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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Red Rock Resources Plc | AQSE:RRR.GB | Aquis Stock Exchange | Ordinary Share | GB00BYWKBV38 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.065 | 0.05 | 0.08 | 0.065 | 0.065 | 0.065 | 0.00 | 06:55:46 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRRR
RNS Number : 6269Q
Red Rock Resources plc
01 December 2016
Red Rock Resources plc
("Red Rock" or the "Company")
Final Audited Results for the Year Ended 30 June 2016
01 December 2016
A copy of the Company's annual report and financial statements for 2016 - extracts from which are set out below - will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting to be held on 30 December 2016.
Chairman's Review
Dear Shareholders,
Overview
Turning points are usually only evident in retrospect, and however obvious they may then seem, they rarely were at the time. We have in the last year lived through one of those points of inflection, and it happened quickly and without explanation, as if events were moved by an invisible tide. It was the turning of commodity prices from decline to recovery, and because the final collapse had been so severe and universal, so the recovery when it came was abrupt and as the signal spread from commodity to commodity all prices rose together.
If we had not already identified the sell-off as the likely end of the bear market, the strength of the recovery gave a good signal, so the turning point could be identified with confidence, even without the benefit of hindsight. Whether it was copper or gold, oil or nickel, gas or manganese, at the end of 2015 and the first quarter of 2016 there was a slump in price followed by an even sharper recovery. This, we felt sure, was the end of the multi-year recession in commodities that had gathered pace since 2010. Whether prices would now plateau or would continue to rise we could not tell, but this period of falling prices and sector decline was over.
Our close involvement in the manganese market made it easier to interpret the data from other commodities, and the case of manganese may serve as an example. We knew that the Tshipi mine, in which we are indirectly invested, was as efficient and low cost a producer as any, and that even with every further measure that could be contemplated it could not be expected within any reasonable time frame to reduce its costs to the level necessary to operate for long at $1.32 per DMTU (dry metric tonne unit), the price seen in early 2016. We concluded in February that no producer could make an economic return at that level, and that a recovery to at least double that level was likely before the end of the calendar year. That recovery in the event took less than a month, and prices have nearly tripled since.
Taking advantage of this turnround was not as easy as identifying it. Fortunately we were already committed to buying into low cost oil and gas exploration and development at Shoats Creek in Louisiana at the end of 2015, in anticipation of the bottoming of prices. As benchmark prices hit their lows we extended this investment, buying on 20 January 2016 into a well just coming into production in the same field.
Fortunately, we also held gold and manganese interests that were expected to become revenue-producing for us within months. Acquiring new assets already income-generating would have been likely to be beyond our depleted financial resources, yet the greatest early beneficiaries of the perception of recovering prices would be those companies with sizeable revenues not yet generating large profits.
One such asset was the gold mine we had sold in Colombia, which was being opened after refurbishment and where we had agreed to take part of our payment in the form of a royalty. Another was our holding in Jupiter Mines Ltd, the Australian public company which held 49.9% of the Tshipi é Ntle manganese mine in the Northern Cape province of South Africa.
During the year in review we also made an investment in the privately owned West African onshore oil explorer Elephant Oil Ltd and an initial investment in AIM-listed Goldstone Resources Ltd, which has an established gold Resource in West Africa and exploration upside.
As a result of actions taken the Company ended the period with oil and gas as well as gold exposure, greater liquidity in its investments, additional income streams developing, and sharply reduced expenses. Even without the background of strongly recovering commodity prices, this would have been a much improved position.
Year in Review
During the financial period to 30 June 2016 our main priority was already established as being to obtain or develop cash flow-producing assets in oil and gas to complement and support our mineral exploration activities, largely focused on gold, and give us greater resilience and less dependence on funding from financial markets.
The three main streams of income we expected in calendar 2016, from gold royalties in Colombia, oil and gas wellbore interests in the U.S., and dividend income from manganese mining and marketing in South Africa, all in the event saw the first payments made after the end of our financial year to 30 June 2016, a fact reflected in the absence of operating revenues in our Consolidated income statement. The initial schedules for the oil and gold payments would have seen them start to be paid earlier, but commissioning and optimization of these projects meant the first payments were later, and smaller, than anticipated, coming in August and September respectively. On the other hand Jupiter announced an initial distribution earlier and larger than expected, stating in November 2016 that it planned to pay at the beginning of March 2017 a sum which would net Red Rock USD 658,350, equivalent at current exchange rates to approximately GBP530,000, with the prospect of a further payment later, that may be almost as large.
The other priorities during the year were to continue and intensify the process of reducing and laying off costs, to reduce payables, to continue disposals of non-core assets, and to reduce dependence on the market for new capital. In all of these aims we had some success. We sublet office space and laid off the majority of our staff, eliminating the bulk of our overhead cost for the second half of the financial year. Our Administration expenses for the year at GBP758,371 were reduced by 20.4% but reflect the lower cost level for only half of the year, and contain substantial redundancy costs. Our strategy at Star Striker Ltd (formerly Resource Star Ltd) of bringing in new high net worth investors, working with them, and then letting them introduce a project, came to a successful culmination during the year and enabled us to dispose of our holding, previously of negligible value, for AUD 1,254,826. We received a scheduled instalment payment of USD 225,000 in February 2016 in respect of the sale of our Colombian gold mine, but due in part to the slow build-up of revenues from Colombia and Shoats Creek we only halved the level of our external equity fundraising during the year, failing to achieve our target in this area.
Red Rock declared an after tax loss for the year reduced from GBP8,411,541 to GBP283,280, reflecting a lower level of provisions. We did provide a further GBP1,500,000 in respect of the Company's Greenland interests, the recovery seen in the iron ore price not having fed through at year end to capital transaction values. Other significant contributors to this reduced loss were an uplift to the fair value of the deferred consideration from the Colombian sale, taken through the GBP918,767 Other income item, and the GBP599,225 gain on sale of associates, which reflected the Star Striker sale. Nearly half of another large number, the Other receivables figure of GBP702,563 in Note 17, represents the current portion of the Colombian sale receivable.
Current Financial Year
The course set in the first half of the calendar year has been maintained, with a further USD 225,000 instalment payment on the sale of the El Limón Mine in Colombia received, further investment in Goldstone Resources Ltd made to maintain our 9.645% holding (9,863,987 shares with 3,857,400 two year warrants), and first payments received from our gold royalty and our oil and gas wellbore interests. Costs have continued to be tightly controlled, and the current fiscal year will be the first which reflects this new low level of overheads for the entire period.
We also proceeded with the prosecution of our judicial review case in Kenya, to protect our interest in the Migori gold asset and its 1.2m oz gold Resource. A moratorium on grants of licenses and permits in Côte d'Ivoire has ended and we expect our gold exploration applications there to pass into the final stages of permitting.
We retain some 30% of our original shares in Jupiter, which given the quality of the Tshipi manganese mine we have regarded as our anchor asset and held on to through the depths of the mineral recession. The strong performance of Tshipi this year argued against premature corporate moves that might require further expansion of our issued share capital, since the prospect of a maiden dividend from Jupiter was clearly near and this would make patent the value of our holding and lead to our share price more nearly reflecting the value of the Red Rock's underlying assets. The Jupiter announcement when it came was of a planned distribution equivalent to a 35.7% yield on the GBP1,483,119 carrying value of our Jupiter holding, with the prospect of another dividend being announced before the end of our financial year.
Forward Prospects
In announcing Jupiter's planned distribution earlier this month, the Jupiter Chairman wrote: "When we took the decision to delist Jupiter in January 2014, I appealed to shareholders to remain invested as we entered the value optimisation phase, so as to realise significantly greater value than was reflected in the then share price. With the mine now well established, and the manganese market robust, shareholder patience is being rewarded." Even today we would echo that advice, as Jupiter pursues strategic options for its holding in Tshipi. Not only is the performance of the mine likely to continue strong, with further distributions probable, but the prospect of a crystallisation event that will unlock the underlying value in our holding has become much immediate.
Elsewhere, we expect significant income growth from our oil and gold interests, and resolution of the issues that had arisen in Kenya. We will also pursue, if necessary through arbitration, the early repayment and conversion of our USD 1,000,000 Promissory Note from Colombia Milling Limited. We continue to review actively opportunities for development that have the potential to add shareholder value. We expect 2016-17 to be a year of significant growth for the business as the sector recovery means we begin to realise the value contained within our existing project and investment portfolio, at a time when increasing revenue flows may be expected to cover and exceed our much reduced overheads.
Once again, as always, we thank you, the shareholders, for your support and look forward to seeing you rewarded for your patience in the months ahead.
Andrew Bell
Chairman and CEO
30 November 2016
Results and dividends
Red Rock (the "Parent") and its subsidiaries made a post-tax loss of GBP283,280 (2015: GBP8,411,541).
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 issue on 30 November 2016.
For further information, please contact:
Andrew Bell 0207 747 9990 Chairman Red Rock Resources Plc
Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd
Consolidated statement of financial position
as at 30 June 2016
Hot Features
Premium
30 June 30 June
2016 2015
Notes GBP GBP
------------------------------------- ----- ------------ ------------
ASSETS
Non-current assets
Property, plant and equipment 10 17,400 266
Investments in associates and joint
ventures 12 2,459,638 3,968,878
Exploration assets 13 280,460 -
Available for sale financial assets 14 1,976,552 1,331,766
Non-current receivables 16 4,838,559 3,634,270
Total non-current assets 9,572,609 8,935,180
------------------------------------- ----- ------------ ------------
Current assets
Cash and cash equivalents 15 26,564 29,426
Other receivables 17 939,554 661,152
Total current assets 966,118 690,578
------------------------------------- ----- ------------ ------------
Assets classified as held for sale 8 - -
------------------------------------- ----- ------------ ------------
TOTAL ASSETS 10,538,727 9,625,758
------------------------------------- ----- ------------ ------------
EQUITY AND LIABILITIES
Equity attributable to owners of the
Parent
Called up share capital 19 2,752,487 2,600,207
Share premium account 25,275,788 24,285,503
Other reserves 523,431 394,899
Retained earnings (19,910,736) (19,747,630)
------------------------------------- ----- ------------ ------------
Total 8,640,971 7,532,979
------------------------------------- ----- ------------ ------------
Non-controlling interest (13,736) (5,491)
------------------------------------- ----- ------------ ------------
Total equity 8,627,235 7,527,488
------------------------------------- ----- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 18 1,854,002 2,098,270
Short-term borrowings 18 57,490 -
Total current liabilities 1,911,492 2,098,270
------------------------------------- ----- ------------ ------------
Liabilities directly associated with
the assets classified as held for
sale 8 - -
------------------------------------- ----- ------------ ------------
Non-current liabilities
Long-term borrowings 18 - -
Total non-current liabilities - -
------------------------------------- ----- ------------ ------------
TOTAL EQUITY AND LIABILITIES 10,538,727 9,625,758
------------------------------------- ----- ------------ ------------
These financial statements were approved by the Board of Directors and authorised for issue on 30 November 2016 and are signed on its behalf by:
Andrew Bell
Executive Chairman
The accompanying notes form an integral part of these financial statements.
