Red Rock Resorts
Annual Report 2013

Plain-text annual report

From Discovery to Development Red Rock Resources plc Annual report and accounts 2013 Realising opportunity Red Rock Resources plc is a mineral exploration and production company primarily focussed on the discovery and development of gold and iron ore. The Company invests in projects and opportunities where it can enhance the value of the assets through exploration, development and corporate transactions. Diversity of projects, an actively managed project pipeline and strategic exit points create a disciplined framework for value creation. The principal activities of the Company have been gold exploration in Kenya, gold production in Colombia and iron ore exploration in Greenland. The Company’s other iron ore interests are held through its strategic holding in Jupiter Mines Limited (ASX: JMS) and its royalty interest in an iron ore project in Australia. pg04 Greenland pg06 Colombia Kenya pg08 www.RRRPLC.COM Annual report and accounts 2013 | 01 Key points Finances Funding Operations » Pre-tax loss of £24,488,003 » Post-tax loss of £22,105,562 » Loss per share of 1.83 pence » Equity fell from £24,401,820 to £14,428,479 » £4,103,795 before expenses raised from share placings at prices between 2.0 pence and 0.4 pence » £1,405,445 raised by new borrowings » Share price fell from 1.88 pence » £1,110,706 raised from sale to 0.38 pence of investments » Greenland: Declared maiden JORC Inferred Mineral Resource Estimate of 67Mt @ 31.4% Fe » Colombia: Increased efficiency and lower cash costs at El Limon mine » Kenya: Pit Optimisation study of Mikei Resources completed In this report Overview 01 Key points 02 Red Rock’s evolution 03 Our key territories 04 Red Rock at a glance: Greenland 06 Red Rock at a glance: Colombia 08 Red Rock at a glance: Kenya Business review 10 Executive Chairman’s review Governance 14 Corporate Social Responsibility and Health & Safety 15 Board of Directors 16 Directors’ report 21 Statement of Directors’ responsibilities 22 Corporate governance statement Financial statements 24 Independent auditor’s report 26 Consolidated statement of financial position 27 Consolidated income statement 28 Consolidated statement of comprehensive income 29 Consolidated statement of changes in equity 30 Consolidated statement of cash flows 31 Company statement of financial position 32 Company statement of changes in equity 33 Company statement of cash flows 34 Notes to the financial statements 68 Notice of Annual General Meeting 72 Company information O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I Visit our website for investor news and announcements: www.rrrplc.com S t A t E M E N t S 02 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Red Rock’s evolution Adding value Red Rock adds value to its projects through activities which include exploration and development, deposit delineation, sales, joint ventures, retention of royalties and other transactions. Red Rock has a strong geological and technical team at its core and a focus on disciplined and cost-effective exploration through critical path analysis. the changes in quality and quantity of the assets of the Company over the past several years have come both through a combination of transactional activity, laying off risk while preserving upside, and successful exploration. The case for investment » Asset rich company with multiple » History of successful transactions disposals in progress » Several assets with potential total value greater than current market capitalisation » Cost-effective explorer with high success rate » Brought gold mine into production and improved processes » Balanced asset and commodity exposure: » three major projects » two commodities internally – more via investments » Experienced, professional management team across financial, technical and corporate operational departments Creating value for shareholders Jupiter Mines » Fe tenements vended into Jupiter Mines (ASX:JMS) in 2009 » Highest shareholding approximately 25% » Partial sale of royalty interest yields uS$6 million in 2012, with further payments possible » AuD$12.1 million raised through multiple disposals of JMS shares » Current holding approximately AuD$1.7 million Kenya » Gold exploration licences acquired 2009, with a 15% direct interest » Inherited dataset required further validation » Resources brought to JORC standard » Pit optimisation completed for hard rock resource » Scoping study completed for tailings resource and Mining Lease Application made » Further exploration targets delineated Greenland » Mineral exploration licences acquired 2011 with 25% ownership » 67Mt @31.4% Fe JORC compliant Inferred Mineral Resource Estimate » Ownership increased to 60% » Sale in progress Read more about our current progress in the Executive Chairman’s review from page 10 www.RRRPLC.COM Annual report and accounts 2013 | 03 Our key territories Melville Bugt iron ore project Red Rock Resources HQ El Limon gold mine O v E R v E w I Migori gold project I B u S N E S S R E v E w I Technical team leaders » Project managed the Melville Bugt project, Greenland » Responsible for developing the greenfield exploration licence from an early-stage concept to defining a JORC compliant Mineral Resource Estimate within budget in less than two field seasons » As the company’s gold specialist provided exploration advice to Kenyan and Colombian gold projects » Currently working on Sudan project for related company, Regency Mines plc. Ian O’Brien BSc (Hons) Co-head of Geology Ian is a geologist with over ten years’ experience in GIS, database development and project management. He has worked in Australia, Europe, Africa and North America and delivered data management solutions on JORC and NI43-101 compliant Resource Estimates for gold, iron ore and uranium. » Since joining RRR in June 2011 has worked across all RRR project teams defining and overseeing technical procedures » Builds databases and software systems and trains project teams in their implementation to streamline data handling from fieldwork through to Resource Estimation and corporate activities » Designed and developed a state-of-the-art database system which was implemented with great success in 2012 Melville Bugt diamond drill programme » System allows for instantaneous insertion of data into working models, allowing for the efficient assessment and evolution of field exploration and resource modelling. Gary Hurst MSci (Hons), FGS Co-head of Geology Gary’s geological experience ranges from greenfield exploration in the Democratic Republic of Congo to advanced exploration with Goldcorp Inc. in Red Lake, Ontario, Canada. During his career, he was a member of a small team of geologists who undertook the project work that lead to the $1.5 billion acquisition of Gold Eagle Mines Ltd.’s Bruce Channel Discovery by Goldcorp Inc. in 2008. G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 04 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Red Rock at a glance Greenland Melville Bugt (Fe) » Red Rock owns 60% of NAMA Greenland Ltd (“NGL”), which owns the 1,570 sq km licence » the successful maiden drill season of 2012 culminated in the declaration of a JORC Inferred Mineral Resource Estimate of 67Mt @ 31.4% Fe » Haematite exploration targets identified with drill core intersections