Red Rock enters option over historic gold and silver assets in Slovakia (RRR)

Monday saw Red Rock Resources (LSE:RRR) add an option over former gold and silver mining and exploration assets in eastern Slovakia to its global project portfolio.

Red Rock has already paid vendor Mr Lubomir Konkil and his associated parties €10,000 for a due diligence period ending 21 September 2020 over the assets.

The firm has also paid €23,000 for a 50% stake in the Zlata Bana licence, which covers around 12km2.

Like many porphyries and other gold deposits in Eastern Europe, Zlata Bana has not undergone systematic modern exploration despite historical success.

Red Rock's chairman Andrew Bell said that this presents the company with an opportunity to create considerable value with a shortened path to production:

"This is an exciting potential addition to Red Rock's silver/gold pipeline and balances the portfolio in terms of risk and geographic spread.

We consider that applying modern geochemical and geophysical techniques to this historic asset will open up new exploration possibilities."

Should Red Rock exercise its option, then it would acquire a 50% interest in land and buildings, vehicles, mining equipment, a permit over a mineral stockpile, and mining information and data.

In exchange for this, the company would establish a joint venture with Konkil and issue €250,000 of new Red Rock shares to the vendor alongside a further €100,000 of shares upon completion of the asset transfer.

It would also be responsible for a portion of the joint venture's expenditures, a sum that is expected to amount to "not less than €100,000" in 2020.

Monday's development follows the news at the end of August that Red Rock has secured the long-awaited renewal of its licence areas covering the Mikei and Macalder gold projects in south-west Kenya.

The projects were 75% beneficially owned by Red Rock until a renegotiation with its partners in 2018 that will see ownership interest rise to 100%. They cover 245km2 in the under-explored Migori gold belt near Barrick's North Mara gold operations in Tanzania.

Migori's greater Mikei area already boasts a 1.2Moz JORC gold resource, while tailings on the property from the Macalder VMS present another 68,000 ounces of the precious metal ready for early production. The latter are in the most valuable Measured category.

The projects offer a great deal of upside potential, with a key component of Red Rock's regional activities focusing on identifying new potentially economic areas of mineralization and expanding the project's existing resource base.

Author: Daniel Flynn

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

Red Rock Resources secures transformational licence renewal for 1.2Moz African gold project (RRR)

Monday saw Red Rock Resources (LSE:RRR) reveal the long-awaited renewal of its licence areas covering its Mikei and Macalder gold projects in south-west Kenya. This is a huge step forward for the company, which the market has yet to wake up to.

The projects were 75% beneficially owned by Red Rock until a renegotiation with its partners in 2018 that will see ownership interest rise to 100%. They cover 245km2 in the under-explored Migori gold belt near Barrick’s North Mara gold operations in Tanzania.

Migori’s greater Mikei area already boasts a 1.2Moz JORC gold resource, while tailings on the property from the Macalder VMS present another 68,000 ounces of the precious metal ready for early production. The latter are in the most valuable Measured category.

The projects offer a great deal of upside potential, with a key component of Red Rock’s regional activities focusing on identifying new potentially economic areas of mineralization and expanding the project’s existing resource base.

Work by the company in the early 2010s already highlighted opportunities through a pit optimisation study and 12 new regional exploration targets.

Back in 2014, Red Rock had got as far completing the first stage of a Bankable Feasible Study for the project’s 200,000 oz Nyanza gold deposit as a stand-alone open pit operation.

A PEA provided projected life of mine revenue of US$95 million based on US$1,200/oz as well as an NPV(10) of US$8 million and CAPEX costs of just US$3 million – recoverable within six months of operation.

Meanwhile, Red Rock had also submitted in 2012 a mining lease application to the Kenya Government for the processing of the Macalder tailings.

However, in 2015, the then Minister moved to terminate the licenses covering the area.

After many years of patiently working through the issue, with the added complexity of straddling a period when 2016’s new Mining Act was coming into force, Red Rock finally announced on Monday that the anticipated issue of Prospecting Licenses PL/2018/0202 and PL/2018/0203 under the new Act have now been received for a period of three years from 2 August 2020.

Given the company has not been able to complete any exploration or technical work on the project for several years, it will now begin a review of how it intends to proceed across the project.

Speaking exclusively to MiningMaven, Red Rock’s chairman, Andrew Bell, told us:

“It has taken a long time for us to get to this point, but the timing could not now be more perfect for Red Rock. With gold prices setting all-time highs, there is a huge amount of renewed interest in the sector.

With a 1.2Moz JORC resource already in place, Red Rock has a platform to build on and expects to be able to achieve a substantial increase in resource size in the next phases of exploration with the eventual aim of building up a multi-million ounce deposit like North Mara.. We have an extremely strong foundation on which to work.

This represents a transformational opportunity for us and our shareholders and I expect plenty of positive updates in the coming months as we bring this project of enormous potential back to life.”