Consolidated income statement
for the year ended 30 June 2016
Year
Year to to
30 June 30 June
2016 2015
Notes GBP GBP
----------------------------------------- ----- ----------- -----------
Gain on sales of investments - 4,308
Gain on sale of associates 599,225 -
Impairment of investment in associates
and joint ventures 12 (1,500,000) (1,349,245)
Impairment of available for sale
investment 14 - -
Impairment of amount due from associates - (5,280,000)
Exploration expenses (119,768) (139,221)
Administration expenses (758,351) (952,185)
Share of losses of associates 12 (9,240) (1,183)
Provision for bad debts (57,768) (222,830)
Other income and currency gain on
MFP receivable 918,767 30,033
Other currency gain/(loss) 346,155 (382,219)
Finance income, net 4 297,700 565,171
----------------------------------------- ----- ----------- -----------
Loss for the year before taxation
from continuing operations 3 (283,280) (7,727,371)
Tax 5 - -
----------------------------------------- ----- ----------- -----------
Loss for the year from continuing
operations (283,280) (7,727,371)
Discontinued operations
Loss after tax for the year from
discontinued operations 8 - (684,170)
Loss for the year (283,280) (8,411,541)
Loss for the year attributable to:
Equity holders of the Parent (275,035) (8,091,951)
Non-controlling interest (8,245) (319,590)
----------------------------------------- ----- ----------- -----------
(283,280) (8,411,541)
----------------------------------------- ----- ----------- -----------
Loss per share attributable to owners
of the Parent:
Basic loss per share
(0.10) (6.69)
- Loss from continuing operations pence pence
(0.31)
- Loss from discontinued operations - pence
----------------------------------------- ----- ----------- -----------
(0.10) (7.00)
Total 9 pence pence
----------------------------------------- ----- ----------- -----------
Diluted
(0.10) (6.69)
- Loss from continuing operations pence pence
(0.31)
- Loss from discontinued operations - pence
----------------------------------------- ----- ----------- -----------
(0.10) (7.00)
Total 9 pence pence
----------------------------------------- ----- ----------- -----------
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
for the year ended 30 June 2016
30 June 30 June
2016 2015
Notes GBP GBP
--------------------------------------- ----- --------- -----------
Loss for the year (283,280) (8,411,541)
Other comprehensive income
Items that will be reclassified
subsequently to profit or loss
Surplus/(Deficit) on revaluation
of available for sale investment 14 157,286 (242,148)
Unrealised foreign currency gain
arising upon retranslation of foreign
operations 19,905 48,973
--------------------------------------- ----- --------- -----------
Total other comprehensive income
net of tax for the year 177,191 (193,175)
--------------------------------------- ----- --------- -----------
Total comprehensive expense net
of tax for the year (106,089) (8,604,716)
--------------------------------------- ----- --------- -----------
Total comprehensive expense net
of tax attributable to:
Owners of the Parent (97,844) (8,285,126)
Non-controlling interest (8,245) (319,590)
--------------------------------------- ----- --------- -----------
(106,089) (8,604,716)
--------------------------------------- ----- --------- -----------
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
for the year ended 30 June 2016
The movements in equity during the period were as follows:
Total
attributable
Share to owners
Share premium Retained Other of Non-controlling Total
capital account earnings reserves the Parent interest equity
GBP GBP GBP GBP GBP GBP GBP
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
As at 30 June
2014 1,934,588 22,663,691 (11,671,669) 604,064 13,530,674 60,461 13,591,135
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
Changes in equity
for 2015
Loss for the
year - - (8,091,951) - (8,091,951) (319,590) (8,411,541)
Disposal of subsidiary - - - - - 253,638 253,638
Other comprehensive
income for the
year - - - (193,175) (193,175) - (193,175)
Transactions
with owners
Issue of shares 655,354 1,656,938 - - 2,312,292 - 2,312,292
Share issue costs - (112,116) - - (112,116) - (112,116)
Share issue in
relation to SIP 10,265 76,990 - - 87,255 - 87,255
Share-based payment
transfer - - 15,990 (15,990) - - -
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
Total transactions
with owners 665,619 1,621,812 15,990 (15,990) 2,287,431 - 2,287,431
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
As at 30 June
2015 2,600,207 24,285,503 (19,747,630) 394,899 7,532,979 (5,491) 7,527,488
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
Changes in equity
for 2016
Loss for the
year - - (275,035) - (275,035) (8,245) (283,280)
Disposal of subsidiary - - - - - - -
Other comprehensive
income for the
year - - 177,191 177,191 - 177,191
Transactions
with owners
Issue of shares 151,541 1,003,782 - - 1,155,323 - 1,155,323
Share issue costs - (40,500) - - (40,500) - (40,500)
Share issue in
relation to SIP 740 27,003 - - 27,743 - 27,743
Share-based payment
transfer - - 111,929 (48,659) 63,270 - 63,270
Total transactions
with owners 152,281 990,285 111,929 (48,659) 1,205,836 - 1,205,836
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
As at 30 June
2016 2,752,488 25,275,788 (19,910,736) 523,431 8,640,971 (13,736) 8,627,235
----------------------- --------- ---------- ------------ --------- ------------- --------------- -----------
Available
for sale Foreign
trade Associate currency Share-based Total
investments investments translation payment other
reserve reserve reserve reserve reserves
GBP GBP GBP GBP GBP
----------------------------- ------------ ------------ ------------ ----------- ---------
As at 30 June 2014 383,958 - 92,187 127,919 604,064
----------------------------- ------------ ------------ ------------ ----------- ---------
Changes in equity for 2015
Other comprehensive income
for the year (242,148) - 48,973 - (193,175)
Transactions with owners
Share-based payment transfer - - - (15,990) (15,990)
----------------------------- ------------ ------------ ------------ ----------- ---------
Total transactions with
owners - - - (15,990) (15,990)
----------------------------- ------------ ------------ ------------ ----------- ---------
As at 30 June 2015 141,810 - 141,160 111,929 394,899
Changes in equity for 2016
Other comprehensive income
for the year 157,286 - 19,905 - 177,191
Transactions with owners
Share-based payment transfer - - - (48,659) (48,659)
----------------------------- ------------ ------------ ------------ ----------- ---------
Total transactions with
owners - - - (48,659) (48,659)
As at 30 June 2016 299,096 - 161,065 63,270 523,431
----------------------------- ------------ ------------ ------------ ----------- ---------
See note 20 for a description of each reserve included above.
Consolidated statement of cash flows
for the year ended 30 June 2016
Year to Year to
30 June 30 June
2016 2015
Notes GBP GBP
------------------------------------------ ----- --------- -----------
Cash flows from operating activities
(Loss) before tax from continuing
operations (283,280) (7,727,371)
(Loss) before tax from discontinued
operations 8 - (721,226)
(Loss) before tax (283,280) (8,448,597)
Decrease/(Increase) in receivables (936,540) 4,898,171
Decrease in payables (244,269) (4,885,663)
Share of losses in associates 9,240 1,183
Interest receivable and finance income (323,229) (668,438)
Interest payable 25,529 103,267
Share-based payments 91,013 72,170
Foreign exchange gain/loss (292,230) 411,988
Impairment of associates and joint
ventures 1,500,000 6,629,245
Impairment of assets classified as
held for sale 8 - 64,406
Gain on sale of associates (599,225) -
Gain on sale of investments - (4,308)
Provision for bad debts 57,769 222,830
Depreciation 867 4,834
------------------------------------------ ----- --------- -----------
Net cash outflow from operations (994,356) (1,598,912) ------------------------------------------ ----- --------- ----------- Corporation tax reclaimed/(paid) - 37,056 ------------------------------------------ ----- --------- ----------- Net cash used in operations (994,356) (1,561,856) ------------------------------------------ ----- --------- ----------- Cash flows from investing activities Interest received 34,785 125 Proceeds of sale of investments - 14,378 Proceeds of sale of associates 599,225 - Proceeds of sale of subsidiary - 292,141 Payments to acquire available for sale investments (487,500) - Payments to acquire exploration assets (280,460) - Payments to acquire property, plant and equipment (18,000) - ------------------------------------------ ----- --------- ----------- Net cash inflow from investing activities (151,950) 306,644 ------------------------------------------ ----- --------- ----------- Cash flows from financing activities Proceeds from issue of shares 1,155,323 2,327,377 Transaction costs of issue of shares (40,500) (112,116) Interest paid (25,529) (103,267) Proceeds of new borrowings 175,000 - Repayments of borrowings (120,850) (882,974) ------------------------------------------ ----- --------- ----------- Net cash inflow from financing activities 1,143,444 1,229,020 ------------------------------------------ ----- --------- ----------- Net (decrease)/increase in cash and cash equivalents (2,862) (26,192) Cash and cash equivalents at the beginning of period 29,426 55,618 ------------------------------------------ ----- --------- ----------- Cash and cash equivalents at end of period 15 26,564 29,426 ------------------------------------------ ----- --------- -----------
The accompanying notes and accounting policies form an integral part of these financial statements.
Company statement of financial position
as at 30 June 2016
30 June 30 June
2016 2015
Notes GBP GBP
------------------------------------ ----- ------------ ------------
ASSETS
Non-current assets
Property, plant and equipment 10 17,400 266
Investments in subsidiaries 11 941 131
Investments in associates and joint
ventures 12 2,544,765 4,299,422
Available for sale financial assets 14 1,976,552 1,331,766
Non-current receivables 16 4,838,558 3,634,270
Total non-current assets 9,378,216 9,265,855
------------------------------------ ----- ------------ ------------
Current assets
Cash and cash equivalents 15 24,370 22,841
Other receivables 17 1,273,496 703,172
Total current assets 1,297,866 726,013
------------------------------------ ----- ------------ ------------
Assets classified as held for sale 8 - -
------------------------------------ ----- ------------ ------------
TOTAL ASSETS 10,676,082 9,991,868
------------------------------------ ----- ------------ ------------
EQUITY AND LIABILITIES
Called up share capital 19 2,752,489 2,600,207
Share premium account 25,275,784 24,285,503
Other reserves 363,715 255,090
Retained earnings (19,606,456) (19,242,714)
------------------------------------ ----- ------------ ------------
Total equity 8,785,532 7,898,086
------------------------------------ ----- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 18 1,833,060 2,093,782
Short-term borrowings 18 57,490 -
Total current liabilities 1,890,550 2,093,782
------------------------------------ ----- ------------ ------------
Non-current liabilities
Long-term borrowings 18 - -
TOTAL EQUITY AND LIABILITIES 10,676,082 9,991,868
------------------------------------ ----- ------------ ------------
These financial statements were approved by the Board of Directors and authorised for issue on 30 November 2016 and are signed on its behalf by:
Andrew Bell
Executive Chairman
The accompanying notes form an integral part of these financial statements.
Company statement of changes in equity
for the year ended 30 June 2016
The movements in equity during the period were as follows:
Share
Share premium Retained Other Total
capital account earnings reserves equity
GBP GBP GBP GBP GBP
------------------------- --------- ---------- ------------ --------- -----------
As at 30 June 2014 1,934,588 22,663,691 (11,207,345) 513,228 13,904,162
------------------------- --------- ---------- ------------ --------- -----------
Changes in equity for
2015
Loss for the year - - (8,051,359) - (8,051,359)
Other comprehensive
income for the year - - - (242,148) (242,148)
Transactions with owners
Issue of shares 655,354 1,656,938 - - 2,312,292
Share issue costs - (112,116) - - (112,116)
Share issues in relation
to SIP 10,265 76,990 - - 87,255
Share-based payment
transfer - - 15,990 (15,990) -
------------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 665,619 1,621,812 15,990 (15,990) 2,287,431
------------------------- --------- ---------- ------------ --------- -----------
As at 30 June 2015 2,600,207 24,285,503 (19,242,714) 255,090 7,898,086
------------------------- --------- ---------- ------------ --------- -----------
Changes in equity for
2016
Loss for the year - - (475,671) - (475,671)
Other comprehensive
income for the year - - - 157,286 157,286
Transactions with owners
Issue of shares 151,541 1,003,782 - - 1,155,323
Share issue costs - (40,500) - - (40,500)
Share issues in relation
to SIP 740 27,003 - - 27,743
Share-based payment
transfer - - 111,929 (48,659) 63,270
Total transactions
with owners 152,281 990,285 111,929 (48,659) 1,205,836
------------------------- --------- ---------- ------------ --------- -----------
As at 30 June 2016 2,752,488 25,275,788 (19,606,456) 363,717 8,785,537
------------------------- --------- ---------- ------------ --------- -----------
Available
for sale
trade Share-based Total
investments payment other
reserve reserve reserves
GBP GBP GBP
------------------------------- ------------ ------------ ---------
As at 30 June 2014 385,309 127,919 513,228
Changes in equity for 2015
Other comprehensive income for
the year (242,148) - (242,148)
Transactions with owners
Share-based payment transfer - (15,990) (15,990)
------------------------------- ------------ ------------ ---------
Total transactions with owners - (15,990) (15,990)
------------------------------- ------------ ------------ ---------
As at 30 June 2015 143,161 111,929 255,090
Changes in equity for 2016
Other comprehensive income for
the year 157,286 - 157,286
Transactions with owners
Share-based payment transfer - (48,659) (48,659)
------------------------------- ------------ ------------ ---------
Total transactions with owners - (48,659) (48,659)
------------------------------- ------------ ------------ ---------
As at 30 June 2016 300,447 63,270 363,717
------------------------------- ------------ ------------ ---------
See note 20 for a description of each reserve included above.
