REG - Red Rock Resources - Final Results
20/12/2023 07:00
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RNS Number : 3787X Red Rock Resources plc 20 December 2023
Red Rock Resources Plc
("Red Rock" or the "Company")
Final Audited Results for the Year Ended 30 June 2023
20 December 2023
A copy of the Company's annual report and financial statements for 2023,
extracts from which are set out below, is available on the Company's
website www.rrrplc.com (http://www.rrrplc.com/) .
Chairman's Statement
Dear Shareholders,
We present the Report and Accounts of Red Rock Resources Plc for the year
ending 30th June 2023. This report also gives us an opportunity to present a
broader review of progress up to the date of publication, and to give an
assessment of the year ahead.
Activity During the Year
We conducted two successful drill programmes on a number of our gold prospects
during the course of the year. The first was at the old Berringa Mine in the
Australian state of Victoria, which we acquired in the course of the year, and
the second was at the recently acquired Bilbale license in Burkina Faso.
At Berringa, a six-hole diamond drill programme tested for down dip and along
strike extensions of the known mineralisation. This was a well-designed
programme, with all six holes encountering visible gold, and hole two
intersecting a 5.2m interval with 2.38 g/t gold, including 0.2m at 34.76 g/t.
Hole six encountered 3.5m at 5.43 g/t at 133m (including 0.7m at 23.9 g/t),
4.9m at 1.09 g/t at 140m, and 3.9m at 1.62 g/t at 153.6m (including 0.7m at
7.49 g/t), with the hole ending in mineralisation. The team's understanding of
structure was confirmed, and we developed new sampling protocols appropriate
for the type of mineralisation. We now understand that in this environment any
result over 0.1 g/t shows we are in the mineralised area, and accordingly
should be followed up.
At Bilbale, a seven-hole reverse circulation drill programme across two
locations in this target-rich license achieved very promising results from the
four holes at Djikologo with mineralisation also encountered in two of the
three holes drilled at the Bilbale Artisanal Area. At Djikologo, the third
drill hole encountered 20m at 3.19 g/t from 22m depth (including 3m at 8.17
g/t) as well as 8m at 2.28 g/tat 62m, and 2m at 1.25 g/t from 118m depth to
end of hole. This was the first drill campaign carried out on this property
and we now assess the requirement for further geochemistry and mapping prior
to the next drill programme.
Aside from this and other exploration work, we obtained the grant of some of
our remaining license applications in Victoria, Australia, as well as our
first license in Ivory Coast, and we applied for a new large copper/base metal
license in South Australia.
Environmental Impact Assessments were carried out on Lithium licenses in
Zimbabwe, as part of the mining license process, and in Kenya as part of the
license renewal process.
DRC Arbitration
We looked forward, a year ago, to obtaining an arbitration award in the
Democratic Republic of Congo, in respect of a 50.1% interest in a
copper-cobalt project sold without our knowledge and consent. $5m had been
paid by the purported buyer, and for our share of this, plus costs and
damages, we had sued our minority partner, and obtained a $2.5m court judgment
in our favour.
Another $15m had not yet been paid by the purported buyer, and for our share
of this we went to arbitration. We expect a favourable arbitration award, but
have awaited the arbitration result for nearly 18 months, a period which has
not been without incident.
This was much longer than expected, but justice is not always swift.
The assets were sold on to a final buyer by the purported buyer at the same
time as it acquired them, and for amounts larger by an order of magnitude. We
were thus deprived of a very great value that we believe should have been
ours. We have been patient and methodical in pursuing the amounts already
awarded, and if we have not sought publicity for our case, it was because in
our judgment quiet persistence was the approach that would best serve the
interest of shareholders at this stage.
It is right that at this point I pay tribute to our colleagues in the DRC:
three men and one woman of great integrity who showed great loyalty to us,
variously their partner or client, and steadiness under pressure. The
Government has also showed at times a concern that investors' interests should
not be overridden, and the Embassy has indicated its concern, met us, and kept
a watching brief.
We continue to remain confident of an early favourable result. An earlier
draft of this report was written on the assumption this had already happened,
but with the Presidential Election now only days away, everything has been put
on hold until after polling day on 20(th) December and after the preliminary
results are announced most likely 31(st) December, and then final results are
released, which we assume to be early January.
Elephant Oil Listing
We also looked forward last year to the listing of Elephant Oil, in which we
have a small but longstanding shareholding, on the NASDAQ market 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 still expect Elephant Oil to be listed
after updating its quarterly results with the SEC early in 2024 at a listing
price of between US$4.15 and US$5.15 per share, indicating our holding of
397,874 shares may be valued 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.
Current and Future Developments
We have secured a lithium mining license and have a stockpile of material in
Zimbabwe, and made our first exports during Q4 2023. Sales of initial
exports will occur upon arrival in the destination port, and further
announcements will be made as these occur. Additional license areas have
also been granted. The lithium price has declined substantially in the last
year and exports from Zimbabwe have become strictly controlled and difficult
for most producers and this provides a good environment for us to tidy up some
other licenses and conclude the grant or transfer processes in those cases and
look at other ways to optimise our long-term position.
Until the rainy season ends in the Spring in Zimbabwe, our plan is to continue
to export from stockpile and avoid extensive civil works in muddy and rainy
conditions. We are currently funding our product pipeline from mine to bonded
warehouse in the destination port. The working capital requirement of funding
a 2-3 month pipeline before getting paid for product means that we are
starting on a modest scale, with 200 tonnes of ore. Once we have established
that the pipeline is working efficiently, and that customers trust our
product, we shall aim to sell product before arrival at port and so shorten
our payment cycle and reduce our working capital requirements.
Potentially significant volumes can be exported and sold by us, but by the
second quarter we will have a better idea of how this business is likely to
develop, with continuing developments in Government thinking likely to require
a flexible and creative approach, but also possibly offering new opportunities
for the nimble. After careful analysis, we will not be putting up a flotation
plant at this time.
In Burkina Faso we are starting to map and sample key areas on a grid, and on
a larger grid which will cover the whole license. We will later auger drill
the alluvial/colluvial areas, at the same time as continuing hard rock
exploration. We intend to start trial mining of gold soon, and then to
accelerate work to get semi-mechanised alluvial mining permitted.
We, therefore, have a clear strategy for sales of lithium and gold from these
two countries through 2024. In Kenya, any scaled up activity awaits gold
license renewal, after which we are likely to seek partners to accelerate the
project's development. A similar approach may be adopted for at least one of
our gold licences in Ivory Coast.
Exploration at our 50.1% subsidiary, Red Rock Australasia Pty Ltd is focussed
on getting to the Indicated Resource stage at Berringa, after which we can be
on a 12-18 month environmental and licensing pathway to mining. Now that we
have opened an old adit at Berringa, and taken samples which will go off for
testing, we will investigate the safety of accessing level 2 of the old mine
via the adit. A positive answer would probably result in an Indicated Resource
being obtainable at very low cost; otherwise some drilling from surface will
be required. Ajax, our other key project/old mine, is now permitted but a
decision on drill plans will be made later in the year, depending on
availability of internal or external finance and other priorities.
In Australia as in Africa, our focus is now on the fastest pathway to positive
cash flow for each project. With a gold Indicated Resource in Australia we
could process a mining application and an environmental study in parallel,
with a plan to process material through a nearby facility eliminating much of
the construction phase.
We continue to expect an early and positive resolution in the DRC, where our
arbitration claim is for $7.5m, and we have a court judgment against our
former partner for $2.5m. The former of these we could expect to be paid soon
after award. If Elephant Oil can achieve a Q1 listing, this could
progressively release funds to us over the course of the year although we
expect the bulk of the holding to be subject to a six month hold period after
listing.
We expect on renewal of Kenya licenses to be able to negotiate agreements
for joint venture, farm in, sale or development as seems most appropriate for
each exploration area. The aim will be to bring forward as far as possible the
date on which we obtain value, first, for our receivables, and second, put
ourselves in a position to gain from future production, whether by royalty or
by shareholding.