up to 68.2% Fe » Investor offer to acquire 51% shareholding of NGL received in November 2012, the details of which are currently being finalised » Exploration team at work, Melville Bugt 2012 Location the 1,570 sq km licence area is located in north-west Greenland, 150km south of the town of Qaanaaq. Greenland is one of the world’s last mining frontiers; exploration in the region has previously faced many challenges, particularly with regard to transport and logistical access. However, a retreat in the ice caps has made exploration and production more feasible. this area of great untapped resource potential is attracting attention from resource exploration companies across the globe. Red Rock Resources’ interest the Melville Bugt licence is 100% owned by NAMA Greenland Limited (“NGL”), for which RRR holds an earn-in agreement with North Atlantic Mining Associates Ltd (“NAMA”). In 2012 the Company funded the maiden drill season and declared a JORC Inferred Mineral Resource Estimate (“MRE”) in December 2012, entitling RRR to increase its holding in NGL from 25% to 60%. Geology the Melville Bugt iron ore project covers an extensive area of Archaean-Palaeoproterozoic crystalline shield, which based on key geological events, is interpreted to lie within the prolific iron rich trend, the Committee Belt. to the south-west, the Canadian extent of the Committee Belt hosts the world class Mary River Project (Direct Shipping Ore (“DSO”)) and the Roche Bay Iron Ore Project (magnetite). targets at Melville Bugt are hosted by iron rich Banded Iron Formations (“BIF”), with magnetite and haematite dominant variants, including apparent potential for high grade DSO style deposits. Exploration history 2011 the 2011 exploration season confirmed the existence of significant iron deposits at Melville Bugt. the Company generated two main sets of targets with apparent regional differentiation: magnetite-rich targets in the western half of the tenements and haematite dominant targets with DSO potential in the eastern half of the licence. 2012 the goal for the 2012 field season was to achieve one MRE and secondarily to generate new exploration targets. Activities included the establishment of a base camp, a diamond drill programme, fieldwork and mapping, as well as geochemical assay analysis. the field team mobilised in late May, with commencement of drilling in late June running until mid-September. During this time, four prospects were drilled totalling 4,061m in 27 drill holes; twelve holes were drilled at Havik East, six at Havik Northeast, five at De Dødes west, and four at Haematite Nunatak. In addition, detailed geological mapping was undertaken at Havik East and Havik Northeast. www.RRRPLC.COM Annual report and accounts 2013 | 05 » Exploration at Havik west, 2012 » Haematite rich drill core, 60cm @ 68% Fe “ Desktop studies and resource analysis continued in 2013, developing plans for the next stages of exploration.” Many other similar magnetic anomalies remain untested, such as the ~8km-long magnetic tuukkaq anomaly which is expected to be a key focus of future exploration programmes. Mineral Resource Estimate Laboratory assay results of the 2012 drill programme were completed in October 2012, allowing project consultants SRK Consulting (uK) Ltd. to complete a JORC compliant Inferred MRE of 67Mt @31.4% Fe. this was declared by the Company on 19 December 2012. the Resource area covers the Havik East and Havik Northeast targets, collectively termed the Havik Asset. Preliminary Davis tube Recovery confirmed the presence of high quality magnetite concentrate, with low deleterious elements and good overall recovery. An additional twelve exploration targets were identified with potential tonnage of 158–474Mt @ 27–47% Fe. these were identified during the MRE study but further work would be required to expand the Resource base at Melville Bugt to include these targets. Sale of asset In November 2012, an offer was received to acquire 51% of the remaining share capital of NGL. technical due diligence by the buyer was completed in February 2013 and the Offer accepted by all NGL shareholders. On completion the Company expects to receive a cash consideration of approximately uSD10.7 million and will retain an interest of 29% in NGL and a royalty interest. » Camp infrastructure evolution: Mobile base camp 2011; Initial development 2012; Fully established camp late 2012 O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 06 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Red Rock at a glance continued Colombia “ El Limon mine cash costs were reduced 56% to $940 per oz over the course of the year, with further potential for reduction.” El Limon mine (Au) » El Limon gold mine owned through 50.002% subsidiary Four Points Mining SAS » Prime location 6km south of Zaragoza on the Frontino Gold Belt » tighter operational and financial control has improved performance » 2012 saw the appointment of a highly qualified Mine Manager, which has led to improvements in production » the Company has received an offer for its holding in FPM » the plant at El Limon Location Both mines are located in northern Colombia, in the region of Antioquia, between Zaragoza and Segovia, along the Frontino Gold Belt, one of Colombia’s premier gold districts. Red Rock Resources’ interest Red Rock owns 50.002% of local operator Four Points Mining (“FPM”), which owns the mining licences to the El Limon mine and has an outstanding loan of uS$2.25 million to FPM. El Limon the El Limon mine has been in periodic production for over 60 years, with extraction on seven levels down to over 350m, and a new eighth level opened by Red Rock. Mining operations were restarted in 2011 after a ten year hiatus due to instability in the region. A programme of improvements has taken place during 2012 and 2013. Initially this concentrated on ore transportation, plant improvement, mine safety and mine design. In the year under review the focus shifted to improving management and reporting structures, and controlling costs. More mine development work gave greater predictability of production levels. the change in emphasis from ore throughput to cost and grade has resulted in improved financial performance with cash costs – which had deteriorated to $1,913 per oz in the last three months of 2011-2012 – falling to $964 per oz in the last three months of 2012-2013. In June 2013, costs were $940 per oz compared with $2,149 per oz a year earlier. we expect long-term cash costs to stabilise at $850 or less per oz. www.RRRPLC.COM Annual report and accounts 2013 | 07 » Flotation cells at the El Limon plant the modern processing plant at El Limon has been operating with improved availability and has spare capacity. Over the summer months of 2013 there had been strike action by the informal mining sector in the area but the Company was able to continue production with minimal disruption. Future work the Company, as part of the process of preparing FPM for sale, has been developing a programme of geological work, a data room and presentation materials, and working on restructuring and rationalising its loans and investments in FPM. Sale process In July 2012, RRR received an offer from Ashmont Resources Corporation (“Ashmont”) to purchase the whole of FPM. Due diligence was completed but delays have occurred, due