Author: Daniel Flynn

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

 

 

Andrew Bell on why Red Rock Resources is positioned perfectly to progress from its £1.2m market cap (RRR)

Like many of its mining peers, Red Rock Resources (LSE:RRR) has been hit by the global outbreak of Covid-19 in 2020. The resultant sell-off across many metal markets and general damage to investor sentiment have seen shares in the natural resources investment, exploration, and development company decline by 58.8% to 0.175p year-to-date.

However, with investments spanning many metal markets, Red Rock’s chief executive Andrew Bell says the value underpinning the firm’s portfolio far exceeds its current £1.2 million market valuation. So, could the current dip mark an opportune time to invest ahead of the inevitable rebound across wider markets?

Jupiter ascending

Firstly, Red Rock’s portfolio is underpinned by its exposure to ASX-listed resources firm Jupiter Mines (ASX:JMS).

Jupiter is the 49.9% owner of Tshipi Borwa, one of the largest and lowest-cost manganese exporting mines globally, based in South Africa’s world-leading Kalahari Manganese field. The mine exported a company record-breaking 3.51 million tonnes of manganese ore in FY19 and is now preparing a feasibility study to expand production capacity by 50% to 4.5 million tonnes of ore.

Manganese prices have been able to rise to around $3.85 per dry metric ton over recent weeks in the face of continuing, robust demand from the Chinese steel-making industry. As a result, sentiment towards Jupiter has remained positive despite the negative impacts of a 21-day country-wide mine lockdown in South Africa, introduced on 26 March.

As it stands, Red Rock owns 17.02 million shares in Jupiter, representing a stake of around 1%. With Jupiter’s shares sitting at around AUD$0.23 each, this holding is currently valued at around AUD$3.91 million, or, approximately £2.45 million- already twice Red Rock’s current market cap.

However, Bell believes the value of Red Rock’s Jupiter holding has the scope to increase much further. With China accounting for around 90% of Tshipi’s market, he thinks the firm will be favoured by a continuing uptick in the country’s economic activity as it works to return to pre-Covid-19 levels .

“If there were any weakness there it would be feeding into manganese prices, but these have been rising in the last few weeks as China rebuilds stocks and rebuilds its steel production,” says Bell. “There was already a trend towards importing high-quality manganese from South Africa, where Tshipi Borwa is based, and this will continue – the Chinese steel industry requires these products if it is to survive and prosper.”

“Besides the observation that Red Rock’s Jupiter holding already carries a higher valuation than Red Rock itself, there is the question of whether Jupiter, with its 100 year mine life and cheap production cost, is itself too cheap. Jupiter pays out a solid dividend – 7.5c, for a yield of 32% last year, and 4c so far this year. That is a 17.4% interim dividend yield. Even if Red Rock had nothing else in its locker, it is surely underpinned by this value.”

Golden opportunity

As alluded to by Bell, Red Rock does, in fact, boast more firepower in its war chest. One such example is its ownership of the Migori gold asset in Kenya.

As readers will know, global uncertainty is favouring gold, with the price of the safe-haven metal rising from around $1,450 an ounce to around $1,650 an ounce since December after some well-publicised volatility in March. Bell expects this dynamic – volatility within an upward trend - to extend well into the future, encouraged further by the raft of central bank stimulus packages announced by governments around the world in recent weeks.

For example, the Fed has taken unprecedented action to inject trillions of dollars into American markets, and Congress has agreed to a bill to hand $1,200 to families in a bid to restart an economy that has ground to a halt.  Meanwhile, the Bank of England also went all-in, dropping interest rates to 0.1%, the lowest level in the institution’s 300-year history.

“All the controls are off for government borrowing, but that cannot last forever,” says Bell. “It will drive essential growth in this sensitive time, but at some point, it will inevitably result in inflation or the fear of inflation. It is in exactly these conditions that people look at gold as a reliable store of value.”

This timeline suits Red Rock down to a tee.

The company has been working through a licensing issue between Kenya’s Mining ministry and Red Rock’s local partner for some years, stemming from the then Minister’s purported termination of the licences covering Migori in 2015.

In the years that have followed, Red Rock has made significant progress in restoring the licences and is now in the final stages of approval. Regardless of any potential coronavirus-related delays, Bell expects the company to be once again able to progress at Migori this year.

When this occurs, the asset’s 1.2 million-ounce JORC-compliant gold resource base can once again be factored into Red Rock’s market cap. As Bell puts it:

“Part of the reason our market cap came down was that we had the legs of the stool we were sitting on at Migori kicked away from under us, but now we have managed to put them back in place. When we get that official documentation restoring the licence, a 1.2-million-ounce gold resource that has been held back like water behind a dam for six years comes back into play. If we value that at $10 an ounce, the cost it got us to bring the gold into resource status, the asset is worth $12 million without even factoring in its exploration potential. If we were to value this mix of proven indicated, and inferred resource at $20, an arguable and  even cheap valuation on some comparison bases, then Migori is worth $24 million before further exploration. In reality, every project is different, and we will have to prove the additional value by what we do.”

