Red Rock Resources reinforces its compelling story with exciting Australia and Kenya updates (RRR)

Every great success is made up of smaller successes, and it’s those smaller victories that ultimately lead to a win.

Red Rock Resources (LON: RRR) is right now enjoying a slew of these kinds of small and cumulative successes across its portfolio, and the latest reports from Kenya and Australia have gone a long a long way to proving this once again.

In Kenya, exploration in the historically underexploited Eastern Licence of the Mikei Gold Project is proving fruitful as new targets are identified along strike from the existing Resources.

Meanwhile, at the Victoria Goldfields in Australia, the company has unearthed workings and areas that can be drilled later this year.

The drilling for cobalt and copper in the Congo has been completed, and the company, which was sufficiently confident to build a camp before drilling at Luanshimba, has gone quiet as it awaits final results from the lab. Now, Red Rock is using the period before it announces exploration results to complete some long lead time license transfer paperwork before it announces exploration results,  

Here, Red Rock’s chairman Andrew Bell walks Mining Maven through the significance of his firm’s latest update and Red Rock’s ambitions.

If the firm can indeed make a discovery at one of the “really exciting” targets Bell describes, then a considerable re-rate from its current sub-£10 million market cap could be just around the corner.

Victoria joint venture unearths “enticing targets”

From Australia comes an exploration update from joint venture (“JV”) subsidiary Red Rock Australasia (“RRAL”) – an entity owned 50.1% by Red Rock and 49.9% by Power Metals Resources (LON: POW).

Victoria was the site of a gold rush back in the mid-1800s after a discovery in Ballarat in 1851 resulted in a riot of activity in the state. At one point, an astonishing one third of the world’s gold production came from Victoria.

While production dwindled after that, interest returned in 2005 when commercial mining started at the Fosterville mine and the State Government started to produce a series of geophysical studies. Fosterville was subsequently bought by Kirkland Lake Gold (NYSE:KL) and is now one of the highest grade and lowest cost gold mines on Earth.

Since Kirkland’s success, explorers have returned to the area, seeking their share of the riches on offer in Victoria.

The latest news reveals the JV’s success so far in the state – with critical steps including the discovery of workings, well-developed adits, and shafts at the O’Laughlins prospect, located in already granted license EL 007271.

Given the lack of prior reports or indications of historical grade so far in the literature, it looks like this will be the first modern day exploration in these once-forgotten workings since the 1860s.

Bell outlines the extent of the discovery here:

“We think that we have a channel with two distinct lines of mineralization with old workings along them, production from which is unrecorded. But you can see a lot of money was put in the 1860s, and we think there’s possibly another similar channel in the middle and there may be shearing or cross-cutting faults.”

As Bell explains, the structures could even turn out to be an offset to the east of the Ballarat trend going through the Ballarat mine.

With safety requirements now complete, RRAL’s geologists are re-entering the old workings at O’Laughlins. There, they’ll investigate how much gold mineralisation was historically exploited, and the nature of that mineralisation.

The re-entry programme also includes the additional underground excavations and shafts located in the immediate area, with the hope of better understanding the lode systems. The aim is also to improve targeting ahead of scheduled diamond drilling.

Bell says the company has identified “some really exciting, enticing targets”. Specifically, there are two or three areas where the plan is to “book the drills to start diamond drilling at the end of November or beginning of December”. 

As Bell comments:

“We think that the prospects now are quite good, that we’ll be able to piece together good-grade resources around old mines workings, which would together potentially support a processing plant.

“With each announcement, and with each piece of news we come out with, we are laying out a little more of the picture of what we potentially have, and what the next steps can be in exploration and drilling.”

It’s these individual pieces of news that go into making the investment case for Red Rock. When put together, they reveal a company undertaking active exploration in some of the most prospective regions on the planet.

Multi-million-ounce potential at Mikei

Strengthening its investment case further, Red Rock also posted an update on the Mikei Gold Project in Kenya.

The company revealed that it has completed 115 line km of induced polarisation (“IP”) surveying in the Masurura area of the Eastern licence. What’s more, because it has its own geophysics team and equipment, Bell highlighted that the firm was able to do so with great efficiency.