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.
During 2024, we expect a resumption of royalty payments from the Colombia gold
royalty, as Soma Gold, the operator of our historic El Limon plant and mine,
has completed the upgrade of the plant to 275 tons per day, and is projecting
production through this facility of 8,000 oz of gold over the course of the
year.
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
2023 was £2,953m (2022: loss of £2,800m). This increased loss reflected
impairment charges at our smaller exploration assets in the DRC as well as
higher finance costs and insurance and administrative expenses over the course
of the year. An amount of £1.1m is included in debtors in respect of
amounts recoverable from our DRC arbitration being a reclassification of
amounts previously capitalised in respect of expenditure on the VUP joint
venture project.
Conclusion
We expect to generate cash from sales of assets and from court and arbitration
awards over the next few months.
However, we are now in a position to start selling product, initially from
Zimbabwe lithium, and a key task is to ensure that this item increases during
the current year of account to the point where our sales and profits
expectations provide tangible support for our value.
If proceeds are not received from the DRC arbitration early in the New Year
then the Company will implement some combination of cost reduction, joint
venture or farm ins, asset disposals, and financing, in order to focus on
those activities that can lead to early cash flow.
Andrew Bell
Chairman and CEO
18 December 2023
Results and Dividends
The Group made a post-tax loss of £2.8 million (2022: loss of £2.8 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
18 December 2023.
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
Bob Roberts 0203
8696081
Joint Broker Clear Capital Corporate Broking
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU, which is part of domestic UK law pursuant to the
Market Abuse (Amendment) (EU Exit) regulations (SI 2019/310) and is disclosed
in accordance with the Company's obligations under Article 17.
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
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') and its subsidiaries (the 'group') for the year ended 30 June 2023
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 Company Statement of Financial Position, the
Company Statement of Changes in Equity, the 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 Company's affairs as at 30 June 2023 and of the Group's loss for the year
then ended;
· 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 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 Directors anticipate having to raise funds within the going concern
period, being 12 months from the date of approval of these financial
statements, in order to meet its liabilities as they fall due, including
repayment of loans due within 12 months from the year end. As stated in note
1.2, these events or conditions, along with the other matters as set forth in
that note, indicate that a material uncertainty exists that may cast
significant doubt on the Group's and 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:
· reviewing the cash flow forecasts for the ensuing twelve months
from the date of approval of these financial statements and critically
challenging the key inputs and assumptions used. The forecasts demonstrated
that, after the removal of expected cash inflows (including asset sales,
estimated settlement amounts in respect of DRC litigation, and anticipated
placings), the timing and amounts of which are uncertain, the Group and
Company will require additional funding in order to meet their liabilities as
and when they fall due, and to fund planned exploration activities;
· reviewing management's going concern memorandum and holding
discussions with management regarding future plans and availability of
funding;
· reviewing the adequacy and completeness of disclosures in the
group financial statements; and
· reviewing post balance sheet events as they relate to the
group's ability to raise funds and restructure debt.
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. We have therefore set Group materiality
at 1.5% of gross assets (2022: 1% of gross assets). Materiality of the Company
was based upon 3% of net assets, capped below group materiality (2022: 1% of
gross assets). We considered this an appropriate benchmark as the Company has
significant assets and liabilities on its statement of financial position.
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 Company materiality for the financial statements
as a whole to be £287,000 and £285,000 (2022: £187,000 and £168,300),
respectively. Performance materiality was set at 60% of overall materiality
for the Group and Company at £172,200 and £171,000 (2021: £112,200 and
£100,980), respectively, whilst the threshold for reporting unadjusted
differences to those charged with governance was set at £14,350 for the Group
and £14,250 (2021: £9,350 and £8,415) for the Company. We also agreed to
report differences below that threshold that, in our view, warranted reporting
on qualitative grounds.
Materiality for other significant components of the group ranged from £8,100
to £8,700 calculated as a percentage of gross assets.
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, including the
recoverability of exploration assets and non-current receivables, 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 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:
£13,611,000 at 30 June 2023 (2022: £13,265,000).
· Obtaining and challenging management's impairment review,
There is a risk that this amount is impaired and that the capitalised amounts together with evaluating announcements and progress on the license areas
do not meet the recognition criteria as adopted by the Group, or as specified during the year and post-year end, including exploration results and mineral
within IFRS 6. resource estimates;
· Holding discussions with management surrounding progress at the
various projects and future plans, including rationale for any impairments
The capitalisation of the costs and determination of the recoverability of recorded;
these assets are subject to a high degree of management estimation and
judgement and therefore there is a risk this balance is materially misstated. · Obtaining copies of the exploration licenses to ensure good title
and ensure, where applicable, that any specific terms or conditions therein
have been adequately met;
Due to the level of judgement required to be exercised by management, and the · Performing an independent assessment for indicators of impairment
magnitude of the balance, we have considered this matter to be a key audit in accordance with the requirements of IFRS 6;
matter.
· Substantive testing of a sample of additions in the period to
ensure they meet the eligibility criteria under IFRS 6 and are capitalised in
accordance with the Group's accounting policy; and
· Assessing the appropriateness of the disclosures made in respect
of intangible assets, including any judgements and sources of estimation.
On the basis of work performed, we are satisfied that, following the
impairments recorded by management as at 30 June 2023, exploration assets are
not materially misstated.
We note that the licenses PL 2018-0202 and PL 2018-0203 held by Mid Migori
Mining Company Ltd in respect of the Migori gold project, with capitalised
exploration assets of £12.9m as at 30 June 2023, expired post-year end in
August 2023. Relevant renewals have been submitted and this process remains
ongoing. The Directors have confirmed they do not have any reason to believe
the renewals will not be forthcoming. If the licenses are not renewed, this
may result in an impairment to these assets.
Recoverability of non-current receivables for MFP sales proceeds (see notes
1.5 and 16)
Non-current receivables for MFP sales proceeds have a carrying value in the Our work in this area included the following:
Financial Statements of £1,410,000 as at 30 June 2023 (2022: £1,224,000).
· Obtaining management's workings supporting the valuation of the MFP
Non-current assets represent amounts expected to be receivable through a net sales 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 activities
cash flows expected to be received in respect of the royalty proceeds. at the mine;
· Reviewing all key inputs and assumptions used within the net
present value model 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 to suggest the balance is not recoverable.
financially significant and management are required to use their judgement and
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:
· Estimated 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. We note that there have been delays to the previously anticipated
production schedule due to priority being given to the expansion of production
and resource at another site. Management anticipate significant growth rates
in production from Q1 2024 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
recoverability of the balance is dependent on the ability of MFP to fully
realise the potential of the site through achieving a minimum level of
production which in turn will enable a potential return through the net
smelter royalty agreement.
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 Group and Company 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 the Company
and their 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 Company,
or returns adequate for our audit have not been received from branches not
visited by us; or
· the 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 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 Company financial statements, the directors are
responsible for assessing the Group and the 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 the 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 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 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 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 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.