Company statement of cash flows
for the year ended 30 June 2016
30 June 30 June
2016 2015
GBP GBP
------------------------------------------- ----------- -----------
Cash flows from operating activities
Loss before taxation (475,671) (8,051,359)
Increase in receivables (1,229,274) (240,028)
Decrease in payables (260,726) (399,213)
Interest receivable and finance income (323,229) (668,438)
Interest payable 24,575 101,395
Share-based payments 91,013 72,170
Impairment of assets held for sale - 358,987
Impairment of investments in associates
and joint ventures 1,500,000 6,674,451
(Gain) on sale of investments - (4,308)
(Gain) on sale of associates (344,569) -
Provision for bad debts 57,769 222,830
Unrealised foreign exchange (gain)/loss (312,134) 363,015
Depreciation 867 4,834
------------------------------------------- ----------- -----------
Net cash outflow from operations (1,271,379) (1,565,664)
------------------------------------------- ----------- -----------
Corporation tax - -
------------------------------------------- ----------- -----------
Net cash used in operations (1,271,379) (1,565,664)
------------------------------------------- ----------- -----------
Cash flows from investing activities
Interest received 34,785 125
Proceeds of sale of investments - 14,378
Proceeds from sale of subsidiary - 292,141
Proceeds from sale of associates 599,225 -
Payments to acquire available for sale
investments (487,500) -
Payments to acquire property plant and
equipment (18,000) -
Net cash outflow from investing activities 128,510 306,644
------------------------------------------- ----------- -----------
Cash flows from financing activities
Proceeds from issue of shares 1,155,323 2,327,377
Transaction costs of issue of shares (40,500) (112,116)
Interest paid (24,575) (101,395)
Proceeds of new borrowings 175,000 -
Repayments of borrowings (120,850) (882,974)
------------------------------------------- ----------- -----------
Net cash inflow from financing activities 1,144,398 1,230,892
------------------------------------------- ----------- -----------
Net increase/(decrease) in cash and cash
equivalents 1,529 (28,128)
Cash and cash equivalents at the beginning
of period 22,841 50,969
------------------------------------------- ----------- -----------
Cash and cash equivalents at end of period 24,370 22,841
------------------------------------------- ----------- -----------
The accompanying notes and accounting policies form an integral part of these financial statements.
Notes to the financial statements
for the year ended 30 June 2016
1 Principal accounting policies
1.1 Authorisation of financial statements and statement of compliance with IFRS
The Group financial statements of Red Rock Resources plc for the year ended 30 June 2016 were authorised for issue by the Board on 30 November 2016 and the statement of financial position signed on the Board's behalf by Andrew Bell. 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.
1.2 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below.
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 GBP475,671 (2015: GBP8,051,359). The Company's other comprehensive income for the financial year was GBP157,286 (2015: GBP242,148 expense).
Amendments to published standards effective for the year ended 30 June 2016
New standards, amendments and interpretations adopted by the Company
No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current year by/to the Company, as standards, amendments and interpretations which are effective for the financial year beginning on 1 July 2014 are not material to the Company.
New standards, amendments and interpretations not yet adopted
At the date of authorisation 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 for the year presented:
- IFRS 9 in respect of Financial Instruments which will be effective for the accounting periods beginning on or after 1 January 2018.
- IFRS 14 in respect of Regulatory Deferral Accounts which will be effective for accounting periods beginning on or after 1 January 2016.
IFRS 15 in respect of Revenue from Contracts with Customers which will be effective for accounting periods beginning on or after 1 January 2017.
Amendments to IFRS 10, IFRS 12 and IAS 28 in respect of the application of the consolidation exemption to investment entities which will be effective for accounting periods beginning on or after 1 January 2016.
Amendments to IFRS 10 and IAS 28 in respect of the treatment of a sale or contribution of assets between an investor and its Associate or Joint Venture which will be effective for accounting periods beginning on or after 1 January 2016.
- Amendments to IFRS 11 in respect of Accounting for Acquisitions of Interest in Joint Operations which will be effective for accounting periods beginning on or after 1 January 2016.
- Amendments to IAS 1 in respect of determining what information to disclose in annual financial statements which will be effective for accounting periods beginning on or after 1 January 2016.
- Amendments to IAS 16 and IAS 38 in respect of Clarification of Acceptable Methods of Depreciation and Amortisation which will be effective for accounting periods beginning on or after 1 January 2016.
- Amendments to IAS 16 and IAS 41 in respect of Bearer Plants which will be effective for accounting periods beginning on or after 1 January 2016.
- Amendments to IAS 27 to allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates which will be effective for accounting periods beginning 1 January 2016.
- Annual improvements to IFRS's which will be effective for accounting periods beginning on or after 1 January 2016 as follows:
-- IFRS 5 - Changes in methods of disposal -- IFRS 7 - Servicing contracts
-- IFRS 7 - Applicability of the amendments to IFRS 7 to condensed interim financial statements
-- IAS 19 - Discount rate: Regional market issue -- IAS 34 - Disclosure of information "elsewhere in the interim financial report"
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.
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 Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.
For the year ended 30 June 2016, the consolidated financial statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd, Red Rock Inc. and Red Rock Kenya Ltd.
The Group's dormant subsidiary, Intrepid Resources Limited and the two subsidiaries in the Ivory Coast, 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 aims of the Parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in equity.
1.4 Summary of significant accounting policies
1.4.1 Property, plant and equipment
Assets in the course of construction are stated at cost, less any identified impairment loss. Depreciation of these assets commences when the assets are ready for their intended use.
Field equipment and fixtures and fittings are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight line method, on the following bases:
Mines 5% per annum Field equipment 33% per annum Fixtures and fittings 10% per annum Assets under construction not depreciated until brought into use
1.4.2 Investment in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or jointly control, 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 are 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 a Group company 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 accounts 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 Company has 60% interest in Melville Bay Limited (formerly known as "NAMA Greenland Limited"). The Company does not have significant control over Melville Bay Limited but has joint control along with North Atlantic Mining Associates Limited and International Media Projects Ltd through a contractual joint venture arrangement making it a jointly controlled entity.
The Group recognises its interest in the 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 balance sheet 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.
Financial statements of the jointly controlled entity are prepared as at and for the year ended 30 November 2015. The joint venture entity prepares, for the use of the Group, financial statements as of the same date as the financial statements of the Group. Where necessary, adjustments are made to bring the accounting policies used into line with those of the Group 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 Non-current assets held for sale
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
When a non-current asset ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) the asset is measured at the lower of: its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale; and its recoverable amount at the date of the subsequent decision not to sell.
1.4.5 Taxation
Corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit 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 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 nor the accounting profit.
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.
1.4.6 Foreign currencies
Both the functional and presentational currency of Red Rock Resources plc is Sterling (GBP). Each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The functional currency of the foreign subsidiaries are Australian Dollars (AUD), Kenyan Shillings, US Dollars (USD) and West Africa Franc (CFA)
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 retranslated 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 retranslation 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.
1.4.7 Share-based payments
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 statements of income with a corresponding increase in equity reserves - the share-based payment reserve.
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. There are no market vesting conditions. The exercise price is fixed at the date of grant.
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.
1.4.8 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 the profit and loss account as they become payable.
1.4.9 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the effective interest method.
Finance revenue 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 through the expected life of the financial asset to the net carrying amount of the financial asset.
1.4.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised where the Group has become party to the contractual provisions of the instrument.
Financial assets
Investments
Investments in subsidiary companies 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.
Investments in associate companies 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.
Available for sale financial assets
Equity investments intended to be held for an indefinite period of time are classified as available for sale investments. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other comprehensive income and debited or credited to the available for sale trade investments reserve. Where the fair value cannot be reliably measured, the investment is carried at cost or a lower valuation where the Directors consider the value of the investment to be impaired.
Available for sale investments are included within non-current assets. On disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the statement of income.
Income from available for sale investments is accounted for in the statement of income when the right to receive it has been established.
The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. When there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement - is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period is not considered cash and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectable amounts.
An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
After initial recognition these assets are measured at amortised cost using the effective interest method less provision for impairment.
Financial liabilities and equity
Trade and other payables
Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in profit or loss over the term of the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter, with any change in the estimated liability being reflected in the income statement. Where deferred consideration is payable after more than one year the estimated liability is discounted using an appropriate rate of interest.
Equity instruments
Equity instruments issued by the Company are recorded at fair value at initial recognition net of issue costs.
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:
Going concern
The Group has incurred a loss of GBP283,280 for the year ended 30 June 2016. At that date there was a net current liability of GBP945,000. The loss resulted mainly from the GBP1.5m impairment of the Company's iron exploration assets in Greenland.
During the fiscal year the Company has continued to receive proceeds from the sale of its gold interests in Colombia. Fixed cash payments have now occurred with a total of $1m paid in three tranches. In addition, the Company has a three-year convertible promissory note of US$1.0m secured over the assets of its former gold mine and associated plant and bearing interest of 5% per annum due in 2018. The Company believes that the conversion rights associated with this note have been triggered as of early 2016, and it has announced the intention to pursue realization of these rights via international arbitration.
Additional payments of up to $2.0m will be paid in the form of a 3% net smelter royalty payable quarterly on gold production and have commenced as of August 2016. The Company estimates that approximately GBP360k will be paid out towards the initial $1m royalty during 2017. A final royalty stream of up to $1.0m will be paid following the payment in full of the initial net smelter royalty in the form of a 0.5% net smelter royalty.
On 21 November 2016, Jupiter Mines Ltd, where the Company holds a 1.2% stake announced that it plans to initiate a share buyback in March 2017. The Company calculates that this should provide cash inflows of approximately GBP530k and will likely be followed by a second buyback later in 2017. In the longer term Jupiter may look to dispose of its main production asset, the Tshipi Manganese Mine in South Africa, which would likely result in a significant dividend pay-out to the Company.
Income streams from the Company's investment in oil production at Shoat's Creek, LA, in the United States are expected to increase in 2017 as operational efficiencies improve and additional wells are drilled and reworked and come onstream.
Further the Company has since the first quarter of 2016 begun to receive revenue from the subletting of its offices in downtown London. With a reduced requirement for space the Company moved to monetize its existing lease and has been able to realize meaningful income from its excess office space. The Company's lease currently extends through to December 2017.
In September 2016, the Company paid off the balance of its GBP250,000 convertible from YA Global Master SPV, Ltd removing all corporate debt from the balance sheet and completing the deleveraging efforts started in 2014.
The Group's cash outflow reduction and restructuring programme came to fruition as corporate headcount was reduced to three individuals by February 2016 and functions including geological and accounting services were outsourced. This has led to total corporate overhead reductions of 60% and the Group has ultimately exceeded anticipated monthly cost reduction targets by 1.8%.
