Red Rock Resources (LSE:RRR) is sitting at 0.6p following the news earlier this week that it has finally settled a long-running licencing disagreement with the government of Kenya. With the firm now able to reapply for its two special licences in the country, chairman Andrew Bell talks us through plans to follow-up the extensive exploration work it carried out before the disruption.

Ongoing dispute

The dispute dates back to May 2015, when Kenya’s government told Mid Migori Mining – Red Rock’s local partner and JV project – that it planned to terminate both its licences in the country. Shortly afterwards, Red Rock ordered a stay on the government’s decision before launching into judicial review proceedings to protect its interests.

These efforts have continued in the background until this week when Red Rock, now 100pc owner of Mid Migori Mining, announced that it has once again been allowed to apply for the licences. It has been able to do this under Section 225(6) of Kenya’s 2016 Mining Act, which requires every business that held a licence before the act’s introduction to reapply.

Bell told us this means that the dispossession of Red Rock’s licences has now been disregarded, giving the firm the same opportunity as any other licence-holder in the country to re-apply under the new act. With this in mind, he added that he is confident the companys will be successful in its latest application:

It may look like we are having to apply again, but we are actually applying under Section 225(6), which means we haven’t lost the licences because this is the procedure for everyone transitioning from the old to the new rules. We expect the licence to go through as there is no valid reason it not to given that everyone is now on the same page.’

Moving on

If Red Rock’s application does pass through, the firm will be able to continue the work it began at the licences earlier this decade. The business has already spent millions exploring the ground, which lies in South West Kenya near the Tanzanian border and Acacia Mining’s North Mara mine.

The work culminated with an initial 1.3MMoz mineral resource under the JORC Code for the licences in 2012. It also found that gold recoveries of more than 90pc were achievable at a prospect called MK, while mineralisation at all prospects remains potentially open at depth and along strike of key higher-grade zones.

Bell told us that Red Rock is keen to get the licencing issue out the way as soon as possible so it can get exploration work moving and begin heading towards production:

‘Obviously, the involvement of the government means we are working at the speed of the system rather than being entirely in control of how quickly things move forward. However, we are hopeful of moving on rapidly. The next stage will be to do all of the things we outlined with our drilling back in 2012. This will involve more work on the higher-grade areas and expanding the resource. We think the next stages of exploration ought to both increase the size of the resource and increase its grade.

Finally, Bell said the news is the latest in a line of positive updates for Red Rock over recent months:

‘It is turning into a great time for us: manganese in South Africa is coming right, Jupiter listed in Australia earlier this year, and we expect royalties in Columbia to begin moving up significantly. Things are really looking very good for Red Rock in our judgment.’

Author: Daniel Flynn

Disclosure: The author does not hold a position in any of the companies mentioned above