Imogen Massey (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
18 December 2023
Consolidated Statement of Financial Position
as at 30 June 2023
Notes 30 June 30 June
2023 2022
£'000 £'000
ASSETS
Non-current assets
Investments in associates and joint ventures 12 1,030 1,030
Exploration assets 13 13,358 13,265
Mineral tenements 13 698 511
Financial instruments - fair value through other comprehensive income (FVTOCI) 14 736 736
PPE 18 -
Non-current receivables 16 2,506 2,320
Total non-current assets 18,346 17,862
Current assets
Cash and cash equivalents 15 155 66
Other receivables 17 670 824
Total current assets 825 890
TOTAL ASSETS 19,171 18,752
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent
Called up share capital 19 2,960 2,839
Share premium account 32,785 31,077
Other reserves 20 1,751 1,434
Retained earnings (22,477) (19,812)
Total equity attributable to owners of the Parent 15,019 15,538
Non-controlling interest (687) (420)
Total equity 14,332 15,118
LIABILITIES
Non-current liabilities
Trade and other payables 18 684 415
Borrowings 18 756 822
Total non-current liabilities 1,440 1,237
Current liabilities
Trade and other payables 18 1,737 1,355
Short-term borrowings 18 1,662 1,042
Total current liabilities 3,399 2,397
TOTAL EQUITY AND LIABILITIES 19,171 18,752
These Financial Statements were approved by the Board of Directors and
authorised for issue on 18 December 2023 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 2023
Continuing operations Notes Year to Year to
30 June 30 June
2023 2022
£'000 £'000
Administrative expenses 4 (1,380) (1,225)
Exploration expenses (318) (256)
Project development 6 (250) (676)
Other project costs 6 (159) (211)
Impairment of E&E assets 13 (259) -
Share based payments (213) (16)
Currency gains 11 (183)
Other gains 5 228 52
Dividend income 5 - -
Finance costs 5 (613) (285)
Profit/(loss) for the year before taxation (2,953) (2,800)
Tax 7 - -
Profit/(loss) for the year (2,953) (2,800)
Profit/(loss) for the year attributable to:
Equity holders of the Parent (2,665) (2,615)
Non-controlling interest (288) (185)
(2,953) (2,800)
Earnings per share attributable to owners of the Parent:
Basic loss per share, pence 10 (0.19) (0.23)
Diluted loss per share, pence 10 (0.19) (0.23)
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
30 June 30 June
2023 2022
£'000 £'000
Profit/(loss) for the year (2,953) (2,800)
Other comprehensive income
Items that will not be reclassified to profit or loss - 418
(Deficit) / surplus on revaluation of FVTOCI financial assets
Losses and transfer of FVTOCI financial assets on disposal - (442)
Items that may be reclassified subsequently to profit or loss 165 (177)
Unrealised foreign currency (loss) / gain arising upon retranslation of
foreign operations
Total other comprehensive income net of tax for the year 165 (201)
Total comprehensive income, net of tax for the year (2,788) (3,001)
Total comprehensive income net of tax attributable to:
Owners of the Parent (2,521) (2,816)
Non-controlling interest (267) (185)
(2,788) (3,001)
The accompanying notes form an integral part of these Financial Statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
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 2021 2,835 30,924 (18,741) 1,627 16,645 (199) 16,446
Changes in equity for 2021
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
Losses on sale of FVTOCI taken directly to reserves - - 1,544 - 1,544 - 1,544
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - (177) (177) (36) (213)
foreign operations
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
Changes in equity for 2023
Loss for the year - - (2,665) - (2,665) (288) (2,953)
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals - - - - - - -
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets - - - - - - -
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - 144 144 21 165
foreign operations
Losses on sale of FVTOCI taken directly to reserves
Total comprehensive income for the year - - (2,665) 144 (2,521) (267) (2,788)
Transactions with owners
Issue of shares 121 1,708 - - 1,829 - 1,829
Issue of warrants - - - 173 173 - 173
Total transactions with owners 121 1,708 - 173 2,002 - 2,002
As at 30 June 2023 2,960 32,785 (22,477) 1,751 15,019 (687) 14,332
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 2021 426 158 230 813 1,627
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals (442) - - - (442)
Transfer of FVTOCI reserve relating to impaired 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 expense for the year (24) (177) - 8 (193)
As at 30 June 2022 402 (19) 230 821 1,434
Changes in equity for 2023
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals - - - - -
Transfer of FVTOCI reserve relating to revalued FVTOCI financial assets - - - - -
Unrealised foreign currency gains on translation of foreign operations - 144 - - 144
Warrants issued in the year - - - 173 173
Total comprehensive income or the year - 144 - 173 317
As at 30 June 2023 402 125 230 994 1,751
See note 20 for a description of each reserve included above.
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Notes Year to Year to
30 June 30 June
2023 2022
£'000 £'000
Cash flows from operating activities
Profit/(loss) before tax (2,953) (2,800)
Increase in receivables (239) (140)
Increase in payables 612 432
Finance costs 5 613 285
Share-based payments 21 213 8
Foreign exchange gain/loss (10) 179
Equity settled transactions - 90
Impairment of E&E assets 13 253 -
Net cash outflow from operations (1,511) (1,946)
Corporation tax reclaimed/(paid) - -
Net cash used in operations (1,511) (1,946)
Cash flows from investing activities
Proceeds from sale of FVTOCI financial assets 14 - 2,539
Purchase of PPE (18) -
Payments to acquire exploration asset (139) (150)
Payments to increase interest in associate - (141)
Payments for tenements (187) (387)
Net cash (outflow) / inflow from investing activities (344) 1,861
Cash flows from financing activities
Proceeds from issue of shares 19 1,112 68
Interest paid 23 - (250)
Proceeds from new borrowings 23 1,237 940
Repayment of borrowings - Non current 23 (38) -
Repayments of borrowings 23 (494) (1,035)
Net cash inflow / (outflow) from financing activities 1,817 (277)
Net (decrease)/increase in cash and cash equivalents (38) (362)
Cash and cash equivalents at the beginning of period 66 457
Exchange (losses)/gains on cash and cash equivalents 127 (29)
Cash and cash equivalents at end of period 15 155 66
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
Red Rock Resources Plc (Registration Number: 05225394) as at 30 June 2023
Notes 30 June 30 June
2023 2022
£'000 £'000
ASSETS
Non-current assets
Investments in subsidiaries 11 76 76
Investments in associates and joint ventures 12 1,111 1,111
Financial instruments - fair value through other comprehensive income (FVTOCI) 14 736 736
Exploration property 13 12,948 12,948
Exploration assets 13 - 258
PPE 1
Non-current receivables 16 4,978 3,945
Total non-current assets 19,850 19,074
Current assets
Cash and cash equivalents 15 149 31
Loans and other receivables 17 601 456
Total current assets 750 487
TOTAL ASSETS 20,600 19,561
EQUITY AND LIABILITIES
Called up share capital 19 2,961 2,839
Share premium account 32,785 31,078
Other reserves 1,676 1,502
Retained earnings (22,798) (20,827)
Total equity 14,624 14,592
LIABILITIES
Non-current liabilities
Borrowings 18 756 822
Total non-current liabilities 756 822
Current liabilities
Trade and other payables 18 1,602 1,235
Intra-group borrowings 18 2,115 1,890
Short-term external borrowings 18 1,503 1,022
Total current liabilities 5,220 4,147
TOTAL EQUITY AND LIABILITIES 20,600 19,561
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 £1.971 million (2022: loss of £1.907
million). The Company's total comprehensive loss for the financial year was
£1.971 million (2022: loss of £1.455 million).
These Financial Statements were approved by the Board of Directors and
authorised for issue on 18 December 2023 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 2023
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 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 impaired 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
Changes in equity for 2023
Loss for the year - - (1,971) - (1,971)
Other comprehensive income for the year
Total comprehensive income for the year - - (1,971) - (1,971)
Transactions with owners
Issue of shares 122 1,707 - - 1,829
Issue of warrants - - - 174 174
Total transactions with owners 122 1,707 - 174 2,003
As at 30 June 2023 2,961 32,785 (22,798) 1,676 14,624
FVTOCI financial assets revaluation Total
reserve Share-based other
£'000 payment Warrant reserves
reserve reserve £'000
£'000 £'000
As at 1 July 2021 - 230 813 1,043
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals 518 - - 518
Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets (66) - - (66)
Issue of warrants - - 7 7
Total Other comprehensive income 452 - 7 459
As at 30 June 2022 452 230 820 1,502
Changes in equity for 2023
Other comprehensive income for the year
Issue of warrants - - 174 174
Total Other comprehensive income - - 174 174
As at 30 June 2023 452 230 994 1,676
See note 20 for a description of each reserve included above.