The Directors are confident in the Company's ability to raise new finance from stock markets if this is required during 2017 and the Group has demonstrated a consistent ability to do so. This includes share issuance of 234 million (post-consolidation) shares for a total consideration of GBP1.26 million since the 2015 financial year-end.
Going concern continued
The Directors have concluded that the combination of these circumstances that preparation of the Group's financial statements on a going concern basis is appropriate. The Company's income has increased due to multiple revenue streams as well the return on prior investments such as Jupiter Mines. The Group expects to receive ongoing cashflows from its Shoats Creek oil investments, the Colombia disposal royalty stream and ongoing office subletting revenue. Thanks to the improving financial and market situation the Company does not anticipate difficulty raising new finance from equity markets if this is required during 2017.
Recognition of holdings less than 20% as an associate
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider this, 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 year ended 30 June 2016.
The effect of recognising MMM as an available for sale financial asset would be to decrease the loss by GBP8,245.
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 selling price of assets held for sale, the useful lives of property plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities.
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
-- 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.
For unquoted equity investments, we have based our valuation on the weighted average share price of actual sale transactions which we consider as level 2 of the fair value hierarchy as they are based on indirectly observable inputs. In the absence of a quoted liquid market for Jupiter shares directly determining their value, the Company applied two different methodologies to estimate the fair value of its holding. These included an Adjusted Net Asset Method and a Market Approach. Under the Adjusted Net Asset method, the final results of Jupiter for the year ended 28 February 2015 announced on 26th June 2015, as well as the independent business valuation on the Tshipi asset by Venmyn Deloitte were used to provide relevant data points. Taking the net asset value, an adjusted hard asset only net asset value, and a further adjusted asset value modified using figures from Venmyn Deloitte, management arrived at an average value of 19.8 cents per share and a total valuation of AUD 5.40m (GBP2.63m).
Applying a discount of 40% to this for illiquidity would reduce the fair value to 11.88 cents per share or AUD 3.24m (GBP1.58m). Under the Market Approach, the Company considered all the transactions involving Jupiter shares since de-listing. A total of thirty five transactions occurred between the de-listing date in January 2014 and the 2015 financial year-end, at an average price of 9.8 cents per share. This period is determined to be representative of the fair value at year end since there were no significant changes to the business and the transactions were considered orderly. After careful consideration of all the facts and circumstances that existed at the year-end date, Management believes that greater weight should be given to the actual transactions between buyers and sellers rather than the net asset value figures. Thus, the market value approach was determined to be more suitable, and the corresponding 9.8 cents per share value implies that the Company's holding in Jupiter Mines is valued at AUD 2.68m (GBP1.30m). The Company reviewed the above handling of the Jupiter Mines investment at the year end 30 June 2016 and after inquiring with Jupiter regarding whether additional transactions of Jupiter shares had occurred and upon learning that none had transpired, the decision was made to continue to use the available market value approach data to value the Jupiter investment.
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.
Impairment of financial assets
The Group follows the guidance of IAS 39 to determine when a financial asset or a group of financial assets is impaired. 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 available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.
As a result of the Group's evaluation, no impairment on available for sale financial assets was recognised in the income statement for the year ended 30 June 2016.
Impairment of non-financial assets
The Group follows the guidance of IAS 36 to determine when a non-financial asset is impaired. The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These projections generally cover a period of five years with a terminal value or salvage value applied.
Impairment losses of continuing operations are recognised in the income statement in expense categories consistent with the function of the impaired asset.
For investments in associates and joint ventures, the Group assesses impairment after the application of the equity method.
Amounts due from associates
As a result of the Group's evaluation of its non-financial assets, an impairment loss of GBP1,500,000 on investments in associates and joint ventures was recognised in the income statement (2015: GBP1,349,245) This relates to the Company's iron ore assets in Greenland. Management recognises that the ongoing price weaknesses of iron ore and global growth rates, are all factors which indicate a further impairment may be required in the Greenland asset. In estimating the level of this impairment, management have considered factors such as the outlook for the iron ore market and the infrastructure which would be required to produce iron ore for the Greenland asset. It was decided that a valuation based on the income approach would not be appropriate due to the relative infancy of the project, and an inability to accurately project cash-flows in a meaningful way. After extensive review and analysis, a final impairment value of GBP1.5m (2015: 1.349m) for the year was thus determined to be most appropriate.
The Company conducted a review of the carrying value of the amount receivable from Mid Migori Mining Company Limited in relation to the Kenya asset. For the purpose of impairment review, the company views this receivable as part of its net investment in the associate and hence followed the guidance of IAS 36. Management recognise that the recent variability in gold prices, change in market fundamentals based on demand from key consumers, concerns around the global macroeconomic environment in general, and the key uncertainty relating to the renewals of licences can all have an effect on the value of this project. The Company is currently engaged via its local partner in Kenya, Mid Migori Mining, in a legal challenge of the purported termination of its Special License numbers 122 and 202. In May 2015 the Company was granted a leave to institute judicial review proceedings and a stay on the implementation of the Ministry of Mines revocation decision, which is currently ongoing. Red Rock has also applied via a local affiliate, Red Rock Kenya, for the same ground covered by the existing licenses. While the Company feels it has a strong and quite valid case for retention of the licenses and the existing JORC resource the ongoing legal process makes the timing of any resolution unclear and difficult to project.
2 Segmental analysis
The Group considered 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. Its mining segment, which has now been sold, is currently presented as discontinued operations on the face of the income statement and is excluded from the continuing operations segmental analysis below.
The Group has made a strategic decision to concentrate on two commodities, gold and iron ore. However, as the Group was only in the production phase of gold during the year, a further segmental analysis by commodity has not been presented.
Investment Exploration Other
---------------------- ------------
Jupiter Corporate
Mines Other Australian African and
Limited investments exploration exploration unallocated Total
Year to 30 June 2016 GBP GBP GBP GBP GBP GBP
Gain on sales of
investments - - - - - -
Impairment of amounts - - - -
due from associates
and
ventures - -
Impairment of investments
in associates and joint
ventures - (1,500,000) - - - (1,500,000)
Exploration expenses - (51,321) 1,277 (51,942) (15,228) (119,768)
Administration expenses
(excl. other income)* - - (1,176) (12,669) (744,505) (758,350)
Currency gain/(loss) - - 26,800 - 319,355 346,155
(Provision for)/Reversal
of provision for bad
debts - (57,769) - - - (57,769)
Share of losses in
associates - - - - (9,240) (9,240)
Other income - - - - 1,517,992 1,517,992
Finance (cost)/income,
net - - - (954) 298,654 297,700
--------------------------- -------- ------------ ------------ ------------ ------------- -----------
Net profit/(loss) before
tax from continuing
operations - (1,609,090) 24,347 (65,566) 1,367,029 (283,280)
--------------------------- -------- ------------ ------------ ------------ ------------- -----------
* Included in administration expenses is a depreciation charge of GBP867.
Investment Exploration Other
---------------------- ------------
Jupiter Corporate
Mines Other Australian African and
Limited investments exploration exploration unallocated Total
Year to 30 June 2015 GBP GBP GBP GBP GBP GBP
Gain on sales of
investments - 4,308 - - - 4,308
Impairment of available
for sale investments - - - (5,280,000) - (5,280,000)
Impairment of investments
in associates and joint
ventures - (1,349,245) - - - (1,349,245)
Exploration expenses - (65,960) 16,710 (81,409) (8,562) (139,221)
Administration expenses
(excl. other income)* - - (2,895) (11,677) (937,613) (952,185)
Currency loss - - (35,648) - (346,571) (382,219)
(Provision for)/Reversal
of provision for bad
debts - (222,830) - - - (222,830)
Share of losses in
associates - - - - (1,183) (1,183)
Other income - - - - 30,033 30,033
Finance income, net - - - (1,872) 567,042 565,170
--------------------------- -------- ------------ ------------ ------------ ------------- -----------
Net profit/(loss) before
tax from continuing
operations - (1,633,727) (21,833) (5,374,958) (696,854) (7,727,372)
--------------------------- -------- ------------ ------------ ------------ ------------- -----------
* Included in administration expenses is a depreciation charge of GBP4,834.
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.
UK USA Greenland Africa Total
Year ended 30 June 2016 GBP GBP GBP GBP GBP
------------------------------ ------ ------- --------- ------- --------------------
Revenue
Gain on sales of investments - - - - -
Total segment revenue and - - - - -
other gains
------------------------------ ------ ------- --------- ------- --------------------
Non-current assets
Property, plant and equipment 17,400 - - - 17,400
Investments in associates
and joint ventures - - 1,496,550 963,089 2,459,639
Exploration assets - 280,460 - - 280,460
Total segment non-current
assets 17,400 280,460 1,496,550 963,089 2,757,499
------------------------------ ------ ------- --------- ------- --------------------
Available for sale financial
assets 1,976,552
Non-current receivables 4,838,558
Total non-current assets 9,572,609
------------------------------ ------ ------- --------- ------- --------------------
UK Australia Greenland Africa Total
Year ended 30 June 2015 GBP GBP GBP GBP GBP
------------------------------ ----- --------- --------- ------- -------------------------
Revenue
Gain on sales of investments 4,308 - - - 4,308
Total segment revenue and
other gains 4,308 - - - 4,308
------------------------------ ----- --------- --------- ------- -------------------------
Non-current assets
Property, plant and equipment 266 - - - 266
Investments in associates
and joint ventures - - 2,997,060 971,818 3,968,878
------------------------------ ----- --------- --------- ------- -------------------------
Total segment non-current
assets 266 - 2,997,060 971,818 3,969,144
------------------------------ ----- --------- --------- ------- -------------------------
Available for sale financial
assets 1,331,766
Non-current receivables 3,634,270
Total non-current assets 8,935,180
------------------------------ ----- --------- --------- ------- -------------------------
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
2016 2015
GBP GBP
------------------------------------------------- --------- -------
Auditor's remuneration:
- fees payable to the Company's auditor
for the audit of consolidated and Company
financial statements 20,000 20,000
Directors' emoluments 270,873 157,169
Share-based payments - Directors 82,470 24,000
Share-based payments - staff 8,543 48,170
Depreciation - continuing operations 867 4,834
Other income and currency gain on MFP receivable 918,767 30,033
Other currency gain/(loss) (346,155) 382,219
------------------------------------------------- --------- -------
4 Finance income/(costs), net
2016 2015
GBP GBP
----------------- -------- ---------
Interest income 323,229 668,438
Interest expense (24,575) (103,267)
298,654 565,171
----------------- -------- ---------
Interest income comes mainly from non-current receivables from an associate. Please refer to note 16.
5 Taxation
2016 2015
Note GBP GBP
---------------------------------------------- ---- --------- -----------
Current period taxation on the Group
UK corporation tax at 20% (2015: 20.75%)
on profits for the period - -
- -
Deferred tax
Origination and reversal of temporary
differences - -
Deferred tax assets not recognised - -
---------------------------------------------- ---- --------- -----------
Tax credit - -
---------------------------------------------- ---- --------- -----------
Factors affecting the tax charge for
the year
Loss on ordinary activities before taxation (283,280) (8,411,542)
---------------------------------------------- ---- --------- -----------
Loss on ordinary activities at the average
UK standard rate of 20% (2015: 20.75%) (56,656) (1,745,395)
Impact of gain on disposal of associates
and subsidiaries (117,997) 74,738
Effect of expenditure not deductible 324,381 1,358,309
Effect of non-taxable income - -
Utilisation of prior year losses (149,728) 312,348
---------------------------------------------- ---- --------- -----------
Tax charge - -
---------------------------------------------- ---- --------- -----------
Tax credit arising from continuing operations - -
Tax credit arising from discontinued
operations 8 - -
---------------------------------------------- ---- --------- -----------
Total tax credit - -
---------------------------------------------- ---- --------- -----------
Deferred tax amounting to GBPnil (2015: GBPnil) relating to the Group's investments was recognised in the statement of comprehensive income.
