REG - Red Rock Resources - Final Results
13/12/2024 14:00
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RNS Number : 0851Q Red Rock Resources plc 13 December 2024
Red Rock Resources Plc
("Red Rock" or the "Company")
Final Audited Results for the Year Ended 30 June 2024
13 December 2024
The Company's Annual Report and Financial Statements for 2024, extracts from
which are set out below, will be published and sent out to the Company's
shareholders shortly and will be 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 2024. We also report on the progress of the Company since the
balance sheet date and review prospects for 2025.
ACTIVITY DURING THE YEAR
The period has been an unusual one for the mineral exploration and production
sectors. Most people would consider it to have been dominated by the rise in
the gold price from a range bouncing around $2,000 per ounce up to March this
year and then a sharp step up to around $2,400 and then a renewed and steady
climb to the current level of around $2,700 an ounce. Yet the performance of
stocks, whether exploration (at one extreme) or royalty (at the other) has
failed to reflect this improvement and the sector has underperformed other
sectors including technology. At the junior stock level this has been
particularly evident, with poor liquidity in junior markets and a shortage of
brokerage and fundraising support. Also, the AIM market, on which we are
listed, has seen a decline in the number of listings and in liquidity, a
matter on which we do not comment here.
Our situation has even within this environment been that of an outlier because
our efforts and probably our share performance has been weighted towards the
ebb and flow of news relating to our constant effort to achieve a resolution
of our initial compensation claim in the Democratic Republic of Congo, in
relation to our copper and cobalt joint venture near Kolwezi.
It is worth recapitulating, though with caution and with the note that no
settlement has yet been signed, why this is so important to Red Rock.
DRC
Red Rock's copper-cobalt joint venture underwent extensive analysis of the
historical records up to and after the time of signing the JV in February
2019. Geologists working for Red Rock gathered historical data from the area
and created a 3-D model of the mineralisation. Historic work had been based on
much higher cut-off grades than would be used today, and aimed to test only
the upper oxide layer of mineralisation. The old pit had reached a depth at
maximum of c105m compared with workings down to 1000m in nearby licences, and
had on abandonment, been backfilled with several tens of metres of rocks. Our
work led to an estimation of up to 180,000 tonnes of contained copper at 2.7%
grade and up to 17,000 tonnes of cobalt at 0.8% grade. This study was based on
83 drill holes, assays and over 750 pages of reports. Drilling reached to a
little below the pit depth. Typical grades in the area ranged from 3-5% copper
and 0.5-1% cobalt.
At a current copper price of over $9,000 per tonne and a cobalt price over
$24,000 per tonne, and bearing in mind that the mineralisation would have been
open pit mined from surface at a grade far above breakeven for each mineral
taken individually, and that the deeper and sulphide mineralisation would have
been drill tested by us to prove up further resource, it can readily be
calculated that the asset was one with a value after mining costs, royalties
and taxes that was very considerable and was transformative in terms of its
potential effect on Company value.
It bears repeating that transforming what was originally a JV over quite
mediocre assets, as our due diligence showed, into a portfolio of exceptional
value and also high prospectivity in other areas was entirely the result of
our perseverance, determination, and speed of analysis. Our partners were the
beneficiaries, and in particular our free-carried local partner, VUP.
When our work was interrupted, we had already dozens of workers working on
collection of historic drill core from the Gécamines sheds at Kolwezi to
verify the written record of the old drilling, and we had a plan for the
accelerated calculation of a compliant Resource based on the historic record
even before, or with minimal, further drilling.
Our asset was purportedly sold behind our backs by our 25% local partner in
December 2019, and to be deprived of this interest that Red Rock had worked so
hard to acquire was an unexpected blow that necessitated prompt follow up
action. On discovery of what had occurred but been hidden from us we went to
court and obtained a final and non-appealable judgment in January 2022 that we
were entitled to 50.1% of the $5m consideration already paid. We then began an
arbitration process in relation to the $15m consideration not yet paid. These
current actions relate to the initial sale back to Gécamines, not the stage 2
immediate on-sale by Gécamines for a quantum an order of magnitude larger.
Some 30 months after the conclusion of the arbitration hearings, we are
pushing for release of the award. A number of delaying tactics were earlier
used to obstruct us, but we have worked to preserve the integrity of the
process and keep it on track and it now appears that we are in a position to
conclude and opposition and obstruction have visibly melted away. At the same
time, we have engaged in indirect discussion with the former local partner and
in the last days have reached an understanding on acceptance of the terms of
settlement.
We therefore expect a successful conclusion in the near future to our current
arbitration, with early payment of any award. The implications however go far
beyond these initial victories, and we look forward to a successful future in
the DRC and with other ongoing matters.
Should we succeed, we will have put down a marker locally that we are prepared
to work in good faith with the DRC authorities and to spend a long time over
an extended period, acting always with patience and goodwill, in order to
protect our legitimate interests.
We will, in terms of our contacts and possibilities, have used this period to
enhance our reputation and position to a point where many opportunities will
open up.
Understandably, shareholders have found this a frustrating time, not least
because some of the detail of any discussions and difficulties have not been
possible to share without compromising the result.
OTHER ACTIVITY
After starting a lithium export product pipeline from Zimbabwe in late 2023,
the sudden and rapid decline in the lithium price at the end of that year,
which continued at various points in 2024, caused us to halt further sales.
Although we could source material cheaper than it could be produced, costs
including the royalty level which had been set at a fixed price when prices of
the commodity were higher, and price softness in the destination market, meant
that operations could not be profitable. Fortunately, by starting with a
trading operation we had avoided stranding capital and had the flexibility to
respond swiftly to these changing economic conditions.
In Burkina Faso, we made the final purchase payments for the Boulon licence,
and developed plans for operations at Bilbale. We identified a London and
South Africa-based partner with equipment that they were ready to contribute
to an initial alluvial operation. Illnesses on their side and their strategy
of bringing in a substantial complement of Indian staff led to some delay,
especially when new requirements for overseas labour were introduced at the
Indian end. We therefore, in order to have activity on the ground as required,
brought in an experienced camp and mine operator from South Africa who with a
local partner runs mining operations in the Congo, in order to achieve a quick
start and are happy with recent progress. Mike Billings has been on site with
the first of the equipment and has proved an efficient and schedule-conscious
manager.
Also in West Africa, the Company has two granted gold licences in Côte
d'Ivoire.
In Kenya, our licences came up for renewal in 2024 and with that an obligation
to drop 50% of the ground. We have been much occupied with the renewal process
where we are well advised by local consultants and lawyers. We are not
implementing our current plans for ground activity until the uncertainties
involved in the surrender process, renewal, and designation of artisanal
reserves are resolved. However, given the relatively modest grade of the
currently identified Resource compared with other commercially viable
projects, the rise in the gold price over the course of 2024 significantly
enhances the prospects for our ground.
During the year we contracted to acquire the 49.9% of our Australian gold
asset portfolio held through Red Rock Australasia Pty Ltd not already owned,
making this a wholly owned subsidiary. We have continued exploration on our
gold licences in Victoria, identifying antimony anomalism at O'Loughlins and
rare earth potential in the eastern licences. The two key assets remain the
old Berringa Mine near Ballarat and the Ajax workings a little to the north.
We have begun to engage with a number of local companies in the second half of
2024 in order potentially to obtain a listing for the Australian gold
portfolio.
