statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
The movements in equity during the period were as follows:
Share Share Retained Other Total Non-controlling Total
capital premium earnings reserves attributable interest equity
£'000 account £'000 £'000 to owners of £'000 £'000
£'000 the Parent
£'000
As at 1 July 2020 2,783 26,909 (17,187) 1,460 13,965 (135) 13,830
Changes in equity for 2021
Loss for the year - - (1,625) - (1,625) (74) (1,699)
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals - - - (401) (401) - (401)
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets - - - (330) (330) - (330)
Losses on sale of FVTOCI taken directly to reserves - - 71 - 71 - 71
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - 19 19 - 19
foreign operations
Total comprehensive income for the year - - (1,554) (712) (2,266) (74) (2,340)
Transactions with owners
Issue of shares 52 4,163 - - 4,215 - 4,215
Share issue costs - (110) - - (110) - (110)
Share based payments - - - 66 66 - 66
Issue of warrants - (38) - 813 775 - 775
Total transactions with owners 52 4,015 - 879 4,946 - 4,946
As at 30 June 2021 2,835 30,924 (18,741) 1,627 16,645 (199) 16,446
Changes in equity for 2022
Loss for the year - - (2,615) - (2,615) (185) (2,800)
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals - - - (442) (442) - (442)
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets - - - 418 418 - 418
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - (177) (177) (36) (213)
foreign operations
Losses on sale of FVTOCI taken directly to reserves - - 1,544 - 1,544 - 1,544
Total comprehensive income for the year - - (1,071) (201) (1,272) (221) (1,493)
Transactions with owners
Issue of shares 4 153 - - 157 - 157
Issue of warrants - - - 8 8 - 8
Total transactions with owners 4 153 - 8 165 - 165
As at 30 June 2022 2,839 31,077 (19,812) 1,434 15,538 (420) 15,118
FVTOCI financial instruments revaluation Foreign Share-based Total
reserve currency payment other
£'000 translation reserve Warrant reserve reserves
reserve £'000 £'000 £'000
£'000
As at 1 July 2020 1,157 139 164 - 1,460
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals (401) - - - (401)
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets (330) - - - (330)
Unrealised foreign currency gains on translation of foreign operations - 19 - - 19
Share based payments - - 66 - 66
Warrants issued in the year - - - 813 813
Total comprehensive income / (expense) for the year (731) 19 66 813 148
As at 30 June 2021 426 158 230 813 1,627
Changes in equity for 2022
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals (442) - - - (442)
Transfer of FVTOCI reserve relating to revalued FVTOCI financial assets 418 - - - 418
Unrealised foreign currency gains on translation of foreign operations - (177) - - (177)
Warrants issued in the year - - - 8 8
Total comprehensive income / (expense) for the year (24) (177) - 8 (193)
As at 30 June 2022 402 (19) 230 821 1,434
See note 20 for a description of each reserve included above.
Consolidated Statement of Cash Flows
for the year ended 30 June 2022
Notes Year to Year to
30 June 30 June
2022 2021
£'000 £'000
Cash flows from operating activities
Profit/(loss) before tax (2,800) (1,699)
Increase in receivables (140) (281)
Increase in payables 432 143
Share of (profit)/losses in associates 12 - -
Interest receivable and finance income, including income from MFP 5 - (152)
Dividend income 5 - (126)
Finance costs 5 285 128
Share-based payments 21 8 350
Foreign exchange gain/loss 179 (50)
Change in value in FVTPL financial assets - 3
Equity settled transactions 90 -
Net cash outflow from operations (1,946) (1,684)
Corporation tax reclaimed/(paid) - -
Net cash used in operations (1,946) (1,684)
Cash flows from investing activities
Proceeds from sale of FVTOCI financial assets 14 2,539 403
Dividends received - 126
Payments to acquire exploration asset (150) (215)
Payments to increase interest in associate (141) (370)
Payments for tenements (387) (93)
Net cash (outflow) / inflow from investing activities 1,861 (149)
Cash flows from financing activities
Proceeds from issue of shares 68 1,957
Share issue costs - (110)
Interest paid 23 (250) (101)
Proceeds from new borrowings 23 940 545
Repayments of borrowings 23 (1,035) (50)
Net cash inflow / (outflow) from financing activities (277) 2,241
Net (decrease)/increase in cash and cash equivalents (362) 408
Cash and cash equivalents at the beginning of period 457 53
Exchange (losses)/gains on cash and cash equivalents (29) (4)
Cash and cash equivalents at end of period 15 66 457
Major non-cash transactions are disclosed in note 23.
The accompanying notes and accounting policies form an integral part of these
Financial Statements.
Company Statement of Financial Position
as at 30 June 2022
Notes 30 June 30 June
2022 2021
£'000 £'000
ASSETS
Non-current assets
Investments in subsidiaries 11 76 39
Investments in associates and joint ventures 12 1,111 1,666
Financial instruments - fair value through other comprehensive income (FVTOCI) 14 736 778
Exploration property 13 12,948 12,948
Exploration assets 13 258 567
Non-current receivables 16 3,945 1,950
Total non-current assets 19,074 17,948
Current assets
Cash and cash equivalents 15 31 366
Loans and other receivables 17 456 365
Total current assets 487 731
TOTAL ASSETS 19,561 18,679
EQUITY AND LIABILITIES
Called up share capital 19 2,839 2,835
Share premium account 31,078 30,924
Other reserves 1,502 1,043
Retained earnings (20,827) (19,003)
Total equity 14,592 15,799
LIABILITIES
Current liabilities
Trade and other payables 18 1,235 1,043
Intra-group borrowings 18 1,890 1,079
Short-term external borrowings 18 1,022 758
Total current liabilities 4,147 2,880
TOTAL EQUITY AND LIABILITIES 19,561 18,679
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented
its own Income Statement or Statement of Comprehensive Income. The Company's
loss for the financial year was £1.907 million (2021: loss of £1.578
million). The Company's total comprehensive loss for the financial year was
£1.455 million (2021: loss of £2.122 million).
These Financial Statements were approved by the Board of Directors and
authorised for issue on 28 December 2022 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes and accounting policies form an integral part of these
Financial Statements.
Company Statement of Changes in Equity
for the year ended 30 June 2022
The movements in equity during the period were as follows:
Share Share Retained Other Total
capital premium earnings reserves equity
£'000 account £'000 £'000 £'000
£'000
As at 1 July 2020 2,783 26,909 (17,362) 645 12,975
Changes in equity for 2021
Loss for the year - - (1,578) - (1,578)
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets - - - (631) (631)
Transfer of FVTOCI reserve relating to disposals - - - 150 150
Losses on sale of FVTOCI taken directly to reserves - - (63) - (63)
Total comprehensive income for the year - - (1,641) (481) (2,122)
Transactions with owners
Issue of shares 52 4,163 - - 4,215
Share issuance costs - (110) - - (110)
Share based payments - - - 66 66
Issue of warrants - (38) - 813 775
Total transactions with owners 52 4,015 - 879 4,946
As at 30 June 2021 2,835 30,924 (19,003) 1,043 15,799
Changes in equity for 2022
Loss for the year - - (1,907) - (1,907)
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to revalued FVTOCI financial assets - - - 518 518
Transfer of FVTOCI reserve relating to disposals - - - (66) (66)
Losses on sale of FVTOCI taken directly to reserves - - 83 - 83
Total comprehensive income for the year - - (1,824) 452 (1,372)
Transactions with owners
Issue of shares 4 154 - - 158
Issue of warrants - - - 7 7
Total transactions with owners 4 154 - 7 165
As at 30 June 2022 2,839 31,078 (20,827) 1,502 14,592
Company Statement of Changes in Equity
for the year ended 30 June 2022
FVTOCI financial assets revaluation Total
reserve Share-based other
£'000 payment Warrant reserves
reserve reserve £'000
£'000 £'000
As at 1 July 2020 481 164 - 645
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals 150 - - 150
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets (631) - - (631)
Share based payments - 66 - 66
Issue of warrants - - 813 813
Total Other comprehensive income (481) 66 813 398
As at 30 June 2021 - 230 813 1,043
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to revalued FVTOCI financial assets 518 - - 518
Transfer of FVTOCI reserve relating to disposals (66) - - (66)
Issue of warrants - - 7 7
Total Other comprehensive income 452 - 7 459
As at 30 June 2022 452 230 820 1,502
See note 20 for a description of each reserve included above.
Company Statement of Cash Flows
for the year ended 30 June 2022
30 June 30 June
2022 2021
£'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation (1,907) (1,578)
Increase in receivables (990) (239)
(Decrease) / Increase in payables 859 (440)
Dividend income - (125)
Interest income and other finance income - (185)
Finance costs 90 128
Share-based payments 7 350
Equity settled transactions 90 -
Change in value in FVTPL financial assets - 3
Foreign exchange loss / (gain) 235 118
Net cash outflow from operations (1,616) (1,968)
Corporation tax - -
Net cash used in operations (1,616) (1,968)
Cash flows from investing activities
Dividends received - 126
Proceeds from sale of FVTOCI financial assets 577 150
Investment in Joint venture projects (141) -
Investment in subsidiaries (37) -
Payments to acquire exploration asset (91) (215)
Net cash outflow from investing activities 308 61
Cash flows from financing activities
Proceeds from issue of shares 68 1,957
Transaction costs of issue of shares - (110)
Interest paid - (101)
Proceeds from new borrowings 940 545
Re-payments of borrowings (35) (50)
Net cash inflow from financing activities 973 2,241
Net increase/(decrease) in cash and cash equivalents (335) 334
Cash and cash equivalents at the beginning of period 366 32
Cash and cash equivalents at end of period 31 366
The accompanying notes and accounting policies form an integral part of these
Financial Statements.
Notes to the Financial Statements
1. Principal Accounting Policies
1.1 Corporate Information
Red Rock Resources Plc is a public limited company incorporated and domiciled
in England and Wales. The Company's ordinary shares are traded on AIM. The
principal activities of the Group are the exploration for and development of
mineral resources in multiple locations globally, principally in Africa and
Australia.
1.2 Basis of Preparation
The Financial Statements have been prepared in accordance with UK-adopted
international accounting standards and with the requirements of the Companies
Act 2006. The Financial Statements have been prepared on the historical cost
basis, except for certain financial instruments, which are carried as
described in the respective sections in the policies below. The principal
accounting policies adopted are set out below.
Going Concern
It is the prime responsibility of the Board to ensure the Company and the
Group remains a going concern. At 30 June 2022, the Group had cash and cash
equivalents of £0.066 million and £1.864 million of borrowings and, as at 22
December 2022, the cash balance was c£400,000. The Directors anticipate
having to raise additional funding over the course of the financial year.
Having considered the prepared cashflow forecasts and the Group budgets, which
includes the possibility of Directors reducing or foregoing their salaries if
required, the progress in activities post year-end, including the anticipated
asset sales of £1.4 million and estimated settlement of DRC litigation of
approximately £4.9 million, the Directors consider that they will have access
to adequate resources in the 12 months from the date of the signing of these
Financial Statements. As a result, they consider it appropriate to continue to
adopt the going concern basis in the preparation of the Financial Statements.