in part to the changing funding and gold price environment during the year. Ashmont has recently reaffirmed its desire to enter into terms of acquisition. the Company has also made its data room available to other potential interested parties and retained the option, in an improving gold price environment, of continuing to hold and further develop the asset. “ The Colombian asset remains for sale, but with increased profitability other options exist.” O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I » Gold pouring » Plant at El Limon S t A t E M E N t S 08 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Red Rock at a glance continued Kenya Migori Project (Au) » Historic licences on Migori gold belt with JORC resource estimate with contained metal content of 1.2 MOz Au @ 0.5g/t Au cut-off » Pit optimisation study shows total 6.5Mt diluted mineral inventory at 2.0g/t Au for 419koz Au with a stripping ratio of 4:3. Nyanza followed by MK show the best potential as high grade starter pits » Mining Lease Application submitted to the Kenyan Department of Mines and Geology for the reprocessing of the Macalder tailings » Exploration programme planning Location Special Prospecting Licences (“SPL”) 122 and 202 are located in the south-west of Kenya and span 63km along the strike length of the Migori Greenstone Belt. Red Rock Resources’ interest Red Rock holds a 15% direct interest in Mid Migori Mining Company Ltd (“MMM”) and 32.27% indirectly through its 37.96% investment in Kansai Mining Corporation Ltd. MMM is the holder of SPL122 and SPL202. upon completion of a Bankable Feasibility Study (“BFS”), Red Rock will be entitled to a 60% direct interest, bringing its total to over 75%. Kenyan political situation Early in 2013 the Kenyan elections took place, alongside which there was a reshuffling of government departments, including the Department of Mines and Geology, and the establishment of a new Ministry of Mines. Red Rock has put a substantial amount of effort into engaging with and ensuring good relationships with the new administration. the Company hopes that with a new political impetus, the Kenyan mining sector will head in a direction that nurtures and welcomes foreign investment in exploration. A key element of ensuring a successful and progressive project is building relationships with stakeholders, from national government to local authorities and the communities in which we work. RRR and MMM have dedicated staff responsible for building stakeholder relationships and, despite occasional challenges, the Company is pleased to have the support of the project’s host nation. Technical work Red Rock is committed to upgrading the quality and size of the Mikei Resources, expanding the total resource base of the project, and realising the economic potential for the retreatment of the Macalder tailings. these aims will be achieved through extensive exploration work, ore delineation drilling and pit scoping studies. In Q2 2013, Red Rock announced the results of a Pit Optimisation Study on the Mikei Resources. Based on the technical and economic parameters, the results demonstrate good economic potential and support project advancement to Scoping Study level. JORC Resource Summary: 1.2m oz Hard rock and 68k oz Tailings Prospect KKM KKM-west Nyanza Gori Maria MK JORC classification Indicated and Inferred Indicated and Inferred Indicated and Inferred Inferred Indicated and Inferred Total Macalder tailings Measured Mt 17.8 4.2 2.3 3.8 1.4 29.4 1.3 g/t Au 1.01 1.04 2.73 1.16 3.07 1.26 1.65 Moz 0.58 0.14 0.20 0.14 0.13 1.2 0.068 Cut-off g/t Au 0.5 0.5 0.5 0.5 0.5 0.5 N/A www.RRRPLC.COM Annual report and accounts 2013 | 09 » Overlooking Macalder tailings » Diamond drill core from Mikei project “ With declared JORC Mineral Resource Estimates, a pit optimisation study completed, and exciting prospects for resource expansion and grade improvements, we now look to realising and exceeding our objectives.” the pit optimisation work was undertaken by SRK Consulting (uK) Limited (“SRK”). SRK comments on Project Potential: “SRK concludes that the work completed to date (resource modelling, metallurgical test work and pit optimisations) is sufficient for a scoping study to be undertaken for the Mikei Gold Project (“MGP”). Additional potential exists to integrate a scoping study with the adjacent Macalder Tailings Resource to develop a larger overall project for Red Rock’s Kenyan assets.” the detailed results indicated that the Nyanza (“NZ”) prospect, followed by MK prospect, show the best potential as high grade starter pits and, through the pit shell modelling, demonstrated lower metal price sensitivity; favourable conversion from Mineral Resources to diluted pit shell metal inventories (NZ ~77%); and relatively low optimised pit shell Cash Cost 476 uS$/oz Au. Geological modelling has been ongoing by site geologists to allow drill targeting for future feasibility work. Objectives include locating high grade ore shoot extensions laterally and at depth; testing the plunge extent of the high grade shoot at NZ; and analysing the continuity and grade distribution within the Mikei shear system. Regional exploration has also been prioritised (grassroots and anomaly testing) to identify and follow up anomalies and plan the next stages of exploration. the Mining Lease Application (“MLA”) is under review at the Department of Mines and Geology and a response is pending. with the recent change in government structure, Red Rock is actively communicating with the department to ensure that the MLA can be finalised soon. Project ownership structure Red Rock Resources plc 15% ownership (with 60% farm-in agreement) 33.02% ownership (+4.94% option) Kansai Mining Corp. Ltd 85% ownership Mid Migori Mining Company Ltd 100% ownership Special Prospecting Licences 122 and 202 O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 10 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Executive Chairman’s review Andrew Bell Highlights » Mineral resource estimate and pit optimisation study completed in Kenya » JORC inferred mineral resource estimate in Greenland » Cash costs slashed at El Limon mine and processing plant, Colombia » Overheads cut and debt reduced significantly » Red Rock now well positioned for a growth in 2014 “ With our reduced cost base, we expect to be able to withstand whatever the market may throw at us and be well positioned for recovery and exploitation of market conditions over the coming months.” Andrew Bell Executive Chairman Dear Shareholders, Overview As shareholders will be aware, the year under review was a challenging one for our sector. However, despite the challenges faced by Red Rock, I am pleased to report that we have made significant progress towards overcoming these obstacles. the market environment has been hostile to the minerals sector, at the same time as it has been favourable for others, and so the underperformance of the market by our peer group has been significant. this has led us to cut overheads and reduce debt to ensure the stability of the business and reduce the need for external funding. As part of this process, we have had to lose colleagues we valued and trusted. Reported losses have been severely affected by a £12,191,284 impairment on our holding in Jupiter Mines Ltd (ASX:JMS, and “Jupiter”) and £2,468,814 of losses on sale of Jupiter shares. these combined have more than wiped out the credit taken to profit on transfer of the Jupiter investment from associate two years ago of £14,238,297. we have focussed on the immediate operational goals outlined in last year’s outlook of delivering an MK Mineral Resource Estimate in Kenya and a Greenland Mineral Resource Estimate, and both of these have been met. we have also been able to produce a pit optimisation study in Kenya and have carried out exploration and assessment work on our Kenya prospects. we were also able, during the year, to reduce Parent Company non-convertible debt from £3,502,730 to £2,557,013 and since the year end that has been further reduced to under £800,000. the other area of frustration during the year was the drawn-out processes following our announced intentions to sell part of our Greenland asset and the totality of our Colombian asset, where transactions have still not been consummated. However, the sales processes are still progressing and with our reduced cost base we expect to be able to withstand whatever the market may throw at us and be well-positioned for recovery and exploitation of market conditions over the coming months. Colombia In last year’s accounts, we accounted for Colombia as an asset held for sale. Given the delay in concluding that sale, it was decided that it would be appropriate to move Colombia back into continuing operations and make the retrospective adjustments for the preceding year. Over the past year, when we expected a more rapid sale, we concentrated on optimising operations without incurring additional costs. this, in retrospect, was the right thing to do from an operational standpoint as well since it enabled us, in cutting costs, to get a better understanding of how we could increase efficiencies and maximise the mine’s profitability. At the same time, the local management came to identify with a culture of strict cost-control. this culture shift has had a number of favourable effects; the declining gold price has meant that many mines have gone out of operation in Colombia, while our subsidiary, Four Points Mining, has been paying down creditors and improving operations. In this, it has been giving an appearance of improvement when others www.RRRPLC.COM Annual report and accounts 2013 | 11 Case study: Jupiter Mines Limited Jupiter Mines Limited has been a key part of Red Rock’s investment portfolio. Over time, the initial shareholding has been exited, including a partial disposal of a royalty interest, and the sale of 40 million shares in 2013. Red Rock retains a 0.86% shareholding in Jupiter, currently valued at approximately Au$1.4 million. the tshipi Borwa manganese mine in South Africa is Jupiter’s flagship project. with a 60-year mine life, and a 2.4 million tonne per annum capacity, tshipi is one of the world’s largest manganese mines. Historically, the Central Yilgarn Iron Project (CYIP), consisting of the DSO project at Mount Mason and the flagship magnetite Project at Mt. Ida (1.85 billion tonnes at 29.48% Fe), has been a key project for Jupiter in Australia. work continues at Mt Mason with a focus on cost optimisation based on the results of the feasibility study. In October 2013 Jupiter petitioned to be de-listed from the ASX, owing to severe undervaluation of the company on the market and adequate cash reserves for the next several years. the firm believes that the true value of just one asset, the tshipi project, exceeds the listed market value of the entire enterprise, and so seeks to maximise the mid-term value of the projects outside of public markets. » Overlooking mine construction were showing deterioration. Business partners and good quality professionals are now seeking us out regarding these improved assets. when we look back, we can see that to arrive in Colombia – with its different language, culture and traditions – and to move straight into our first role as mine operators when we exercised our option was a brave decision. However, in the event, we have developed some skills in operation and developed a record and a base that, if we were to retain the asset, we could build on. If we were to bring a gold mine into production again, we could do much better still. the next step at El Limon, whether for us or for a buyer, will be to do some more geology and establish a mineral resource and perhaps a mineral reserve. the Company is taking the first steps in that direction by drilling three underground holes and has plans to do some additional surface drilling. we are aware that some shareholders have wanted to see production figures. we took the view, over the last year, that the asset sale process made these irrelevant unless there was a significant divergence from trend and expectations. In retrospect, there was another justification. the key over the last year was to achieve professional and efficient operation of the mine and plant. there is a missing generation of Colombian professionals suitable for this kind of work, and we found that professionals imported from neighbouring countries had at least as great cultural problems as we did. we therefore recognised that we would have, by trial and error, to identify and build the confidence of key local staff and establish a team that could take the project forward. the pressures of demands to produce either fixed tonnages of ore or fixed ounces of gold monthly would have acted counter to our policy of patiently working with local staff to resolve issues one by one. there will always be more than one opinion over whether this was right or wrong, but at the moment we stand as a foreign company operating a modestly successful gold mine in Colombia, when all about us we have seen operations closing and foreign companies admitting defeat. Greenland In Greenland, the Company owns 60% of NAMA Greenland Ltd, which owns the Melville Bugt iron ore project. Late in 2012, we produced the maiden JORC compliant Mineral Resource Estimates for the Havik East and Havik Northeast project. this gave an Inferred Mineral Resource Estimate of 67Mt of magnetite at 31.4% Fe for the Havik asset. the potential targets at Melville Bugt comprise both magnetite and haematite, although the magnetite is obviously easier to locate as it shows up strongly in magnetic surveys. the Company’s progress in going from greenfields to mineral resource in two extremely short seasons is remarkable and the mineral potential of the area remains largely untapped. It was our view that the next stages of exploration should if possible be carried out with a financially stronger partner, because as exploration progresses, the amounts of money required will increase, and Red Rock remains a relatively small company that needs to control its risk and exposure on any one project. In November 2012, therefore, after several months of discussions with various parties, the Company announced an indicative offer, subject to due diligence, of 51% of its stake, with other shareholders in NAMA Greenland Ltd selling similar proportions of their shares. It was also provided that Red Rock would maintain a royalty interest. It has been as much a frustration to us as no doubt to other shareholders that the process has taken so long, particularly since we have received repeated assurances from our partner’s