We had looked forward during the period under review to the proposed listing
of Elephant Oil, where we have a small but longstanding shareholding, on the
NASDAQ market in the U.S. These plans were abandoned and Elephant acquired two
onshore licences in the Ivory Coast, and preliminary commitments of the
funding to develop further these comparatively advanced plays. The
implications of this are that Elephant is likely to remain private for longer
while it uses these funds to add value through further exploratory work, but
the countervailing benefit should be that it becomes a considerably more
valuable company before seeking a future liquidity event, and the possibility
of the sale of a non-core asset may exist in a way it did not while Elephant
was seeking a listing and so any offer by us competed with their own
fundraising.
FINANCIAL RESULTS
We report pre-tax losses for the year ended 30 June 2024 of £3,012m (2023:
loss of £2,953m). Reductions in administration expenses and share based
payments have been offset by various project and asset related expenses,
resulting in a fairly comparable bottom line result to the prior year.
Reduced administrative costs in particular, reflect reductions in payroll, as
well as marketing and compliance costs during the year.
CONCLUSION
We expect to generate cash from sales of assets and from court and arbitration
awards over the next few months.
The Company remains fairly highly indebted, as it has sought to maintain a
portfolio of what is considers to be high quality exploration assets while
waiting for a major, and excessively delayed, liquidity event in the DRC. It
will be important to address this either by sourcing substantial funds by
compensation awards and sales, or by negotiating farm ins, or by sales of
significant but non-core assets.
A continuing strong gold price may help us in this regard, and the combination
of strong gold and a weak Australian dollar is likely in particular to create
additional local investment and market interest in the Australian gold sector,
providing potential opportunities to finance drilling with local capital.
We are now making sales of gold a current priority, and a key operational task
at present is to develop our operations in Burkina Faso and elsewhere to
generate a steady stream of income.
Andrew Bell
Chairman and CEO
12 December 2024
Results and Dividends
The Group made a post-tax loss of £3.012 million (2023: loss of £2.953
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 12 December 2024.
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
Bob Roberts 0203
8696081
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
'parent company') and its subsidiaries (the 'group') for the year ended 30
June 2024 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 parent company's affairs as at 30 June 2024 and of
the group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis For Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material Uncertainty Related To Going Concern
We draw attention to note 1.2 in the Financial Statements, which indicates
that the 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;
· obtaining evidence where possible in support of the Group's and
Company's ability to defer certain payments, including evidence of the ongoing
financial support of key stakeholders currently providing loans to the
Company;
· 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 (2023: 1.5% of gross assets). Materiality of the
Company was based upon 3% of net assets, capped below group materiality (2023:
3% of net 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 £322,000 and £320,000 (2023: £287,000 and £285,000),
respectively. Performance materiality was set at 60% (2023: 60%) of overall
materiality for the Group and Company at £193,200 and £192,000 (2023:
£172,200 and £171,000), respectively, whilst the threshold for reporting
unadjusted differences to those charged with governance was set at £16,100
for the Group and £16,000 for the Company (2023: £14,350 and £14,250). 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 £62,600
to £120,400 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 and evaluation assets comprise exploration assets of £13,576k Our work in this area included the following:
(2023: £13,358k) and mineral tenements of £532k (2023: £698k) as at 30 June
2024.
· Obtaining and challenging management's impairment paper, together
with evaluating announcements and progress on the license areas during the
There is a risk that these amounts are impaired and that the capitalised year and post-year end, including exploration results and mineral resource
amounts do not meet the recognition criteria as adopted by the Group, or as estimates;
specified within IFRS 6.
· Holding discussions with management surrounding progress at the
various projects and future plans, including rationale for any impairments
recorded;
The capitalisation of the costs and determination of the recoverability of
these assets are subject to a high degree of management estimation and · Obtaining copies of the exploration licenses to ensure good title
judgement and therefore there is a risk this balance is materially misstated. and ensure, where applicable, that any specific terms or conditions therein
have been adequately met;
· Performing an independent assessment for indicators of impairment
Due to the level of judgement required to be exercised by management, and the in accordance with the requirements of IFRS 6;
magnitude of the balance, we have considered this matter to be a key audit
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.
Key Observations
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 2024, expired 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 and the circumstances surrounding this matter are
described in Note 1.5 to the financial statements. If the licenses are not
renewed, this may result in an impairment to these assets.
We also note that certain licences have minimum spend requirements and the
ability to meet these over the course of the licence terms will depend on
availability of funding as mentioned in Note 1.2. Should these not be met in
the future, this could result in impairment to the related assets.
Recoverability of current and non-current receivables for MFP sales proceeds
(see notes 1.5, 16 and 17)
Non-current receivables for MFP sales proceeds have a carrying value in the Our work in this area included the following:
Financial Statements of £1,464,000 as at 30 June 2024 (2023: £1,410,000),
with the current portion being £239,000 (2023: £171,000).
· Obtaining management's workings supporting the valuation of the
MFP sales proceeds and ensuring arithmetical accuracy of the workings;
These assets represent amounts expected to be receivable through a net smelter
royalty, following the sale of MFP in a previous accounting period. The asset · Evaluating publicly available information on production
is measured at fair value based on the net present value of future cash flows activities at the mine;
expected to be received in respect of the royalty proceeds.
· Reviewing all key inputs and assumptions used within the net
present value model and ensuring they are reasonable and appropriate.
Performing sensitivity analysis on the key assumptions, being production
We identified an audit risk that these assets are not recoverable and, volume, discount rate and gold price;
therefore, are incorrectly valued in the Financial Statements.
· Engaging auditor's expert to review mechanics of the discounted
cash flow model and the appropriateness of the discount rate used;
This was assessed to be a key audit matter due to the financially significant · Considering whether management have included all possible factors
value of the total receivable, and the fact that management are required to which could impact the valuation;
use their judgement and estimation in preparing the net present value of
future cash flows from the royalty stream. · Considering whether there are indications of impairment in the
valuation to suggest the balance is not recoverable; and
· Reviewing disclosures surrounding the balance in the financial
statements, including any uncertainties or judgements.