Should the Group be unable to continue trading as a going concern, adjustments
would have to be made to reduce the value of the assets to their recoverable
amounts, to provide for further liabilities, which might arise, and to
classify non-current assets as current. The Financial Statements have been
prepared on the going concern basis and do not include the adjustments that
would result if the Group was unable to continue as a going concern.
New Standards, Amendments and Interpretations Not Yet Adopted
At the date of approval of these Financial Statements, the following standards
and interpretations, which have not been applied in these Financial Statements
were in issue but not yet effective:
· Annual Improvements: 2018 - 2020 Cycle (effective 1 January
2022);
· Amendments to IAS 1: Classifications of liabilities and
Disclosure of Accounting Policies (effective 1 January 2023);
· Amendments to IAS 8: Accounting Policies, Changes to Accounting
Estimates and Errors (effective 1 January 2023);
· Amendments to IAS 12: Income Taxes - Deferred Tax arising from a
Single Transaction (effective 1 January 2023);
· Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets (effective 1 January 2022).
The effect of these new and amended standards and interpretations, which are
in issue but not yet mandatorily effective, is not expected to be material.
Standards Adopted Early by the Group
The Group has not adopted any standards or interpretations early in either the
current or the preceding financial year.
1.3 Basis of Consolidation
The Consolidated Financial Statements of the Group incorporate the Financial
Statements of the Company and subsidiaries controlled by the Company made up
to 30 June each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the
financial and operating policies so as to obtain economic benefits from their
activities. Subsidiaries are consolidated from the date on which control is
obtained, the acquisition date, up until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued, contingent consideration
and liabilities incurred or assumed at the date of exchange. Costs, directly
attributable to the acquisition, are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are initially measured at fair value at the acquisition date.
Provisional fair values are adjusted against goodwill if additional
information is obtained within one year of the acquisition date, about facts
or circumstances, existing at the acquisition date. Other changes in
provisional fair values are recognised through profit or loss.
Non-controlling interests in subsidiaries are measured at the proportionate
share of the fair value of their identifiable net assets.
Intra-group transactions, balances and unrealised gains and losses on
transactions between the Group companies are eliminated on consolidation,
except to the extent that intra-group losses indicate an impairment.
At 30 June 2022, the Consolidated Financial Statements combine those of the
Company with those of its subsidiaries, Red Rock Australasia Pty Ltd, New
Ballarat Gold Corporation Plc, RRR Coal Ltd, African Lithium Resources
Limited, Lac Minerals Ltd, Lacgold Resources SARLU, Faso Minerals Ltd, Faso
Greenstone Resources SARLU, Jimano Ltd, Red Rock Resources Congo S.A.U., Red
Rock Galaxy SA, RedRock Kenya Ltd, RRR Kenya Ltd and Red Rock Resources (HK)
Ltd.
The Group's dormant subsidiaries Intrepid Resources Ltd, Red Rock Resources
Inc., Red Rock Cote D'Ivoire SARL and Basse Terre SARL, have been excluded
from consolidation on the basis of the exemption provided by Section 405(2) of
the Companies Act 2006 that their inclusion is not material for the purpose of
giving a true and fair view.
Non-Controlling Interests
Profit or loss and each component of other comprehensive income are allocated
between the Parent and non-controlling interests, even if this results in the
non-controlling interest having a deficit balance.
Transactions with non-controlling interests, that do not result in loss of
control, are accounted for as equity transactions. Any differences between the
adjustment for the non-controlling interest and the fair value of
consideration paid or received are recognised in equity.
1.4 Summary of Significant Accounting Policies
1.4.1 Mineral Tenements and Exploration Property
Exploration licence and property acquisition costs are capitalised in
intangible assets. Licence costs, paid in connection with a right to explore
in an existing exploration area, are capitalised and amortised over the term
of the permit. Licence and property acquisition costs are reviewed at each
reporting date to confirm that there is no indication that the carrying amount
exceeds the recoverable amount. If no future activity is planned or the
licence has been relinquished or has expired, the carrying value of the
licence and property acquisition costs are written off through the statement
of profit or loss and other comprehensive income.
1.4.2 Investment in Associates
An associate is an entity over which the Group has the power to exercise
significant influence, but not controlled or jointly controlled by the Group,
through participation in the financial and operating policy decisions of the
investee.
Investments in associates are recognised in the Consolidated Financial
Statements, using the equity method of accounting. The Group's share of
post-acquisition profits or losses is recognised in profit or loss and its
share of post-acquisition movements in other comprehensive income is
recognised directly in other comprehensive income.
The carrying value of the investment, including goodwill, is tested for
impairment, when there is objective evidence of impairment. Losses in excess
of the Group's interest in those associates are not recognised, unless the
Group has incurred obligations or made payments on behalf of the associate.
Where the Group transacts with an associate of the Group, unrealised gains are
eliminated to the extent of the Group's interest in the relevant associate.
Unrealised losses are also eliminated, unless the transaction provides
evidence of an impairment of the asset transferred, in which case appropriate
provision is made for impairment.
In the Company Financial Statements, investments in associates are recognised
and held at cost. The carrying value of the investment is tested for
impairment, when there is objective evidence of impairment.
1.4.3 Interests in Joint Ventures
The Group recognises its interest in the jointly controlled entity's assets
and liabilities, using the equity method of accounting. Under the equity
method, the interest in the joint venture is carried in the Statement of
Financial Position at cost plus post-acquisition changes in the Group's share
of its net assets, less distributions received and less any impairment in
value of individual investments. The Group Income Statement reflects the share
of the jointly controlled entity's results after tax.
Any goodwill, arising on the acquisition of a jointly controlled entity, is
included in the carrying amount of the jointly controlled entity and is not
amortised. To the extent that the net fair value of the entity's identifiable
assets, liabilities and contingent liabilities is greater than the cost of the
investment, a gain is recognised and added to the Group's share of the
entity's profit or loss in the period in which the investment is acquired.
Where necessary, adjustments are made to bring the accounting policies in line
with those of the Group's and to reflect impairment losses where appropriate.
Adjustments are also made in the Group's Financial Statements to eliminate the
Group's share of unrealised gains and losses on transactions between the Group
and its jointly controlled entity. The Group ceases to use the equity method
on the date from which it no longer has joint control over, or significant
influence in, the joint venture.
1.4.4 Taxation
Corporation tax is provided on taxable profits or losses at the current rate.
The tax expense/credit represents the sum of the current tax expense/credit
and deferred tax.
The tax currently payable/receivable is based on taxable profit or loss for
the year. Taxable profit or loss differs from accounting profit or loss as
reported in the Statement of Comprehensive Income, because it excludes items
of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Group's
liability for current tax is measured using tax rates that have been enacted
or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the Financial
Statements and the corresponding tax bases used in the computation of taxable
profit or loss and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against, which deductible, temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction, which affects neither the taxable
profit or loss nor the accounting profit or loss.
Deferred tax liabilities are recognised for taxable temporary differences,
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the
period, when the asset is realised or the liability is settled, based upon tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates
to items credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity, or items charged or credited directly to
other comprehensive income, in which case the deferred tax is also recognised
in other comprehensive income.
Deferred tax assets and liabilities are offset, where there is a legally
enforceable right to offset current tax assets and liabilities, and the
deferred tax relates to income tax levied by the same tax authorities on
either:
· The same taxable entity; or
· Different taxable entities, which intend to settle current tax
assets and liabilities on a net basis or to realise and settle them
simultaneously in each future period, when the significant deferred tax assets
and liabilities are expected to be realised or settled.
1.4.5 Foreign Currencies
Both the functional and presentational currency of Red Rock Resources Plc is
Pounds Sterling ("£"). Each Group entity determines its own functional
currency and items, included in the Financial Statements of each entity, are
measured, using that functional currency.
The functional currency of the foreign subsidiaries are Australian Dollars
("AUD"), the Congolese Franc ("CFD"), and Kenyan Shillings ("KES").
Transactions in currencies other than the functional currency of the relevant
entity are initially recorded at the exchange rate, prevailing on the dates of
the transaction. At each reporting date, monetary assets and liabilities, that
are denominated in foreign currencies, are translated at the exchange rate,
prevailing at the reporting date. Non-monetary assets and liabilities, carried
at fair value that are denominated in foreign currencies, are translated at
the rates, prevailing at the date when the fair value was determined. Gains
and losses, arising on translation, are included in profit or loss for the
period, except for exchange differences on non-monetary assets and
liabilities, which are recognised directly in other comprehensive income, when
the changes in fair value are recognised directly in other comprehensive
income.
On consolidation, the assets and liabilities of the Group's overseas
operations are translated into the Group's presentational currency at exchange
rates, prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate
at the date of the transaction is used. All exchange differences arising, if
any, are recognised as other comprehensive income and are transferred to the
Group's foreign currency translation reserve.
1.4.6 Share-Based Payments
Share Options
The Group operates an equity-settled share-based payment arrangement, whereby
the fair value of services provided is determined indirectly by reference to
the fair value of the instrument granted.
The fair value of options, granted to Directors and others in respect of
services provided, is recognised as an expense in the Income Statement, with a
corresponding increase in equity reserves - the share-based payment reserve,
until the award has been settled and then make a transfer to share capital.
On exercise or lapse of share options, the proportion of the share-based
payment reserve, relevant to those options, is transferred to retained
earnings. On exercise, equity is also increased by the amount of the proceeds
received.
The fair value is measured at grant date and charged over the vesting period,
during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model, taking
into account the terms and conditions upon which the options were granted. The
exercise price is fixed at the date of grant.
Non-market conditions are performance conditions that are not related to the
market price of the entity's equity instruments. They are not considered, when
estimating the fair value of a share-based payment. Where the vesting period
is linked to a non-market performance condition, the Group recognises the
goods and services it has acquired during the vesting period, based on the
best available estimate of the number of equity instruments expected to vest.
The estimate is reconsidered at each reporting date, based on factors such as
a shortened vesting period, and the cumulative expense is "trued up" for both
the change in the number expected to vest and any change in the expected
vesting period.
Market conditions are performance conditions that relate to the market price
of the entity's equity instruments. These conditions are included in the
estimate of the fair value of a share-based payment. They are not taken into
account for the purpose of estimating the number of equity instruments that
will vest. Where the vesting period is linked to a market performance
condition, the Group estimates the expected vesting period. If the actual
vesting period is shorter than estimated, the charge is accelerated in the
period that the entity delivers the cash or equity instruments to the
counterparty. When the vesting period is longer, the expense is recognised
over the originally estimated vesting period.
For other equity instruments, granted during the year (i.e. other than share
options), fair value is measured on the basis of an observable market price.
Warrants or options, issued to parties other than employees, are valued based
on the value of the service provided.
Share Incentive Plan
Where shares are granted to employees under the Share Incentive Plan, the fair
value of services provided is determined indirectly by reference to the fair
value of the free, partnership and matching shares, granted on the grant date.
