17th Dec 2007 07:00
Red Rock Resources plc17 December 2007 Red Rock Resources plc ("Red Rock" or the "Company") Final results announcement year ended 30 June 2007 Dated: 17 December 2007 Chairman's statement Dear Shareholders This third annual report has some positive progress to report, but much needs tobe done to take advantage in the coming year of the opportunities which are nowbefore the Company. Summary The Company reports the following developments during the year to 30 June 2007: • Share price increase from 1.25p to 3.5p • £1,358,375 before expenses raised from share placings, in August 2006 and January-February 2007 at 2p and in June 2007 at 3p • Agreement to sell uranium assets to ASX-listed Retail Star Limited • Exercise of Jupiter Mines Ltd option over Mt Ida and Mt Hope iron ore tenements • Exploration and studies over manganese deposit at Chiwefwe. Exploration Manganese exploration was concentrated on the Company's newly acquired Zambianlicence. Manganese prices, until the end of the period when they doubled as aresult of Chinese demand, were stable to soft during the year - although mostother metals saw price strength. This meant that the Company's 695 sq km oflicence applications in the East Pilbara manganese field of Western Australiawere not perceived by the market as exciting. With rising labour, raw materialand transport costs and by virtue of the fact that the licence area is exposedto a harsh climate and is in a remote location, margins looked as if they mightbe inadequate on a new project. Even Consolidated Minerals Ltd, a largeproducer in the area, seemed increasingly to be seen as an incipient nickel andcopper play rather than a manganese company. Therefore, although we believedstrongly in the fundamental argument for manganese and in Chinese demand as thekey driver, in the short term a smaller project from an area with a productionhistory, cheap labour, and with good infrastructure might be easier to progress,and so Zambia rather than western Australia was the focus. Early in the year we began mapping and sampling at our 400 hectare manganeseproject at Chiwefwe, near Mkushi in Zambia. This was followed by a 15 holeshallow RAB drill programme to test for good grade mineralisation extending todepth. The results enhanced our understanding of the deposit, and some holesended in mineralisation. The grades encountered were variable, as were thosefrom a sampling programme on the several thousand tons contained in oldstockpiles on site. A scoping study was carried out by CSA Consultants Ltd ("CSA"), which concluded that production was likely to be practicable andeconomic, provided that reliance could be placed on the assumptions made ontonnage and grade. In order to improve our understanding of the geology and identify drill targetsfor the drill campaign recommended by CSA, Aurum Exploration Ltd were engaged tocarry out further mapping and sampling of the licence and the surrounding area. This exercise was completed during June 2007. The study identified significantnew mineralisation in additional areas, but as there was a six month moratoriumimposed by the Zambian Government on new licence applications from 1 July 2007to 1 January 2008, while the Ministry's systems are computerised, the Companyconsidered it prudent to make no public statements pending application by theCompany for these new areas in the New Year. During the year geophysical interpretation and limited sampling was carried outon the Company's uranium licences in the Northern Territory, and initialexploration was carried out at the Company's Mt Alfred uranium-iron ore licence. Other On 28 May 2007 Jupiter Mines Ltd ("Jupiter") exercised the option granted on 23May 2006 over the Mt Ida and Mt Hope iron ore tenements in Western Australia.A$250,000 was paid and 4,617,178 Jupiter shares will be issued to the Company,which in addition retains a 1.5% production royalty. On 9 May 2007 Retail Star Limited ("Retail Star"), a Company listed on theAustralian Stock Exchange (ASX:RSL), agreed Heads of Terms to acquire 100% ofOrion Exploration Pty Ltd, owner of Red Rock's Northern Territory uraniumassets, and of certain other uranium interests, including any uranium interestsheld in Malawi that might be transferable and the uranium rights at the MtAlfred licence. We entered an agreement with private Chinese parties in Zambia on manganeseprocessing. This group ran into trouble as a result of the poor environmentalperformance of their plant. We also identified safety issues at the plant,which has been periodically shut down by the authorities. We have conducted astudy on the plant and have concluded that correct operation would not bedifficult to implement. We therefore continue to negotiate a revised agreementallowing us to operate the plant and produce ferromanganese. There can be nocertainty these discussions will be successful, but we remain hopeful of anearly and positive resolution. Post-balance sheet events Further issues of stock on 2 July 2007 at 3p per share and on 22 November 2007at 2.5p per share strengthened the Company's balance sheet by raising £825,000before expenses. The transaction with Retail Star was completed, and as a result Red Rock holds80,000,000 shares (15.5%) in Retail Star, as well as 20,000,000 options with anexercise price of 2.5 cents each and an expiry date of 30 June 2008. A further 60,000,000 Retail Star shares will be issued to Red Rock inconsideration of the Malawi licences being issued to or transferred to RetailStar. Red Rock has appointed two directors to the board of Retail Star and recruitedIan Scott, former Geology Manager and Chief Geologist at the Olympic Dam mine,as Managing Director. Ian Scott has extensive uranium experience and we welcomehim to the group. With his expertise, we have hopes of building Retail Starinto a significant player in the uranium exploration market. Recent work has been carried out by the Company at Mt Alfred, testing foruranium at the eastern