Explorers use IP surveys as one tool to identify gold deposits, along with additional metals like copper and silver. The chargeability map generated from this IP survey coincides well with the presence of artisanal miners, as well as the soil geochemical contours already delineated. The map also coincides with shallow historic drilled assay intercepts.

Red Rock’s survey recorded a total of four important anomalous areas in Francis 2, Francis 3, Lake Bush and Lake Bush Banded Iron Formation. Today, work continues and will focus on prioritising targets and locations for a 2022 drill programme.

Mikei is a powerful project, covering “nearly 250 square kilometres along a Greenstone belt with 24 good targets”, as Bell says. This belt is the next along from the parallel North Mara mine – operated by Barrick Gold (NYSE: GOLD).

North Mara lies 30km away, over the border from Mikei in Tanzania. Both projects are on the northern part of the Tanzanian Craton, which crosses into Kenya.

As Bell explains, North Mara is what Barrick calls a “tier one asset”, putting it among their top mines with production at “nearly 200,000 ounces a year”.

Bell goes on to add that:

“In the last seven or eight years, North Mara has gone from looking like a declining mine to one which, having produced 3 million ounces since 2002, has another 5 million-plus ounces of resource and reserves – including underground at higher grades than we were seeing a few years ago.

“Ultimately, I think when we look back on it, we will say that was a 10-million-ounce mine.”

The latest Kenya release also mentions that drilling continues in the Western licence at Mikei, though has been interrupted by an equipment breakdown.

Red Rock is bringing in an additional compressor so as to improve penetration and recoveries where graphitic shales around the water table level have impacted drill performance.

Bell is enthusiastic about the drilling in the Western licence, noting:

“We’ve already begun to be able to model something underground and say where the higher-grade zones are, and how we think the structure works. Each new hole we drill can be positioned to give us more information in relation to what we already have.”

So, there’s the promising existing drilling in the Western licence, and then there’s the potential in the Eastern licence as well – as shown in these new IP survey results.

If the Eastern and Western licences reveal what the company thinks they might, Bell says, the potential is huge.

“If we find something there, then we could start talking about a target of not just one or two million ounces, but potentially three or four million,” says Bell, “but the ground will not give up all its secrets quickly, or cheaply”.  

With so much on offer, then, it’s imperative to look not just at individual releases, but to put them in context and focus on the bigger picture.

“Making progress all the time” – Red Rock’s efforts continue to bear fruit

Shares in Red Rock are up 8% since September began. At the same time, the shares remain below their heights back in February – making this an affordable point to buy.

There tends to be this tendency among exploration investors to wait to for a single moment of victory, of triumph, the long-awaited result.

But this short-sighted outlook prevents investors from taking a company in as a whole, and understanding its merit. It puts people on the back foot, waiting for something big to happen instead of taking action.

In Bell’s words:

“It’s been quite difficult to get across the fact that we are in three jurisdictions – Congo, Kenya and Australia – actually drilling this year.

“Even when we’re not announcing ‘today we had dramatically good drill results’ we are still making progress all the time. We’re doing things that add to the story. Not everything we do is going to produce an instant headline, but we’re building the picture. You have to focus out on the big picture. We are currently working in three countries with three projects which we believe can deliver three mines.”

The case for Red Rock is compelling enough when taken in these small updates, but is stronger still when taking the span of the company’s history into account.

As newsflow builds – with drilling in so many jurisdictions in this year alone – the chance to get in on the ground floor is unlikely to last.

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

Red Rock Resources and Power Metal in Victoria – on the hunt for Fosterville-scale gold (RRR, POW)

Red Rock Resources’ (LON:RRR) joint venture in Victoria could be on track to discover Fosterville-scale gold, as its exploration of Australia’s hottest goldfields continues.

The discovery of Fosterville, the world’s highest grade and lowest cost gold mine, triggered huge interest in Victoria, which lies in southeast Australia. And now, Red Rock and Power Metal Resources (LSE:POW) have teamed up to focus on exploring the area further with their gold joint venture (“JV”) Red Rock Australasia. Red Rock has a 51.1% stake in the JV, and Power Metal the remainder.

