Red Rock boss Bell says firm in better position than ever to increase liquidity (RRR)

Red Rock Resources (LON: RRR) chair Andrew Bell said Tuesday the company was in a better position than ever to improve liquidity, paving the way for evolution to a mid-tier exploration and production firm.

 

In its half-year ended December 31, Red Rock’s total equity climbed a highly encouraging 20% to £16.7 million, after rising 54% over the previous six months. 

Not only that, but there was a £2.3 million increase in current and non-current assets over the half-year while liabilities dropped by £530,000. Red Rock has, since December, paid out £1.4 million to Kansai Mining.

“If we want to advance to become a mid-tier mineral exploration and production company, we need from here to give increasing importance to building and maintaining a high level of liquidity. We are in a better position to do so than we have ever been,” said Bell.

The value of Red Rock’s marketable securities and cash now approaches £4 million. This has been higher of late and is expected to rise by its year end in June thanks to dividends from Jupiter Mines, as well as Juno Minerals’ in specie share distribution and floatation.

The company’s value is also set to rise thanks to “the dynamism of Power Metal Resources”. Red Rock owns 25.0 million shares in Power Metal (LON: POW), as well as another 25.0 million warrants. The two are partners in the Red Rock Australasia joint venture (“JV”), which holds a major position in Australia’s highly lucrative Victoria goldfields.

Victoria is where Kirkland Lake Gold’s (NYSE:KL) astonishing Fosterville mine is located, the highest grade and lowest cost gold mine in the world.

Red Rock and Power Metal are planning an IPO for Red Rock Australasia. Bell expects this will crystallise the value of Red Rock’s holding in the JV to result in “a valuation uplift significant in relation to our market value”. The JV is split almost evenly, with Red Rock holding the slightly higher 50.1% stake.

Earlier this month, the JV obtained another two licences, bringing the total to five, with more expected soon. All licences so far are located in Red Rock Australasia’s high priority areas, where the JV is already developing its early drill targets. The 11 other JV licences are in the final processing stage.

Juno and Red Rock Australasia are not even the only upcoming IPOs in Red Rock’s portfolio, with Elephant Oil also poised for a market listing. Bell pointed out that if results from Juno’s passive seismic two years ago in onshore Benin are fulfilled “to any degree” then Juno could become one of Red Rock’s significant assets.

The company’s liquidity is improving already in its second half, with the company aiming to hit a £20 million cash and liquid investments target in the medium term.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Loss for the six months amounted to £430,000, swinging from a £337,000 profit the prior year. This results from higher administration costs, including employment costs, as a partial result of Red Rock Australasia’s elevated activity level amid increasing land holdings plus preparations for exploration and listing.

Lower dividends from Jupiter Mining also played into the interim loss.

Big things ahead

Red Rock has a variety of exciting plans lined up. For example, the firm is preparing to drill short reverse circulation holes at its Luanshimba copper-cobalt prospect, located in the DRC, once geophysics is done and ground conditions allow.

Elsewhere, in Kenya, the company is finalising its drill programme to follow up a recently announced JORC resource while in Australia it has started active exploration with the first targets set for drilling later this year.

“We live in volatile times” said Bell, noting the need to prepare “for sieges as well as marches”. While there appear to be promising opportunities in all directions for Red Rock, there are also grounds for caution.

Bell explained that while this could be the time for “move up by an order of magnitude to a new level” thanks to exciting project and a strong market, it is important for Red Rock to keep its footing and not put “the hard won gains of the last year” at risk.

 

Red Rock and Power Metals push forward at Victoria gold JV with two more licence approvals (RRR, POW)

Red Rock Resources (LON: RRR) has charged ahead in Australia, announcing on Wednesday that another two licences have been granted for its exciting Australian gold joint venture with more soon to come. The project has serious potential, being located in the same state as the widely renowned Fosterville mine.

The company’s Red Rock Australasia joint venture (“JV”) with Power Metal Resources (LON:POW) now has five licences already granted in Australia’s Victoria Goldfields. The JV is split almost evenly, with Red Rock holding a slightly higher 50.1% stake.

Importantly, all five licences so far are located in Red Rock Australasia’s high priority areas, where the JV is already developing its early drill targets.

Victoria has undeniably drawn huge attention in recent years after Kirkland Lake Gold’s (NYSE:KL) incredible discoveries at Fosterville, the world’s highest-grade and lowest-cost gold mine.

Red Rock Australasia now has licences covering 279 square kilometres (“sq km”). The latest two licences are EL007385 – named Sardinia – and EL007327, aka Blue Stocking. Sardinia is a 60 sq km licence south west of Ballarat, and Sardinia is 4 sq km in size and located north of existing JV licence Daylesford. Both new licences are for a five-year period.