Key Observations
In reviewing the calculations prepared by management, we noted the following
assumptions as key:
· Estimated production volumes and timing;
· 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 Q4 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 the receivable. The
recoverability of this asset is dependent on the ability of the company to
fully realise the potential of the site to achieve 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 parent 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 parent
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 parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities Of Directors
As explained more fully in the Statement of directors' responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities For The Audit Of The Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the Group and 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, making enquiries of management, performing a review of
Board minutes and a review of legal and 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. 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
12 December
2024
Consolidated Statement of Financial Position
as at 30 June 2024
Notes 30 June 30 June
2024 2023
£'000 £'000
ASSETS
Non-current assets
Investments in associates and joint ventures 12 1,030 1,030
Exploration assets 13 13,576 13,358
Mineral tenements 13 532 698
Financial instruments - fair value through other comprehensive income (FVTOCI) 14 736 736
PPE 19 18
Non-current receivables 16 2,560 2,506
Total non-current assets 18,453 18,346
Current assets
Cash and cash equivalents 15 38 155
Other receivables 17 807 670
Total current assets 845 825
TOTAL ASSETS 19,298 19,171
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent
Called up share capital 19 3,143 2,960
Share premium account 20 33,804 32,785
Other reserves 20 1,193 1,751
Retained earnings (25,323) (22,477)
Total equity attributable to owners of the Parent 12,817 15,019
Non-controlling interest (150) (687)
Total equity 12,667 14,332
LIABILITIES
Non-current liabilities
Trade and other payables 18 - 684
Borrowings 18 756 756
Total non-current liabilities 756 1,440
Current liabilities
Trade and other payables 18 2,838 1,737
Short-term borrowings 18 3,037 1,662
Total current liabilities 5,875 3,399
TOTAL EQUITY AND LIABILITIES 19,298 19,171
These Financial Statements were approved by the Board of Directors and
authorised for issue on 12 December 2024 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 2024
Continuing operations Notes Year to Year to
30 June 30 June
2024 2023
£'000 £'000
Administrative expenses 4 (1,273) (1,380)
Exploration expenses (293) (318)
Project development 6 (280) (250)
Other project costs 6 (153) (159)
Impairment of E&E assets 13 (202) (259)
Impairment of Mineral Tenements 13 (184) -
Share based payments 21 (136) (213)
Currency gains 27 11
Other income / gains 5 122 228
Finance costs 5 (640) (613)
Profit/(loss) for the year before taxation (3,012) (2,953)
Tax 7 - -
Profit/(loss) for the year (3,012) (2,953)
Profit/(loss) for the year attributable to:
Equity holders of the Parent (2,846) (2,665)
Non-controlling interest (166) (288)
(3,012) (2,953)
Earnings per share attributable to owners of the Parent:
Basic loss per share, pence 10 (0.09) (0.19)
Diluted loss per share, pence 10 (0.09) (0.19)
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2024
30 June 30 June
2024 2023
£'000 £'000
Profit/(loss) for the year (3,012) (2,953)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss 60 165
Unrealised foreign currency (loss) / gain arising upon retranslation of
foreign operations
Total other comprehensive income net of tax for the year 60 165
Total comprehensive income, net of tax for the year (2,952) (2,788)
Total comprehensive income net of tax attributable to:
Owners of the Parent (2,813) (2,521)
Non-controlling interest (139) (267)
(2,952) (2,788)
The accompanying notes form an integral part of these Financial Statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2024
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 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
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - 144 144 21 165
foreign operations
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
Changes in equity for 2024
Loss for the year - - (2,846) - (2,846) (166) (3,012)
Other comprehensive income for the year
Unrealised foreign currency (loss) / gain arising upon retranslation of - - - (7) (7) 27 (20
foreign operations
Total comprehensive income for the year - - (2,846) (7) (2,853) (139) (2,992)
Transactions with owners
Issue of shares 183 1,019 - - 1,202 - 1,202
Issue of warrants - - - 97 97 - 97
Acquisition of NCI - - - (648) (648) 676 28
Total transactions with owners 183 1,019 - (551) 651 676 1,327
As at 30 June 2024 3,143 33,804 (25,323) 1,193 12,817 (150) 12,667
FVTOCI financial instruments revaluation Foreign Share-based Total
reserve currency payment other
£'000 translation reserve Warrant reserve Other reserves
reserve £'000 £'000 reserve £'000
£'000 £'000
As at 1 July 2022 402 (19) 230 821 - 1,434
Changes in equity for 2022
Other comprehensive income for the year
Unrealised foreign currency gains on translation of foreign operations - 144 - - 144
-
Total comprehensive Income for the year - 144 - - - 144
Warrants issued in the year - - - 173 - 173
Total transactions with owners - - - 173 - 173
As at 30 June 2023 402 125 230 994 - 1,751
Changes in equity for 2024
Other comprehensive income for the year
Unrealised foreign currency gains on translation of foreign operations - (7) - - (7)
-
Total comprehensive income for the year - (7) - - - (7)
Warrants issued in the year - - - 97 - 97
Acquisition of NCI - - - - (648) (648)
Total transactions with owners - - - 97 (648) (551)
As at 30 June 2024 402 118 230 1,091 (648) 1,193
See note 20 for a description of each reserve included above.
Consolidated Statement of Cash Flows
for the year ended 30 June 2024
Notes Year to Year to
30 June 30 June
2024 2023
£'000 £'000
Cash flows from operating activities
Loss before tax (3,012) (2,953)
Increase in receivables (192) (239)
Increase in payables 293 612
Finance costs 5 640 613
Share-based payments 21 136 213
Foreign exchange gain/loss - (10)
Impairment of E&E assets 13 202 253
Impairment of Mineral Tenements 13 184 -
Net cash outflow from operations (1,749) (1,511)
Corporation tax (paid) - -
Net cash used in operations (1,749) (1,511)
Cash flows from investing activities
Purchase of PPE (1) (18)
Payments to acquire exploration asset 13 (419) (139)
Payments for tenements 13 (17) (187)
Net cash (outflow) from investing activities (437) (344)
Cash flows from financing activities
Proceeds from issue of shares 19 772 1,112
Proceeds from new borrowings 23 1,460 1,237
Repayment of borrowings - Non current 23 (24) (38)
Repayments of borrowings 23 (79) (494)
Net cash inflow from financing activities 2,129 1,817
Net (decrease) in cash and cash equivalents (57) (38)
Cash and cash equivalents at the beginning of period 155 66
Exchange (losses)/gains on cash and cash equivalents (60) 127
Cash and cash equivalents at end of period 15 38 155
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 2024
Notes 30 June 30 June
2024 2023
£'000 £'000
ASSETS
Non-current assets
Investments in subsidiaries 11 893 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
PPE 1 1
Non-current receivables 16 5,410 4,978
Total non-current assets 21,099 19,850
Current assets
Cash and cash equivalents 15 17 149
Loans and other receivables 17 727 601
Total current assets 744 750
TOTAL ASSETS 21,843 20,600
EQUITY AND LIABILITIES
Called up share capital 19 3,143 2,961
Share premium account 33,804 32,785
Other reserves 1,773 1,676
Retained earnings (25,071) (22,798)
Total equity 13,649 14,624
LIABILITIES
Non-current liabilities
Borrowings 18 756 756
Total non-current liabilities 756 756
Current liabilities
Trade and other payables 18 2,511 1,602
Intra-group borrowings 18 1,890 2,115
Short-term borrowings 18 3,037 1,503
Total current liabilities 7,438 5,220
TOTAL EQUITY AND LIABILITIES 21,843 20,600
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 £2.273 million (2023: loss of £1.971
million). The Company's total comprehensive loss for the financial year was
£2.273 million (2023: loss of £1.971 million).
These Financial Statements on were approved by the Board of Directors and
authorised for issue on 12 December 2024 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 2024
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 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
Changes in equity for 2024
Loss for the year - - (2,273) - (2,273)
Other comprehensive income for the year
Total comprehensive income for the year - - (2,273) - (2,273)
Transactions with owners
Issue of shares 182 1,019 - - 1,201
Issue of warrants - - - 97 97
Total transactions with owners 182 1,019 - 97 1,298
As at 30 June 2024 3,143 33,804 (25,071) 1,773 13,649
FVTOCI financial assets revaluation Total
reserve Share-based other
£'000 payment Warrant reserves
reserve reserve £'000
£'000 £'000
As at 1 July 2022 452 230 820 1,502
Changes in equity for 2023
Transactions with owners
Issue of warrants - - 174 174
Total transactions with owners - - 174 174
As at 30 June 2023 452 230 994 1,676
Changes in equity for 2024
Transactions with owners
Issue of warrants - - 97 97
Total transactions with owners - - 97 97
As at 30 June 2024 452 230 1,091 1,773
See note 20 for a description of each reserve included above.