Finance Act 2013 set the main rate of corporation tax at 20% from 1 April 2015 and at 20% from 1 April 2016. Therefore deferred tax assets/(liabilities) are calculated at 20% (2015: 20%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:
2016 2015
GBP GBP
------------------------------------ ------- -------
Wages and salaries 284,473 546,749
Pension 15,637 19,083
Social security costs 21,692 60,174
Severance costs 14,679 -
Employee share-based payment charge 91,013 72,170
------------------------------------ ------- -------
Total staff costs 427,494 698,176
------------------------------------ ------- -------
The average number of Group employees (including Directors) during the year was:
2016 2015
Number Number
--------------- ------- -------
Executives 4 4
Administration 1 12
Exploration - 5
--------------- ------- -------
5 21
--------------- ------- -------
The Company's staff also work for Regency Mines plc and staff costs of GBP24,687 (2015: GBP44,031) were recharged during the year. Such charges are offset against administration expenses in the income statement.
The key management personnel are the Directors and their remuneration is disclosed within note 7.
7 Directors' emoluments
Share Social
Directors' Consultancy Incentive Pension security
fees fees Plan contributions costs Total
2016 GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ---------- -------------- --------- -------
Executive Directors
A R M Bell 88,750 15,000 8,813 6,443 7,655 126,661
S Kaintz 65,000 - 8,813 3,284 6,468 83,565
Other Directors
J F Ladner 9,000 - - - 651 9,651
M C Nott 18,000 - 8,632 909 1,027 28,568
S Quinn 18,069 - 3,412 - 945 22,426
-------------------- ---------- ----------- ---------- -------------- --------- -------
198,819 15,000 29,670 10,636 16,746 270,871
-------------------- ---------- ----------- ---------- -------------- --------- -------
Share Social
Directors' Consultancy Incentive Pension security
fees fees Plan contributions costs Total
2015 GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ---------- -------------- --------- -------
Executive Directors
A R M Bell 61,750 15,000 6,000 3,361 5,384 91,495
Other Directors
J F Ladner 16,500 8,500 6,000 - 956 31,956
M C Nott 16,500 8,500 6,000 795 905 32,700
J Watkins 16,500 1,500 6,000 - 1,018 25,018
-------------------- ---------- ----------- ---------- -------------- --------- -------
111,250 33,500 24,000 4,156 8,263 181,169
-------------------- ---------- ----------- ---------- -------------- --------- -------
The number of Directors who exercised share options in the year was nil (2015: nil).
During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors' Report. 4,550,000 (2015: 3,529,411) free shares were issued to each employee, including Directors, making a total of 8,822,000 (2015: 14,117,644) free shares issued.
8 Assets classified as held for sale at 30 June 2015
Four Points Mining SAS
On 13 May 2015 the transaction to sell, and Colombia Milling Limited ("CML") to buy, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in Four Points Mining SAS ("FPM"), the owner of the El Limón mine, and (b) its loans to FPM, for a total consideration of USD5,000,000, was completed. Payment of the unchanged consideration of USD5,000,000 will occur in tranches. The initial payment of USD100,000 was previously made in respect of CML's due diligence review. The first tranche of USD450,000 was paid at the closing of the transaction ("Completion"). The second tranche of USD225,000 was paid in February 2016 and the third tranche of USD225,000 was paid in August 2016. A further payment of USD1,000,000 will be satisfied by the issuance by CML to Red Rock at Completion of a three year convertible 5% promissory note ("PN"), secured on the acquired shares in AGM and providing that during the duration of the loan, CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN will be held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or transfer of the assets into a public vehicle.
Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM. A 7% commission is payable to Ariel Partners on the transaction.
9 Loss per share
The basic 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 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.
The following reflects the loss and share data used in the basic and diluted earnings per share computations:
2016 2015 (restated)
-------------------------------------------- ------------ ---------------
Loss attributable to equity holders
of the parent from continuing operations GBP(275,035) GBP(7,721,880)
Loss attributable to equity holders
of the parent from discontinued operations - GBP(370,071)
-------------------------------------------- ------------ ---------------
Loss attributable to equity holders
of the Parent GBP(275,035) GBP(8,091,951)
Weighted average number of Ordinary
shares of GBP0.0001 (2015: GBP0.001)
in issue 263,154,543 115,363,741
(7.00)
Loss per share - basic (0.10) pence pence
-------------------------------------------- ------------ ---------------
Weighted average number of Ordinary
shares of GBP0.0001 (2015: GBP0.001)
in issue inclusive of outstanding
dilutive options* 263,154,543 115,363,741
(7.00)
Loss per share - fully diluted (0.10) pence pence
-------------------------------------------- ------------ ---------------
The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:
2016 2015 (restated)
--------------------------------------- ----------- ---------------
Loss per share denominator 263,154,543 115,363,741
Weighted average number of exercisable
share options - -
--------------------------------------- ----------- ---------------
Diluted loss per share denominator* 263,154,543 115,363,741
--------------------------------------- ----------- ---------------
*In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of Ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 2,169,727 (2015: 7,265,753). These were not included in the calculation of diluted earnings per share because all the options are not likely to be exercised given that even the lowest exercise price is substantially higher than the market price and are therefore non-dilutive for the period presented.
The 2015 loss per share has been restated to reflect the capital reorganisation on 21 December 2015. The impact of this reorganisation would be to increase the loss per share from 0.28 pence to 7 pence per share.
10 Property, plant and equipment
Field Fixtures Assets
equipment and under
Mines and machinery fittings construction Total
Group GBP GBP GBP GBP GBP
------------------------------ ----- -------------- --------- ------------- --------
Cost
At 1 July 2014 - 34,607 28,649 - 63,256
Additions - - - - -
Disposals - - (842) - (842)
Currency exchange - - - - -
At 30 June 2015 - 34,607 27,807 - 62,414
------------------------------ ----- -------------- --------- ------------- --------
Additions - - 18,000 - 18,000
Disposals - - - - -
At 30 June 2016 - 34,607 45,807 - 80.414
------------------------------ ----- -------------- --------- ------------- --------
Depreciation and impairment
At 1 July 2014 - (31,980) (26,176) - (58,156)
Depreciation charge - (2,627) (2,207) - (4,834)
Disposal - - 842 - 842
Currency exchange - - - - -
At 30 June 2015 - (34,607) (27,541) - (62,148)
Depreciation charge - - (866) - (866)
Disposals - - - - -
At 30 June 2016 - (34,607) (28,407) - (63,014)
------------------------------ ----- -------------- --------- ------------- --------
Net book value
At 30 June 2016 - - 17,400 - 17,400
------------------------------ ----- -------------- --------- ------------- --------
At 30 June 2015 - - 266 - 266
------------------------------ ----- -------------- --------- ------------- --------
Of the depreciation charge, GBP866 (2015: GBP4,834) is included within other expenses in the income statement.
Field
equipment Fixtures
and and
machinery fittings Total
Company GBP GBP GBP
----------------- ---------- --------- --------
Cost
At 1 July 2014 34,607 28,649 63,256
Additions - - -
Disposals - (842) (842)
----------------- ---------- --------- --------
At 30 June 2015 34,607 27,807 62,414
Additions - 18,000 18,000
Disposals - - -
----------------- ---------- --------- --------
At 30 June 2016 34,607 45,807 80,414
----------------- ---------- --------- --------
Depreciation
At 1 July 2014 (31,980) (26,176) (58,156)
Charge (2,627) (2,207) (4,834)
----------------- ---------- --------- --------
At 30 June 2015 (34,607) (27,541) (62,148)
Charge - (866) (866)
Disposals - - -
----------------- ---------- --------- --------
At 30 June 2016 (34,607) (28,407) (63,014)
----------------- ---------- --------- --------
Net book value
At 30 June 2016 - 17,400 17,400
----------------- ---------- --------- --------
At 30 June 2015 - 266 266
----------------- ---------- --------- --------
11 Investments in subsidiaries
2016 2015
Company GBP GBP
------------------------------------ ----- -----
Cost
At 1 July 2015 613 482
Investment in subsidiary 810 131
Reclassification to assets held for
sale - -
------------------------------------ ----- -----
At 30 June 2016 1,423 613
------------------------------------ ----- -----
Impairment
At 1 July 2015 (482) (482)
Charge in the year - -
Reclassification to assets held for
sale - -
------------------------------------ ----- -----
At 30 June 2016 (482) (482)
------------------------------------ ----- -----
Net book value 941 131
------------------------------------ ----- -----
As at 30 June 2016, the Company held interests in the following subsidiary companies:
Country of Proportion Nature of
Company registration Class held business
---------------------- ------------- -------- ---------- -------------------
Intrepid Resources
Limited Zambia Ordinary 100% Dormant
Red Rock Australasia
Pty Limited Australia Ordinary 100% Mineral exploration
Red Rock Kenya Limited Kenya Ordinary 87% Mineral exploration
Red Rock Inc. USA Ordinary 100% Mining exploration
Red Rock Cote D'Ivoire
sarl Ivory Coast Ordinary 100% Mineral exploration
Basse Terre sarl Ivory Coast Ordinary 100% Mineral exploration
---------------------- ------------- -------- ---------- -------------------
12 Investments in associates and joint ventures
Group Company
------------------------ ------------------------
2016 2015 2016 2015
GBP GBP GBP GBP
------------------------------ ----------- ----------- ----------- -----------
Cost
At 30 June 2015 9,108,304 9,108,304 8,951,460 8,951,460
Additions during the year - - - -
Disposals during the year (1,709,735) - (1,709,735) -
Transfer from assets held for
sale - - - -
------------------------------ ----------- ----------- ----------- -----------
At 30 June 2016 7,398,569 9,108,304 7,241,725 8,951,460
------------------------------ ----------- ----------- ----------- -----------
Impairment
At 30 June 2015 (5,139,426) (3,788,998) (4,652,038) (3,257,587)
Losses during the year (9,240) (1,183) - -
Disposals during the year 1,709,735 - 1,455,079 -
Impairment in the year (1,500,000) (1,349,245) (1,500,000) (1,394,451)
At 30 June 2016 (4,938,931) (5,139,426) (4,696,959) (4,652,038)
------------------------------ ----------- ----------- ----------- -----------
Net book amount 2,459,638 3,968,878 2,544,766 4,299,422
------------------------------ ----------- ----------- ----------- -----------
The Company, at 30 June 2016, had holdings amounting to 20% or more of the issued share capital of the following companies which amounted to significant influence or joint control:
Country Percentage
of Class of of Accounting
Company incorporation shares held issued capital year ended
------------------------------ -------------- ------------ --------------- ------------
Red Rock Zambia Limited* Zambia Ordinary 28.40% 30 June 2016
Melville Bay Limited (formerly 30 November
"NAMA Greenland Limited") England Ordinary 60.00% 2015
------------------------------ -------------- ------------ --------------- ------------
* Financial information was not available for this company.