Red Rock Australasia has applied for 30 licences in Victoria in total, covering around 2,300 square kilometres (“sq km”). In an interview with ValueTheMarkets, chief executive Andrew Bell noted that the JV’s entry into the area was timed perfectly, being followed by “a rush for all available land” by explorers and high-profile producers alike.

Asked if the Red Rock Australasia JV has the same potential as Fosterville, Bell noted the region’s considerable geological potential.

He also highlighted that the JV has targets “just waiting to be explored”, with two in particular that clearly “could be big”.

The chief executive also pointed to Fosterville’s extraordinary recent results, and its hunger to “find another Fosterville”:

“There must be other Fostervilles out there, or other rich deposits. And with the footprint we have in really good ground, we have as good a chance of finding them,” Bell said.

Bell said the JV’s wisdom lies in using old gold mines to find new ones, pointing out that it has “a lot of old workings” alongside targets based purely on geology and geophysics.

 

Past and future

Red Rock and Power Metals have major plans for Red Rock Australasia. Of the total licences applied for, the JV has been granted five – covering 279 sq km – while several of its other eleven licences are in the last processing stage.

Eventually, the JV partners plan to list core Red Rock Australasia assets through a Canadian public listing. This process is now well underway in parallel with other project work.

There is a strong mining history in Victoria, with a discovery in Ballarat in 1851 triggering a gold rush with around 6,000 diggers arriving every week. During the 1850s, an incredible one-third of global production came from the region.

Indeed, despite being Australia’s smallest state, Victoria has produced in excess of 2,400 tons of gold – an incredible 32% of all gold mined in the country – to date.

Production ceased in the 1920s for mines at the two centres, Bendigo and Ballarat ahead of a sixty-year hiatus.

But that all changed in 2005 when commercial mining started at Fosterville, located east of Bendigo, with a million ounces mined by 2016.

 

What next for gold?

Adding to Red Rock’s interest in Victoria is the gold price itself, which has been “very strong”.

Bell attributed this to extreme quantitative easing (“QE”) measures, which were introduced in the wake of the 2008 financial crash as a way to expand the monetary base while maintaining a low interest rate.

The chief executive commented on how difficult it has been for the US to stop issuing new credit through QE and begin reducing the central bank balance sheet in spite of its strength. Each time, Bell explained, markets were spooked and the policy had to be reversed. With even the US unable to achieve this goal, Bell does not expect others like Japan or the EU to fare any better.

Bell added that the pandemic has taken this “to a new level”, making it “difficult to imagine that there will not be inflation in the next two or three years”.

While the impact of inflation on the gold price in early stages might be ambiguous, Bell stressed that gold will ultimately “be seen as a safe haven and an inflation hedge” for “any prolonged period”.

Adding to this has been a lack of new gold discoveries, with not enough investment to meet foreseeable demands. Bell pointed out that, as the world gets richer, demand will rise. As such, if gold is “to hold its own as a percentage of assets”, its production must increase.

Bell acknowledged that some countries have been increasing production – with China in particular hitting around 380 metric tonnes in 2020. But nothing so far, he said, “has been able to replace the old position of South Africa, which, in the 1970s, was still producing 900 tons a year.”

Much of this was obscured by gold sale programmes conducted by central banks. However, as Bell pointed out, “non-traditional countries” have been “building up gold as part of their reserves”.

The chief executive asserted that, marginally speaking, there is an inclination among private investors and central banks to increase gold holdings. At a time when the gold supply is now increasing, this will put upward pressure on the precious yellow metal.

For that reason, Bell asserted that gold was not high risk and represents “a great insurance policy”. Not only that, but he believed it was “more probable than not” that gold will “go considerably higher”.

Red Rock and Power Metal have identified Victoria as just the right place for their exploration efforts, with its rich history and thriving present. Not only that, but they also have excellent timing – picking gold just as the element is set to rise. This could well mean great things for the early investor.

 

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, does not own 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

Red Rock Resources poised for cobalt success amid EV revolution (RRR)

Red Rock Resources (LON: RRR) looks to be perfectly positioned at the moment when it comes to the electric vehicle revolution. This is particularly the case for its interests in the DRC, origin of more than half of the world’s cobalt.