Company Statement of Cash Flows
for the year ended 30 June 2023
30 June 30 June
2023 2022
£'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation (1,971) (1,907)
Increase in receivables (1,178) (990)
Increase in payables 644 859
Finance costs (Note 5) 613 90
Share-based payments (Note 21) 214 7
Equity settled transactions - 90
Change in value in FVTPL financial assets - -
Foreign exchange loss / (gain) (83) 235
Impairment of E&E assets (Note 13) 259 -
Net cash outflow from operations (1,503) (1,616)
Corporation tax - -
Net cash used in operations (1,503) (1,616)
Cash flows from investing activities
Purchase of PPE (1) -
Proceeds from sale of FVTOCI financial assets - 577
Investment in Joint venture projects - (141)
Investment in subsidiaries - (37)
Payments to acquire exploration asset - (91)
Net cash outflow from investing activities (1) 308
Cash flows from financing activities
Proceeds from issue of shares 1,112 68
Proceeds from new borrowings (Note 23) 1,078 940
Repayment of borrowings - Non current (Note 23) (38)
Repayment of borrowings (Note 23) (494) (35)
Net cash inflow from financing activities 1,659 973
Net increase/(decrease) in cash and cash equivalents 155 (335)
Cash and cash equivalents at the beginning of period 31 366
Exchange (losses)/gains on cash and cash equivalents (37) -
Cash and cash equivalents at end of period (Note 15) 149 31
The accompanying notes and accounting policies form an integral part of these
Financial Statements.
Notes to the Financial Statements
for the year ended 30 June 2023
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 2023, the Group had cash and cash
equivalents of £0.155 million and £2.418 million of borrowings and, as at 13
December 2023, the cash balance was c£11,000. The Directors anticipate having
to raise additional funding over the course of the current 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 £1.5 million over the course of the year and estimated
settlement of DRC litigation of up to £6.77 million (gross and before
deductions and expenses and subject to repatriation to the UK), 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. However, as the amounts and timings
of these sources of funding are currently uncertain, a material uncertainty
exists which may result in the need to raise additional equity or debt funding
based on conditions in existence at the appropriate time. In particular, if
proceeds are not received from the DRC arbitration early in the New Year then,
then in the absence of adequate assets sales, another fundraising would likely
be required.
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:
· Amendments to IAS 1: Classifications of current or non-current
liabilities (effective 1 January 2024);
· 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 1: Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting Policies (effective 1
January 2023).
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 2023, 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 also capitalised. 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. For assets that move into production any intangible E&E assets
values are amortised on a unit production basis over the period of production.
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 currencies of the major 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 costs is dependent upon successful development
and commercial exploitation of each area of interest and will not be amortised
until the existence (or otherwise) of commercial reserves in the area of
interest has been determined. 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 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 at Amortised Cost
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
2023, 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 £5 (2022: increase the profit by £29).
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.
Recoverability of VUP Litigation Related Receivable
The directors have reviewed progress as regards the outstanding litigation
relating to the VUP project with a view to assessing the recoverability of the
amounts held within the balance sheet totalling £1,096,256. The directors
consider that the carrying value of this receivables at the current balance
sheet date is more than justified given the potential quantum and likelihood
of a favourable outcome. Whilst the directors believe that this balance will
become realised in the near term, as there remains a level of uncertainty over
the timing of such an event, the directors have determined it appropriate to
carry this balance as non-current so as to present the liquidity position of
the Group on the most prudent basis. See note 16 for details.
Recoverability of Capitalised Exploration and Evaluation Costs
Kenya
After the year end the Kenyan exploration licences came due for renewal, with
a 50% relinquishment obligation. Applications for renewal have now been made
and the directors do not anticipate any issues associated with processing of
these renewal applications. The Directors believe that the Migori gold project
remains amongst the highest quality of comparable Kenyan projects, with
conservative estimations of 844,000 oz gold Resource (formerly calculated at
1.2m oz), further supported by the strength of the gold price in local
currency. The Directors therefore believe that it is prudent to retain the
current carrying value of the project in these financial statements.
Australia
The Company has assembled a portfolio of Australian properties comprising a
broad range from exploration targets to near term appraisal (and hence
resource potential targets), all of which remain largely undeveloped by modern
standards of exploration. Two key former mines, Ajax and the recently acquired
Berringa, have been the focus of recent exploration efforts, including a
drilling campaign at Berringa. A high-grade target with a range reaching 1.2m
oz and a most likely 500k oz plus has been identified by this work at
Berringa. The Company believes both mining areas can be brought into
production, with additional value catalysts being presented by proximity to
third party processing plants, currently operating sub capacity. The JV
Partners expect, subject to market conditions, to accelerate preparations for
the listing of the JV company NBGC, including the intended completion of a
Pre-IPO financing round for NBGC in 2024. The Company has therefore deemed the
carrying value of these assets to remain recoverable, given high asset
quality, low "pegging" costs and the proximity to underutilised
infrastructure.
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$1,957 (2022: US$1,750);
· Discount rate - 10% (2022: 10%); and
· Annual production rate - 8,000oz (2022: 6,500oz)
The directors have reviewed the future gold model provided by MFP to consider
the reasonableness of the assumptions, following this review the directors
deem the assumptions appropriate.
The fair value is directly sensitive to any changes in the key assumptions.
For the overall carrying value (current and non-current) to fall by a material
amount, the above assumptions would have to change as follows:
· Gold price (US$/oz) - US$1,000;
· Discount rate - 17%; or
· Annual production rate - 6,000oz
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.
Fair Value 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. With respect to Elephant Oil the fair
value is based on expected listing in Q1 2024, should this not happen then the
value of the asset may need to be written down. The directors current expect
the listing to go ahead. 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.
The group has the following Non-Financial Assets; Investments in associates,
investments in subsidiaries and loans extended to subsidiaries (Company only).
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 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)
Year to 30 June 2023 Gold Gold Copper Other Projects £'000 Investments Corporate Total
Exploration Exploration Exploration £'000 and £'000
Australia Kenya DRC unallocated
£'000 £'000 £'000 £'000
Exploration expenses - (252) - (66) - - (318)
Administration expenses (383) (3) (13) (5) (1) (975) (1,380)
Project development (14) - (234) (8) - (0) (256)
Other project costs - - - - - (159) (159)
Impairment of E&E assets - (253) - - - - (253)
Share based payments - - - - - (39) (39)
Currency gain (73) - - - - 84 11
Other income - - - - 228 - 228
Dividend income - - - - - - -
Finance costs, net - - - - - (787) (787)
Net profit/(loss) before tax from continuing operations (470) (508) (247) (79) 227 (1,876) (2,953)
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 2023 UK Africa Australia Total
£'000 £'000 £'000 £'000
Non-current assets
Investments in associates and joint ventures - 1,030 - 1,030
Mineral tenements - 165 533 698
Exploration properties - 12,949 - 12,949
Exploration assets - 410 - 410
FVTOCI financial assets 736 - - 736
PPE 1 17 - 18
Non-current receivables 1,410 1,096 - 2,506
Total segment non-current assets 2,147 15,667 533 18,346
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
3. (Loss)/Profit for the Year Before Taxation
(Loss)/profit for the year before taxation is stated after charging:
2023 2022
£'000 £'000
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of consolidated and 39 28
Company Financial Statements
Directors' emoluments (note 9) 319 310
- Share Incentive plan - Directors 6 12
- Share Incentive plan - staff 2 4
4. Administrative Expenses
Group Group Company Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Staff costs
Payroll 655 562 377 356
Pension 56 47 27 27
Consultants 15 15 15 15
HMRC / PAYE 42 39 42 39
Professional services
Accounting and Audit 112 115 90 98
Legal 22 36 13 23
Marketing 78 45 78 33
Other 12 13 - 5
Regulatory compliance 109 96 106 96
Travel 66 77 66 75
Office and Admin
General 38 37 30 29
IT and Software Costs 45 10 14 10
Rent 86 92 67 72
Insurance 43 41 40 39
Total administrative expenses 1,380 1,225 965 917
5. Finance Income/(Costs), Net
Group 2023 2022
£'000 £'000
Interest income (other than MFP finance income) - -
Dividend income - -
Interest expense & other finance costs (613) (209)
Total finance (costs) / income (other than MFP finance income) (613) (209)
MFP finance (expense) / income - note 16 228 (76)
Total finance (costs) / income (385) (285)
Other gains - 52
MFP finance income is reflected within other gains on the consolidated profit
and loss.