The Company, at 30 June 2016, had significant influence by virtue other than shareholding over 20% over the following companies:
Country Percentage
of Class of of Accounting
Company incorporation shares held issued capital year ended
------------------------- -------------- ------------ --------------- ------------
Mid Migori Mining Company 30 September
Limited Kenya Ordinary 15.00% 2015
------------------------- -------------- ------------ --------------- ------------
Summarised financial information for the Company's associates and joint ventures, where available, as at 30 June 2016 is given below:
Revenue Loss Assets Liabilities
Company GBP GBP GBP GBP
---------------------------------- ---------- ----------- ----------- -----------
Mid Migori Mining Company Limited - (58,197) 2,753,364 (3,411,111)
Melville Bay Limited - (1,760,272) 4,178,640 (223,420)
---------------------------------- ---------- ----------- ----------- -----------
Mid Migori
Mining Red Rock Star Melville
Company Zambia Striker Bay
Limited Limited Limited Limited Total
GBP GBP GBP GBP GBP
---------------------------------- ---------- ----------- ----------- ----------- -----------
Cost
At 30 June 2015 1,044,766 140,596 1,709,735 6,213,207 9,108,304
Additions during the year - - - - -
Disposals during the year - - (1,709,735) - (1,709,735)
At 30 June 2016 1,044,766 140,596 - 6,213,207 7,398,569
---------------------------------- ---------- ----------- ----------- ----------- -----------
Impairment and losses during
the year
At 30 June 2015 (72,948) (140,596) (1,709,735) (3,216,147) (5,139,426)
(Losses) during the year (8,730) - - (510) (9,240)
Impairment in period - - - (1,500,000) (1,500,000)
Disposals during the year - - 1,709,735 - 1,709,735
At 30 June 2016 (81,677) (140,596) - (4,716,657) (4,938,931)
---------------------------------- ---------- ----------- ----------- ----------- -----------
Carrying amount
At 30 June 2016 963,089 - - 1,496,550 2,459,638
---------------------------------- ---------- ----------- ----------- ----------- -----------
At 30 June 2015 971,818 - - 2,997,060 3,968,878
---------------------------------- ---------- ----------- ----------- ----------- -----------
Mid Migori Mining Company Limited
The Company owns 15% of the issued share capital of Mid Migori Mining Company Limited ("MMM"). The Company has entered into an agreement whereby it manages and funds a number of 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).
Red Rock Zambia Limited
The book value of Red Rock Zambia Limited was fully written off in previous years.
Star Striker Limited (formerly known as Resource Star Limited)
The market value as at 30 June 2016 of the Company's investments in listed associates was as follows:
2016 2015
GBP GBP
--------------------- ---- -------
Star Striker Limited - 222,824
--------------------- ---- -------
During the year the Company disposed of its remaining investment in Star Striker Limited, (including options).
Melville Bay Limited
In consideration for funding the 2012 exploration programme of North Atlantic Mining Associates Limited ("NAMA"), the Company earned 60% interest in Melville Bay Limited ("MBL"). The Company does not have control over MBL but has joint control along with North Atlantic Mining Associates Limited and International Media Projects Ltd through a contractual joint venture arrangement making MBL a jointly controlled entity.
13 Exploration Assets
2016 2015
Group GBP GBP
------------------- ------- ----
Cost
At 1 July 2015 - -
Additions 280,460 -
Disposals - -
------------------- ------- ----
At 30 June 2016 280,460 -
------------------- ------- ----
Impairment
At 1 July 2015 - -
Charge in the year - -
At 30 June 2016 - -
------------------- ------- ----
Net book value 280,460 -
------------------- ------- ----
14 Available for sale financial assets
Group and Company
--------------------
2016 2015
GBP GBP
------------------------------------------- --------- ---------
Opening balance 1,331,766 1,583,984
Additions 487,500 -
Disposals - (10,070)
Revaluations 157,286 (242,148)
Impairment of available for sale financial
assets - -
------------------------------------------- --------- ---------
Closing balance 1,976,552 1,331,766
------------------------------------------- --------- ---------
Market value of investments
The market value as at 30 June 2016 of the Company's available for sale listed and unlisted investments were as follows:
2016 2015
GBP GBP
----------------------------------- --------- ---------
Quoted on London AIM 105,933 27,120
Unquoted investments at fair value 1,870,619 1,304,646
----------------------------------- --------- ---------
1,976,552 1,331,766
----------------------------------- --------- ---------
15 Cash and cash equivalents and restricted cash
30 June Cash 30 June
2016 flow 2015
Group GBP GBP GBP
------------------------- ------- ------- -------
Cash in hand and at bank 26,564 (2,862) 29,426
26,564 (2,862) 29,426
------------------------- ------- ------- -------
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:
30 June 30 June
2016 2015
GBP GBP
-------------------------------------- ------- -------
Cash in hand and at bank 26,564 29,426
Cash in hand and at bank attributable
to asset held for sale (note 8) - -
-------------------------------------- ------- -------
26,564 29,426
-------------------------------------- ------- -------
30 June Cash 30 June
2016 flow 2015
Company GBP GBP GBP
------------------------- ------- ----- -------
Cash in hand and at bank 24,370 1,529 22,841
24,370 1,529 22,841
------------------------- ------- ----- -------
16 Non-current receivables
Group and Company
--------------------
2016 2015
GBP GBP
---------------------------- --------- ---------
Amounts due from associates 2,857,810 2,228,812
FPM sale proceeds 1,980,748 1,405,458
---------------------------- --------- ---------
4,838,558 3,634,270
---------------------------- --------- ---------
Non-current related party receivables of GBP2,857,810 (2015: GBP2,228,812) is recoverable from Mid Migori Mining Company Limited under the terms of the joint venture, purchase and sale agreement entered into in August 2009 as detailed in note 26. The amount is unsecured and has no fixed repayment date. Interest is charged at 8% per annum. Management have considered the recoverability of this debt and, although the Judicial Review case is ongoing, no further impairment is considered necessary (2015: GBP5,280,000). More details are given in note 1.5, Significant accounting judgements, estimates and assumptions.
The FPM sale proceeds represents the fair value of the deferred consideration receivable for the sale of FPM. 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 level, estimates of future production level and gold price forecasts.
17 Other receivables
Group Company
---------------- ------------------
2016 2015 2016 2015
GBP GBP GBP GBP
------------------------------------ ------- ------- --------- -------
Current trade and other receivables
Prepayments 236,765 270,110 170,313 231,290
Related party receivables:
- due from subsidiaries - - 404,747 82,978
- due from associates 225 715 225 715
- due from key management - - - -
Other receivables 702,563 390,327 698,211 388,189
------------------------------------ ------- ------- --------- -------
Total 939,553 661,152 1,273,496 703,172
------------------------------------ ------- ------- --------- -------
Other receivables are stated after full provision of GBP600,000 relating to an amount due from North Atlantic Mining Associates Limited (2015: GBP600,000).
18 Trade and other payables
Group Company
-------------------- --------------------
2016 2015 2016 2015
GBP GBP GBP GBP
------------------------- --------- --------- --------- ---------
Trade and other payables 1,368,746 1,410,726 1,347,803 1,406,238
Accruals 335,663 302,397 335,663 302,397
Related party payables:
- due to associates 86,966 317,882 86,966 317,882
- due to key management 62,629 67,265 62,629 67,265
------------------------- --------- --------- --------- ---------
Trade and other payables 1,854,004 2,098,270 1,833,061 2,093,782
Short-term borrowings 57,490 - 57,490 -
------------------------- --------- --------- --------- ---------
1,911,494 2,098,270 1,890,551 2,093,782
Long-term borrowings - - - -
------------------------- --------- --------- --------- ---------
Total 1,911,494 2,098,270 1,890,551 2,093,782
------------------------- --------- --------- --------- ---------
YA Global Master SPV Limited
A short-term loan of GBP57,490 (2015: GBPnil) with YA Global Master SPV Limited ("YAGM") remains outstanding as at the end of the year.
19 Share capital of the Company
The share capital of the Company is as follows:
2016 2015
Issued and fully paid GBP GBP
-------------------------------------------------- --------- ---------
2,371,116,172 deferred shares of GBP0.0009 each - 2,134,005
4,662,024,541 ordinary shares of GBP0.0001 each - 466,202
241,354,445 ordinary shares of GBP0.01 each 24,135
2,371,116,172 deferred shares of GBP0.09 each 2,134.005
6,033,861,125 A deferred shares of GBP0.0096 each 579,251
150,971,295 ordinary shares of GBP0.01 each 15,097
As at 30 June 2,752,488 2,600,207
Nominal
Movement in share capital Number GBP
------------------------------------------ --------------- ---------
Ordinary shares of GBP0.001 each
As at 30 June 2014 1,934,587,543 1,934,588
Shares issued in the year to 30 June
2015 2,727,436,998 665,619
------------------------------------------ --------------- ---------
As at 30 June 2015 - ordinary shares
of GBP0.0001 each 4,662,024,541 2,600,207
Issued 07 July 2015 at 0.0475 pence
per share 421,052,632 42,105
Issued 07 July 2015 at 0.0475 pence
per share 268,421,074 26,842
Issued 08 July 2015 at 0.0475 pence
per share 107,894,948 10,789
Issued 13 July 2015 at 0.475 pence
per share 157,894,800 15,789
Issued 09 October 2015 at 0.0183 pence
per share 416,573,115 41,657
------------------------------------------ --------------- ---------
As at 21 December 2015, pre-share
re-organisation 6,033,861,110 2,737,389
21 December 2015, Share Re-organisation
(see below)
Issue of A deferred shares of GBP0.0096
each (6,033,861,110) (579,251)
Issue of new ordinary shares of GBP0.0004
each (6,033,861,110) (24,135)
Share consolidation: 1 new ordinary
share of GBP0.01 for 25 ordinary shares
of GBP0.0004 241,354,445 603,388
Issued 21 January 2016 at 0.375 pence
per share 3,750,000 375
Issued 01 April 2016 at 0.375 pence
per share 5,072,000 507
Issued 28 April 2016 at 0.52777 pence
per share 21,315,971 2,132
Issued 29 April 2016 at 0.42 pence
per share 97,023,801 9,702
Issued 29 April 2016 at 0.42 pence
per share 23,809,523 2,381
As at 30 June 2016 - ordinary shares
of GBP0.01 each 392,325,740 2,752,488
------------------------------------------ --------------- ---------
Change in Nominal Value / share re-organisation
The nominal value of shares in the company was originally 0.1 pence. At a shareholders meeting on 21 December 2015, the Company's shareholders approved a re-organisation of the company's shares which resulted in the creation of three classes of shares, being:
-- Ordinary shares with a nominal value of 0.01 pence, which will continue as the company's listed securities.
-- Deferred shares with a value of 0.09 pence -- A Deferred shares with a value of 0.0096 pence
Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the company, or bought back for GBP1 and then cancelled. The deferred shares are not quoted and carry no rights whatsoever.
Equity subscription arrangements
On 7 July 2015 the Company agreed to subscribe for 1,086,956 new ordinary shares in Elephant Oil Limited at a price per share of 25.3 pence, for an aggregate consideration of GBP275,000. The Company issued a total of 689,473,706 ordinary shares of 0.01p each in the Company at a price of 0.0475 pence per Share. The gross proceeds of the Subscription were GBP327,500. For every two Subscription Shares, each subscriber was issued with one warrant exercisable at 0.065p per Share and expiring on 7 July 2017.
421,052,632 new Shares represent a GBP200,000 subscription by Elephant Oil Limited, who following the Subscription will hold 7.87% of the enlarged issued capital of the Company. The remaining 268,421,074 new Shares have been placed with institutional and private investors.
On 28 April 2016 the Company co-ordinated the acquisition of 12,013,173 shares of Goldstone Resources Ltd by itself and Metal Tiger plc.
The consideration for the acquisition was GBP225,000, paid half in cash and half in new shares of the Company issued at a price of 0.52777328 pence per Red Rock share, being the VWAP (volume-weighted average price) at which Red Rock shares traded on the AIM market in the five trading days to 26 April. On completion the Company issued and allotted to the vendor, Unity Mining Ltd (ASX:UML), a company listed on the Australian Stock Exchange, 21,315,971 new Red Rock shares credited as fully paid as the Share Consideration. The Cash Consideration was paid by Metal Tiger plc.
In addition, Red Rock issued to the vendor 21,315,971 options giving the right within two years to exercise each option into a new Red Rock share at a price of 0.66 pence per share.