Fair value of shares is measured on the basis of an observable market price,
i.e. share price as at grant date, and is recognised as an expense in the
Income Statement on the date of the grant. For the partnership shares, the
charge is calculated as the excess of the mid-market price on the date of
grant over the employee's contribution.
1.4.7 Pension
The Group operates a defined contribution pension plan, which requires
contributions to be made to a separately administered fund. Contributions to
the defined contribution scheme are charged to profit or loss as they become
payable.
1.4.8 Exploration Assets
Exploration assets comprise exploration and development costs incurred on
prospects at an exploratory stage. These costs include the cost of
acquisition, exploration, determination of recoverable reserves, economic
feasibility studies and all technical and administrative overheads directly
associated with those projects. These costs are carried forward in the
Statement of Financial Position as non-current intangible assets less
provision for identified impairments.
Recoverability of exploration and development costs is dependent upon
successful development and commercial exploitation of each area of interest
and will be amortised over the expected commercial life of each area once
production commences. The Group and the Company currently have no exploration
assets, where production has commenced.
The Group adopts the "area of interest" method of accounting, whereby all
exploration and development costs, relating to an area of interest, are
capitalised and carried forward until abandoned. In the event that an area of
interest is abandoned, or if the Directors consider the expenditure to be of
no value, accumulated exploration costs are written off in the financial year
in which the decision is made. All expenditure incurred prior to approval of
an application is expensed with the exception of refundable rent, which is
raised as a receivable.
Upon disposal, the difference between the fair value of consideration
receivable for exploration assets and the relevant cost within non-current
assets is recognised in the Income Statement.
1.4.9 Impairment of Non-Financial Assets
The carrying values of assets, other than those to which IAS 36 "Impairment of
Assets" does not apply, are reviewed at the end of each reporting period for
impairment, when there is an indication that the assets might be impaired.
Impairment is measured by comparing the carrying values of the assets with
their recoverable amounts. The recoverable amount of the assets is the higher
of the assets' fair value less costs to sell and their value-in-use, which is
measured by reference to discounted future cash flow.
An impairment loss is recognised immediately in the Consolidated Statement of
Comprehensive Income.
When there is a change in the estimates used to determine the recoverable
amount, a subsequent increase in the recoverable amount of an asset is treated
as a reversal of the previous impairment loss and is recognised to the extent
of the carrying amount of the asset that would have been determined (net of
amortisation and depreciation) had no impairment loss been recognised. The
reversal is recognised in profit or loss immediately, unless the asset is
carried at its revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
1.4.10 Finance Income/Expense
Finance income and expense is recognised as interest accrues, using the
effective interest method. This is a method of calculating the amortised cost
of a financial asset and allocating the interest income over the relevant
period, using the effective interest rate, which is the rate that exactly
discounts estimated future cash receipts or re-payments through the expected
life of the financial asset or liability to the net carrying amount of the
financial asset or liability.
1.4.11 Financial Instruments
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and out-of-money derivatives,
where the time value offsets the negative intrinsic value. They are carried in
the Statement of Financial Position at fair value, with changes in fair value
recognised in the Consolidated Statement of Comprehensive Income in the
finance income or expense line. Other than derivative financial instruments,
which are not designated as hedging instruments, the Group does not have any
assets held for trading nor does it voluntarily classify any financial assets
as being at fair value through profit or loss.
Amortised Cost
These assets comprise the types of financial assets, where the objective is to
hold these assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of principal and interest. They are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at
amortised cost, using the effective interest rate method, less provision for
impairment. Impairment provisions, for current and non-current trade
receivables. are recognised, based on the simplified approach within IFRS 9,
using a provision matrix in the determination of the lifetime expected credit
losses.
During this process, the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of
the expected loss, arising from default to determine the lifetime expected
credit loss for the trade receivables. For the receivables, which are reported
net, such provisions are recorded in a separate provision account, with the
loss being recognised in the Consolidated Statement of Comprehensive Income.
On confirmation that the receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
Impairment provisions, for receivables from related parties and loans to
related parties, are recognised, based on a forward-looking expected credit
loss model. The methodology, used to determine the amount of the provision, is
based on whether there has been a significant increase in credit risk since
initial recognition of the financial asset, based on analysis of internal or
external information. For those where the credit risk has not increased
significantly since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are recognised. For
those for which credit risk has increased significantly, lifetime expected
credit losses, along with the gross interest income, are recognised. For those
that are determined to be credit impaired, lifetime expected credit losses,
along with interest income on a net basis, are recognised.
The Group considers a financial asset in default, when contractual payments
are 180 days past due. However, in certain cases, the Group may also consider
a financial asset to be in default, when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full, before taking into account any credit enhancements held by
the Group. A financial asset is written off, when there is no reasonable
expectation of recovering the contractual cash flows.
The Group's financial assets, measured at amortised cost, comprise trade and
other receivables and cash and cash equivalents in the Consolidated Statement
of Financial Position. Cash and cash equivalents include cash in hand,
deposits held at call with banks, other short term highly liquid investments
with original maturities of three months or less, and, for the purpose of the
Statement of Cash Flows, bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities on the Consolidated Statement of
Financial Position.
Fair Value through Other Comprehensive Income (FVTOCI)
The Group has a number of strategic investments in listed and unlisted
entities, which are not accounted for as subsidiaries, associates or jointly
controlled entities. For those investments, the Group has made an irrevocable
election to classify the investments at fair value through other comprehensive
income rather than through profit or loss as the Group considers this
measurement to be the most representative of the business model for these
assets. They are carried at fair value, with changes in fair value recognised
in other comprehensive income, and accumulated in the fair value through other
comprehensive income reserve. Upon disposal, any balance, within fair value
through other comprehensive income reserve, is reclassified directly to
retained earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend clearly
represents a recovery of part of the cost of the investment, in which case,
the full or partial amount of the dividend is recorded against the associated
investments carrying amount.
Purchases and sales of financial assets, measured at fair value through other
comprehensive income, are recognised on settlement date with any change in
fair value between trade date and settlement date, being recognised in the
fair value through other comprehensive income reserve.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous
market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured, using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement, of a non-financial asset, takes into account a
market participant's ability to generate economic benefits by using the asset
in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
All assets and liabilities, for which fair value is measured or disclosed in
the Financial Statements, are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities;
· Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or indirectly
observable; and
· Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the Financial Statements on
a recurring basis, the Group determines, whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks
of the asset or liability and the level of the fair value hierarchy as
explained above.
Financial Liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired:
Fair Value through Profit or Loss (FVTPL)
This category comprises out-of-the-money derivatives, where the time value
does not offset the negative intrinsic value or any liabilities held for
trading. They are carried in the consolidated statement of financial position
at fair value with changes in fair value recognised in the Consolidated
Statement of Comprehensive Income. The Group did not hold any such liabilities
at the date of IFRS 9 adoption or at the end of the reporting year.
Other Financial Liabilities
Other financial liabilities include:
· Borrowings, which are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the instrument.
Such interest-bearing liabilities are subsequently measured at amortised cost,
using the effective interest rate method, which ensures that any interest
expense over the period to repayment is at a constant rate on the balance of
the liability carried in the Consolidated Statement of Financial Position. For
the purposes of each financial liability, interest expense includes initial
transaction costs and any premium payable on redemption as well as any
interest or coupon payable while the liability is outstanding;
· Liability components of convertible loan notes are measured as
described further below; and
· Trade payables and other short-term monetary liabilities, which
are initially recognised at fair value and subsequently carried at amortised
cost, using the effective interest method.
1.4.12 Investments
Investments in subsidiaries are classified as non-current assets and included
in the Statement of Financial Position of the Company at cost at the date of
acquisition less any identified impairments.
For acquisitions of subsidiaries or associates achieved in stages, the Company
re-measures its previously held equity interests in the acquiree at its
acquisition-date fair value and recognises the resulting gain or loss, if any,
in profit or loss. Any gains or losses, previously recognised in other
comprehensive income, are transferred to profit and loss.
Investments in associates and joint ventures are classified as non-current
assets and included in the Statement of Financial Position of the Company at
cost at the date of acquisition less any identified impairment.
1.4.13 Dividend Income
Dividends, received from strategic investments, are recognised, when they
become legally receivable. In case of interim dividends, this is when
declared. In case of final dividends, this is when approved by the
shareholders at the Annual General Meeting.
1.4.14 Share Capital
Financial instruments, issued by the Group, are classified as equity only to
the extent that they do not meet the definition of a financial liability or
financial asset. The Group's ordinary shares are classified as equity
instruments.
1.4.15 Convertible Debt
The proceeds, received on issue of the Group's convertible debt, are allocated
into their liability and equity components. The amount initially attributed to
the debt component equals the discounted cash flows, using a market rate of
interest that would be payable on a similar debt instrument that does not
include an option to convert. Subsequently, the debt component is accounted
for as a financial liability, measured at amortised cost until extinguished on
conversion or maturity of the bond. The remainder of the proceeds is allocated
to the conversion option and is recognised in the "Convertible debt option
reserve" within shareholders' equity, net of income tax effects.
1.4.16 Warrants
Derivative contracts, that only result in the delivery of a fixed amount of
cash or other financial assets for a fixed number of an entity's own equity
instruments, are classified as equity instruments. When warrants are issued,
attached to specific loan notes, the Company estimates the fair value of the
issued warrants, using the Black-Scholes pricing model, taking into account
the terms and conditions upon which the warrants were issued, value of such
warrants is deducted from the balance of loan notes, a directly attributable
transaction cost. Warrants, relating to equity finance and issued together
with ordinary shares placement, are valued by residual method and treated as
directly attributable transaction costs and recorded as a reduction of share
premium account based on the fair value of the warrants. Warrants, classified
as equity instruments, are not subsequently re-measured.
1.5 Significant Accounting Judgements, Estimates and Assumptions
The preparation of the Group's Consolidated Financial Statements, requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities at the end of
the reporting period. However, uncertainty, about these assumptions and
estimates, could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Significant Judgements in Applying the Accounting Policies
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts, recognised in the Consolidated Financial Statements:
Recognition of Holdings Less Than 20% as an Associate
The Company owns 15% of the issued share capital of Mid Migori Mining Company
Ltd ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with
IAS 28, the Directors of the Company consider that, the agreements whereby the
Company owns the beneficial interest in the Kenyan assets, and the input of
resource by the Company in respect of drilling and analytical activities, to
provide the Group with significant influence as defined by the standard. As
such, MMM has been recognised as an associate for the years ended 30 June
2022, 30 June 2021, 30 June 2020 and 30 June 2019.
The effect of recognising MMM as an FVTOCI financial asset would be to
increase the profit by £29 (2021: decrease the profit by £25).
Significant Accounting Estimates and Assumptions
The carrying amounts of certain assets and liabilities are often determined
based on estimates and assumptions of future events. The key estimates and
assumptions, that have a significant risk of causing a material adjustment to
the carrying amounts of certain assets and liabilities within the next annual
reporting period, include the impairment determinations, the useful lives of
property, plant and equipment, the bad debt provision and the fair values of
our financial assets and liabilities.