representatives that the process would move more quickly. It is worth pointing out that at Red Rock’s sister company, Regency Mines Plc, a transaction has just completed a year after the original announcement, and that was in a case where the legal system and language are similar to those in England. As we awaited this transaction, no work was carried out in Greenland other than a short field trip conducted by local hires journeying to camp to check on equipment and supplies. After the transaction completes, which we continue to expect, we will plan an exploration programme for 2014 which will build on the achievements of 2012. Kenya In Kenya, we have a combined direct and indirect interest of approximately 47% in Mid Migori Mining Ltd with the right to farm in to a majority and are the largest shareholder in Mid Migori’s controlling shareholder, Kansai Mining Corporation Ltd. we have continued to conduct geological assessments during the year, beginning with a Mineral Resource Estimate at MK, and ending with a pit optimisation study for the Migori gold project, which was carried out for the Company by SRK Consulting. O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 12 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Executive Chairman’s review continued Andrew Bell » Mineral identification » Core logging Kenya continued the pit optimisation study demonstrated the overall economic potential of the project, and supports the advancement to scoping study and feasibility stages. A proposal for work through to feasibility study has been received and the Company anticipates moving forward with this. the Company has also been discussing a restructuring of its Kenyan interests in order to enable it and the other Kansai shareholders together to source exploration funding for the next stages. this is not a prerequisite of Red Rock proceeding with feasibility work, but it would enable early recognition of the value of the project. the decline in valuations on the market of exploration companies has however made this reorganisation less of a priority than it was a year ago, but ongoing discussions continue. It was pleasing that the elections under the new constitution held early this year passed off without communal strife, in contrast to the 2007 presidential election. However, the new constitutional arrangements and the multiplicity of elected positions have created a prolonged period of transition. we now no longer deal with the Minister for Mining and Environment but with a cabinet Secretary for Mining, and with a new commissioner. Locally, we no longer deal with an MP but with a governor, a senator and an MP. the new administration is looking to introduce a new draft Mining Bill and we, through the Chamber of Mines, have contributed our suggestions. A number of companies have found themselves in conflict with the Ministry for Mining and with what they believe is an inclination to disregard previous commitments and agreements. we are actively engaging with the Ministry, the British High Commission and the Chamber of Mines to ensure that our credentials and record are recognised and we are determined to maintain a good relationship with the Ministry. It remains the case that Kenya is still developing as a mining jurisdiction and that each time officials change, we have to re-explain our operations. Our view is that working to high standards and demonstrating continued progress in work on the ground will be the best evidence of our seriousness and commitment to the country and will, as it has in the past, be rewarded by the esteem of the officials with whom we have to deal. Jupiter Mines Ltd During the year, Jupiter Mines saw a considerable decrease in share price as the expected strengthening of its position following the tshipi mine coming into operation did not occur. the holding of over 90 million Jupiter shares, which at their peak were valued at nearly 90 cents each, was a core asset that for a time gave us enormous stability. the Jupiter share price has fallen to a current level of less than 7 cents over two years and, despite the periodic sales that we have been able to achieve, this has been a considerable blow to our balance sheet. the asset, which we thought would be a strong buttress, enabling the rest of the business to weather the downturn of the sector, proved to be as vulnerable as any other. this was despite a string of good news about production, transport and marketing arrangements. However, this in no way reflects underlying fundamentals. the tshipi manganese mine, which successfully shipped its first shipment of manganese ore from Port Elizabeth in December 2012, is a long-life, open-pit manganese mine with state-of-the art railway loading and handling facilities. It is destined to be one of the world’s leading and most cost-effective producers of manganese for decades to come. Although some analysts had suggested Jupiter might have difficulty in obtaining railway or port capacity, we did not believe this would be the case and announcements were made during the year to confirm that port and railway capacity were agreed with transnet. the establishment of a joint venture marketing company with OM Holdings, a company with strong credentials in marketing to China, was also announced. Despite this, and the substantial cash holdings of Jupiter, the share price has continued to decline and Jupiter has now decided to delist from the ASX. we believe this to be a sensible decision, as the main ownership group is now moving into the harvesting phase of its investment in Jupiter and can expect considerable industry interest from potential acquirers and may itself be in a position to consolidate the industry regionally. In these efforts, it would be inhibited by a share price and market value capitalisation that understated its real worth and prevented it from realising full asset values. Elsewhere, in January 2013 Jupiter announced an increased JORC compliant Mineral Resource Estimate at its Mt Ida magnetite project to 1.86 billion tonnes at 29.48% Fe. Red Rock has a gross production royalty of 0.75% on this project. In November 2012, Jupiter announced a freeze on expenditure on this www.RRRPLC.COM Annual report and accounts 2013 | 13 » Iceberg offshore Dudley Di ´g ´ges base camp, Melville Bugt 2012 “ We consider that we remain good explorers and our prudence in maintaining geographical and commodity diversity has given us a capability for resilience that many others do not possess.” project, reflecting weak iron ore prices, but our expectation is that improved iron ore prices and progress with the Esperance port development plans will lead to movement in the next year at the Mt Mason haematite project and eventually at Mt Ida. we still believe there is value in that royalty interest which has a book value of nil, and so represents great upside potential. One concern that has been expressed is that delisting may reduce our ability to sell Jupiter shares. we do not see this as probable, as this is likely to be a consideration only for small shareholders. All sales carried out by us in the last two years have been off-market and Jupiter intends to maintain a matched buyer and seller market in its shares after its delisting. Outlook there have recently been some signs of improvement in sentiment towards the