On 29 April 2016 Metal Tiger plc ("MTR") agreed to subscribe GBP100,000 for a further 23,809,523 new ordinary shares in the Company of 0.01p each but without attached warrants. Red Rock has agreed to accept payment in the form of 1,818,182 MTR shares based on a price per MTR share of 5.5 pence per MTR share. MTR and the Company have agreed not to dispose of the New Shares or the Payment Shares received through this equity exchange for a period of three months from issue without the agreement of the other party, such agreement not to be unreasonably withheld.
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.
Available for sale trade investments reserve
The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments.
Associate investment reserve
The associate investments reserve represents the cumulative share of gains and losses of associates recognised in the statement of other comprehensive income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options 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 2016, the Company had outstanding options to subscribe for Ordinary shares as follows:
Options issued
14 June 2016
exercisable
at
0.45 pence
per
share expiring
29 January
2022
Number
----------------------------------------------------- ------------------------
A R M Bell 5,760,000
S Kaintz 4,680,000
M C Nott 900,000
S Quinn 900,000
Employees 1,080,000
----------------------------------------------------- ------------------------
Total 13,320,000
----------------------------------------------------- ------------------------
Company and Group
----------------------------------------------
2016 2015
---------------------- ----------------------
Weighted Weighted
average average
exercise exercise
Number of price Number of price
options pence options pence
----------------------------- ----------- --------- ----------- ---------
Outstanding at the beginning
of the period 7,000,000 3.20 8,000,000 3.20
Expired (7,000,000) 3.20 (1,000,000) 3.20
----------------------------- ----------- --------- ----------- ---------
Issued 13,320,000 0.45
----------------------------- ----------- --------- ----------- ---------
Outstanding at the end of
the period 13,320,000 0.45 7,000,000 3.20
----------------------------- ----------- --------- ----------- ---------
Exercisable at the end of
the period 13,320,000 0.45 7,000,000 3.20
----------------------------- ----------- --------- ----------- ---------
The remaining options in issue at 30 June expired on 21 September 2015. During the financial year 13,320,000 options were issued at an exercise price of 0.45 pence (2015: nil) and they expire on 29 January 2022. A credit of GBP111,929 was posted to the income statement in respect of the cancelled share options and a charge of GBP63,270 was posted to the income statement in respect of the share options issued during the year. Therefore, a net credit of GBP48,659 was posted to the income statement during the year.
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 GBP150 per month with Trustees who invest the monies in the Company's 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 GBP3,600 per employee per annum.
The subscriptions remain free of taxation and national insurance if held for five years.
The fair value of services provided is recognised as an expense in the income statement at grant date and is determined indirectly by reference to the fair value of the free and matching shares granted. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date.
During the financial year, a total of 7,398,000 free and matching shares were awarded with a fair value of 0.375 pence resulting in a share-based payment charge of GBP27,743 in the income statement.
22 Financial instruments
22.1 Categories of financial instruments
The Group and Company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables and trade payables.
The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies, are as follows:
Group 2016 2015 30 June 2016 GBP GBP ------------------------------------ --------- --------- Financial assets Available for sale financial assets at fair value through OCI Unquoted equity shares 1,870,619 1,304,646 Quoted equity shares 105,933 27,120 ------------------------------------ --------- --------- Total available for sale financial assets at fair value through OCI 1,976,552 1,331,766 Loans and receivables Non-current receivables 4,838,559 3,634,270 Other receivables - current 1,217,425 391,042 ------------------------------------ --------- --------- Total loans and receivables 6,055,984 4,025,312 Total financial assets 8,032,536 5,357,078 ------------------------------------ --------- --------- Total current 1,217,425 391,042 ------------------------------------ --------- --------- Total non-current 6,815,111 4,966,036 ------------------------------------ --------- ---------
The carrying value of non-current financial assets in the Company equals that of the Group.
The carrying value of current financial assets in the Company is not materially different from that of the Group.
Other receivables and trade payables
Management assessed that 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.
Financial instruments held at cost can be reconciled from beginning to ending balances as follows:
Group 2016 2015 30 June 2016 GBP GBP Financial liabilities Loans and borrowings Trade and other payables 1,854,003 2,098,270 Short-term borrowings 57,490 - Total loans and borrowings 1,911,493 2,098,270 Total financial liabilities 1,911,493 2,098,270 ---------------------------- --------- --------- Total current 1,911,493 2,098,270 ---------------------------- --------- --------- Total non-current - - ---------------------------- --------- ---------
The carrying value of non-current financial liabilities in the Company equals that of the Group.
The carrying value of current financial liabilities in the Company is not materially different from that of the Group.
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.
22.2 Fair values
22.2.1 Fair values of financial assets and liabilities
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.
Level Level Level
Group and Company 1 2 3 Total
30 June 2016 GBP GBP GBP GBP
------------------------------ ------- --------- ----- ---------
Available for sale financial
assets at fair value through
OCI
- Unquoted equity shares - 1,870,619 - 1,870,619
- Quoted equity shares 105,933 - - 105,933
------------------------------ ------- --------- ----- ---------
Level Level Level
Group and Company 1 2 3 Total
30 June 2015 GBP GBP GBP GBP
------------------------------ ------ --------- ----- ---------
Available for sale financial
assets at fair value through
OCI
- Unquoted equity shares - 1,304,646 - 1,304,646
- Quoted equity shares 27,120 - - 27,120
------------------------------ ------ --------- ----- ---------
The valuation techniques used for instruments categorised in Levels 2 and 3 are described below:
Unquoted available for sale financial assets (Level 2)
A significant portion of the Group's available for sale financial asset is an investment in equity shares of a non-listed company. The fair value of unquoted ordinary shares has been estimated using the weighted average share price of actual sale transactions that happened between de-listing date and the year-end.
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 to 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.
There are no amounts of collateral held as security in respect of trade and other receivables.
The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Limited, an associate of the Company. Management have impaired this asset by GBP5.28m. See note 1.5, 'Significant accounting judgements, estimates and assumptions' and note 15 for further details.
The Group has no outstanding pledges (2015: GBPnil) of its shares in Jupiter Mines Limited as security.
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 that controls over expenditure are carefully managed.
Management intend to meet obligations as they become due through 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 Groups transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, US Dollar, Kenyan Shilling, Canadian Dollar and Danish Krone.
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 the available for sale financial assets.
These assets are denominated in the following currencies:
Group and Company GBP AUD USD Total 30 June 2016 GBP GBP GBP GBP ------------------------------- ------- --------- ------- --------- Available for sale investments 218,432 1,483,120 275,000 1,976,552 ------------------------------- ------- --------- ------- --------- Group and Company GBP AUD USD Total 30 June 2015 GBP GBP GBP GBP ------------------------------- ------ --------- ---- --------- Available for sale investments 27,120 1,304,646 - 1,331,766 ------------------------------- ------ --------- ---- ---------
Exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions.
23 Significant agreements and transactions
The following are the significant agreements and transactions recently undertaken having an impact in the year under review and for the period to 24 November 2016. For the sake of completeness and of clarity, some events after the reporting period are included here and in note 25.
Four Points Mining
On 14 April 2015 the Company executed a Sale Agreement with Colombia Milling Limited ("CML"), a private company registered in Belize. CML is the nominee of Nicaragua Milling Company ("NML"), with which Red Rock signed a Letter of Intent on 12 May 2014. CML is represented by James Randall Martin and Geoff Hampson, and the entire share capital of CML has as of early 2016 been vended into Para Resources Ltd, a public vehicle listed on the TSX Venture Exchange. Completion ("Completion") of the Sale Agreement took place on 13 May 2015. Under the Sale Agreement, the Company sold, and CML bought, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns a 50.002% interest in Four Points Mining SAS ("FPM"), the owner of the El Limón mine, and (b) its loans to FPM, for a total consideration of USD5,000,000. CML also purchased a 11.2% stake from a minority shareholder in the business. Payment of the consideration of USD5,000,000 occurs in tranches. The initial payment of USD100,000, was made in respect of the CML's due diligence review and was considered part of the first tranche. The balance of the first tranche of USD400,000 and second tranche of USD225,000 have been paid as of year-end.
The third tranche of USD225,000 was made after the year-end in August 2016, completing the fixed payments of USD1,000,000. Additional payments of up to USD2,000,000 will be paid in the form of a 3% net smelter return royalty ("First NSR") payable quarterly on gold production from FPM commencing on the earlier of (a) 9 months from Completion; and (b) the achievement of commercial gold production and processing through the El Limon plant of at least 100 tons per day for 30 consecutive calendar days. A final royalty stream of up to USD1,000,000 will be paid following the payment in full of the First NSR in the form of a 0.5% net smelter return royalty ("Second NSR") payable quarterly on gold production from FPM. A further payment of USD1,000,000 was satisfied by the issuance by CML to Red Rock at Completion of a three year convertible 5% promissory note ("PN"), secured on the acquired shares in AGM and providing that during its currency CML will procure that AGM does not alienate or dispose of its interest in FPM. Security for the PN is held in the form of a charge over 100% of the shares in AGM and conversion is possible following any listing of CML or vend of the assets into a public vehicle. As of 1 July 2016 the Company has informed Colombia Mining Limited and it's 100% owner Para Resources that it believes that its right to convert its USD1,000,000 note into share of the listed vehicle, Para Resources Ltd, has been triggered. As of September 2016 the Company has announced that both parties were in discussion on the matter of conversion and that resolution prior to arbitration was being sought.
Convertible loan notes
On 4 September 2015 the Company announced that it had agreed to issue an unsecured convertible loan note of GBP250,000 with YA Global Master SPV. The notes yield 10% per annum, have a maturity of 12 months, and are able to be converted into ordinary shares at any time up until maturity. The conversion price on each conversion will be the determined by a formula equal to 94% of the three lasted daily volume weighted average prices during 15 consecutive trading days beginning on the first day immediately following the delivery of a notice of conversion by the note holder. The conversion of the notes is to have a price cap of GBP0.01. The notes fall due on 31 August 2016 if not previously converted. The Company will issue warrants over the shares in the capital of the Company exercisable at a price of 0.036 pence and freely transferable for a period of 3 years
On 9 October 2015, the Company announced that YA Global Master SPV Ltd had converted GBP75,000 of its outstanding balance of GBP250,000 unsecured Convertible Notes and GBP1,233 of accrued interest, into 416,573,115 ordinary shares in the Company at a price of 0.0183 pence per share.
On 11 December 2015, the Company repaid GBP94,378 of the outstanding convertible loan and interest balance due to YA Global Master SPV Limited. On 5 May 2016, the Company repaid GBP26,320 of the outstanding convertible loan and interest balance due to YA Global Master SPV Limited. On 19 August 2016, the Company repaid $26,102 of the outstanding convertible loan and interest balance due to YA Global Master SPV Limited. Finally, on 8 September 2016, the Company repaid in full the outstanding convertible loan and interest balance due to YA Global Master SPV Limited of GBP39,571.
Financing
On 7 July 2015, the Company raised GBP327,500 by way of an issue of 689,473,706 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. Elephant Oil Limited participated in GBP200,000 of the placing. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017. The proceeds of the placing will fund the Company's investment in Elephant Oil and general working capital.
On 8 July 2015, the Company raised GBP51,250 by way of an issue of 107,894,948 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. The Directors, Andrew Bell, Michael Nott and Sam Quinn participated in GBP41,250 of this placing. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017.
On 13 July 2015, the Company raised GBP75,000 by way of an issue of 157,894,800 new ordinary shares of 0.01 pence each in the Company at a price of 0.0475 pence per share. For every two shares, each subscriber will be issued with one warrant exercisable at 0.065 pence per share and expiring on 7 July 2017. The proceeds of the placing were applied towards funding exploration activities in West Africa.
