7th May 2015 09:18
LONDON (Alliance News) - Red Rock Resources PLC Thursday said it has moved to protect its interests in Kenya after the country's Ministry of Mining told the company's local partner that it had terminated two special licenses, although it warned that it may have to book a further writedown on its Kenyan assets if it doesn't get a positive result quickly.
The gold explorer said local partner Mid Migori Mining Ltd intends to challenge the terminaton of Special Licenses 122 and 202, and also still has an application for a mining license over part of the licenses pending. It submitted the application in 2012.
Red Rock said it also is applying for the ground covered by the special licenses through a local affiliate, and the Ministry has indicated that it will take into account the work and expenditure Red Rock has undertaken since 2009 when it considers the application.
However, if there isn't a "rapid and positive" outcome in Kenya, Red Rock said it would have to make a further impairment against its assets in the country in its financial accounts for the current financial year that end on June 30. Kenya-related items had a carrying value of about GBP8.5 million in the company's books at the end of 2014.
"We are sorry at this action taken by the Ministry of Mines towards Mid Migori Mining Ltd, which we do not think is to the benefit of the exploration and mining industry in Kenya. However Red Rock has moved vigorously to protect its interests and will continue to do so. The outcome may yet be favourable," Chairman Andrew Bell said in a statement.
"I think shareholders are aware that progress in Kenya has for some time been held up by political and other issues, despite the excellent exploration work we had carried out there, and therefore our interests there have not been the focus of our activities," he added.
Red Rocks Resources shares were down 16% at 0.0714 pence Thursday morning, one of the worst-performing stocks on the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
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