Fair value of Mineras Four Points Sales Proceeds Receivable
In estimating the fair value of the Company's future gold royalties from
Colombia, the Directors have made assumptions about the future cash flows,
which include the following key assumptions:
· Gold price (US$/oz) - US$1,750 (2021: US$1,750);
· Discount rate - 10% (2021: 10%); and
· Annual production rate - 6,500 (2021: 10,000oz)
The fair value is directly sensitive to any changes in the key assumptions.
Share-Based Payment Transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value of share options is determined using the
Black-Scholes model. The model has its strengths and weaknesses and requires
six inputs as a minimum: 1) the share price; 2) the exercise price; 3) the
risk-free rate of return; 4) the expected dividends or dividend yield; 5) the
life of the option; and 6) the volatility of the expected return. The first
three inputs are normally, but not always, straightforward. The last three
involve greater judgement and have the greatest impact on the fair value.
Impairment of Financial Assets
A financial asset, or a group of financial assets, is deemed to be impaired
if, and only if, there is objective evidence of impairment as a result of one
or more events that has occurred after the initial recognition of the asset
(an incurred "loss event") and that loss event has an impact on the estimated
future cash flows of the financial asset or the group of financial assets that
can be reliably estimated. This determination requires significant judgement.
In making this judgement, the Group evaluates, among other factors, the
duration and extent to which fair value of an investment is less than its
cost.
In the case of equity investments, classified as financial instruments with
fair value movements through other comprehensive income (FVTOCI), objective
evidence would include a significant or prolonged decline in the fair value of
the investment below its cost. "Significant" is evaluated against the original
cost of the investment and "prolonged" against the period in which the fair
value has been below its original cost. Mining share prices typically have
more volatility than most other shares and this is taken into account by
management, when considering if a significant decline in the fair value of its
mining investments has occurred. Management would consider that there is a
prolonged decline in the fair value of an equity investment, when the period
of decline in fair value has extended to beyond the expectation management
have for the equity investment. This expectation will be influenced
particularly by the Company development cycle of the investment.
Impairment of Non-financial Assets
The Group follows the guidance of IAS 36 to determine, when a non-financial
asset is impaired. The Group assesses, at each reporting date, whether there
is an indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Group estimates
the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating unit's (CGU) fair value less costs to sell and
its value in use. Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value, using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset. In determining fair value less costs to sell, recent market
transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Group bases its impairment calculation on detailed projections, which are
prepared separately for each of the Group's CGUs to which the individual
assets are allocated. These projections generally cover a period of five years
with a terminal value or salvage value applied.
Impairment losses of continuing operations are recognised in the Income
Statement in expense categories, consistent with the function of the impaired
asset.
For investments in associates and joint ventures, the Group assesses
impairment after the application of the equity method.
2. Segmental Analysis
The Group consider its mining and exploration activities as separate segments.
These are in addition to the investment activities, which continue to form a
significant segment of the business.
The Group has made a strategic decision to concentrate on several commodities,
ranging from gold to manganese and copper/cobalt, and as such further
segmental analysis by commodity has not been considered useful or been
presented. Transfer prices, between operating segments, are on an arm's length
basis in a manner similar to transactions with third parties.
Year to 30 June 2022 Gold Gold Copper Other Projects Investments Corporate Total
Exploration Exploration Exploration £'000 and £'000
Australia Kenya DRC £'000 unallocated
£'000 £'000 £'000 £'000
Exploration expenses - (255) - (1) - - (256)
Administration expenses (280) (1) (1) (8) (9) (926) (1,225)
Project development - - (623) (54) - - (677)
Other project costs (45) (10) (15) (140) - - (210)
Share based payments - - - - (16) (16)
Currency gain 20 - - 32 (235) (183)
Other income - - - 116 (77) 13 52
Dividend income
Finance costs - - - 1 (205) (81) (285)
Net profit/(loss) before tax from continuing operations (305) (266) (639) (259) (1,245) (2,800)
(86)
Year to 30 June 2021 Gold Gold Copper Investments Corporate Total
Exploration Exploration Exploration £'000 and £'000
Australia Kenya DRC unallocated
£'000 £'000 £'000 £'000
Exploration expenses - (98) - - (7) (105)
Administration expenses - (5) (4) - (690) (699)
Project development - - (559) - - (559)
Other project costs (138) (40) - - (127) (305)
Share based payments - - - - (350) (350)
Currency gain (9) - - - 43 34
Other income - - - - 290 290
Dividend income - - - 126 - 126
Finance income, net - - - (2) (129) (131)
Net profit/(loss) before tax from continuing operations (147) (143) (563) 124 (970) (1,699)
Information by Geographical Area
Presented below is certain information by the geographical area of the Group's
activities. Revenue, from investment sales and the sale of exploration assets,
is allocated to the location of the asset sold.
Year ended 30 June 2022 UK Africa Australia Total
£'000 £'000 £'000 £'000
Non-current assets
Investments in associates and joint ventures - 1,030 - 1,030
Mineral tenements - 165 346 511
Exploration properties - 12,949 - 12,949
Exploration assets - 316 - 316
FVTOCI financial assets 736 - - 736
Non-current receivables 1,224 1,096 - 2,320
Total segment non-current assets 1,960 15,556 346 17,862
Year ended 30 June 2021 UK Africa Australia Total
£'000 £'000 £'000 £'000
Non-current assets
Investments in associates and joint ventures - 1,585 - 1,585
Mineral tenements - - 124 124
Exploration properties - 12,948 - 12,948
Exploration assets - 567 - 567
FVTOCI financial assets 736 1,019 - 1,755
Non-current receivables 1,341 - 3 1,344
Total segment non-current assets 2,077 16,119 127 18,323
3. (Loss)/Profit for the Year Before Taxation
(Loss)/profit for the year before taxation is stated after charging:
2022 2021
£'000 £'000
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of consolidated and 28 25
Company Financial Statements
Directors' emoluments (note 9) 310 312
- Share Incentive plan - Directors 12 11
- Share Incentive plan - staff 4 7
4. Administrative Expenses
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Staff costs
Payroll 562 307 356 307
Pension 47 20 27 20
Consultants 15 15 15 15
HMRC / PAYE 39 28 39 28
Professional services
Accounting and Audit 115 42 98 40
Legal 36 15 23 14
Marketing 45 64 33 64
Other 13 - 5 -
Regulatory compliance 96 105 96 105
Travel 77 24 75 24
Office and Admin
General 37 22 29 17
IT costs 10 8 10 8
Rent 92 35 72 35
Insurance 41 13 39 13
Total administrative expenses 1,225 699 917 690
5. Finance Income/(Costs), Net
Group 2022 2021
£'000 £'000
Interest income (other than MFP finance income) - 290
Dividend income - 126
Interest expense & other finance costs (209) (131)
Total finance (costs) / income (other than MFP finance income) (209) 285
MFP finance expense / (income) (76) -
Total finance (costs) / income (285) 285
Other gains 52 -
Interest income (other than Mineras Four Points ("MFP") finance income) comes
from non-current receivables from an associate. Please refer to note 16 and
note 17 respectively. Dividend income in the prior year represents the money
received from the Group's 0.53% holding in Jupiter Mines Limited as at 30 June
2021, which was fully disposed of in the current year.
6. Project Development and Other Project Expenses
Project development expenses include costs, incurred during the assessment and
due diligence phases of a project, when material uncertainties exist
regarding, whether the project meets the Company's investment and development
criteria and, whether as a result, the project will be advanced further.
Other Project Expenses include costs associated with current and previous
projects and include remediation and administration expenses.
Group and Company
2022 2021
£'000 £'000
Project development expenses
VUP (Congo) (328) (392)
Zlata Bana - (42)
Galaxy (Congo) (47) (14)
Other (Congo) (79) -
Luanshimba (Congo) (166) (19)
Kinsevere (2) (92)
Other (54) -
Total project development expenses (676) (559)
Other project costs
Mid Migori Mines (Kenya) (10) (40)
Greenland (68) (126)
Other (133) (139)
Total other project expenses (211) (305)
7. Taxation
2022 2021
£'000 £'000
Current period taxation on the Group
UK corporation tax at 19.00% (2020: 19.00%) on profit/(loss) for the period - -
- -
Deferred tax
Origination and reversal of temporary differences - -
Deferred tax assets not recognised - -
Tax credit - -
Factors affecting the tax charge/(credit) for the year
Profit/(loss) on ordinary activities before taxation (2,800) (1,699)
Profit/(loss) on ordinary activities at the average UK standard rate of 19.00% (532) (323)
(2020: 19.00%)
Income not taxable - -
Effect of expenditure not deductible 20 67
Losses brought forward utilised in the current period - -
Tax losses carried forward 512 256
Tax charge - -
No deferred tax asset, relating to the Group's investments, was recognised in
the Statement of Comprehensive Income (2021: £nil). No deferred tax charge
has been made due to the availability of trading losses. Unutilised tax
losses, arising in the UK, amount to £4.4 million (2021: £4.1 million).
On 3 March 2021, the UK government announced that it intended to increase the
main rate of corporation tax to 25% for the financial years beginning 1 April
2023. This new rate was substantively enacted by Finance Act 2021 on 10 June
2021.
8. Staff Costs
The aggregate employment costs of staff (including Directors) for the year in
respect of the Group was:
2022 2021
£'000 £'000
Wages and salaries 562 322
Pension 47 20
Social security costs 39 28
Employee share-based payment charge 9 66
Total staff costs 657 436
The average number of Group employees (including Directors) during the year
was:
2022 2021
Number Number
Executives 4 4
Administration 1 1
Exploration 9 1
14 6
The key management personnel are the Directors and their remuneration is
disclosed within note 9.
1,236,656 free shares were issued to five employees (2021: 360,000), including
Directors. 1,267,199 partnership and 2,534,398 matching shares, making the
total of 3,801,597, were issued in the year ended 30 June 2022 (2021:
4,589,418 partnership, 9,178,836 matching, 15,568,254 total).
9. Directors' Emoluments
2022 Directors' Directors' fees - discretionary bonus Consultancy Share Pension Social Total
fees £'000 fees Incentive Plan contributions security costs £'000
£'000 £'000 £'000 £'000 £'000
Executive Directors
A R M Bell 120 - 15 4 10 15 164
Other Directors
S Kaintz 65 - - 3 6 7 81
S Quinn 24 - - 3 2 2 31
A Borrelli 22 - - 2 - 2 26
231 - 15 12 18 26 302
2021 Directors' Directors' fees - discretionary bonus, Consultancy Share Pension Social Total
fees £'000 fees Incentive Plan contributions security costs £'000
£'000 £'000 £'000 £'000 £'000
Executive Directors
A R M Bell 88 17 15 7 7 10 144
Other Directors
S Kaintz 65 15 - 7 6 7 100
M C Nott 15 7 - 7 1 1 31
S Quinn 19 7 - 7 2 2 37
187 46 15 28 16 20 312
Three Directors exercised share options in the year, for a total of 5,670,000
new shares (2021: nil). During the year, the Company contributed to a Share
Incentive Plan more fully described in the Directors' Report.