On 29 April 2016, the Company raised GBP407,500 by way of an issue of 97,023,801 new ordinary shares of 0.01 pence each in the Company at a price of 0.42 pence per share. Metal Tiger plc participated in GBP125,000 of the placing. For every one share, each subscriber will be issued with one warrant exercisable at a price of 0.84 pence per share and expiring on 13 November 2018. The proceeds of the placing were applied towards funding the Company's participation in Shoat's Creek oil development and advancement of the Company's gold interests.
On 29 April 2016, the Company participated in a strategic equity exchange agreement for GBP100,000 by way of an issue of 23,809,523 new ordinary shares of 0.01 pence each in the Company at a price of 0.42 pence per share. Metal Tiger plc participated in the full GBP100,000 of the exchange agreement and the Company has agreed to accept payment in the form of 1,818,182 new ordinary shares of 0.01 pence each Metal Tiger plc at a price of 5.5 pence per share.
Kenya
On 7 May 2015, the Company announced that its partner, Mid Migori Mining Ltd ("MMM"), has been advised by the Ministry of Mining of the termination of its Special Licenses numbers 122 and 202 ("the SLs"). MMM intends to challenge this purported termination. MMM also continues to have an application for a Mining License over a part of the SLs, submitted in 2012 pending at the Ministry. Meanwhile Red Rock through its local affiliate Red Rock Kenya Limited is applying for the ground covered by the SLs. The Ministry has indicated that in considering this application the work and expenditure of the Company since 2009 will be taken into account.
On 26 June 2015, the Company announced that it has been granted leave to institute judicial review proceedings and a stay in relation to the purported termination of the Special Licenses covering the Migori Gold Project of its partner Mid Migori Mining Ltd ("MMM"). Red Rock has now executed an agreement with Kansai Mining Corporation Ltd ("Kansai"), the other shareholder in MMM, pursuant to which Red Rock's farm-in agreement is replaced by arrangements under which any interest in the Migori Gold Project or the other assets of MMM that may be retained by or granted to MMM or Red Rock shall be shared in the ratio 75% to Red Rock and 25% to Kansai. Kansai's interest will be carried up to the point of an Indicated Mineral Resource of 2m oz gold. Red Rock is to have full management rights and the conduct of legal proceedings on behalf of both MMM and itself. Red Rock at the same time surrenders all its share interest in Kansai and pays GBP25,000 to Kansai, with a further GBP25,000 due upon recovery of the Migori Gold Project.
During the year under review the Company continued to work to protect its interests and those of its local partner in Kenya via its application for judicial review in relation to its Kenyan licenses.
Elephant Oil
On 26 June 2015, the Company announced that it has entered into an option agreement ("the Option") with Elephant Oil Limited ("Elephant"), an oil and gas exploration company focused on West Africa. The Option if exercised requires Red Rock to subscribe for 1,086,956 new ordinary shares in Elephant, at a price per share of 25.3 pence, for an aggregate consideration of GBP275,000. Further, the Option if executed, includes the right to invest an additional GBP412,500 in to Elephant within a six month period, also at
25.3 pence per share. The Option is exercisable within seven days, unless extended by Elephant.
On 7 July 2015, the Company agreed to subscribe for 1,086,956 new ordinary shares in Elephant Oil Limited, at a price per share of 25.3 pence, for an aggregate consideration of GBP275,000. The Company has also been granted the right to invest a further GBP412,500 in to Elephant Oil Limited within a six-month period, also at 25.3 pence per share. This right was not utilized and lapsed in January 2016.
Shoats Creek
On 28 October 2015, the Company announced it had entered into an option agreement with Shoats Creek Development Corporation Inc, to take a 20% Working Interest in the planned development of the LM#21 and LM#22 wells at the Shoats Creek Field, Beauregard Parish, Louisiana. The Operator will be an affiliate of Northcote Energy plc, later renamed Mayan Energy Plc. The 20% Working Interest is to be achieved at an aggregate cost of up to US$500,000 - US$600,000.
On 27 November 2015, the Company announced that it has exercised its option to take a 20% working interest / 14.4% net revenue interest in the planned LM#21 and LM#22 wells at Shoats Creek. The Company received an interest in associated common tank and production facilities as well as in two salt water disposal wells. Shoats Creek Development Corporation Inc will have a 18.75% back-in-after-payout so that once the Company has received payments for oil and gas sales minus operating expenses equal to the investment required to drill the wells and associated facilities, the Company's working interest will reset to 16.25% with a 11.7% net revenue interest.
On 20 January 2016 the Company announced that its wholly owned subsidiary Red Rock Resources Inc, has agreed to acquire a 20% working interest / 14.4% net revenue interest from Shoats Creek Development Corporation in the LM#20 well for an immediate payment of US$120,000 and a US$80,000 promissory note payable in monthly instalments between July 2016 and December 2018 and bearing 4.5% interest. In the event that cumulative production from the LM#20 well exceeds 100,000 barrels of oil within three years, a further payment of US$40,000 becomes due. Shoats Creek Development Corporation receives a back-in-after-payout so that once the Company has received payments for oil and gas sales minus operating expenses equal to the investment required to drill the wells and associated facilities, the Company's working interest will reset to 16.25% with a 11.7% net revenue interest. The Company further acquired the option but not the obligation to invest in additional wells and re-entry opportunities that might be proposed from time to time on a heads-up basis.
On 8 June 2016 the Company announced that it had agreed to participate in the re-entry and recompletion of the LM#19 well at Shoats Creek, Louisiana. The work on the well was expected to cost US$40,000, US$8,000 net to the Company in exchange for a 20% working interest and 14.4% net revenue interest.
Goldstone Resources Investment
On 28 April 2016, the Company announced a joint acquisition of 12,013,173 new ordinary shares of Goldstone Resources Ltd ("GRL") by the Company and Metal Tiger plc ("MTR") for a total consideration of GBP225,000. The acquired shares amount to 19.29% of the issued share capital of GRL, and upon completion of the acquisition the Company will own 6,006,587 or 9.645% of GRL. The total consideration will be payable half in cash (the "Cash Consideration") and half in new shares (the "Share Consideration"). On completion, the Company will issue and allot to Unity Mining Ltd 21,315,971 new ordinary shares of 0.01 pence each in the Company at a volume-weighted average price of 0.52777328 pence per share. For every one share, Unity Mining Ltd will be issued with one option exercisable at exercisable at 0.66 pence per share and expiring on 28 April 2018. These shares were credited as fully paid as the Share Consideration while the Cash Consideration will be paid by MTR.
Share Incentive Plan
On 22 January 2016, the Board of Directors approved the issue of 3,750,000 ordinary shares of 0.01 pence each in the Company under the Company's Share Incentive Plan ("SIP") for the 2015/16 tax year. 3,750,000 Free Shares have been awarded with reference to the mid-market closing price of 0.4 pence on 20 January 2016.
On 7 April 2016, the Board of Directors approved the issue of 5,072,000 ordinary shares of 0.01 pence each in the Company under the Company's Share Incentive Plan ("SIP") for the 2015/16 tax year. 800,000 Free Shares, 1,424,000 Partnership Shares and 2,848,000 Matching Shares have been awarded with reference to the mid-market closing price of 0.375 pence on 31 March 2016.
Consolidation of Shares
On 21 December 2015, the Company announced that each of the existing 6,033,861,125 issued ordinary shares of 0.01 pence each in the capital of the Company ("Existing Ordinary Shares") will be subdivided into one A deferred share of 0.0096 pence each ("A Deferred Shares") and one new ordinary share of 0.0004 pence each. Furthermore, every 25 ordinary shares of 0.0004 pence each in the capital of the Company will be consolidated into one new ordinary shares of 0.01 pence each ("New Ordinary Shares") and accordingly the Company will have 241,354,445 New Ordinary Shares in issue post consolidation. The New Ordinary Shares will have the same rights and be subject to the same restrictions as the Existing Ordinary Shares in the Company's Articles of Association and the A Deferred Shares will have the rights and be subject to the restrictions attached to A Deferred Shares as set out in the Articles of Association.
24 Related party transactions
-- On 5 April 2013, Regency Mines plc, Red Rock Resources plc where Andrew Bell currently is a Director and Greatland Gold plc, where Andrew Bell previously was a Director, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total cost to the Company for these expenses during the year was GBP110,918 (2015: GBP151,632), of which GBP44,949 represented the Company's share of the office rent and the balance services provided (2015: GBP48,725).
-- The Company's staff are also sub-contracted to Regency Mines plc to work on specific assignments as necessary. During the year, staff costs of GBP24,687 (2015: GBP44,031) were recharged to Regency Mines plc. Such charges are offset against administration expenses in the income statement.
-- The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled as soon as may be possible. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charge for the year was GBP15,869 (2015: GBP16,865).
-- Related party receivables and payables are disclosed in notes 16 to 18.
-- The Company held 1,695,000 shares (0.52%) in Regency Mines plc as at 30 June 2016 and the same figures at 24 November 2016.
-- The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2016 are shown in the Director's Report.
-- The key management personnel are the Directors and their remuneration is disclosed within note 7.
25 Events after the reporting period
Issue of new shares
-- On 28 July 2016, the Company agreed to acquire a further 3,857,400 new ordinary shares in Goldstone Resources Ltd, at a price per share of 2.5 pence, for an aggregate consideration of GBP96,435. For every one share, the Company will also receive one warrant exercisable at 5 pence per share and expiring on 28 July 2018.
-- On 24 August 2016, the Company raised GBP300,000 by way of an issue of 75,000,000 new ordinary shares of 0.01 pence each in the Company at a price of 0.4 pence per share. Metal Tiger plc participated in GBP100,000 of this placing. The Company has also granted Metal Tiger plc the option to nominate a non-executive director to the board of the Company. For every one share, each subscriber will be issued with one warrant exercisable at 0.8 pence per share and expiring on 24 August 2018.
El Limon
-- On 1 July 2016, Colombia Milling Limited, a 100% owned subsidiary of Para Resources Inc, informed the Company that they do not agree that the Company's conversion right of its $1,000,000 Promissory Note into new ordinary shares of Para Resources Inc, has been triggered. The Company has set in motion the arbitration process provided for in its Letter Agreement with Colombia Milling Limited and is in discussions with Para Resources Inc regarding a solution that would avoid arbitration.
Jupiter Mines
-- On 21 November 2016, Jupiter announced that its 49.9% owned associate Tshipi é Ntle Manganese Mining Proprietary Ltd has resolved to distribute ZAR1,000,000,000 to its shareholders in respect of the year ending 28 February 2017, subject to there being no material change in production and market conditions for the rest of the financial year. Jupiter has resolved on receipt of its portion of this payment to distribute $55,000,000 to its own shareholders. This distribution would equate to a $658,350 payment to the Company.
Annual General Meeting
The Company intends to issue a notice of Annual General Meeting of shareholders to be held on 30 December 2016 for the urpose of dealing with the usual business applicable at such a meeting.
26 Commitments
As at 30 June 2015, the Company had entered into the following commitments:
-- Exploration commitments: ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits in Kenya and Greenland. 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.
-- Under the terms of the joint venture, purchase and sale agreement entered into in August 2009 between the Company and Kansai Mining Corporation Limited, the Company is required to act as manager of the tenements held by Mid Migori Mining Company Limited in Kenya, pay the costs of exploration and other costs except for the costs of licence renewal and rents, and keep the tenements in good standing.
-- On 5 April 2013, Red Rock Resources plc entered into a joint lease agreement with Regency Mines plc and Greatland Gold plc at Ivybridge House, 1 Adam Street, London WC2N 6LE. The lease is non-cancellable until 1 December 2017. Future minimum annual rental and service charges payable by the Company is GBP38,850.
27 Control
There is considered to be no controlling party.
28 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 2016 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 2016 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 2016 will be delivered to the Registrar of Companies by 31 December 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
December 01, 2016 02:00 ET (07:00 GMT)
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