Please refer to note 16 and note 17 for more details.
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
2023 2022
£'000 £'000
Project development expenses
VUP (Congo) (161) (328)
Galaxy (Congo) - (47)
Other (Congo) (62) (79)
Luanshimba (Congo) (12) (166)
Kinsevere - (2)
Zimbabwe Lithium (64) -
Other 49 (54)
Total project development expenses (250) (676)
Other project costs
Mid Migori Mines (Kenya) - (10)
Greenland (159) (68)
Other - (133)
Total other project expenses (159) (211)
7. Taxation
2023 2022
£'000 £'000
Current period taxation on the Group
UK corporation tax at 19.00% (2022: 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 (2,700) (2,800)
Profit/(loss) on ordinary activities at the average UK standard rate of 19.00% (519) (532)
(2020: 19.00%)
Income not taxable - -
Effect of expenditure not deductible 42 20
Losses brought forward utilised in the current period -
Tax losses carried forward 471 512
Tax charge - -
No deferred tax charge has been made due to the availability of trading losses
due to uncertainty surrounding future profitability. Unutilised tax losses,
arising in the UK, amount to £4.7 million (2022: £4.4 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:
2023 2022
£'000 £'000
Wages and salaries 648 562
Pension 55 47
Social security costs 42 39
Employee share-based payment charge 40 9
Total staff costs 785 657
The average number of Group employees (including Directors) during the year
was:
2023 2022
Number Number
Executives 4 4
Administration 1 1
Exploration 9 9
14 14
The key management personnel are the Directors and their remuneration is
disclosed within note 9.
11,675,670 free shares were issued to five employees (2022: 1,236,656),
including Directors. 4,278,853 partnership and 8,557,706 matching shares,
making the total of 24,512,229, were issued in the year ended 30 June 2023
(2022: 1,267,199 partnership, 2,534,398 matching, 3,801,597 total).
9. Directors' Emoluments
2023 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 10 15 2 10 17 174
Other Directors
S Kaintz 65 5 - 2 6 9 87
S Quinn 24 2 - 2 2 2 32
A Borrelli 22 - - 2 - 2 26
231 17 15 8 18 30 319
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
The highest paid director in the current year was Mr A Bell who was paid total
remuneration of £174,000 (2022: £164,000).
Social security costs have been included in the above figures for completeness
however does not typically form a component of director's remuneration.
No Directors exercised share options in the year, (2022: 5,670,000). 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.
2023 2022
(Loss)/profit attributable to equity holders of the parent company, £ (2,952,933) (2,799,730)
Adjusted for interest accrued on the convertible notes - -
Adjusted (loss) / profit attributable to equity holders of the parent company (2,952,933) (2,799,730)
used for diluted EPS calculation
Weighted average number of ordinary shares of £0.0001 in issue, used for 1,592,083,739 1,221,091,538
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 1,592,083,739 1,221,091,538
potential ordinary shares, used for diluted EPS
2023 2022
(Loss)/earnings per share - basic (0.19 pence) (0.23 pence)
(Loss)/earnings per share - fully diluted (0.19 pence) (0.23 pence)
At 30 June 2023, 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:
2023 2022
Share options granted to employees - either not vested and/or out of the money 21,000,000 50,000,000
Number of warrants given to shareholders as a part of placing equity 314,178,213 389,430,010
instruments - out of the money
Total number of contingently issuable shares, that could potentially dilute 335,178,213 439,430,010
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 2023, 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 2023 2022
£'000 £'000
Cost
At 1 July 77 40
Investment in subsidiaries - 37
At 30 June 77 77
Impairment
At 1 July (1) (1)
Charge in the year - -
At 30 June (1) (1)
Net book value 76 76
As at 30 June 2023 and 30 June 2022, 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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cost
At 1 July 1,251 1,806 1,114 1,669
Reclassifications to Other Receivables - (696) - (696)
Additions during the year - 141 - 141
At 30 June 1,251 1,251 1,114 1,114
Impairment
At 1 July (221) (221) (3) (3)
Impairment during the year - - - -
At 30 June (221) (221) (3) (3)
Net book amount at 30 June 1,030 1,030 1,111 1,111
The Company, at 30 June 2023 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 2022
Summarised financial information for the Company's associates and joint
ventures, where available, is given below:
For the year as at 30 June 2023:
Company Revenue Loss Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 1,889 (1,917)
For the year as at 30 June 2022:
Company Revenue Profit Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 2,110 (2,238)
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. The Company continues to liaise closely
with its advisors in country regarding the expectations for final ruling and
settlement of this matter and expect a conclusion to be arrived at in early
2024.
Due to the above development, the Company reclassified these amounts
recognised in investments in the VUP joint venture (£696,364), along with
amounts previously classified as Exploration Assets (£399,892), as a
Non-current receivable in the prior year. These amounts remain recognised as
a non-current receivable associated with the above as at the current year end
30 June 2023.
Mid Migori VUP Musonoi Mining SA Total
Mining Company £'000 £'000
Limited
£'000
Cost
At 1 July 2022 1,111 - 1,111
Additions during the year - - -
Reclassified during the year - - -
At 30 June 2023 1,111 - 1,111
Impairment and losses during the year
At 1 July 2022 (81) - (81)
The Group's share of profit/(loss) during the year - - -
At 30 June 2023 (81) - (81)
Carrying amount
At 30 June 2022 1,030 - 1,030
At 30 June 2023 1,030 - 1,030
13. Exploration Assets and Mineral Tenements
Group Exploration Assets 2023 2022
£'000 £'000
At 1 July 13,265 13,515
Additions 139 150
Impairments (259) -
Reclassification to non-current receivables - (400)
Reclassification from other current assets (note 17) 213 -
At 30 June 13,358 13,265
Group Mineral Tenements 2023 2022
£'000 £'000
At 1 July 511 124
Additions 187 387
At 30 June 698 511
Company Exploration Assets 2023 2022
£'000 £'000
At 1 July 13,206 13,515
Additions - 91
Impairments (258) -
Reclassification to non-current receivables (note 16) - (400)
At 30 June 12,948 13,206
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 prior 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 has 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.
Impairments in the year relate to the Congo Galaxy project, which has now been
fully impaired, following commercial determination not to progress the project
and, as a consequence, the discontinuation of meeting mandatory expenditures
under the terms of the licences.
Reclassifications of exploration assets in the prior year relate to the
reclassification of assets held under the VUP project into non current
receivables, following commencement of litigation regarding this JV and
assessment of the Company's recourse through arbitration.
Reclassifications in the current year relate to expenditures undertaken on the
Kenyan licence areas that had previously been held as recoverable receivables
and have been determined in the year to now form part of the base cost of the
E&E asset.
14. Financial Instruments with Fair Value Through Other Comprehensive Income
(FVTOCI)
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Opening balance 736 1,755 736 778
Additions - 223 - 223
Disposals - (1,693) - (775)
Change in fair value - 451 - 510
At 30 June 736 736 736 736
Market Value of Investments
The market value as at 30 June of the listed and unlisted investments was as
follows:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Quoted on London AIM - - - -
Quoted on other foreign stock exchanges - - - -
Unquoted investments at fair value 736 736 736 736
736 736 736 736
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 maintained at £736,281 (2022: £736,281).
Details of the fair value measurement hierarchy are included in note 22.
15. Cash and Cash Equivalents
Group 30 June 30 June
2023 2022
£'000 £'000
Cash in hand and at bank 155 66
155 66
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
2023 2022
£'000 £'000
Cash in hand and at bank 149 31
149 31
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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Amounts receivable relating to VUP Joint Venture 1,096 1,096 1,096 1,096
Due from subsidiaries - - 2,472 1,625
MFP sale proceeds 1,410 1,224 1,410 1,224
2,506 2,320 4,978 3,945
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 prior 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. Changes in the
fair value of the receivable at each reporting date are taken to profit/loss
for the year as finance income/expense. See note 5 for further details.