end of Lake Barlee on behalf of Retail Star, and samplingfor iron ore in the areas lying along strike and in some cases adjacent to thesites of recently announced discoveries by our northern neighbours Iron MountainLtd and Mindax Ltd. Results from this sampling of the banded iron formationhorizons are awaited. Future prospects Metals demand will continue to be strong, as the demand from developingeconomies, such as China and India continues. Iron ore is the largest volumemetal commodity, and demand will track the economic growth of these economies.China already accounts for about 50% of world iron ore demand. Manganese isindispensable and non-substitutable for steel production, and economicallysignificant deposits of metallurgical grade manganese are, at current prices,difficult to find. Recently, manganese and iron ore prices have been strong, and consensusexpectations for 2008 are for a further rise in contract prices. The bid battlefor Consolidated Minerals Limited, and the pending listing of Spitfire ResourcesLimited on the Australian Stock Exchange, have focussed attention on the EastPilbara manganese province where we have so strong a position. At the same time,the Eastern Goldfields area of the Yilgarn craton of Western Australia, where wehave most of our iron ore interests, has become topical since September as ourvarious neighbours have begun sampling and drilling, and produce good results. We have signed native title agreements for our Oakover manganese properties, andwill begin geophysical exploration soon after grant. We continue to makeprogress in Zambia with our negotiations, and expect a number of developments byearly 2008. Meanwhile, we await results from our iron ore sampling and from our neighbours'drilling in the Yilgarn, and expect to start our own drill programme when thoseresults are back. We listed with high hopes for our two main commodities and two main areas; ithas taken two years, but perhaps the world is coming round a little to our wayof thinking. It is up to us to use the next year to convince it. Andrew R. McM. Bell Chairman 13 December 2007 The following are extracts from the financial statements for the year ended 30June 2007 which have been audited by Chapman Davis LLP Consolidated profit and loss accountfor the year ended 30 June 2007 Year ended Year ended 30 June 2007 30 June 2006 £ £ Turnover 551,652 -Cost of sales (200,461) -Gross profit 351,191 -Exploration costs (245,207) (58,455)Administrative expenses (415,343) (133,652)Currency profit/(loss) 18,038 (5,100) Operating loss (291,321) (197,207)Interest receivable 7,170 4,224Interest payable (5,579) - Loss on ordinary activities before taxation (289,730) (192,983)Tax on loss on ordinary activities - - Loss on ordinary activities after taxation (289,730) (192,983) Loss per share (0.15) pence (0.13) pence All of the operations are considered to be continuing. Statement of recognised gains and lossesFor the year ended 30 June 2007 Year ended Year ended 30 June 2007 30 June 2006 £ £ Deficit on revaluation of current asset (5,948) -investments Loss recognised directly to equity (5,948) -Loss for the financial period (289,730) (192,983) Total recognised losses for the year (295,678) (192,983) Consolidated balance sheetAs at 30 June 2007 30 June 2007 30 June 2006 £ £Fixed assets Investments 26,250 26,250Current assets Debtors 1,080,013 26,416 Cash at bank 220,347 101,021 Current asset investments 513,900 15,491 Exploration properties 935,353 972,290 2,749,613 1,115,218Creditors - amounts due within oneyear (293,609) (38,417)Net current assets 2,456,004 1,076,801 Total assets less current 2,482,254 1,103,051liabilities Share capital and reserves Called-up share capital 235,481 166,679 Share premium account 2,665,486 1,141,988 Share option reserve 82,581 - Other reserves (5,948) -Profit and loss account (495,346) (205,616) Equity shareholders' funds 2,482,254 1,103,051 Company balance sheetAs at 30 June 2007 30 June 2007 30 June 2006 £ £Fixed assets Investments 26,251 26,251Current assets Debtors 1,731,433 141,002 Cash at bank 209,103 79,106 Current asset investments 513,900 15,491 Exploration properties 466,455 971,888 2,920,891 1,207,487Creditors - amounts due within oneyear (293,609) (40,543)Net current assets 2,627,282 1,166,944 Total assets less current 2,653,533 1,193,195liabilities Share capital and reserves Called-up share capital 235,481 166,679 Share premium account 2,665,486 1,141,988 Share option reserve 82,581 - Other reserves (5,948)Profit and loss account (324,067) (115,472) Equity shareholders' funds 2,653,533 1,193,195 Consolidated cash flow statementfor the year ended 30 June 2007 Year ended Year ended 30 June 2007 30 June 2006 £ £ Net cash outflow from operating activities (607,974) (460,871)Cash outflow before financing (607,974) (460,781)Financing 727,300 561,802Increase in cash in the year 119,326 101,021 The financial information set out above does not constitute statutory accountsas defined in section 240 of the Companies Act 1985. The balance sheet at 30 June 2007, the profit and loss account, and the cashflow statement for the year then ended have been extracted from the Company'sstatutory financial statements upon which the auditor's opinion is unqualifiedand does not include any statement under Section 237 of the Companies Act 1985. Copies of the report and financial statements will be posted to Shareholders nolater than 20 December 2007 and will be available for a period of one monththereafter from the Company Secretary at 115 Eastbourne Mews, Paddington LondonW2 6LQ Alternatively, the report may be downloaded from the Company's website,www.rrrplc.com Enquiries: Andrew Bell 0207 402 4580 Red Rock Resources plc Chairman or 07766 474849 John Simpson 020 7512 0191 Blomfield Corporate Finance Ltd Nominated Adviser Ron Marshman / John Greenhalgh 020 7628 5518 City of London PR Limited Public Relations This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Red Rock Resources