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.