mining sector, but it is still too early to say whether this will be the beginning of a lasting trend. However, regardless of the market environment we have continued to focus on developing Red Rock’s core portfolio of assets, enhancing value where we see opportunities, while retaining our focus on gold, iron ore, and its related commodity, manganese. the progress made in de-gearing the balance sheet during the year absorbed much of the Company’s fundraising proceeds. when we look forward, we hope that future funding will largely be provided by asset sales and realisations. It has always been an important part of our business model to fund in this way in order that we rapidly circulate capital and redeploy assets to exploit what we believe is our greatest strength: our exploration capability. the ability to sell assets is much greater in more favourable markets. the ability to obtain new high quality exploration assets cheaply is greater in less favourable markets. In this, there is always a dilemma for us in that when the opportunities are greatest, we may not have the resources to pursue them. After the 2008 global financial crisis, we were willing to take the risk of raising money to invest in projects at the bottom of the cycle, which we then explored or developed. If we see suitable opportunities arise, we will have to consider whether this time we should be afraid of doing the same thing again, or whether we should persist. Our hope is that an early asset sale will put us in a position to make any future investment from these proceeds. the Company has a strong portfolio of assets and some flexibility in how it develops them. Our approach has been validated through the offers we received in respect of our assets in Greenland and Colombia. we consider that we remain good explorers and our prudence in maintaining geographical and commodity diversity has given us a capability for resilience that many others do not possess. we remain confident for the future and thank our shareholders for standing by us over the last year. Yours sincerely, Andrew Bell Executive Chairman 29 November 2013 O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 14 | RED ROCK RESOuRCES PLC Annual report and accounts 2013 Corporate Social Responsibility and Health & Safety » Field health & safety training: back injuries » Field health & safety training: suturing Corporate Social Responsibility Ensuring long-term success in our projects means laying strong foundations early on, and there can be no sustainable accomplishments without vital support at ground level – the local community. with very few standardised frameworks for early-stage Corporate Social Responsibility (“CSR”), it often falls upon the junior explorer to navigate their own way through the complex maze of stakeholder identification and engagement in order to gain a “social licence to operate”. Red Rock has taken inspiration from PDAC’s e3 Plus framework in order to adopt responsible behaviours in indigenous environments. Information dissemination, engagement with local authorities, becoming a member of the local community, protecting the environment, strategic community investment and contributing to sustainable community development define RRR as an explorer that takes pride in its history of responsible behaviour. Health and safety Red Rock Resources Plc takes pride in the achievements of its Health and Safety programmes across its various projects. Comprehensive Risk Assessments of Health and Safety Systems have been developed to identify existing risks, to implement relevant mitigation measures, and to identify potential risks before they may be directly applicable to our operations. the overarching goal is to expand Project Manager familiarity with and expertise regarding Health and Safety Systems and procedures, to prepare them for the various issues they may encounter, and to provide » Community football tournament a framework for them to continuously monitor the Heath and Safety situation while in the field. this effort further aids in project planning, budgeting, management and execution, which contributes to the success of the Company’s overall mineral exploration and development efforts. Project and location specific Emergency Response Plans and field team reporting procedures have also been developed. these are supported by dedicated Emergency Response teams at both our offices in London and in the various host-countries. these teams monitor the daily status reports from the field and are available 24/7 to respond and assist remotely with emergencies or developing issues as may be required. Prior to travelling overseas employees receive Health and Safety inductions as well as project specific training as may be applicable. Examples include glacier rescue training, open water and boat safety, and dangerous and wild animal training, to name but a few. the majority of field team members have also received wilderness Medical training and Advanced Medicine to aid them in situations where medical assistance may not be readily available and where in the case of an accident on-site team members may need to provide critical initial first aid prior to outside help arriving on the scene. the firm’s Health and Safety culture has improved significantly from its inception. Initially H&S was a relatively small part of our day to day operations and our overall approach and tended to be reactive to the needs of each project as issues arose. today the Company includes H&S procedures and frameworks in all of its planning and field activities, with a special emphasis on top-down ownership and responsibility, quality training of all personnel, and risk assessments that go beyond basic regulatory compliance. www.RRRPLC.COM Annual report and accounts 2013 | 1515 Board of Directors Andrew Bell, MA, LLB, FGS Executive Chairman Andrew Bell began his career as a natural resources analyst at Morgan Grenfell & Co. in the 1970s. His business experience encompasses periods in fund management and advisory work at leading financial institutions, international corporate finance work and private equity. Andrew Bell’s listed company directorships are Regency Mines plc (chairman and CEO), Greatland Gold plc (non-executive chairman), Jupiter Mines Limited (non-executive director) and Resource Star Limited (non-executive chairman). Manoli Yannaghas, BA Non-executive Director Manoli Yannaghas is a former financial analyst working with an international financial consultancy firm. Experienced with small companies including operations and corporate finance, for over ten years he has worked in various operational capacities within small and medium sized businesses. Manoli has experience with management and fundraising as well as other areas of corporate finance. He currently sits as managing director at Stratmin Global Resources plc (AIM:StGR) and has held non-executive board seats on a number of small fast growth companies. He is a former director of ASX-listed Resource Star Limited. Michael Nott, BSc, MSc, DIC, FIMMM, FMES, FIQ, C.Eng Non-executive Director Mike Nott is a geologist and mining engineer by profession and has 35 years’ experience in the mining, minerals and quarrying industries. His early career was based in Zambia including nine years with Roan Consolidated Mines Limited. He was a regional