Company Statement of Cash Flows
for the year ended 30 June 2024
30 June 30 June
2024 2023
£'000 £'000
Cash flows from operating activities
Loss before taxation (2,273) (1,971)
Increase in receivables (854) (1,178)
Increase in payables 156 644
Finance costs (Note 5) 640 613
Share-based payments (Note 21) 136 214
Equity settled transactions - -
Change in value in FVTPL financial assets - -
Foreign exchange loss / (gain) - (83)
Impairment of E&E assets (Note 13) - 259
Impairment of loans to subsidiaries 295 -
Net cash outflow from operations (1,900) (1,502)
Cash flows from investing activities
Purchase of PPE - (1)
Net cash outflow from investing activities - (1)
Cash flows from financing activities
Proceeds from issue of shares 772 1,112
Proceeds from new borrowings (Note 23) 1,169 1,078
Repayment of borrowings - Non current (Note 23) (24) (38)
Repayment of borrowings (Note 23) (79) (494)
Net cash inflow from financing activities 1,838 1,658
Net (decrease)/increase in cash and cash equivalents (61) 155
Cash and cash equivalents at the beginning of period 149 31
Exchange losses on cash and cash equivalents (71) (37)
Cash and cash equivalents at end of period (Note 15) 17 149
The accompanying notes and accounting policies form an integral part of these
Financial Statements.
Significant non-cash transactions undertaken in the year are disclosed in note
23 to these Financial Statements.
Notes to the Financial Statements
for the year ended 30 June 2024
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 2024, the Group had cash and cash
equivalents of £38k and £3.03 million of borrowings. The Directors
anticipate having to raise additional funding over the course of the current
financial year in order to continue to meet working capital requirements and
fund work programmes as planned.
Having considered the prepared cashflow forecasts and the Group budgets, which
includes anticipated fundraising activity, the possibility of Directors
reducing or foregoing their salaries if required, the progress in activities
post year-end, the capacity to defer expenditure and seek the support of
suppliers and other creditors defer settlement of fees if necessary and the
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 to meet
their financial obligations as they fall due. 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. As the ability to meet
minimum work obligations on the Group's various licences is dependent on the
availability of further funding, should the funding not be available as and
when required then any impact on licence terms compliance may result in an
impairment of the licences in question.
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: Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (effective 1 January
2024);
· Amendments to IAS 1: Classification of Liabilities as Current
or Non-current - Deferral of Effective Date (effective 1 January 2024);
· Amendments to IAS 1 Presentation of Financial Statements:
Non-current Liabilities with Covenants (effective 1 January 2024);
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures: Supplier Finance Arrangements (effective 1
January 2024);
· Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rate: Lack of Exchangeability (effective 1 January 2025).
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 2024, 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 "other reserves" 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:
Contingent Consideration for the Acquisition of 49.9% Interest in Red Rock
Australasia
During the year, the Company entered into an agreement to acquire the 49.9%
interest in Red Rock Australasia Pty Ltd from Power Metals plc, via its
ownership in the holding company New Ballarat Gold Corporation plc - see note
24 for details. The consideration payable for the acquisition includes two
tranches payable in cash or shares in the event of a threshold level of JORC
compliant reserves being attained following a reassessment of the mineral
resource within the company licence areas - see note 24 for further details.
The directors have determined that there can be no certainty that levels of
resource will be attained sufficient to trigger the crystallisation of these
contingent consideration tranches, such that they have not been recognised as
liabilities in these 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
2024, 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 £nil (2023: increase the profit by £nil).
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
The VUP JV asset was misappropriated some years ago by the 25% local partner
by way of a sale of the project to a third party without our consent, for a
total consideration of $20m. On discovery of this development the Company
pursued a cure through the DRC courts and obtained a final and non-appealable
judgment that it is entitled to 50.1% of the $5m consideration already paid to
the JV partner for the unapproved sale of the project. The Company then began
an arbitration process in relation to the $15m consideration not yet paid by
the purchaser to the JV partner.
Some 30 months following the conclusion of the arbitration hearings, we are
pushing for release of the award. A number of delays have been encountered to
this process, however it now appears that the matter should be concluded in
the near term. At the same time, we have engaged in indirect discussion with
the former local partner and in the last days have reached an understanding on
acceptance of the terms of settlement.
The Company therefore expects a successful conclusion in the near future to
our current arbitration, with early payment of any award.
In assessing the above matters and impact on the recoverability of the asset
carrying value, the Directors have had to apply judgements, based on the legal
advice received from local counsel, as to the likelihood of a successful
outcome to the remaining legal process and the likelihood of successfully
receiving funds due once the legal process has fully completed. The
Directors have estimated that the recoverable amounts greatly exceed the
carrying value of the asset, albeit it subject to the above described
uncertainties, such that no impairment of the asset carrying value is
required.
Whilst the directors believe that this balance will become realised in the
near term, given the time taken to date there remains a level of uncertainty
over the timing of such an event, such that 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
During the year the Kenyan exploration licences came due for renewal,
inclusive of a 50% relinquishment obligation. Applications for renewal have
now been made and the directors believe they have dealt with any issues raised
in relation to the 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. As at the date of these financial statements, the formal
renewal of the Group's licences in Kenya remained subject to administrative
and legal processes currently under way. However the Directors remain strongly
of the view that renewal of the licences will be formalised in due course and
note that the process of renewal has not in the past been completed until some
time after the expiry date. The administrative processes associated with the
renewal have been affected also by the replacement of the Responsible Cabinet
Secretary and Principal Secretary.
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.
During the year, the Company acquired the remaining interest in the Australia
projects from its JV partner, see note 24 for further details.
The Company expects, subject to market conditions, to continue preparations
for the listing of the Australian subsidiary NBGC, including the intended
completion of a Pre-IPO financing round for NBGC in 2025. 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$2,735 (2023 US$1,957);
· Discount rate - 10% (2023: 10%); and
· Annual production rate - 8,000oz (2023: 8,000oz)
The Directors have reviewed the future gold model provided by MFP to consider
the reasonableness of the assumptions, following this review the directors
deem the assumptions appropriate.
The fair value is directly sensitive to any changes in the key assumptions.
For the overall carrying value (current and non-current) to fall by a material
amount, the above assumptions would have to change as follows:
· Gold price (US$/oz) - US$1,300;
· Discount rate - 18%; or
· Annual production rate - 5,000oz
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 the fair value implied by the last fundraising round
undertaken by the company during preparations for its proposed listing. The
company has determined not to pursue a listing at this time and instead is
evaluating funding strategies to continue development of its portfolio without
a listing, which may include a significant private financing. The Directors
of the Company believe that there is no current indication that the current
carrying value of this investment is not recoverable and continues to monitor
the investment for additional fair value datapoints. The Directors are aware
of intended fundraising activity commensurate with the levels taken as the
last fair value data point in arriving at the current carrying value of the
asset, further supporting the above position.