10. Earnings Per Share
The basic earnings/(loss) per share is derived by dividing the loss for the
year, attributable to ordinary shareholders of the Parent by the weighted
average number of shares in issue. Diluted earnings/(loss) per share is
derived by dividing the loss for the year, attributable to ordinary
shareholders of the Parent by the weighted average number of shares in issue
plus the weighted average number of ordinary shares that would be issued on
conversion of all dilutive potential ordinary shares into ordinary shares.
2022 2021
(Loss)/profit attributable to equity holders of the parent company, £ (2,799,730) (1,698,983)
Adjusted for interest accrued on the convertible notes - -
Adjusted (loss) / profit attributable to equity holders of the parent company (2,799,730) (1,698,983)
used for diluted EPS calculation
Weighted average number of ordinary shares of £0.0001 in issue, used for 1,221,091,538 939,293,986
basic EPS
from potential ordinary shares that would have to be issued, if all loan - -
notes, convertible at the discretion of the noteholder, converted at the
beginning of the period or at the inception of the instrument, whichever is
later
Weighted average number of ordinary shares of £0.0001 in issue, including 1,221,091,538 939,293,986
potential ordinary shares, used for diluted EPS
2022 2021
(Loss)/earnings per share - basic (0.23 pence) (0.18 pence)
(Loss)/earnings per share - fully diluted (0.23 pence) (0.18 pence)
At 30 June 2022, the effect of all the instruments (fully vested and in the
money) is anti-dilutive as it would lead to a further reduction of loss per
share, therefore, they were not included into the diluted loss per share
calculation.
Options and warrants, that could potentially dilute basic EPS in the future,
but were not included in the calculation of diluted EPS for the periods
presented:
2022 2021
Share options granted to employees - either not vested and/or out of the money 50,000,000 63,320,000
Number of warrants given to shareholders as a part of placing equity 389,430,010 380,197,618
instruments - out of the money
Total number of contingently issuable shares, that could potentially dilute 439,430,010 443,517,618
basic earnings per share in future, and anti-dilutive potential ordinary
shares, that were not included into the fully diluted EPS calculation
There were no ordinary share transactions such as share capitalisation, share
split or bonus issue after 30 June 2022, that could have changed the EPS
calculations significantly, if those transactions had occurred before the end
of the reporting period.
11. Investments in Subsidiaries
Company 2022 2021
£'000 £'000
Cost
At 1 July 40 20
Investment in subsidiaries 37 20
At 30 June 77 40
Impairment
At 1 July (1) (1)
Charge in the year - -
At 30 June (1) (1)
Net book value 76 39
As at 30 June 2022 and 30 June 2021, the Company held interests in the
following subsidiary companies:
Company Country of Class Proportion Proportion Nature of business
registration Held Held
At 30 June 2022 At 30 June 2021
Red Rock Australasia Pty Ltd Australia Ordinary 50.1% 50.1% Mineral exploration
New Ballarat Gold Corporation Plc UK Ordinary 50.1% 50.1% Mineral exploration
RedRock Kenya Ltd Kenya Ordinary 87% 87% Mineral exploration
RRR Kenya Ltd Kenya Ordinary 100% 100% Mineral exploration
Red Rock Resources (HK) Ltd Hong Kong Ordinary 100% 100% Holding company
Red Rock Resources Congo S.A.U. DRC Ordinary 100% 100% Holding company
African Lithium Resources PVT Ltd Zimbabwe Ordinary 65% nil Mineral exploration
Lac Minerals Ltd UK Ordinary 100% 100% Mineral exploration
Lacgold Resources SARLU Ivory Coast Ordinary 100% 100% Mineral exploration
Faso Minerals Ltd UK Ordinary 100% 100% Mineral exploration
Faso Greenstone Resources SARL Burkino Faso Ordinary 100% 100% Mineral exploration
RRR Coal Ltd UK Ordinary 100% 100% Holding company
Jimano Ltd Cyprus Ordinary 100% 100% Royalty Holdings
Red Rock Galaxy SA DRC Ordinary 80% 80% Holding company
Red Rock Australasia Pty Ltd registered office is c/o Paragon Consultants PTY
Ltd, PO Box 903, Claremont WA, 6910, Australia.
New Ballarat Gold Corporation Plc registered office is 201 Temple Chambers,
3-7 Temple Avenue, London EC4Y 0DT.
RedRock Kenya Ltd and RRR Kenya Ltd registered office is PO Box 9306 - 003000,
Nairobi, Kenya.
Red Rock Resources (HK) Ltd registered office is Suites 1601-1603, Kinwick
Centre, 32 Hollywood Road, Central, Hong Kong.
Red Rock Resources Congo S.A.U. registered office is Boulevard Du 30 Juin et
Avenue Batetela, Immeuble Crown Tower, 5 Eme Niveau, Local 504, Gombe,
Kinshasa.
African Lithium Resources PVT Ltd registered office is 3 Hex Road, Queensdale,
Harrare, Zimbabwe.
Lac Minerals Ltd registered office is Salisbury House, London Wall, London
EC2M 5PS.
Lacgold Resources SARLU registered office is Yamoussoukro Morofe Lot 420B Ilot
32, BP 1364 Yamoussoukro, Ivory Coast.
Faso Minerals Ltd registered office is Salisbury House, London Wall, London
EC2M 5PS.
Faso Greenstone Resources SARL registered office is Secteur 54, Quartier Ouaga
2000, Lot 28, Parcelle 18, Section 280, 01 BP 5602 Ouagadougou 01, Burkina
Faso.
RRR Coal Ltd registered office is Salisbury House, London Wall, London EC2M
5PS.
Jimano Ltd registered office Strovolou, 77 Strovolos Center, 4(th) Floor
Office 401, Nicosia, Cyprus
Red Rock Galaxy SA office is 1320 Av Meteo 2 Q/Meteo C/Lumbumbashi, DRC
12. Investments in Associates and Joint Ventures
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cost
At 1 July 1,806 1,805 1,669 1,668
Reclassifications to Other Receivables (696) - (696) -
Additions during the year 141 1 141 1
At 30 June 1,251 1,806 1,114 1,669
Impairment
At 1 July (221) (221) (3) (3)
Profit/(loss) during the year - - - -
At 30 June (221) (221) (3) (3)
Net book amount at 30 June 1,030 1,585 1,111 1,666
The Company, at 30 June 2022 and at 30 June 2022, had significant influence by
virtue other than shareholding over 20% over Mid Migori Mining Company Ltd.
Company Country of Class of Percentage of Accounting year ended
incorporation shares held issued capital
Mid Migori Mining Company Limited Kenya Ordinary 15.00% 30 September 2021
Summarised financial information for the Company's associates and joint
ventures, where available, is given below:
For the year as at 30 June 2022:
Company Revenue Loss Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 2,110 (2,238)
For the year as at 30 June 2021:
Company Revenue Profit Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 2,559 (2,623)
Mid Migori Mining Company Ltd
The Company owns 15% of the issued share capital of Mid Migori Mining Company
Ltd ("MMM"), incorporated in Kenya. The Company has entered into agreements
under which it manages 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).
VUP Musonoi Mining SA
On 28 February 2019, Vumilia Pendeza S.A. ("VUP") and Bring Minerals S.A.U.
("B.Min"), and Red Rock Resources Congo S.A.U. ("RRRC"), a wholly owned
local subsidiary of the Company, signed a "Joint Venture Agreement" and B,Min
and RRRC signed the "Statutes of VUP Musonoi Mining SA" ("VMM S.A."), the
joint venture company (incorporated in the Democratic Republic of Congo)
through which the JV Project was to be pursued. The Statutes were then taken
by the lawyer to procure the signature of the correct officer of VUP. RRRC
owns 50.1% of the Joint Venture and was to own 50.1% of VMM SA. The Company
sent the registration costs of VMM SA twice, but the lawyer failed to register
the company. The governing document of the joint venture therefore remains an
unincorporated joint venture under the Joint Venture Agreement. The Company
announced on 16 November 2021 that it had served an Ordonnance de Saisie
Conservatoire (precautionary attachment) order on VUP and taken other measures
locally to protect its interest in relation to this joint venture. On 28
December 2021 it obtained an order from the Tribunal de Commerce de Lubumbashi
against VUP in the sum of US$2.5m in respect of US$5m that had been paid to
VUP in relation to a sale of the JV Project to which the Company had not been
a party (the Unauthorised Sale). Subsequently on 28 June 2022 an Arbitration
was ordered in respect of a further US$15m due to be paid by the buyer to VUP
pursuant to the Unauthorised Sale.
Due to the above developments in the year, the Company has reclassified
amounts recognised as investments in the VUP joint venture (£696,364), along
with amounts previously classified as Exploration Assets (£399,892), as a
Non-current receivable.
Mid Migori VUP Musonoi Mining SA Total
Mining Company £'000 £'000
Limited
£'000
Cost
At 1 July 2021 1,083 583 1,666
Additions during the year 28 113 141
Reclassified during the year - (696) (696)
At 30 June 2022 1,111 - 1,111
Impairment and losses during the year
At 1 July 2021 (81) - (81)
The Group's share of profit/(loss) during the year - - -
At 30 June 2022 (81) - (81)
Carrying amount
At 30 June 2021 1,002 583 1,585
At 30 June 2022 1,030 - 1,030
13. Exploration Assets
Group 2022 2021
£'000 £'000
At 1 July 13,515 11,858
Additions 150 1,657
Reclassification as non-current receivables (note 16) (400) -
At 30 June 13,265 13,515
Exploration assets were capitalised:
· For the Galaxy (DRC) project since 17 October 2018, when
exploration commenced at the project license in the DRC; and
· For the VUP (DRC) project since 22 November 2018, when the joint
venture agreement was finalised, with all capitalised amounts having been
reclassified as non current receivables in the current year.
· For the African Lithium Resources Limited project, all amounts
relate to the acquisition of mineral rights in Zimbabwe. This includes the
purchase of the Tin Hill project on 2 February 2022.
· For the Faso Greenstone project since the acquisition of the
Bilbale licence interest on 24 December 2021.
Under a 2018 agreement with MMM partner Kansai Mining Corporation Ltd, in the
event of a renewal or reissue of licenses, covering the relevant assets, the
Company was within three months to make further payment of US$2.5 million
(£2.028 million) to Kansai Mining Corporation Ltd. For further details of the
payments see note 27.
14. Financial Instruments with Fair Value Through Other Comprehensive
Income (FVTOCI)
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Opening balance 1,755 2,755 778 1,711
Additions 223 143 223 143
Disposals (1,693) (401) (775) (697)
Change in fair value 451 (742) 510 (379)
At 30 June 736 1,755 736 778
Market Value of Investments
The market value as at 30 June of the listed and unlisted investments was as
follows:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Quoted on London AIM - 562 - 562
Quoted on other foreign stock exchanges - 1,019 - 42
Unquoted investments at fair value 736 174 736 174
736 1,755 736 778
Jupiter Mines Limited
During the prior year, Jupiter Mines Limited made distributions recognised as
dividends and included into the Dividend line in the Consolidated Income
Statement in the amount of £0.126 million. No dividends were received in
the current year as this investment was fully disposed of during the year.