manager for Pioneer Aggregates (uK) Limited, then an Australian company, and later a director of Jay Minerals Services Limited and Hills Aggregates Limited, becoming trading director of ARC (Southern) Limited and production director of C white Limited. He is currently chairman and managing director of Alba Mineral Resources plc and a director and CEO of Magyar Mining Limited. John Watkins, FCA Non-executive Director John watkins has spent 50 years in the accountancy profession during which time he has been a partner in the firms of Ernst & Young and Neville Russell. For the past 15 years he has been involved in a number of new business ventures including biotech, retail, web-based trading and more recently early-stage mineral exploration. Currently, he is finance director of AIM-listed Starvest plc, a non-executive director of Regency Mines plc and of Greatland Gold plc and chairman of both Equity Resources plc and Goldcrest Resources plc. James Ladner, lic. oec. HSG Independent Non-executive Director James Ladner, a Swiss citizen, has over 40 years’ experience in the finance industry. After 28 years at Coutts Bank (Switzerland) Limited, where he was an executive vice-president, he was for nine years chairman of Bank Austria (Switzerland). He has also served as a director of the Royal Bank of Scotland AG, Interallianz Bank AG, Asahi Bank AG and F. van Lanschot Bankiers (Switzerland). He was a member of the Swiss Admissions Commission for listing on the Swiss Stock Exchanges and of the Swiss Capital Market Commission of the Swiss National Bank. Outside Switzerland, he has served as director of a number of companies, including StrataGold Corporation, Pan Pacific Aggregates plc, Colombia Gold plc and Nevoro Inc. He is currently a director of Oracle Energy Corp., Colt Resources Inc. and Guerrero Exploration Inc. O v E R v E w I I B u S N E S S R E v E w I G O v E R N A N C E I F N A N C A L I S t A t E M E N t S 16 | Red Rock ResouRces plc Annual report and accounts 2013 Directors’ report for the year ended 30 June 2013 The directors present their ninth annual report on the affairs of the Group and parent company, together with the Group financial statements for the year ended 30 June 2013. Principal activities and business review The Group was established as a mineral exploration and development company focussed on the discovery and development of gold, iron ore and other minerals. during the past year it concentrated principally on the continuation of iron ore exploration in Greenland, achieving a JoRc Mineral Resource estimate on the project, gold exploration in kenya and improving operating efficiencies at the colombian gold mine. The Group’s objective is to maximise shareholder value both by exploring for minerals and by taking strategic stakes in other mineral exploration ventures. The developments during the period and future plans are given in the chairman’s statement with a summary of significant agreements and transactions in note 24 to the financial statements. Results and dividends The Group’s results are set out in the consolidated income statement on page 27. The audited financial statements for the year ended 30 June 2013 are set out on pages 26 to 67. The Group made a post-tax loss of £22,105,562 (2012: £1,962,882). consistent decline in stock market performance resulted in a significant devaluation in the fair value of its available for sale investments resulting in an impairment charge of £12.7 million and losses on sale of investments of £2.5 million. The directors do not recommend the payment of a dividend. Future developments The Group is currently actively involved in the partial sale of its Greenland asset. proceeds will be used to pay outstanding vendor debt, borrowings, additional exploration work and to replenish the company’s project pipeline. early or mid-stage project acquisitions would be considered. There is no doubt that the Group would remain an exploration company at core, and any additional assets that came in via a sale would be held and disposed of as deemed appropriate. The Group is also improving the operating efficiencies at its colombian gold mine and will attempt to prove up a resource with a view to a future sale. Fundraising and share capital during the year, the company raised £4,103,795 (2012: £4,441,844) of new equity by the issue of 395,619,288 ordinary shares (2012: 160,166,531 shares); further details are given in note 20. Principal risks and uncertainties The management of the business and the execution of the Board’s strategy are subject to a number of risks as explained below. The key risks are: » exploration and development risks; » general and economic risks; » funding risk; » commodity risk; » liquidity risk; and » market risk. Exploration and development risks » exploration is speculative in nature. success in identifying economically recoverable reserves can never be guaranteed. Also, the Group cannot guarantee that the companies in which it has invested will be able to obtain the necessary permits and approvals required for development of their projects. » estimates of ore reserves are based on many assumptions and subjective judgements which may change significantly when new information becomes available. » exploration and development activity is subject to numerous risks, including failure to achieve estimated mineral resource, recovery and production rates and capital and operating costs. » some of the countries in which the Group operates have native title laws which could affect exploration and development activities. The companies in which the Group has an interest may be required to undertake clean-up programmes on any contamination from their operations or to participate in site rehabilitation programmes which may vary from country to country. The Group’s policy is to follow all applicable laws and regulations and the Group is not currently aware of any material issues in this regard. www.RRRplc.coM Annual report and accounts 2013 | 17 Principal risks and uncertainties continued Exploration and development risks continued » Timely approval of mining permits and operating plans through the respective regulatory agencies cannot be guaranteed. » Availability of skilled workers is an ongoing challenge. » Geology is always a potential risk in mining activities. General and economic risks » contractions in the world’s major economies or increases in the rate of inflation resulting from international conditions; » movements in the equity and share markets in the united kingdom and throughout the world; » weakness in global equity and share markets, in particular in the united kingdom, and adverse changes in market sentiment towards the resource industry; » currency exchange rate fluctuations and, in particular, the relative prices of the Australian dollar, the colombian peso, the us dollar, the kenyan shilling, canadian dollar, danish krone and the uk pound; and » adverse changes in factors affecting the success of exploration and development operations, such as increases in expenses, changes in government policy such as increased taxes or royalties and further regulation of the industry; unforeseen major failure, breakdowns or repairs required to key items of plant and equipment resulting in significant delays, notwithstanding regular programmes of repair, maintenance