17. Other Receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Current trade and other receivables
Prepayments 32 310 32 46
Short-term loan receivable 164 164 164 164
MFP sales proceeds - current element 171 129 171 129
Other receivables 303 221 234 120
Total 670 824 601 459
During the year, amounts held in the group as recoverable receivables
totalling £213,000 in Red Rock Kenya relating to expenditures undertaken on
the Kenyan licence areas have been determined in the year to now form part of
the base cost of the E&E asset and so have been reclassified from other
receivables to intangibles in the current year. See note 13 for further
details.
18. Trade and Other Payables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Non-current liabilities
Trade and other payables 684 415 - -
Borrowings 756 822 756 822
Total non-current liabilities 1,440 1,237 756 822
Current liabilities
Trade payables 1,646 1,149 1,512 1,029
Accruals 91 206 91 206
Total trade and other payables 1,737 1,355 1,602 1,235
Intra-group borrowings - - 2,115 1,890
Short-term borrowings 1,662 1,042 1,503 1,022
Total current liabilities 3,399 2,397 5,220 4,147
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;
· On 25 July 2022, the Company announced that it had issued
£623,000 of convertible loan notes to high-net-worth investors, with each
note convertible into ordinary shares at a price of £0.006 per share over a
twelve month period. Each note holder also received 83,333 warrants for each
note subscribed, entitling the holder to subscribe for shares for 30 months
from the date of issue at a price of £0.008 per share. The interest rate of
the notes is 12% per annum, payable upon maturity. These notes were
refinanced after the year end.
· On 19 August 2022, the Company announced the creation of an
additional £50,000 of convertible loan notes, which were ultimately
transferred to a separate loan note with a further net amount of £50,000
added during the year. The notes carry an interest rate of 0.05% per day, a
cash repayment bonus of 25% of the outstanding principal, and allow the
investor to receive one for one warrants exercisable for two years into RRR
shares at an exercise price of the higher of £0.006 or 10% above the VWAP on
the repayment date (or in the event of a placing on the repayment day, 10%
above the placing price). The notes were payable from a date three weeks
following the original drawdown date.
· On 30 November 2022, the Company entered into a prepayment
agreement for the sum of £10,000. The prepayment was to relate to a placing
of shares expected to be completed on or around 8 December 2022, which
ultimately did not conclude. The prepayment amount attracts a cash bonus fee
of 25% of the prepayment amount upon repayment and allows the investor to
receive one for one warrants exercisable for 24 months at the higher of
£0.006 or 25% above the closing price on the date of repayment. The notes
were due for repayment three weeks from the prepayment date, and any delay in
repayment will draw interest of 0.5% per day.
· On 22 Feb 2023 the Company entered into a loan agreement with a
high-net-worth investor with an initial principal amount of £125,000, and an
additional £80,000 drawn down on this facility during the course of the
year. The note was due for repayment 14 days after the date of the initial
agreement. The notes carry a 20% interest rate per annum, with a 20%
redemption fee payable on the total amount drawn down on the notes at
repayment. The investor may elect to require conversion of all or part of
the loan and redemption fee into shares at a price of £0.0025 per share,
which may be reduced to the price, if lower, of any placing that completes
before the loan is repaid.
· On 5 May 2023, the Company entered into a loan note agreement
with a principal amount of £50,000. The note carries an interest rate of
0.05% per day from 20 May 2023, and a cash repayment bonus of 30% of the
outstanding principal. The notes are due within 3 days of receipt of funds
from a settlement in the DRC.
· On 25 May 2023, the Company entered into a loan note agreement
with a principal amount of £50,000. The note carries an interest rate of
0.05% per day from 20 May 2023, a repayment bonus of 30% of the outstanding
principal. The notes are due within 3 days of receipt of funds from a
settlement in the DRC.
· During the year a convertible loan note facility with Riverfort
Global Opportunities Fund ("RGO") was in place. The facility was for up to
£1,000,000 in funding for working capital purposes, with an initial drawdown
of £385,000 in principle (before costs). This loan was repaid through a
series of conversions and cash repayments after the year end.
· A $955,000 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 the pending
Democratic Republic of Congo legal claim has been resolved.
19. Share Capital of the Company
The share capital of the Group and the Company is as follows:
Authorized, Issued and fully paid 2023 2022
£'000 £'000
2,480,597,806 (2022: 1,256,147,238) ordinary shares of £0.0001 each 248 126
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 2,961 2,839
Movement in ordinary shares Number Nominal
£'000
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
Issued on 27 Sep 2022 at 0.4 pence per share (allotment for cash) 40,000,000 4
Issued on 19 Dec 2022 at 0.1 pence per share (non-cash) 28,000,000 3
Issued on 19 Dec 2022 at 0.2829 pence per share (non-cash) 17,000,000 2
Issued on 2 Mar 2023 at 0.25 pence per share (non-cash) 26,753,616 3
Issued on 13 April 2023 at 0.18 pence per share (allotment for cash) 56,487,601 6
Issued on 19 April 2023 for 0.1661 pence per share (non-cash) 123,888,888 12
Issued on 11 May 2023 for 0.15741 pence per share (non-cash) 15,055,706 2
Issued on 18 May 2023 for 0.1425 pence per share (allotment for cash) 19,176,965 2
Issued on 18 May 2023 for 0.185 pence per share (non-cash, SIP) 376,028,070 38
Issued on 18 May 2023 for 0.21 pence per share (non-cash, SIP) 11,675,670 1
Issued on 31 May 2023 for 0.1298 pence per share (non-cash) 12,836,559 1
Issued on 5 June 2023 for 0.1425 pence per share (non-cash) 43,781,746 4
Issued on 5 June 2023 for 0.11 pence per share (non-cash) 45,964,912 4
Issued on 27 June 2023 for 0.11385 pence per share (non-cash) 33,237,805 3
Issued on 27 June 2023 for 0.116908 pence per share (non-cash) 65,876,152 7
Issued on 27 June 2023 for 0.11 pence per share (non-cash) 23,657,440 2
Issued on 28 June 2023 for 0.1650 pence per share (allotment for cash) 110,029,423 11
Issued on 27 Sep 2022 at 0.4 pence per share (allotment for cash) 175,000,000 17
As at 30 June 2023 - ordinary shares of £0.0001 each 2,480,597,791 248
The total net cash raised from allotments of shares was £1,112,227 for the
year.
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 2023, the Company had 314,178,213 warrants in issue (2022:
389,430,010) with a weighted average exercise price of £0.0039 (2022:
£0.0128). Weighted average remaining life of the warrants, at 30 June 2023,
was 678 days (2022: 293 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 2023 2022
number of warrants number of warrants
Outstanding at the beginning of the year 389,430,010 380,197,618
Granted during the period 304,945,821 9,232,392
Exercised during the period - -
Cancelled during the period - -
Expired during the period (380,197,618) -
Outstanding at the end of the year 314,178,213 389,430,010
During the year ended 30 June 2023, the Company had the following warrants to
subscribe for shares in issue:
Warrant exercise price, £ Number of warrants
Grant date Expiry date
8 Jun 2022 16 Aug 2025 0.005 9,232,392
16 Aug 2022 16 Aug 2025 0.005 41,454,767
16 Aug 2022 16 Feb 2025 0.008 51,916,664
13 April 2023 12 Oct 2024 0.0035 123,888,888
13 April 2023 12 Oct 2024 0.0035 12,388,888
11 May 2023 10 May 2026 0.0014 75,205,614
Total warrants in issue at 30 June 2023 314,178,213
The aggregate fair value, related to the share warrants granted during the
reporting period, was £173,825 (2022: £7,578).