At 30 June 2022, Red Rock retains a nil% stake in the share capital of Jupiter
Mines Limited (2020: 0.53%).
Elephant Oil Ltd
Following discussions with the management team of Elephant Oil Ltd and
internal analysis, conducted on the Company's projects and prospects for
onshore oil exploration activities in Benin, and consideration of the implied
value of the company by recent new subscriptions by investors and the
intention to list the Company on the USA capital markets, the fair value of
the investment has been revalued to £736,281 (2021: £173,866).
Corcel Plc
During the prior year, the Company sold 3,383,633 shares in Corcel Plc to
maintain the Company's working capital. Gain on sale of these shares
recognised in the Statement of Other Comprehensive Income amounted to
£65,606.
Juno Minerals Limited
At 30 June 2022, Red Rock retains a nil% stake in the share capital of Juno
Minerals Limited (2021: 0.29%).
Details of the fair value measurement hierarchy are included in note 22.
15. Cash and Cash Equivalents
Group 30 June 30 June
2022 2021
£'000 £'000
Cash in hand and at bank 66 457
66 457
For the purpose of the statement of cash flows, cash and cash equivalents
comprise cash at bank and in hand.
Company 30 June 30 June
2022 2021
£'000 £'000
Cash in hand and at bank 31 366
31 366
Credit Risk
The Group's exposure to credit risk, or the risk of counterparties defaulting,
arises mainly from notes and other receivables. The Directors manage the
Group's exposure to credit risk by the application of monitoring procedures on
an ongoing basis. For other financial assets (including cash and bank
balances), the Directors minimise credit risk by dealing exclusively with high
credit rating counterparties. The Company defines default through a
framework of qualitative "unlikeliness to pay" with a more objective 90 days
past due timeline. The qualitative criteria allows the Company to identify
exposure early on in the process, with the 90 day past due limit providing a
clear final metric.
Credit Risk Concentration Profile
The Group's receivables do not have significant credit risk exposure to any
single counterparty or any group of counterparties, having similar
characteristics. The Directors define major credit risk as exposure to a
concentration exceeding 10% of a total class of such asset.
The Company maintains its cash reserves in Coutts & Co, which maintains an
A-1 credit rating from Standard & Poor's.
16. Non-Current Receivables
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Amounts receivable relating to VUP Joint Venture 1,096 - 1,096 -
Due from subsidiaries - - 1,625 601
MFP sale proceeds 1,224 1,344 1,224 1,341
2,320 1,344 3,945 1,942
Amounts receivable relating to the VUP joint venture have arisen due to the
reclassification of Joint Venture investment costs and capitalised exploration
asset costs in the year. See note 12 for further detail.
The Mineras Four Points ("MFP") sale proceeds represent the fair value of the
non-current portion of the deferred consideration receivable for the sale of
MFP. 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 levels,
estimates of future production levels and gold price forecasts.
17. Other Receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current trade and other receivables
Prepayments 310 42 46 42
Short-term loan receivable - - 161 162
MFP sales proceeds - current element 129 85 129 85
Other receivables 221 272 120 76
Total 660 399 456 365
Prepayments in the year include £264,085 of prepaid/deferred costs relating
to mineral exploration activity in Kenya (2021: £nil).
18. Trade and Other Payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Non-current liabilities
Trade and other payables 415 119 - -
Borrowings 822 731 822 731
Total non-current liabilities 1,237 850 822 731
Current liabilities
Trade payables 1,149 835 1,029 803
Accruals 206 240 206 240
Due to Partners in associate (note 26) - - - -
Due to key management - - - -
Total trade and other payables 1,355 1,075 1,235 1,043
Intra-group borrowings - - 1,890 1,079
Short-term borrowings 1,042 969 1,022 27
Total current liabilities 2,397 2,044 4,147 2,149
During the prior year, on 6 November 2020, the Company's 100% owned
subsidiary, RRR Coal Ltd, refinanced its existing loan facility with Riverfort
Global Opportunities PCC Limited and YA II PN Ltd, increasing the total amount
available for draw-down to US$ 2.0 million, and drawing down an initial gross
amount of US$ 1.0 million with additional tranches available at the lenders'
absolute discretion. The notes were secured on 6,302,000 shares in Jupiter
Mines Limited as well as 20,000,000 shares in Power Metal Resources Plc, which
were transferred from the Company to an escrow account for the duration of the
loan as well as by a corporate guarantee, executed by Red Rock Resources
Plc. The notes carried an interest rate of 10% and came with a 7.5%
implementation fee. The notes were repaid in the year out of the disposal
proceeds of Jupiter Mines Limited shares.
During the year, the Company took out the following additional borrowings:
· A £100,000 working capital loan from Power Metals Corporation
plc, the joint venture partner in Red Rock Australasia Pty Ltd was advanced to
the Company for use in covering pre-IPO related costs of the New Ballarat Gold
Corporation;
· A convertible loan note facility with Riverfort Global
Opportunities Fund ("RGO"). The facility is for up to £1,000,000 in funding
for working capital purposes, with an initial drawdown of £385,000 in
principal (before costs). On drawdown, 18,464,800 shares in the Company were
issued to RGO as security against future conversions of principal. The
unremunerated value of these shares, being £68,153 at the reporting date,
forms an offsetting receivable against the principal owing on the facility in
these financial statements. Drawdown on the facility was subject to a coupon
deduction of £35,000, implementation fee of £26,950 and various legal costs
of £14,346. Amounts owing are convertible at the lower of 0.455 pence per
share and the volume weighted average share price in the 5 trading days prior
to conversion. The facility is further secured by a fixed and floating
charge over the assets of the Company, which was registered on 27 May 2022 and
will be satisfied on full settlement of amounts owing, by either repayment or
conversion.
· A short-term loan facility provided by Yew Tree Capital for a
principal amount of £250,000 (before £6,250 in drawdown deductions) for
working capital purposes. The facility accrues interest at 8% per annum and
was settled via novation into convertible loan notes following the reporting
date.
· In June 2022, various subscribers to new convertible loan notes,
which were issued following the reporting date, had provided their
subscription funding for this transaction. As a consequence, as at the
reporting date, the Company had received £320,000 in funds to be applied
against these convertible loan notes, which were formally issued on 25 July
2022. As at the reporting date, these funds represent "prepaid
subscriptions" and have been recognised as a short term borrowing in these
financial statements.
· A $1,000,000 loan note remains payable to Kansai Ltd, which would
complete the acquisition of the Mid Migori Gold project. Payment of this
loan has been mutually agreed with Kansai to be delayed until a transaction or
exit of the project is completed.
19. Share Capital of the Company
The share capital of the Group and the Company is as follows:
Authorized, Issued and fully paid 2022 2021
£'000 £'000
1,216,708,801 (2020: 696,767,452) ordinary shares of £0.0001 each 126 122
2,371,116,172 deferred shares of £0.0009 each 2,134 2,134
6,033,861,125 A deferred shares of £0.000096 each 579 579
As at 30 June 2,839 2,835
Movement in ordinary shares Number Nominal
£'000
As at 30 June 2020 - ordinary shares of £0.0001 each 696,767,452 70
Issued 28 Sep 2020 at 0.8 pence per share (cash) 125,000,000 13
Issued 18 Nov 2020 at 0.7 pence per share (non-cash, Kansai settlement for 3,571,429 -
MMM)
Issued 14 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note 42,493,333 4
conversion)
Issued 18 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note 34,313,378 3
conversion)
Issued 22 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note 70,466,665 7
conversion)
Issued on 12 Feb 2021 at 1.05 pence per share (cash) 95,238,095 10
Issued on 22 Mar 2021 at 1.05 pence per share (non-cash, Kansai settlement) 101,550,000 10
Issued on 9 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) 980,392 -
Issued on 12 Apr 2021 at 1 pence per share (non-cash, SIP) 1,800,000 -
Issued on 12 Apr 2021 at 0.155 pence per share (non-cash, SIP) 13,768,254 1
Issued on 15 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) 1,838,235 -
Issued on 19 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) 980,392 -
Issued on 20 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) 980,392 -
Issued on 4 Jun 2021 at 0.75 pence per share (cash, exercise of warrants) 26,960,784 3
As at 30 June 2021 - ordinary shares of £0.0001 each 1,216,708,801 122
Issued on 28 Jan 2022 at 0.45 pence per share (cash - options exercise) 5,670,000 1
Issued on 3 Feb 2022 at 0.45 pence per share (cash - options exercise) 450,000 -
Issued on 13 May 2022 at 0.425 pence per share (non-cash, SIP) 5,038,253 -
Issued on 15 Jun 2022 at 0.3791 pence per share (non-cash, secured shares for 18,464,800 2
convertible facility)
Issued on 15 Jun 2022 at 0.39 pence per share (cash, placing) 9,815,384 1
As at 30 June 2022 - ordinary shares of £0.0001 each 1,256,147,238 126
Ordinary shares represent the Company's basic voting rights and reflect the
equity ownership of the Company. Ordinary shares carry one vote per share and
each share gives equal right to dividends. These shares also give right to the
distribution of the Company's assets in the event of winding-up or sale.
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.
Warrants
At 30 June 2022, the Company had 389,430,010 warrants in issue (2021:
380,197,618) with a weighted average exercise price of £0.0128 (2021:
£0.0015). Weighted average remaining life of the warrants, at 30 June 2022,
was 293 days (2021: 582 days). All the warrants were issued by the Group to
its shareholders in the capacity of shareholders and, therefore, are outside
of IFRS 2 scope.
Group and Company 2022 2021
number of warrants number of warrants
Outstanding at the beginning of the year 380,197,618 101,740,195
Granted during the period 9,232,392 323,322,618
Exercised during the period - (44,865,195)
Cancelled during the period - -
Lapsed during the period - -
Outstanding at the end of the year 389,430,010 380,197,618
During the year ended 30 June 2022, the Company had the following warrants to
subscribe for shares in issue:
Grant date Expiry date Warrant exercise price, £ Number of warrants
10 Dec 2019 19 Dec 2022 0.009 56,875,000
28 Sep 2020 27 Mar 2023 0.012 137,500,000
6 Nov 2020 6 Nov 2023 0.016 8,000,000
6 Nov 2020 6 Nov 2023 0.024 8,000,000
18 Nov 2020 18 May 2023 0.007 71,428,571
19 Mar 2021 18 Mar 2023 0.020 47,619,047
1 Mar 2021 18 Mar 2023 0.020 50,775,000
8 Jun 2022 16 Aug 25 0.005 9,232,392
Total warrants in issue at 30 June 2022 389,430,010
The aggregate fair value, related to the share warrants granted during the
reporting period, was £7,578 (2021: £1,195,797).
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.
Fair Value Through Other Comprehensive Income Financial Assets Revaluation
Reserve
The available for sale trade investments reserve represents the cumulative
revaluation gains and losses in respect of available for sale trade
investments.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative charge for options
granted, still outstanding and not exercised.