The unstoppable rise of electric vehicles

Moving on from gold, another substantial component of Red Rock’s portfolio is its exposure to battery metals.

Specifically, the firm has a 50.1% controlling interest in a joint venture with a local partner that has exposure to three copper and cobalt prospective exploration licences in the Katanga segment of the DRC. Here, it is surrounded by active majors like Glencore and FE Limited. The firm also has a further 80% interest in another JV, where earlier this year it revealed that it had identified two open-ended areas strongly anomalous for both copper and cobalt at one of the licences. It is now preparing a more in-depth exploration programme.

The massive opportunity in the battery metals sector is well-known, with the minerals representing an essential component of the power sources for electric vehicles (“EVs”). The world’s fleet of EVs grew by 54% to about 3.1 million in 2017 and is expected to hit 125 million by 2030, according to the International Energy Agency.  Likewise, JP Morgan forecasts that EVs will account for 30% of all global vehicle sales 2025 – this compares to 1% in 2016.

Critically, Bell believes that the electrification of vehicles is a trend that will continue regardless of any disruption arising from Covid-19’s impact of supply chains and consumer sentiment over the short-term.

“Battery technology is really advancing fast now,” he tells us. “For example, just in the last week or so, Toyota and a Chinese auto manufacturer have set up a JV to design and develop all-electric vehicles in China. Toyota is the world’s biggest carmaker, so its display of serious commitment to this electric battery and EV market shows the scale of the enduring opportunity on offer. It immediately alters the kind of projection that we use for long-term EV uptake.

“As a result, I think the EV story will proceed coronavirus or no coronavirus. This means that our exposure to the sector through our DRC assets and our position in Power Metal Resources (LSE:POW) represent excellent opportunities that can add value for shareholders.”

Turning a corner

Like many areas of the market, the damage to mining stocks this year has been all encompassing and unforgiving. However, many remain confident that when the Covid-19 pandemic passes, a recovery rally will come into play.

When this will occur is extremely difficult to predict. However, when it does, Red Rock’s mix of exposure to producing assets – in the form of its Jupiter holding – and interest exploration projects approaching exciting milestones in robust metal markets should serve it well.

As Bell puts it, “In summary, we cannot imagine two better areas to be in within the sector than gold and battery metals, and from this base we will progress”.

Author: Daniel Flynn

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 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

  1. Red Rock Resources makes moves to navigate choppy markets (RRR)
  2. Red Rock Resources makes moves to navigate choppy markets (RRR)
  3. Red Rock Resources says work in Africa will not be inhibited over the short-term (RRR)
  4. Red Rock Resources to push forward at prospective DRC copper-cobalt project (DRC)
  5. Red Rock Resources highlights expansion progress at the Tshipi Borwa manganese mine (RRR)
  6. Andrew Bell on the major upside potential at Red Rock Resources currently being undervalued by the market (RRR)
  7. Red Rock Resources updates on investments in DRC and Jupiter Mines (RRR)
  8. Andrew Bell discusses Red Rock’s plans in Kenya following legal breakthrough (RRR)
  9. Red Rock Resources + Regency Mines: Update interview with Andrew Bell
  10. Red Rock Reshapes as it Forges a Golden African Future
  11. Red Rock Resources: When the going gets tough….will the tough get going?
  12. Red Rock Resources: August Update Interview with Chairman Andrew Bell
  13. Red Rock Resources: Colombia update Interview with Chairman Andrew Bell
  14. Red Rock Resources: August Interview with Andrew Bell
  15. Red Rock Resources: NAMA Sale Agreement Interview with the Chairman Andrew Bell
  16. Red Rock Resources: Year end review interview
  17. Red Rock Resources: Greenland – Route to Value
  18. Red Rock Resources: Podcast Interview with Chairman Andrew Bell
  19. Red Rock Resources: Value review, right now and looking ahead
  20. Red Rock Resources: A few things you may not realise...
  21. Red Rock Resources: Value articulated
  22. Red Rock Resources: Proven explorers, expanding producers
  23. Red Rock Resources: September Q&A with Andrew Bell
  24. Red Rock Resources: Red Rock Star! Royalties revisited
  25. Red Rock Resources: In depth interview with Andrew Bell
  26. Red Rock Resources: Iron Ore in Greenland, Louis Vuitton & Walmart!
  27. Red Rock Resources: Update Q&A with Andrew Bell
  28. Red Rock Resources: El Limon up & running!
  29. Red Rock Resources:Joining The Colombian Gold Rush!
  30. Red Rock Resources: Wake up and smell the coffee!