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 2023, the Company had outstanding options to subscribe for ordinary
shares as follows:
Options issued on Options issued on Total
24 August 2020 at 0.2p per share, expiring on 24 August 2020 at 0.25p per share, expiring on
19 August 2025 19 August 2025
Number Number
Number
A R M Bell 5,500,000 5,500,000 11,000,000
S Kaintz 2,250,000 2,250,000 4,500,000
Employees 2,750,000 2,750,000 5,500,000
Total 10,500,000 10,500,000 21,000,000
Company and Group
2023 2022
Number of Weighted Number of Weighted
options average options average
exercise exercise
price price
pence pence
Outstanding at the beginning of the year 50,000,000 1.41 63,320,000 0.46
Options issued in the year - - - -
Options exercised in the year - - (6,120,000) 0.45
Options lapsed in the year (29,000,000) 0.46 (7,200,000) 0.45
Outstanding at the beginning of the year 21,000,000 2.25 50,000,000 1.41
Nil share options were granted by the Company in the reporting year (2022:
Nil). The weighted average fair value of each option granted during the year
was £nil (2022: Nil). The exercise price of options, outstanding at 30 June
2023, ranged between £0.0025 and £0.02 (2022: £0.0008 and £0.025). Their
weighted average contractual life was 1.63 years (2020: 2.41 years).
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 12,836,559 Partnership and Matching
Shares were awarded and 11,675,670 Free Shares (2022: 3,801,597 Partnership
and Matching Shares and 1,236,656 Free Shares) with a fair value of £0.0021
for the Partnership and the Matching Shares and £0.00185 for the Free Shares
(2022: £0.00425 for the Partnership and the Matching Shares and £0.00425 for
the Free Shares), resulting in a share-based payment charge of £39,571 (2022:
£16,027), 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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Financial assets
Available for sale financial assets at fair value through OCI
Unquoted equity shares 736 736 736 736
Quoted equity shares - -
Total available for sale financial assets at fair value through OCI
Financial assets FVTPL (Para warrants) - - - -
Total financial assets carried at fair value through profit and loss 736 736 736 736
Cash and cash equivalents 155 66 149 31
Loans and receivables
Non-current receivables 2,506 2,320 4,978 3,945
Other receivables - current 506 660 601 456
Total loans and receivables carried at amortised cost 3,012 2,980 5,579 4,401
Total financial assets 3,903 3,782 6,464 5,168
Total current financial assets 661 726 750 487
Total non-current financial assets 3,242 3,056 5,714 4,681
Financial liabilities
Short-term borrowings, including intra-group 1,662 1,042 3,618 2,912
Long-term borrowings 1,440 1,237 756 822
Trade and other payables, excluding accruals 1,646 1,149 1,511 1,029
Total current financial liabilities 4,748 3.428 5,885 4,763
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 2023
£'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 2023
£'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 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) - - - -
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 2023
£ £ £ £ £ £
Cash and cash equivalents 149 2 - - 4 155
Amortised cost financial assets - Other receivables 228 10 374 - 58 670
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,506 - - 2,506
Trade and other payables, excluding accruals 355 42 286 959 4 1,646
Short-term borrowings 1,503 - 159 - - 1,662
Long term borrowings - 684 756 - - 1,440
Group GBP AUD USD CAD Other Total
30 June 2022
£'000 £'000 £'000 £'000 £'000 £'000
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
Company GBP AUD USD CAD Other Total
30 June 2023
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 149 - - - - 149
Amortised cost financial assets - Other receivables 2,700 - 373 - - 3,073
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,506 - - 2,506
Trade and other payables, excluding accruals 351 - 200 959 1 1,511
Short-term borrowings, including intra-group 3,618 - - - - 3,618
Long term borrowings - - 756 - - 756
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
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 2022 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 2023
Interest paid Introducers fee accrued
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from institutional investors 577 410 (205) - 18 (903) 103 - -
Convertible notes 317 47 (190) - - 350 170 - 694
Other loans 100 780 (99) - - (66) 252 - 967
Total 994 1,237 (494) - 18 (619) 525 - 1,661
Company 30 June 2022 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 2023
Interest paid
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from subsidiary 1,889 225 - - - - - - 2,115
Loan from institutional investors 577 410 (205) - 18 (903) 103 - -
Convertible notes 317 47 (190) - - 350 170 - 694
Other loans 100 621 (99) - - (65) 252 - 809
Total 2,883 1,303 (494) - 18 (618) 525 - 3,618
Repayments of borrowings in the year include £37,636 paid against non-current
borrowings from Kansai not included in the above table of current borrowings.
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.
Financing
A convertible loan note facility was in place 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). This loan was repaid through a series of
conversions and cash repayments after the year end.
On 25 July 2022, the Company announced that it had issued £623,000 of
convertible loan notes to high-net-worth investors, with each note convertible
into ordinary shares at a price of £0.006 per share over a twelve-month
period. Each note holder also received 83,333 warrants for each note
subscribed, entitling the holder to subscribe for shares for 30 months from
the date of issue at a price of £0.008 per share. The interest rate of the
notes is 12% per annum, payable upon maturity.
On 19 August 2022, the Company announced the creation of an additional
£50,000 of convertible loan notes, which were ultimately transferred to a
separate loan note with a further net amount of £50,000 added during the
year. The notes carry an interest rate of 0.05% per day, a cash repayment
bonus of 25% of the outstanding principal, and allow the investor to receive
one for one warrants exercisable for two years into RRR shares at an exercise
price of the higher of £0.006 or 10% above the VWAP on the repayment date (or
in the invent of a placing on the repayment day, 10% above the placing
price). The notes were originally payable from a date three weeks following
the original drawdown date.
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 30 November 2022, the Company entered into a prepayment agreement for the
sum of £10,000. The prepayment was to relate to a placing of shares
expected to be completed on or around 8 December 2022. The prepayment amount
attracts a cash bonus fee of 25% of the prepayment amount upon repayment and
allows the investor to receive one for one warrants exercisable for 24 months
at the higher of £0.006 or 25% above the closing price on the date of
repayment. The notes were due for repayment three weeks from the prepayment
date, and any delay in repayment will draw interest of 0.5% per day.
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
by Diversified Metal Holdings LLC. 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.
On 24 February 2023, the Company announced that following to the funding of 15
December 2022, that Diversified Metal Holdings LLC had requested that the
Company issue 26,753,616 new ordinary shares at a price of £0.0025 per share,
which had been prepaid by the subscriber at the time of the initial
investment. The Company further agreed with the investor that it could apply
in respect of a further amount of US$274,000 at this same purchase price.
The Company had agreed to a variation fee of US$78,000 payable within thirty
days or by way of an increase in the total amount outstanding, in relation to
agreeing to this modification of the agreement.
On 22 Feb 2023, the Company entered into a loan agreement with a
high-net-worth investor with an initial principal amount of £125,000, and
with an additional £80,000 drawn down on this facility during the course of
the year. The note was due for repayment 14 days after the date of the
agreement. The notes carry a 20% interest rate per annum, with a 20%
redemption fee payable on the total amount drawn down on the notes at
repayment. The investor may elect to require conversion of all or part of
the loan and redemption fee into shares at a price of £0.0025 per share,
which may be reduced to the price of any placing in the event of any issue of
new ordinary shares at a lower price before the loan is repaid.
On 15 March 2023, the Company announced that Diversified Metal Holdings LLC
had subscribed for a further 56,487,601 new ordinary shares at a price of
£0.0018 per share. This purchase had been prepaid by the investor at the
time of the original subscription agreement on 15 December 2022. The total
amount of the subscription outstanding then stood at US$348,000.
On 14 April 2023, the Company announced that it had issued 15,055,706 new
ordinary shares of the Company at a price of £0.001661 per share in
settlement of £25,000 of outstanding debt owed to Riverfort Global
Opportunities PCC Ltd.
On 4 May 2023, the Company announced that it had issued 19,176,965 new
ordinary shares of the Company at a price of £0.0015741 per share in
settlement of £30,186.46 of outstanding debt owed to Riverfort Global
Opportunities PCC Ltd.
On 5 May 2023, the Company entered into a loan note agreement with a principal
amount of £50,000. The note carries an interest rate of 0.05% per day from
20 May 2023, and a cash repayment bonus of 30% of the outstanding principal.
The notes are due within 3 days of receipt of funds from a settlement in the
DRC.