Warrant Reserve
The warrant reserve represents the cumulative charge for warrants 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 2022, the Company had outstanding options to subscribe for ordinary
shares as follows:
Options issued Options issued on Options issued on Total
13 January 2017 exercisable at 0.8p per share, expiring on 24 August 2020 at 0.2p per share, expiring on 24 August 2020 at 0.25p per share, expiring on
13 January 2023 19 August 2025 19 August 2025
Number
Number Number
Number
A R M Bell 12,000,000 5,500,000 5,500,000 23,000,000
S Kaintz 11,000,000 2,250,000 2,250,000 15,500,000
S Quinn 3,000,000 - - 3,000,000
Employees 3,000,000 2,750,000 2,750,000 8,500,000
Total 29,000,000 10,500,000 10,500,000 50,000,000
Company and Group
2022 2021
Number of Weighted Number of Weighted
options average options average
exercise exercise
price price
pence pence
Outstanding at the beginning of the year 63,320,000 0.46 48,320,000 0.70
Options issued in the year - - 21,000,000 0.225
Options exercised in the year (6,120,000) 0.45 - -
Options lapsed in the year (7,200,000) 0.45 (6,000,000) 0.80
Outstanding at the beginning of the year 50,000,000 1.41 63,320,000 0.46
Nil share options were granted by the Company in the reporting year (2021:
21,000,000). The weighted average fair value of each option granted during the
year was £nil (2021: £0.002). The exercise price of options, outstanding at
30 June 2022, ranged between £0.0008 and £0.025 (2021: £0.0020 and
£0.0045). Their weighted average contractual life was 1.63 years (2020: 2.41
years).
Share-based remuneration expense, related to the share options grant, is
included in the administration expenses line in the Consolidated Income
Statement in the amount of £nil (2021: £42,000).
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 ("Partnership 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 ("Free Shares").
The subscriptions remain free of taxation and national insurance if held for
five years.
All such shares are held by Share Incentive Plan Trustees and the ordinary
shares cannot be released to participants until five years after the date of
the award.
During the financial year, a total of 3,801,597 Partnership and Matching
Shares were awarded and 1,236,656 Free Shares (2021: 13,768,254 Partnership
and Matching Shares and 1,800,000 Free Shares) with a fair value of £0.00425
for the Partnership and the Matching Shares and £0.00425 for the Free Shares
(2021: £0.00155 for the Partnership and the Matching Shares and £0.01 for
the Free Shares), resulting in a share-based payment charge of £16,027 (2020:
£39,341), included in the administration expenses line in the Income
Statement.
22. Financial Instruments
22.1 Categories of Financial Instruments
The Group and the Company hold a number of financial instruments, including
bank deposits, short-term investments, loans and receivables, borrowings and
trade payables. The carrying amounts for each category of financial instrument
are as follows:
30 June Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Financial assets
Available for sale financial assets at fair value through OCI
Unquoted equity shares 736 174 736 174
Quoted equity shares - 1,581 - 604
Total available for sale financial assets at fair value through OCI 1,755 778
Financial assets FVTPL (Para warrants) - - - -
Total financial assets carried at fair value through profit and loss 736 - 736 -
Cash and cash equivalents 66 457 31 366
Loans and receivables
Non-current receivables 2,320 1,344 3,945 1,950
Other receivables - current 660 560 456 365
Total loans and receivables carried at amortised cost 2,980 1,904 4,401 2,315
Total financial assets 3,782 4,116 5,168 3,459
Total current financial assets 726 1,067 487 731
Total non-current financial assets 3,056 3,099 4,681 2,728
Financial liabilities
Short-term borrowings, including intra-group 1,042 969 2,912 1,106
Long-term borrowings 1,237 731 822 731
Trade and other payables, excluding accruals 1,149 954 1,029 803
Total current financial liabilities 3.428 2,654 4,763 2,640
Other Receivables and Trade Payables
Management assessed that fair values of 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.
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.
The carrying value of current financial liabilities in the Company is not
materially different from that of the Group.
22.2 Fair Values
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 Level 1 Level 2 Level 3 Total
30 June 2022
£'000 £'000 £'000 £'000
FVTOCI financial assets
- Unquoted equity shares - 736 - 736
- Quoted equity shares - - - -
FVTPL (Para warrants) - - - -
Company Level 1 Level 2 Level 3 Total
30 June 2022
£'000 £'000 £'000 £'000
FVTOCI financial assets
- Unquoted equity shares - 736 - 736
- Quoted equity shares - - - -
FVTPL (Para warrants) - - - -
Group Level 1 Level 2 Level 3 Total
30 June 2021
£'000 £'000 £'000 £'000
FVTOCI financial assets
- Unquoted equity shares - - 174 174
- Quoted equity shares 1,581 - - 1,581
FVTPL (Para warrants) - - - -
Company Level 1 Level 2 Level 3 Total
30 June 2021
£'000 £'000 £'000 £'000
FVTOCI financial assets
- Unquoted equity shares - - 174 174
- Quoted equity shares 604 - - 604
FVTPL (Para warrants) - - - -
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 for 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.
The consolidated Group does have a material credit risk exposure with Mid
Migori Mining Company Ltd, an associate of the Company. See note 1.5,
"Significant accounting judgements, estimates and assumptions" for further
details.
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 development and that controls over
expenditure are carefully managed.
Management intend to meet obligations as they become due through ongoing
revenue streams, 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 Group's transactions are carried out in a variety of currencies, including
Sterling, Australian Dollar, US Dollar, Kenyan and Shilling.
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 financial assets with FVTOCI.
These assets are denominated in the following currencies:
Group GBP AUD USD CAD Other Total
30 June 2022
£ £ £ £ £ £
Cash and cash equivalents 31 13 16 - 6 66
Amortised cost financial assets - Other receivables 125 8 332 - 360 825
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,320 - - 2,320
Trade and other payables, excluding accruals 77 26 166 876 4 1,149
Short-term borrowings 1,042 - - - - 1,042
Long term borrowings - 415 822 - - 1,237
Group GBP AUD USD CAD Other Total
30 June 2021
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 387 29 7 - 34 457
Amortised cost financial assets - Other receivables 254 1 144 - 161 560
FVTOCI financial assets 604 977 174 - - 1,755
Amortised costs financial assets - Non-current receivables - 3 1341 - - 1,344
Trade and other payables, excluding accruals 57 26 699 - 53 835
Short-term borrowings 969 - - - - 969
Company GBP AUD USD CAD Other Total
30 June 2022
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 31 - - - - 31
Amortised cost financial assets - Other receivables 1,750 - 331 - - 2,081
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,320 - - 2,320
Trade and other payables, excluding accruals 74 - 79 876 - 1,029
Short-term borrowings, including intra-group 2,912 - - - - 2,912
Long term borrowings - - 822 - - 822
Company GBP AUD USD CAD Other Total
30 June 2021
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 361 5 - - - 366
Amortised cost financial assets - Other receivables 204 - 161 - - 365
FVTOCI financial assets 604 - 174 - - 778
Amortised costs financial assets - Non-current receivables - - 1,341 - - 1,341
Trade and other payables, excluding accruals 57 - 693 - 53 803
Short-term borrowings, including intra-group 27 - - - - 27
Exposures to foreign exchange rates vary during the year, depending on the
volume and nature of overseas transactions.
23. Reconciliation of Liabilities Arising from Financing Activities and
Major Non-Cash Transactions
Group 30 June 2021 Cash flow loans received Cash flow principal re-payment Cash flow Non-cash flow Forex movement Non-cash flow -Conversion Non-cash flow Interest and arrangement fee accreted Non-cash flow 30 June 2022
Interest paid Introducers fee accrued
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from institutional investors 963 564 (963) (37) - - 37 13 577
Convertible notes - 241 - - - - 35 41 317
Other loans - 100 - - - - - - 100
Total 963 905 (963) (37) - - 72 54 994
Company 30 June 2021 Cash flow loans received Cash flow loans re-payment Cash flow Non-cash flow Forex movement Non-cash flow - Conversion Non-cash flow Interest accreted Non-cash flow arrangement fee accreted 30 June 2022
Interest paid
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from subsidiary RRR Coal 1,079 810 - - - - - - 1,889
Loan from institutional investors - 564 - - - - 13 - 577
Convertible notes - 241 - - - - 35 41 317
Other loans - 100 - - - - - - 100
Total 1,079 1,715 - - - - 48 41 2,883
Significant non-cash transactions from financing activities, in relation to
raising new capital, are disclosed in note 18.
24. Significant Agreements and Transactions
The following are the significant agreements and transactions recently
undertaken having an impact in the year under review. For the sake of
completeness and of clarity, some events after the reporting year may be
included here and in note 26.
Investment Disposals
During the year, the Group disposed of its entire holding in Power Metals
Resources plc, raising proceeds of £0.7m after transaction fees.
During the year, the Group disposed of its entire holding in Jupiter Mines
Ltd, raising proceeds of £1.9m after transaction fees. Proceeds from these
disposals were used in full settlement of loans payable to Riverfort/YA drawn
down in the prior year, totalling £962,758 as at 30 June 2021.
Financing
During the year, the Group entered into a convertible loan note facility with
Riverfort Global Opportunities Fund (RGO) for up to £1m, with an initial
principal drawdown of £385,000 before costs (£310,550 after costs).
Principal owing on the initial drawdown is convertible by the note holders at
the lower of 4.549 pence per share and the Volume Weighted Average Share Price
(VWASP) of the Company shares in the 5 trading days prior to notice of
conversion. As part of the transaction, the Company issued RGO with
18,464,800 ordinary shares as security against amounts owing, at a total value
of £70,000. The par value of these shares was remitted to the Company on
issue, with the remainder being recognised in these financial statements as an
offsetting receivable against the principal amounts owing at the reporting
date.
During the year, the Company entered into an agreement with Yew Tree Capital
for a loan of £250,000 before costs (£243,750 net of costs) at a coupon
interest rate of 8% pa. The entire principal owing on this loan was novated
into subscriptions to convertible loan notes following the reporting date.
See note 26 for further details.
During the year, the Company received £320,000 form institutional investors
as subscription prepayments against convertible loan notes issued after the
reporting date. As at the reporting date, these amounts have been recognised
as a current loan payable.
During the year, the Company entered into an agreement with Power Metal
Resources plc for the provision of a £100,000 working capital loan towards
expenses incurred on behalf of that company and the Company as shareholders in
New Ballarat Gold Corporation Plc, The intention of the parties is that where
such joint expenses do not arise or have not arisen within a reasonable time
frame, any outstanding balance will be settled by the issue of Company shares
on commercial terms to Power Metal Resources Plc. As of this date, no such
terms have been agreed.
The Company has agreed to defer payment of its outstanding US$1,000,000
promissory note to Kansai Limited.
During the year, 6,120,000 options previously issued to staff were exercised
at a price of 0.45 pence per share, yielding total subscription proceeds of
£27,540.
Elephant Oil & Gas
Elephant Oil is currently finalizing an IPO on the Nasdaq market. This is
expected to complete with an up to US$12m funding. The most recent Elephant
Oil pre-IPO funding has revalued the price per share to US$2.25 per share.