In an interview with ValueTheMarkets, chair and chief executive Andrew Bell highlighted the excellent combination of Red Rock’s copper/cobalt joint ventures amid the push for electrification.

Red Rock has a controlling position in its projects, which cover potentially four copper/cobalt licences and one copper licence in the heart of the Katanga provinces, located within the Central African Copperbelt.

Around 60% of the globe’s cobalt resources come from the DRC. Not only that, but, as Bell explained, “50% of that cobalt comes from the areas around Kolwezi, including where we have one project”.

In terms of cobalt reserves by country, the DRC had 3.6 million metric tons as of 2020. Meanwhile, there is an estimated $24 trillion worth of cobalt, copper, gold, diamonds, and other mineral deposits untapped in the country, making it one of the world’s most in-demand mining destinations.

Specifically, the global electrification trend that is currently playing out is reliant heavily on both cobalt and copper.  

Indeed, right now, around 50% of cobalt produced worldwide ends up in rechargeable batteries, and when it comes to the total battery metals market, cobalt has the second-biggest volume share.

Meanwhile, copper is another major electric vehicle (“EV”) component used in electric motors, batteries, and wiring. The red metal is also used for EV charging stations, part of the infrastructure needed to make electrification possible.

This is all great news for Red Rock and its investors, because the JVs target both cobalt and copper. As Bell explained:

“The argument for copper is really good already. The argument for copper including electric cars is even better. Copper and cobalt are often found together, as in the parts of the DRC where we're exploring.”

Bell also pointed out the “government pressure” that is helping to push electrification forward. He highlighted that “a lot of money” is going into driving the change.

“Humans are so innovative that people will find cheaper and cheaper car batteries and this market will expand,” he added.

Evidence of this direction of travel is playing out everywhere.

For example, Norway is poised to ban the sale of fossil fuel-powered cars within just four years. The UK is to follow suit with a ban in 2030 and Japan in the mid-2030s. The EU is also proposing a crackdown in order to hit its legally-binding 2050 zero emissions target while China, too, is considering its own ban.

Likewise, over in the US, California intends a halt the sale of passenger cars and trucks that use gasoline by 2035. 

This will sit alongside broader US measures under the Biden administration’s American Jobs Plan. These include sales rebates and tax incentives to encourage the purchase of EVs. Further, the plan will also involve the creation of a network of 500,000 EV chargers by 2030.

Moving back to the JVs, and Bell said Red Rock is right now conducting exploration on one licence, which will involve drilling. “We have taken a greenfield project from zero to high expectations of an imminent resource with careful, economical, systematic, intelligent exploration,” he added

Bell also said the company was also “negotiating with other parties about assets that contain resources”. 

Alongside its position in the DRC, Red Rock also owns 25 million shares in its London-peer Power Metal Resources (LON: POW) along with a further 20 million warrants.

Power Metals is also exploring for key metals needed to fuel the EV revolution – including nickel, copper, lithium, and cobalt. As a result, Red Rock’s position adds further diversified exposure to the electrification trend and another string to its already-well-crafted bow.

With all of this combined Red Rock is perfectly positioned right now to capitalise on the EV revolution. It has electrification exposure just as the sector is booming, both regulation and incentives in place to encourage huge growth in the EV space.

On top of that, Red Rock also has gold exposure at a time when prices of the yellow metal are on the rise. While there was some premature optimism at the start of 2021, which led a few investors away from safe havens, reality has set in again. A resurgence of Covid-19 outbreaks, like one right now in India, remain a threat and make gold all the more enticing.

It is also worth considering the firm’s c.1% ownership of Jupiter Mines (ASX:JMS), a manganese producer in South Africa and a significant part of Red Rock’s investment portfolio since 2007. In the past two years, Jupiter has made a number of distributions totalling more than $200 million.

Red Rock is in the perfect position, with plenty of catalysts waiting in the wings that could trigger a significant re-rate from its current £10.2 million market cap. The Congo JVs alone stands to benefit not only from any strong drill results and production in the DRC, but also increasing demand from the EV space keeping prices high.

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, does not own 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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