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 2024 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 - (166) - (127) - - (293)
Administration expenses (261) - (8) (3) (2) (999) (1,273)
Project development (13) (41) (8) (218) - - (280)
Other project costs - (18) - (135) - - (153)
Impairment of E&E assets - - - (202) - - (202)
Impairment of mineral tenements (19) - - (165) - - (184)
Share based payments - - - - - (136) (136)
Currency gain (3) - - - - 30 27
Other income - - - - 122 - 122
Finance costs, net - - - - - (640) (640)
Net profit/(loss) before tax from continuing operations (296) (225) (16) (850) 120 (1,745) (3,012)
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) - - (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 2024 UK Africa Australia Total
£'000 £'000 £'000 £'000
Non-current assets
Investments in associates and joint ventures - 1,030 - 1,030
Mineral tenements - - 532 532
Exploration properties - 12,949 - 12,949
Exploration assets - 627 - 627
FVTOCI financial assets 736 - - 736
PPE 1 18 - 19
Non-current receivables 1,464 1,096 - 2,560
Total segment non-current assets 2,201 15,720 532 18,453
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 18,347
3. (Loss)/Profit for the Year Before Taxation
(Loss)/profit for the year before taxation is stated after charging:
2024 2023
£'000 £'000
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of consolidated and 47 39
Company Financial Statements
Directors' emoluments (note 9) 283 319
- Share Incentive plan - Directors 8 6
- Share Incentive plan - staff 2 2
4. Administrative Expenses
Group Group Company Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Staff costs
Payroll 546 655 354 377
Pension 49 56 28 27
Consultants 40 15 40 15
HMRC / PAYE 40 42 40 42
Professional services
Accounting and Audit 124 112 111 90
Legal 9 22 7 13
Marketing 47 78 47 78
Other 10 12 - -
Regulatory compliance 93 109 93 106
Travel 76 66 75 66
Office and Admin
General 95 38 87 30
IT and Software Costs 8 45 6 14
Rent 90 86 69 67
Insurance 47 43 42 40
Total administrative expenses 1,274 1,379 999 965
5. Finance Income/(Costs), Net
Group 2024 2023
£'000 £'000
Interest income (other than MFP finance income) - -
Dividend income - -
Interest expense & other finance costs (640) (613)
Total finance (costs) / income (other than MFP finance income) (640) (613)
MFP finance income - note 16 122 228
Total finance (costs) / income (518) (385)
Other gains - -
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
2024 2023
£'000 £'000
Project development expenses
VUP (Congo) (8) (161)
Galaxy (Congo) - -
Other (Congo) (36) (62)
Luanshimba (Congo) - (12)
Kinsevere - -
Zimbabwe Lithium (107) (64)
Other (129) 49
Total project development expenses (280) (250)
Other project costs
Mid Migori Mines (Kenya) (18) -
Greenland (135) (159)
Other - -
Total other project expenses (153) (159)
7. Taxation
2024 2023
£'000 £'000
Current period taxation on the Group
UK corporation tax at 19.00% (2023: 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 (3,012) (2,700)
Profit/(loss) on ordinary activities at the small company UK standard rate of (572) (519)
19.00% (2023: 19.00%)
Income not taxable - -
Effect of expenditure not deductible 50 42
Losses brought forward utilised in the current period - -
Tax losses carried forward 522 471
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 £5.2 million (2023: £4.7 million). The
Company has applied the "small company" tax rate in the UK of 19% as it falls
within the thresholds of profitability for application of this preferential
rate.
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:
2024 2023
£'000 £'000
Wages and salaries 546 648
Pension 48 55
Social security costs 40 42
Employee share-based payment charge 40 40
Total staff costs 674 785
The average number of Group employees (including Directors) during the year
was:
2024 2023
Number Number
Executives 4 4
Administration 1 1
Exploration 5 9
10 14
The key management personnel are the Directors and their remuneration is
disclosed within note 9.
36,000,000 free shares were issued to six employees (2023: 11,675,670),
including Directors. 14,976,000 partnership and 29,952,000 matching shares,
making the total of 80,928,000, were issued in the year ended 30 June 2024
(2023: 4,278,853 partnership, 8,557,706 matching, 24,512,229 total).
9. Directors' Emoluments
2024 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 5 15 2 10 16 168
Other Directors
S Kaintz 41 3 - 2 4 5 55
S Quinn 24 1 - 2 2 2 31
A Borrelli 24 1 - 2 - 2 29
209 10 15 8 16 25 283
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
*Social security costs have been included in these disclosures but do not form
a disclosable component of directors remuneration.
The highest paid director in the current year was Mr A Bell who was paid total
remuneration of £151,400 (2023: £156,400).
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, (2023: nil). During the
year, the Company contributed to a Share Incentive Plan.
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.
2024 2023
(Loss)/profit attributable to equity holders of the parent company, £ (3,010,495) (2,952,933)
Adjusted for interest accrued on the convertible notes - -
Adjusted (loss) / profit attributable to equity holders of the parent company (3,010,495) (2,952,933)
used for diluted EPS calculation
Weighted average number of ordinary shares of £0.0001 in issue, used for 3,176,919,382 1,592,083,739
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 3,176,919,382 1,592,083,739
potential ordinary shares, used for diluted EPS
2024 2023
(Loss)/earnings per share - basic (0.09 pence) (0.19 pence)
(Loss)/earnings per share - fully diluted (0.09 pence) (0.19 pence)
At 30 June 2024, 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:
2024 2023
Share options granted to employees - either not vested and/or out of the money 21,000,000 21,000,000
Number of warrants given to shareholders as a part of placing equity 849,156,350 314,178,213
instruments - out of the money
Total number of contingently issuable shares, that could potentially dilute 870,156,350 335,178,213
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 2024, 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 2024 2023
£'000 £'000
Cost
At 1 July 77 77
Investment in subsidiaries * 817 -
At 30 June 894 77
Impairment
At 1 July (1) (1)
Charge in the year - -
At 30 June (1) (1)
Net book value 893 76
*Additions to investments in subsidiaries in the year arise from the
acquisition of the remaining 49.9% interest in the equity of Red Rock
Australasia Pty Ltd not previously held by the Company from Power Metals
plc. See note 24 for further details.
As at 30 June 2024 and 30 June 2023, the Company held interests in the
following subsidiary companies:
Company Country of Class Proportion Proportion Nature of business
registration Held Held
At 30 June 2024 At 30 June 2023
Red Rock Australasia Pty Ltd Australia Ordinary 100% 50.1% Mineral exploration
New Ballarat Gold Corporation Plc UK Ordinary 100% 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 Congo S.A.U. DRC Ordinary 100% 100% Holding company
African Lithium Resources PVT Ltd Zimbabwe Ordinary 64.5% 65% Mineral exploration
African Lithium Resources Limited UK Ordinary 100% 100% Holding Company
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
RRR Lithium Limited UK Ordinary 100% 100% Holding Company
Tripler Royalties Limited 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.
Red Rock Kenya Ltd and RRR Kenya Ltd registered office is PO Box 9306 -
003000, Nairobi, Kenya.
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.
African Lithium Resources Limited registered office is Aldwych House 71-91
Aldwych, London, England, WC2B 4HN
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.