The current Form S1 filed with the SEC gives a listing price range of US$4.15
to US$5.15. Given the pricing and the pending IPO, the Company believes that
it would be prudent to hold this investment at the pre-IPO funding pricing of
US$2.25 per share pending the final listing, when the holding can be marked to
market.
Power Metal Resources Plc and Australian Joint Venture
On 21 September 2021, the Company announced that it had incorporated New
Ballarat Gold Corporation plc ("NBGC") in order for Red Rock and Power Metal
Resources to hold their interest in the Victoria Goldfields joint venture in
Australia. The Companies agreed to retain the same shareholdings as in the
previous JV structure, 50.1% Red Rock and 49.9% Power metal resources. Red
Rock Australasia was to become a 100% owned Australian subsidiary of New
Ballarat Gold Corporation. A further announcement on 7 December 2021 confirmed
that shares in the old JV, RRAL, had now been exchanged for shares in NBGC.
On 24 May 2022, the Company announced that three further exploration licenses
had been granted bring the project's footprint in the Victoria Goldfields to
over 1,800 sq km.
VUP Project - Democratic Republic of Congo
On 6 January 2022, the Company announced that it had obtained an order
Ordonnance No 437/BIL/12/2021 Portant Injonction de Payer (the "Payment
Order") from the Commercial Court in Lubumbashi instructing VUP SA, the
Company's partner in the joint venture, to pay US$2,505,000 as a principal
amount to Red Rock. It further indicated that an audience took place in
Lubumbashi at which the Company's claim for interest and damages
of US$11,000,000 was heard, with judgment was to be given within eight days.
Red Rock indicated that it continues to investigate additional remedies that
may be available to it in the Congo and elsewhere.
On 19 January 2022, the Company announced that on 14 January
2022 the Commercial Court of Lubumbashi issued an executory judgment
ordering VUP SA, the Company's partner in the Joint Venture, to
pay US$2,000,000 as damages, with costs. This follows the earlier judgment
for payment of a principal amount of US$2,505,000, representing 50.1% of the
payment already made by a third party to VUP SA.
Faso Greenstone Resources SARLU
On 6 January 2022, the Company announced that it had acquired two new
prospective exploration projects in the prolific Boromo and Banfora Greenstone
Belts of Burkina Faso. The assets were to be held by Faso Greenstone Resources
SARLU, a wholly owned subsidiary of Faso Minerals Ltd, which itself is wholly
owned by Red Rock.
Establishment of Lithium Subsidiary in Zimbabwe
On 31 March 2022, the Company announced that it had completed the creation of
African Lithium Resources Pvt Limited ("ALR"), which was established as a 75%
owned subsidiary in Zimbabwe with a local partner. ALR has acquired 51 ha of
lithium claims 29 km NW of Bikita in SE Zimbabwe at Tin Hill and was in the
process of transferring title. Consideration of US$25,000 had been paid with
a further US$10,000 retained by ALR until completion of the transfer. A new
125 ha application near Arcturus, a mining site 32km E of Harare in Zimbabwe
had also been approved for grant with a further application nearby in
process. A 107 ha application near Bikita had been made and another property
with high grades from our sampling has been identified for purchase. On 6
May 2022, the Company announced that a group of high net worth investors had
acquired a 10% early stage interest in African Lithium Resources Pvt Ltd for
consideration of US$100,000. The consideration of this sale would be applied
to the development of the ALR business, which included recent additions
including an application for 46 ha near Arcturus and an agreed acquisition of
net 25 ha of claims East of Bikita. The Company reported that work continued
on additional applications within and outside the registered area of interest
Kimono Cobalt Project - DRC
On 27 June 2022, the Company announced it has entered into a joint venture
agreement with the Société d'Investissement Minier Akon et Sodimico
S.A. ("Simaks") whereby the Company will acquire a 58% holding in the Kimono
Cobalt-Copper Project ("KCCP"), a cobalt project in Haut Katanga
Province of the DRC. Simaks is a joint venture company between Whitewater
LLC of Sharidan, Wyoming ("WhiteWater") and La Société de Développement
Industriel et Minier du Congo ("SODIMICO"), which currently owns the 20
carrés (17 sq km) of mining licence PE 102 containing the KCCP. SODIMICO is
a parastatal mining company of the DRC. White Waterfall LLC is a private
equity fund controlled by the American-Senegalese businessman and musician Mr
Aliaune Thiam. Red Rock indicated that it had currently paid US$50,000 for
58% of the project, with a further US$25,000 due per quarter until a total of
US$400,000 had been paid. The Company further indicated that an
acceleration of payments to US$100,000 per quarter or a temporary suspension
of payments was provided for in the executed agreement depending on certain
eventualities involving liquidity events at Red Rock as well as an ongoing
license extension and restructuring of the license block holding
structure.
25. Related Party Transactions
· Power Metal Resources Plc (POW) are the Company's partner and
holder of 49.9% in the Company's 50.1% owned subsidiary Red Rock Australasia
Pty Ltd ("RRAL"). During the year, the Company entered into an agreement
with POW for the provision of a £100,000 working capital loan to the
Company. See note 24 for further details.
· In the prior year, costs incurred by the Company on behalf of
Power Metal Resources Plc were £76,422 (2022: £nil) in relation to shared
costs paid on behalf of RRAL during the year. Of this, £6,000 was
outstanding at 30 June 2021 (2022: £nil).
· Related party receivables and payables are disclosed in notes
17 and 18.
· The Company held nil shares (nil%) in Power Metal Resources Plc
as at 30 June 2022 (2021: 25,000,000 (2.18%)).
· The direct and beneficial interests of the Board in the shares
of the Company as at 30 June 2022 and at 30 June 2021 are shown in the
Director's Report.
· The key management personnel are the Directors and their
remuneration is disclosed within note 9.
26. Significant Events After the Reporting Period
On 6 July 2022, the Group announced that it had entered into an agreement for
the acquisition of EL 5535, a 9 block (288 net hectare) exploration licence
south-west of Ballarat containing the historic Berringa Mine from Balmaine
Gold Pty Ltd. Under the terms of the agreement Balmaine was to transfer
license EL 5535 to RRAL for an initial payment of A$20,000. Pending
successful renewal of the license for five additional years, RRAL has agreed
to pay a further A$130,000 to the vendor. A further payment of A$350,000 was
to be made upon the public release of a mineral resource estimate of no less
than 100,000 of gold in the inferred category as defined by the JORC code.
Finally a net smelter royalty of 1.5% is payable to the vendor up to a maximum
total of A$1,500,000. Completion of the acquisition was announced on 22
September 2022.
On 25 July 2022, the Group announced the issuance of £623,000 in new
convertible loan notes to a variety of institutional investors. Of the
principal amount, £256,000 was the novation of amounts payable to Yew Tree
Capital at the reporting date and £367,000 represented new subscriptions to
notes, of which £320,000 of subscription proceeds had been received as
prepaid funds at the reporting date. The notes have a denomination of
£1,000 each, are convertible at 0.6 pence per share and each note holder was
granted 83,333 warrants per note to subscribe to new ordinary shares at 0.8
pence per share. The notes attract a coupon of 12% pa, mature 12 months from
issuance and may be convertible at any point prior to maturity. On 19 August
2022, the Group announced the further issuance of £50,000 in convertible loan
notes, on the same terms as above.
On 21 September 2022, the Group announced the placing of 40,000,000 new
ordinary shares to institutional investors at 0.4 pence per share, raising
gross proceeds of £160,000 before costs. Additionally, 20,000,000 warrants
to subscribe to ordinary shares at 0.8 pence each for a period of 24 months
were issued to placees. The Company further announced that it had appointed
OvalX as joint broker to the Company.
On 15 December 2022, the Company announced a fundraising of US$500,000 by way
of a subscription of new ordinary shares with an ascribed value of
US$548,000. Following this subscription, the investor may make an additional
advance of US$1,000,000 by way of a further subscription for shares to an
ascribed value of US$1,098,000. Each subscription under the agreement will
be made by way of the subscriber prepaying for shares to be issued at the
subscriber's request, in one or several tranches. These subscriptions must
occur within twenty-four months of the date of the placing at the subscription
price, initially set at £0.007 per share, then after the first month,
adjusting to the average of five VWAPs selected by the investor during a
twenty-day period prior to the date of the subscriber's formal notice, but
subject to a floor price of £0.002 per share.
The Company will also have the right (but no obligation) to forego issuing
shares in relation to the subscriber's request for issuance and instead opt to
repay the applicable subscription amount by making a payment to the subscriber
equal to the market value of the shares that would have otherwise been
issued. Concurrent with the subscription, the Company will issue 28,000,000
of the subscription shares to the subscriber at par value, reducing the amount
to be ultimately issued under the agreement. In lieu of applying these shares
towards the aggregate number of subscription shares to be issued, the
subscriber may make an additional cash payment to the Company. The Company
will further issue to the subscriber 17,000,000 shares in satisfaction of an
arrangement fee.
27. Commitments
As at 30 June 2022, the Company had entered into the following commitments:
· Exploration commitments: On-going exploration expenditure is
required to maintain title to the Group mineral exploration permits. 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.
· On 26 June 2015, the Company announced an agreement with Kansai
Mining Corporation Ltd, pursuant to which Red Rock's farm in agreement was
replaced by agreements, under which any interest in the Migori Gold Project or
the other assets of Mid Migori Mines, that may be retained or granted to Mid
Migori Mines or Red Rock, would be shared 75% to Red Rock and 25% to Kansai.
Kansai's interest was to be carried up the point of an Indicated Mineral
Resource of 2m oz of gold. Red Rock was to have full management rights of
the operations and of the conduct of legal proceedings on behalf of both Mid
Migori Mines and itself. On 15 June 2018, Red Rock announced a revision to
this agreement. The effect of the revision is that Kansai exchanged its 25%
carried interest under the 2015 agreement for a US$ 50,000 payment, leaving
Red Rock with a 100% interest. In the event of a renewal or reissue of
licenses, covering the relevant assets, the Company will within three months
make further payments, subject to such renewal or reissue not being on unduly
onerous terms, as follows: (1) US$ 2.5 million payable in cash; (2) a US$ 1
million promissory note, payable 15 months after issue; and (3) £0.500
million of warrants into Red Rock shares at a price 20% above their average
closing price on the three trading days prior to issue. This agreement was
further amended on 21 December 2020 through agreement with Kansai to pay US$ 1
million, of which US$ 0.5 million has been paid on 24 December 2020, and to
defer payment of US$ 1.5 million until 29 January 2021, at which time the
balance could be paid in cash or shares at Kansai's discretion, with any
shares to be issued at the closing price of the Company's shares on the 21 of
December 2021. As at the reporting date, the amount of US$1,000,000 remains
payable, with agreement having been arrived at between the parties that
payment shall be deferred until receipt by the Company of any funds awarded by
the court of the DRC.
28. Control
There is considered to be no controlling party.
29. 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 2022
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
2022 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 2022 will be delivered to the Registrar of
Companies by 31 December 2022.
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