Red Rock Resources (LSE:RRR) has said it sees “upside potential rather than a potential for more downside surprises” as the world continues to move through the Covid-19 pandemic.

In a statement, the natural resources development company noted the measures taken by central banks around the world to shore up shaky markets. Among the largest developments here came when the US Federal Reserve rolled-out an “unlimited” buy up of mortgage-backed securities and corporate debt.  Elsewhere, the Bank of England has slashed interest rates to 0.1%, and the ECB has announced plans to buy up to 750 million euros in government and private sector debt, as well as commercial paper, by the end of 2020.

Red Rock’s chairman Andrew Bell said these measures could have several benefits – in particular highlighting rising gold prices and an increase in market liquidity. “From this point forward, therefore, the company sees upside potential rather than a potential for more downside surprises,” he added.

Regarding Red Rock’s own portfolio, Bell said the firm spent most of the first ten weeks of the year travelling overseas in anticipation of a world-wide shutdown. As such, although it is currently unable to visit any of its operations due to travel restrictions, it said it does not expect coronavirus to “inhibit [its] activities in the near-term”.

The company is therefore up to date on local developments and has had many interactions, now being followed up with local counterparts,” said Bell. “The countries in which we operate have taken actions which should reduce the rate of transmission and keep numbers at a level where tracing, isolation, and testing can be brought to bear to eliminate infection, as in East Asia.”

Specifically, the firm said that planning for a new stage of exploration on its 80%-owned Luanshimba licence in the Democratic Republic of Congo is ongoing.

Meanwhile, developments at the firm’s Migori gold project in Kenya are ongoing thanks to the country’s strong efforts to contain coronavirus to date – which have allowed government offices to remain open. Migori is 100%-owned by Red Rock and contains a 1.2 million-ounce JORC gold resource, which Red Rock is planning to develop in some form of partnership. As it stands, the firm is close to resolving a long-standing legal case regarding the special licences covering Migori, which Kenya’s government had previously ordered terminated.

Finally, the firm said that the producing Tshipi manganese mine, which is 49.9%-owned by Jupiter Mines (ASX:JMS), has been closed for 21 days as per a government lockdown. However, Bell – whose firm owns a stake in Jupiter – highlighted a recent return to form in the manganese market driven by improving economic conditions in China.

“We note the recovery of economic activity and demand in China, evidenced by the return of normal conditions in the manganese market and the increasing manganese price over recent weeks,” he said. “China needs manganese, and particularly South African manganese, for its steel industry and to avoid shortages, it is necessary that production resumes after the shortest possible delay.”

Author: Daniel Flynn

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