RRR Lithium Limited registered office is Aldwych House 71-91 Aldwych, London,
England, WC2B 4HN
Jimano Ltd registered office Strovolou, 77 Strovolos Center, 4(th) Floor
Office 401, Nicosia, Cyprus
Tripler Royalties Ltd registered office is Aldwych House 71-91 Aldwych,
London, England, WC2B 4HN
Red Rock Galaxy SA office is 1320 Av Meteo 2 Q/Meteo C/Lumbumbashi, DRC
12. Investments in Associates and Joint Ventures
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Cost
At 1 July 1,251 1,251 1,114 1,114
At 30 June 1,251 1,251 1,114 1,114
Impairment
At 1 July (221) (221) (3) (3)
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 2024 and at 30 June 2023, 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 2024
Summarised financial information for the Company's associates and joint
ventures, where available, is given below:
For the year as at 30 June 2024:
Company Revenue Loss Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 2,745 (2,775)
For the year as at 30 June 2023:
Company Revenue Profit Assets Liabilities
£'000 £'000 £'000 £'000
Mid Migori Mining Company Limited - - 2,551 (2,579)
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).
Mid Migori VUP Musonoi Mining SA Total
Mining Company £'000 £'000
Limited
£'000
Cost
At 1 July 2023 1,111 - 1,111
Additions during the year - - -
Reclassified during the year - - -
At 30 June 2024 1,111 - 1,111
Impairment and losses during the year
At 1 July 2023 (81) - (81)
The Group's share of profit/(loss) during the year - - -
At 30 June 2024 (81) - (81)
Carrying amount
At 30 June 2023 1,030 - 1,030
At 30 June 2024 1,030 - 1,030
13. Exploration Assets and Mineral Tenements
Group Exploration Assets 2024 2023
£'000 £'000
At 1 July 13,358 13,265
Additions 419 139
Impairments (201) (259)
Reclassification from other current assets (note 17) - 213
At 30 June 13,576 13,358
Group Mineral Tenements 2024 2023
£'000 £'000
At 1 July 698 511
Additions 17 187
Impairment (184) -
At 30 June 532 698
Company Exploration Assets 2024 2023
£'000 £'000
At 1 July 12,948 13,206
Impairments - (258)
At 30 June 12,948 12,948
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 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. Amounts incurred on
this project to date have been fully impaired in the current year following
uncertainty over ultimate commercialisation of the asset.
· For the Faso Greenstone project since the acquisition of the
Bilbale licence interest on 24 December 2021 (expiring / due for renewal in
November 2025).
· For the Ballarat project since the acquisition of the remaining
license interest from RRAL on 19 June 2024.
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 had 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 26.
Impairments in the prior 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 in the prior year relate to expenditures undertaken on the
Kenyan licence areas that had previously been held as recoverable receivables
and have been determined in the prior year to now form part of the base cost
of the E&E asset.
14. Financial Instruments at Fair Value Through Other Comprehensive Income
(FVTOCI)
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Opening balance 736 736 736 736
Additions - - - -
Disposals - - - -
Change in fair value - - - -
At 30 June 736 736 736 736
Fair Value of Investments
The fair value as at 30 June of the listed and unlisted investments was as
follows:
Group Company
2024 2023 2024 2023
£'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, the fair value
of the investment has been maintained at £736,281 (2023: £736,281).
Details of the fair value measurement hierarchy are included in note 22.
15. Cash and Cash Equivalents
Group 30 June 30 June
2024 2023
£'000 £'000
Cash in hand and at bank 38 155
38 155
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
2024 2023
£'000 £'000
Cash in hand and at bank 17 149
17 149
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
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Amounts receivable relating to VUP Joint Venture 1,096 1,096 1,096 1,096
Due from subsidiaries - - 2,850 2,472
MFP sale proceeds 1,464 1,410 1,464 1,410
2,560 2,506 5,410 4,978
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
2025.
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 year ended 30 June 2022. These amounts remain
recognised as a non-current receivable associated with the above as at the
current year end 30 June 2024.
MFP Sale Proceeds
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
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Current trade and other receivables
Prepayments 68 32 68 32
Short-term loan receivable 164 164 164 164
MFP sales proceeds - current element 239 171 239 171
Other receivables 336 303 256 234
Total 807 670 727 601
18. Trade and Other Payables
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Non-current liabilities
Trade and other payables - 684 - -
Borrowings 756 756 756 756
Total non-current liabilities 756 1,440 756 756
Current liabilities
Trade payables 2,754 1,646 2,426 1,512
Accruals 84 91 84 91
Total trade and other payables 2,838 1,737 2,510 1,602
Intra-group borrowings - - 1,890 2,115
Short-term borrowings 3,037 1,662 3,037 1,503
Total current liabilities 5,875 3,399 7,437 5,220
During the year, the Company took out the following additional borrowings
against both new and pre-existing facilities:
· In October 2023 convertible loan notes totalling £210,000 were
issued to various investors and recognised in current borrowings. The notes
attract interest at 12% per annum and were subject to £135,000 of conversions
in the year with the notes fully retired.
· During the year convertible loan notes of £693,645 were
outstanding. £127,000 of these notes were converted, leaving a balance of
£566,645. The notes carry an interest rate of 12% per annum. The balance
owing at year end was £638,535 and is recognised in current borrowings.
· Over the course of the year £1,050,000 was drawn on an
existing loan facility with a high-net-worth investor. The facility attracts
interest at 20% per annum and carries a 20% redemption fee and has been
recognised in current borrowings.
· During the year a loan from a high net worth investor of
£50,000 remained drawn, carrying interest of 0.5% per day and a repayment
bonus of 30% and has been recognised in current borrowings.
· During the year a loan from a high-net-worth investor of
£150,000 remained drawn, carrying interest of 0.5% per day and a repayment
bonus of 25% and has been recognised in current borrowings.
· During the year a loan from a high-net worth investor of
£100,000 remained drawn, carrying interest at 20% per annum if unpaid at
redemption date and carries a 20% redemption fee and has been recognised in
current borrowings.
· A $925,000 loan note (£756,000), recognised in non-current
borrowings, 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 2024 2023
£'000 £'000
4,305,645,493 (2023: 2,480,597,806) ordinary shares of £0.0001 each 430 247
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 3,143 2,960
Movement in ordinary shares Number Nominal
£'000
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
Issued on 10 Aug 2023 at 0.2 pence per share (non-cash) 63,500,000 6
Issued on 29 Aug 2023 at 0.2 pence per share (non-cash) 26,000,000 3
Issued on 18 Dec 2023 at 0.011 pence per share (allotment for cash) 100,000,000 10
Issued on 21 Dec 2023 at 0.0075 pence per share (allotment for cash) 666,666,667 66
Issued on 12 Feb 2024 at 0.00637 pence per share (non-cash) 211,482,353 21
Issued on 12 Apr 2024 at 0.0051 pence per share (allotment for cash) 509,804,000 51
Issued on 12 Apr 2024 for 0.06 pence per share (non-cash, SIP) 80,928,000 8
Issued on 18 June 2024 for 0.015 pence per share (non-cash, SIP) 166,666,667 17
As at 30 June 2024 - ordinary shares of £0.0001 each 4,305,645,478 430
The total net cash raised from allotments of shares was £772,000 for the year
(£488,000 in non-cash share allotments giving rise to total share allotments
of £1,202,000 in value).
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 2024, the Company had 849,156,350 warrants in issue (2023:
314,178,213) with a weighted average exercise price of £0.0019 (2023:
£0.0023). Weighted average remaining life of the warrants, at 30 June 2024,
was 615 days (2023: 678 days). The majority of the warrants were issued by the
Group to its investors in the capacity of investors and, therefore, are
outside of IFRS 2 scope. Warrants issued to finance providers not
subscribing to new ordinary shares are recognised within the scope of IFRS 2.