More licences soon

In yet more excellent news, Red Rock chair Andrew Bell has revealed that “several more” of the 11 other JV licences are in the final processing stage. In total, these 11 cover a further 2,057 sq km of the Victoria Goldfields.

Red Rock and Power Metal plan to list core Red Rock Australasia assets with a Canadian public listing, a process well underway and taking place in parallel with other work.

Bell described these newly granted licences, and those just ahead, as “an encouraging background to our continuing work on the planned IPO”.

Both Red Rock and Power Metal were enthusiastic over new appointments at the JV. This includes the addition of current Red Rock Australasia exploration manager David Holden as a director on the JV board, and the hire of Jack McInerney as exploration geologist at the JV.

Bell noted McInerney’s “four years of regional experience at the Ballarat Gold Mine” in particular.

Meanwhile, Paul Johnson, chief executive officer of Power Metal, emphasised the recent announcement that Red Rock Australasia’s exploration programmes have already begun. He added that work is “targeting a large scale gold discovery or discoveries” with first exploration results expected to be announced “in the near future”.

Gold’s shine hasn’t dimmed yet

Gold has risen 11% since the start of 2020, from $1,557.32 per ounce to $1,734.28 an ounce. While it has fallen from its July peak of more than $2,036, as investors look towards the end of the pandemic, a later rise doesn’t seem too unlikely.

Not only will markets have to keep enduring the Covid-19 virus, likely indefinitely, but they will also have to reckon with the massive amounts of debt issued in the weeks after the 2020 pandemic. This could well trigger a return to the safe haven asset.

Alongside all this, Red Rock announced that the IPO date for its iron ore spin-out, Juno Minerals, has been delayed so that a general meeting can be called to remove some conditions after compliance issues with an overseas shareholder.

Bell said Red Rock has “sought guidance and taken appropriate advice” and can now move forward with the deal “with minimal delay”.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Market conditions favour Red Rock as it pushes forward DRC-based cobalt/copper project

On 20th November 2020, Red Rock Resources PLC, a UK-based natural resource development company, mobilised a team to the company’s 80% owned Luanshimba license in the Democratic Republic of Congo. 

The company sent the team on a programme of geophysics to follow up on two anomalies identified in late 2018. 

At the time, a comprehensive termite mound sampling programme and a reconnaissance geological mapping were conducted over a 100x100m area of prospective Roan group sediments within the company’s 420-hectare prospecting license, highlighting: 

  • A 2km long anomaly up to 500m wide that follows a carbonaceous shale and silicified dolomite. 
  • Anomalous metal assays of 519ppm Cu and 425ppm Co, likely indicative of Cu-Co mineralisation. 

The recently deployed programme takes the form of a 71km ground magnetics survey, a 12km induced polarisation survey, and the checking of on-site artisanal activity based on the findings from two years ago. The programme aims to identify conductive targets and provide Red Rock with a better understanding of the license’s structure for upcoming drilling.

The Chairman of Red Rock, Andrew Bell, said: “Once we start pitting and drilling, we are likely to have to maintain a continuous presence on-site to keep artisanal activity under control, so good preparatory work including geophysics […] was a critical next step.”

The news comes at an interesting time for the copper and cobalt markets.

Better than expected demand for portable electronics, mobility products such as eBikes, and an influx of home workers have seen cobalt demand improve considerably from the early days of the pandemic. In March, the metal was priced at just $28,500 per tonne, compared to its value of $31,990 at the end of November.

This, coupled with a recent report by Benchmark Mineral Intelligence suggesting that the battery industry, which at the moment makes up over half of the world’s cobalt demand, will require a further 100,000 tonnes of the metal by 2025, suggests a bullish outlook for the metal.

And while automakers, another large market for cobalt, move towards less costly electric vehicles and improvements in technology that reduce the need for cobalt, the positive sentiment around battery demand seems to outweigh the bearish fears of cobalt’s antiquatedness. 

Copper has had a similar, more dramatic trajectory, rallying to a seven-year peak at the start of December. Copper prices on the London Metal Exchange hit $7,719 a tonne in afternoon trading, highs that the metal hasn’t seen since 2013, after Goldman Sachs in Asia said the metal was in the first leg of a bull market that could see record highs.

A weak US dollar, which makes copper and other commodities cheaper in other currencies, and the hopes that a COVID-19 vaccine will slow the spread of the virus, has lent support to copper’s stock, which fell to $4,600 in March. 

With both metals having quite the positive outlook, Red Rock’s programme could prove to be a timely venture. If the two metals continue on their bullish path, the company’s drilling in DRC is definitely one to watch. 

Author: Mark Sheridan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

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