On 11 May 2023, the Company announced it had completed a placing of
376,028,070 new ordinary shares of the Company, which raised £535,840 before
expenses at a price of £0.001425 per share. A fee of 7.5% was to be paid to
Clear Capital Corporate Broking, and Clear Capital was to receive £107,168 of
warrants exercisable for three years also at a price of £0.001425 per
warrant.
On 12 May 2023, the Company announced the issuance of 24,512,229 new ordinary
shares to employees of the Company under the Company's Share Incentive Plan
for the 2022-23 tax year as agreed by the Trustees of the plan in their
meeting held on 5 April 2023.
On 24 May 2023, the Company announced that it had issued 43,781,746 new
ordinary shares of the Company to Riverfort Global Opportunities PCC LTD at a
price of £0.0012978 in settlement of £56,819.95 of outstanding debt.
On 25 May 2023, the Company entered into a loan note agreement with a
principal amount of £50,000. The note carries an interest rate of 0.05% per
day from 20 June 2023, a repayment bonus of 30% of the outstanding
principal. The notes are due within 3 days of receipt of funds from a
settlement in the DRC.
On 30 May 2023, the Company announced that it had repaid £65,500 of
outstanding corporate debt through the issuance of 45,964,912 new ordinary
shares of the Company at a price of £0.001425 per share.
On 30 May 2023, the Company announced that had issued Diversified Metal
Holdings LLC 33,237,805 new ordinary shares at a price of £0.0011 per share
in satisfaction of £36,562 of the subscription originally announced and
prepaid on 15 December 2022.
On 21 June 2023, the Company announced that it had issued 65,876,152 to
Riverfort Global Opportunities PCC LTD in repayment of £75,000 of outstanding
debt at a price of £0.0011385 per share. It further announced the issuance of
23,657,440 new ordinary shares at a price of £0.0016908 per share to
Riverfort Global Opportunities PCC Ltd in relation to a consent fee of
£40,000 in relation to a Deed of Consent executed on 19 January 2023.
Lastly the Company announced the that an issuance of 110,029,438 shares at a
price of £0.0011 per share had been issued to Diversified Metals Holdings LLC
in repayment of £121,032.38, in full settlement of the subscription
originally prepaid on 15 December 2022. The amount outstanding to Riverfort
Global Opportunities PCC Ltd was approximately £60,000 and would be
immediately settled in cash.
On 22 June 2023, the Company announced that CMC Markets UK Plc had raised the
Company £288,750 before expenses through the placing of 175,000,000 new
ordinary shares at a price of £0.00165 per share.
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.
New Ballarat Gold Corporation
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.
Elephant Oil & Gas
Elephant Oil is currently finalizing an IPO on the Nasdaq market. This is
expected to complete with an up to US$7m funding. The most recent Elephant
Oil pre-IPO funding has valued the price per share to US$2.25 per share.
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, now expected in early 2024, when the holding
can be marked to market.
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 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.
As of 2023, the Company has been provided with a draft arbitration result in
which it would receive a gross award of US$7,500,000, in addition to the
executory judgement for US$2,500,000. The Company believes that execution of
this agreement is likely in early 2024.
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 prior 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. Amounts drawn under this
facility were converted after the reporting period. See note 26 for further
details.
· Related party receivables and payables are disclosed in notes
17 and 18.
· The direct and beneficial interests of the Board in the shares
of the Company as at 30 June 2023 and at 30 June 2022 are shown in the
Director's Report.
· The key management personnel are the board of Directors and
their remuneration is disclosed within note 9.
26. Significant Events After the Reporting Period
On 3 July 2023, the Company announced that it had been issued of a Certificate
of Registration in relation to the Company's application through its local
subsidiary for a new lithium license near Bikita, giving the Company a license
covering 94 hectares. Certificates for two small extension applications
adding 45 hectares to the core license in this area were also recently
granted. Also near Bikita, adjacent to a purchased areas where transfer is
in progress, registration of two small extension license areas of 21 and 22ha
were recently granted.
On 7 August 2023, the Company announced the extension and partial conversion
of its 12% convertible loan notes. The Company had agreed with investors to
extend the terms of the notes and the related warrants, including accrued
interest by one year to 18 July 2024 and 18 January 2026 respectively. The
total amount of the extended convertible loan notes at the time of the
extension was £689,840. The conversion priced of the extended notes had
been adjusted to a price set at a 20% uplift from the 30 day VWAP starting
from 9 July 2023, provided that the conversion price must fall between £0.002
and £0.006 per share. The partial conversion of £127,000 of the notes
prior to the extension, was to be settled by the issuance of £63,500,000 new
shares a price of £0.002 per share. Following this conversion, the residual
balance of the notes due in July 2024 would be £562,840 plus any interest
accumulated during this period.
On 22 August 2023, the Company announced that it had received notice of the
conversion of £52,509.60 of convertible loan notes by a high-net-worth
investor inclusive of interest at a price of £0.0020196 per share, retiring
this note in full.
On 20 September 2023, the Company announced that it had sent three samples of
approximately 2KG each from the pegmatites at the first permitted area at the
Company's African Lithium Resources lithium project in Zimbabwe, to an ISO
accredited laboratory in Harare.
On 19 October 2023, the Company announced that it had approved the issuance of
up to £500,000 of convertible loan notes at a price of £10,000 per note.
The notes would attract interest of 6% + 0.5% per month from the issue date to
the final conversion date or 23 March 2024. The notes were convertible into
new ordinary shares of the company at a price set at a 15% discount to the
price of any placing conducted during the period that raised a minimum of
£200,000 or more, provided that this placing were to take place prior to 23
March 2024 Default interest of 10% + 1% would be payable for each month or
portion of a month and would accrue from the date of any default until
payment. For every share issued to the noteholder as part of conversion of
any note, or that would have been issued to the holder had the investor not
made an election to be paid in cash, one warrant will be issued to the
investor with a life of 30 months and set at an exercise price at 50% above
the placing price. In the event that a noteholder is repaid in cash by 23
March 2024, each note will receive 4,500,000 warrants with a life of 30 months
and an exercise of £0.0025 per share. The Company further announced that it
had raised £210,000 before expenses by subscription to 21 of these Notes as a
First Tranche closing of this facility. Additional for every 12 warrants
issued to holders either via conversion or by cash repayment, 1 broker warrant
will be issued to First Equity Limited on the same terms as the relevant note
holder warrants.
On 15 November 2023, announced that at the Company's lithium project in
Zimbabwe, 200 tons of lithium ore has been prepared for export and that the
first truck had now left Harare for the Mozambican port of Beria.
On 28 November 2023, the Company announced that at the Company's operations in
Cote d'Ivoire, a decree had been issued granting a second license to the
Company's subsidiary LacGold Resources SARLU for an initial term of 4 years.
The license covers 380.94 sq km in the departments of Yamoussoukro and others,
and this grant was one of a total of Red Rock's applications consisting of a
total of 1,404,.86 sq km. This decree brought the total of granted licenses
725.55 sq km of prospective gold ground. Each application is located on a
known regional shear zone where gold mines are currently operating, and each
grant has significant artisanal mining occurring within and around
them.
On 11 December 2023, the Company announced that it had placed £110,000 in the
form of 100,000,000 new ordinary shares at a price of £0.0011 per share to a
high net worth investor in satisfaction of costs that had been incurred at the
Company's Zimbabwe lithium project and Burkina Faso gold projects
respectively.
On 14 December 2023, the Company announced that it had raised gross proceeds
of £500,000 through the issuance of 666,666,667 new ordinary shares at a
price of £0.00075 per share.
27. Commitments
As at 30 June 2023, 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 1 January 2023, the Company extended its existing lease at We
Work, Aldwych House, through to 30 June 2024. Total lease rentals payable to
30 June 2024 are £69,454.
· 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 $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 2023 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 2023
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 2023 will be delivered to the Registrar of Companies
by 31 December 2023.
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