Group and Company 2024 2023
number of warrants number of warrants
Outstanding at the beginning of the year 314,178,213 389,430,010
Granted during the period 534,978,137 304,945,821
Exercised during the period - -
Cancelled during the period - -
Expired during the period - (380,197,618)
Outstanding at the end of the year 849,156,350 314,178,213
During the year ended 30 June 2024, the Company had the following warrants to
subscribe for shares in issue:
Warrant exercise price, £ Number of warrants
Grant date Expiry date
16 Aug 2022 16 Aug 2025 0.0045 50,778,159
* 16 Aug 2022 18 Jan 2026 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
7 Aug 2023 18 Jan 2026 0.0025 3,135,000
22 Aug 2023 21 Aug 2025 0.002 50,000,000
19 June 2024 19 June 2027 0.0015 100,000,000
20 June 2024 21 June 2026 0.001125 381,843,137
Total warrants in issue at 30 June 2024 849,156,350
* In August 2023 the Company's 51,916,664 warrants outstanding were repriced
from 0.8 pence to 0.25 pence and expiry date extended from 16 Feb 2025 to 18
Jan 2026. Consequently, the Company undertook a fair value determination of
these instruments as if they had been issued on the date of modification, on
the basis of the new expiry and exercise price and utilising volatility and
risk free rates based on the date of modification and remaining contractual
life, with the difference in the fair value determined for the new terms of
the warrants as if they had been issued at the date of modification and the
original fair value recognised on grant having been recognised in the current
year.
The aggregate fair value, related to the share warrants granted during the
reporting period to non-equity finance providers and recognised in finance
costs for the year, was £96,781 (2023: £173,825).
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 2024, 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
Employees 5,000,000 5,000,000 10,000,000
Total 10,500,000 10,500,000 21,000,000
Company and Group
2024 2023
Number of Weighted Number of Weighted
options average options average
exercise exercise
price price
pence pence
Outstanding at the beginning of the year 21,000,000 2.25 50,000,000 1.41
Options issued in the year - - - -
Options exercised in the year - - - -
Options lapsed in the year - - (29,000,000) 0.46
Outstanding at the end of the year 21,000,000 2.25 21,000,000 2.25
Nil share options were granted by the Company in the reporting year (2023:
Nil). The weighted average fair value of each option granted during the year
was £nil (2023: Nil). The exercise price of options, outstanding at 30 June
2024, ranged between £0.0025 and £0.02 (2023: £0.0025 and £0.02 Their
weighted average contractual life was 1.14 years (2023: 1.63 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 44,928,000 Partnership and Matching
Shares were awarded and 36,000,000 Free Shares (2023: 12,836,559 Partnership
and Matching Shares and 11,675,670 Free Shares) with a fair value of £0.0060
for the Partnership and the Matching Shares and £0.0060 for the Free Shares
(2023: £0.0021 for the Partnership and the Matching Shares and £0.00185 for
the Free Shares), resulting in a share-based payment charge of £39,571 (2023:
£39,571), 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
2024 2023 2024 2023
£'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 736 736 736 736
Financial assets FVTPL (Para warrants) - - - -
Total financial assets carried at fair value through profit and loss 736 736 736 736
Cash and cash equivalents 38 155 17 149
Loans and receivables
Non-current receivables 2,560 2,506 5,410 4,978
Other receivables - current 807 506 727 601
Total loans and receivables carried at amortised cost 3,367 3,012 6,137 5,579
Total financial assets 4,141 3,903 6,890 6,464
Total current financial assets 845 661 744 750
Total non-current financial assets 3,296 3,242 6,146 5,714
Financial liabilities
Short-term borrowings, including intra-group 3,037 1,662 4,927 3,618
Long-term borrowings 756 1,440 756 756
Trade and other payables 2,838 1,646 2,511 1,511
Total current financial liabilities 6,631 4,748 8,194 5,885
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 2024
£'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 2024
£'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 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) - - - -
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 2024
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 17 17 - - 4 38
Amortised cost financial assets - Other receivables 724 - 1 - 103 828
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,560 - - 2,560
Trade and other payables, excluding accruals 1,195 17 288 1,248 5 2,753
Short-term borrowings 3,037 - - - - 3,037
Long term borrowings - - 756 - - 756
Group GBP AUD USD CAD Other Total
30 June 2023
£'000 £'000 £'000 £'000 £'000 £'000
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
Company GBP AUD USD CAD Other Total
30 June 2024
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 17 - - - - 17
Amortised cost financial assets - Other receivables 3,598 - - - - 3,598
FVTOCI financial assets - - 736 - - 736
Amortised costs financial assets - Non-current receivables - - 2,560 - - 2,560
Trade and other payables, excluding accruals 966 7 204 1,248 2 2,427
Short-term borrowings, including intra-group 4,926 - - - - 4,926
Long term borrowings - - 756 - - 756
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
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 2023 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 2024
Interest paid Introducers fee accrued
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from institutional investors -
Convertible notes 694 210 - - - (262) 83 - 725
Other loans 967 1,250 (79) - - (352) 525 - 2,311
Total 1,661 1,460 (79) - - (614) 608 - 3,036
Company 30 June 2023 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 2024
Interest paid
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan from subsidiary 2,115 - (225) - - - - - 1,890
Loan from institutional investors - - - - - - - - -
Convertible notes 694 210 - - - (262) 83 - 725
Other loans 809 1,250 (79) - - (193) 525 - 2,312
Total 3,618 1,460 (304) - - (455) 608 - 4,927
Significant non-cash transactions from financing activities, in relation to
raising new capital, are disclosed in note 18.
On 19 June 2024, the Company announced the completion of the acquisition of
the remaining 49.9% interest in the Company's subsidiary New Ballarat Gold
Corporation plc, which holds the Group's Australian gold interests, from Power
Metals plc. The transaction includes significant non cash components to the
consideration payable. See note 24 below for details.
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
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 price 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 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 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 of 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. Additionally, 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 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.
On 12 February 2024, the Company announced the partial conversion and full
retirement of its loan notes issued 23 October 2023 for 211,482,353 shares at
a price of £0.000637 per share.
On 12 April 2024, the Company announced that it had raised gross proceeds of
£260,000 through the issuance of 501,804,000 new ordinary shares at a price
of £0.00051 per share.
On 22 April 2024, the Company announced the issuance of 80,928,000 new
ordinary shares to employees of the Company under the Company's Share
Incentive Plan for the 2023-24 tax year as agreed by the Trustees of the
plan.
On 19 June 2024, the Company announced the completion of the acquisition of
the remaining 49.9% interest in the Company's subsidiary Red Rock Australasia
Pty Ltd ("RRAL"), which holds the Group's Australian gold interests, from
Power Metals plc ("POW"). Consideration for the acquisition of the interest
from the JV partner comprised the following:
- £250,000 in Company shares priced at 0.15p each, issuable immediately
on close of the agreement and with 1:1 attendant warrants at 0.25p strike and
exercisable for 3 years;
- £250,000 in convertible loan notes to be issued immediately on close of
the agreement, converting at the price of any placing in excess of £200,000
taking place within 6 months of transaction close, failing which become
repayable in cash;
- £250,000 in cash 2 months from transaction completion
- £250,000 in cash or shares, at the Company election and based on 5 day
VWAP at the time of the election, 9 months from transaction completion
- £250,000 in cash or shares, at the Company election and based on 5 day
VWAP at the time of the election, on achievement of a 20,000oz gold JORC on
the assets acquired and;
- £250,000 in cash or shares, at the Company election and based on 5 day
VWAP at the time of the election, on achievement of a 200,000oz gold JORC on
the assets acquired.
Included in the assets acquired by the Company in the above transaction was
the loan account payable by RRAL to POW totalling £845,237, which was
assigned to the benefit of the Company and so forms part of the calculation of
the accounting loss on acquisition of the non-controlling interest taken to
"other reserves" on recognition of the transaction.
VUP Project - Democratic Republic of Congo
In the DRC we seek compensation for the illegitimate process whereby our
majority-owned project was purportedly sold behind our backs at a serious
undervaluation at the end of 2019 by local partner VUP, a fact that did not
come to light until some time afterwards. The Company conducted successful
legal proceedings at the end of 2021 and beginning of 2022 and established its
right to 50.1% of the $5m already paid by the purchaser by a final and
non-appealable judgment. The Company then went to arbitration under the aegis
of the Presidential office in order to ensure that the 50.1% of the $15m still
to be paid by the purchaser came to Red Rock. The company was on the point of
achieving a result from the arbitration in November last year, in the normal
course and after a long process of negotiation, debate, discussion, and
pressure to announce a result.
A conclusion to the arbitration was then deferred until after the end-2023
Presidential and parliamentary elections in order to distance the result from
the pre-election period where hurried and irregular transactions can sometimes
occur. We have followed a regular process and it is better that it is seen
as such and does not get caught up in any election-period controversies.
It was of course painful for us to agree to a further delay, but the best
advice was to accept this, and we were assured the delay would be a short one.
In fact it was not. After the election there were Electoral Tribunal hearings
before the President could take up his position, followed by a process of
selection of a Prime Minister, and then a long and painful process of
selecting a Speaker and then choosing a Cabinet, from the plethora of
political parties that had formed the Presidential alliance, that commanded
sufficient consent to win Parliamentary approval.
Then a new Chief of Staff of the Presidential Office had to be selected, with
his predecessor, who had presided over our arbitration hearings, going off to
be a Minister. By this time we were heading into the Autumn, and the new Chief
of Staff barely had his feet under the desk.
Thus it was only towards the end of the year that we could get attention paid
to our case. From the President down, there is awareness of our case, but in a
country of nearly 100m with an occasionally high intensity conflict raging on
its Eastern border with Rwanda, our case is never top of the agenda of a very
busy office. It is probably fair to say that there is broad recognition of our
rights, which have been confirmed in a formal letter to the Presidency by the
lawyer acting for VUP at all material times. We assert that we are entitled to
50.1% of the sale proceeds of the JV assets, ie $7.5m of the $15m under
arbitration and $10m out of $20m in total.
Parastatal miner Gécamines has paid $5m to VUP, in respect of which we have
our judgment, but has not yet paid the other $15m though is ready to do so and
of course has the money: it is this in relation to which we have been
arbitrating.
We have also reached out to certain persons who can bring VUP to the table,
and believe we have the outline of an agreement, though we wait for a date
where we might meet to sign. Our preference is to sign a settlement in front
of the Chief of Staff's office, since that would carry its own enforcement and
completion mechanisms, but the latter office acts slowly though we have
promises that a concluding session will be called imminently. A private
ceremony is also possible.
We are working also through other channels since we have other possible causes
of action locally and the harms we have suffered, including lost interest and
opportunity, cost, and delay are not fully compensated by an arbitration
settlement. There is some recognition of this and other settlements are
possible.
25. Related Party Transactions
· Power Metal Resources Plc (POW) are the Company's partner and
holder of 49.9% in the Company's 50.1% owned subsidiary Red Rock Australasia
Pty Ltd ("RRAL"). During the year, the Company entered into an agreement
with POW for the purchase of their 49.9% holding. See note 24 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 2024 and at 30 June 2023 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 2024, the Company issued 75m new ordinary shares at a price of 0.045
pence per share in settlement of conversion of £33,750 of debt owed to a
service provider.
On 4 July 2024, the Company issued 405,175,088 new ordinary shares at a price
of 0.045 pence per share in conversion of debts totalling £182,329.
On 16 August 2024, the Company issued 44,444,444 new ordinary shares at a
price of 0.045 pence per share in conversion of £20,000 of debts.
On 23 August 2024, the Company announced the extension of the maturity of
existing convertible loan notes to 18 November 2024, alongside partial
conversion of £68,403 of interest by the issuance of 129,628,588 new ordinary
shares at a price of 0.0475p per share. The extension of the convertible
loan notes maturity includes an adjustment of the conversion price of the
notes to 0.095 pence per share and adjustment of the attendant warrants strike
price to 0.11875p per share. An extension fee was also payable by way of
issuing additional warrants to the noteholders to the value of 5% of amounts
extended, with such warrants having a strike price of 0.11875p per share and
exercisability period of 3 years.
On 27 August 2024, the Company issued 44,444,444 new ordinary shares at a
price of 0.045 pence per share in conversion of £20,000 of debts.
On 26 September 2024, the Company issued 54,444,444 new ordinary shares at a
price of 0.045 pence per share in conversion of £24,500 of debt.
On 23 October 2024, the Company issued 597,014,925 new ordinary shares at a
price of 0.0335 pence per share to raise £200,000 in gross cash proceeds.
On 11 December 2024, the Company announced an amendment to its agreement with
Power Metals plc (POW) as regards consideration payable for the acquisition of
the 49.9% interest in Red Rock Australasia Pte Ltd (RRAL) as follows:
- £200,000 of the £250,000 payable in cash nine months after
completion of the acquisition of POW's holding in RRAL has been paid by the
Company with the remaining £50,000 owed being rescheduled for payment on 20
January 2025.
- The £250,000 convertible loan notes issued to the POW at
Completion and expiring on 19 December 2024 will instead be repaid in cash
on 19 March 2025.
- The 166,666,667 Company warrants issued to POW and expiring
three years after the date of issue will be repriced to an exercise price
of 0.041 pence each.
27. Commitments
As at 30 June 2024, 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 30 April 2024, the Company extended its existing lease at We
Work, Aldwych House, through to 30 June 2026. Total lease rentals payable over
the full term to June 2026 are £147,492. However as the lease allows for a
3 month notice period to terminate, no lease liability and corresponding right
of use asset has been recognised in these financial statements.
· 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 to 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, with all other amounts having been settled since. 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.
· On 19 June 2024, the Company completed the acquisition of the
remaining 49.9% equity interest in Red Rock Australasia Pty Ltd from Power
Metals plc. The acquisition agreement includes unconditional deferred
consideration, which has been recognised as a liability in these financial
statements, and conditional consideration, which has not been recognised as a
liability in these financial statements due to the inability to assess the
probability of the conditions for such consideration to become payable being
met. The two tranches of conditional consideration are as follows:
o £250,000 in cash or shares (at the Company election and priced at 5 day
VWAP) in the event of a JORC determination in excess of 20,000oz of gold in
any of the company held licence areas and ;
o £250,000 in cash or shares (at the Company election and priced at 5 day
VWAP) in the event of a JORC determination in excess of 200,000oz of gold in
any of the company held licence areas.
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 2024 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 2024
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 2024 will be delivered to the Registrar of Companies
by 31 December 2024.
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