and upkeep; variations in grades; and unforeseen adverse geological factors or prolonged weather conditions. Funding risk The Group or the companies in which it has invested may not be able to raise, either by debt or further equity, sufficient funds to enable completion of planned exploration, investment and/or development projects. Commodity risk The economic viability of a project is affected by world commodity prices. commodities are subject to high levels of volatility in price and demand, international economic trends, currency fluctuations and consumption patterns over which the Group has no control. Mining, processing and transportation costs also depend on many factors, including commodity prices, capital costs and operating costs in relation to any operational site. Liquidity risk liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms: » monitoring undrawn credit facilities; » obtaining funding from a variety of sources; and » maintaining a reputable credit profile. The directors are confident that adequate resources exist to finance operations for commercial exploration and that controls over expenditure are carefully managed. Market risk The ability of the Group, and the companies in which it invests, to continue to secure sufficient and profitable sales contracts to support its operations is a key business risk. Risk management The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by senior management of forecasts. The company involves itself in a diversity of projects to mitigate risks and exploration uncertainties. project milestones and timelines are regularly reviewed. further details of the Group’s risk management policies can be found in note 23. Key performance indicators The Group analyses key performance indicators for gold production in colombia, in particular the ore mined, the gold sold and the average grade of the ore. The Group also monitors health and safety incidents across its operations. As a mineral exploration business, one of the most important factors is a steadily improving market perception of the progress and value of the business leading to an improving share price, continued support from shareholders and therefore the ability to raise new equity capital at increasing prices thus minimising dilution for those early investors who bore significant risk. The Group therefore monitors the availability of sufficient cash to facilitate continued investment and to fund exploration programmes. At 30 June 2013 the Group had cash and cash equivalents of £21,081 and undrawn facilities available in the standby equity distribution Agreement (“sedA”) of £4.8 million. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 18 | Red Rock ResouRces plc Annual report and accounts 2013 Directors’ report continued for the year ended 30 June 2013 Directors The directors who served at any time during the period to date are as follows: Andrew R M Bell James f ladner Michael c nott John watkins Manoli G R Yannaghas (non-executive director effective 1 July 2013) The direct and beneficial interests of the Board in the shares of the company as at 30 June 2013 were as follows: Andrew R M Bell James f ladner Michael c nott John watkins Manoli G R Yannaghas ordinary shares direct Beneficial* Total — 1,046,904 — 1,683,169 1,481,904 2,906,904 — 1,731,904 1,325,000 1,250,000 1,046,904 1,683,169 2,806,904 4,156,904 1,731,904 As percentage of issued share capital 0.08% 0.13% 0.22% 0.32% 0.14% * each director indirectly holds 906,904 shares through the share incentive plan Trustees. in addition, Andrew Bell holds 140,000 shares through Hartmann capital nominees limited, Michael c nott indirectly holds 575,000 shares through Anna nott, John watkins holds 2,000,000 shares through diane Mary watkins, Manoli G R Yannaghas holds 825,000 shares through Hartmann capital nominees limited and James f ladner holds 776,265 shares through an undisclosed nominee which are pledged as collateral for a loan. Charitable and political donations during the period the Group made no charitable or political contributions. Payment of suppliers The Group’s policy is to settle terms of payment with suppliers when agreeing terms of business, to ensure that suppliers are aware of the terms of payment and to abide by them as much as possible. standard supplier terms are usually to be paid within 30 days of receipt of invoice. Trade creditors at the year end were equivalent to 281 (2012: 39) days of costs. Events after the reporting period The events after the reporting period are set out in note 26 to the financial statements. Substantial shareholdings on 30 June 2013 and 11 november 2013 the following were registered as being interested in 3% or more of the company’s ordinary share capital: Td direct investing nominees (europe) limited Regency Mines plc Hsdl nominees limited Barclayshare nominees limited Hargreaves lansdown (nominees) limited Jim nominees limited investor nominees limited credit suisse client nominees (uk) limited HsBc client Holdings nominee (uk) limited l R nominees limited 30 June 2013 11 november 2013 ordinary shares of £0.001 each percentage of issued share capital ordinary shares of £0.001 each percentage of issued share capital 168,030,693 145,764,666 134,759,409 99,956,498 94,622,695 81,234,965 62,884,213 60,300,000 51,480,475 39,087,188 13.13% 11.39% 10.53% 7.81% 7.39% 6.35% 4.91% 4.71% 4.02% 3.05% 219,170,883 145,764,666 178,576,136 131,050,989 143,529,265 54,332,363 79,981,210 — 84,104,453 — 15.59% 10.37% 12.70% 9.32% 10.21% 3.87% 5.69% — 5.98% — Total number of shares in issue 1,279,769,102 1,405,570,545 Auditor A resolution proposing the re-appointment of Grant Thornton uk llp as auditor is contained in the notice of Annual General Meeting and will be put to shareholders at the Annual General Meeting. www.RRRplc.coM Annual report and accounts 2013 | 19 Derivative risk management equity swaps were entered into by the company to manage dilution of existing shareholders while managing liquidity risk. entering into the equity swaps allowed the company to issue shares at a premium, without the normal costs associated with market issuances. The swap arrangement locks in the number of shares thereby limiting dilution at the expense of potentially incurring losses in the event of a downward price movement. conversely, in a rising market, the equity swap would allow the company to share some of the upside in share performance over a period of time, rather than locking in what might be a much lower price. Management incentives in each of the years to 30 June 2007, 30 June 2009 and 30 June 2011, the company granted options over a total of 39,500,000 ordinary shares. As at 30 June 2013, 24,250,000 of these options were outstanding. The company implements a tax efficient share incentive plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including directors, who had served for three months or more at the time of issue. The terms of the plan provide for: » each employee to be given the right to subscribe any amount up to £125 per month with Trustees who invest the monies in the company’s shares; » the company to match the employee’s investment by contributing an amount equal to double the employee’s investment; and » the company to award free shares to a maximum of £3,000 per annum. The subscriptions remain free of taxation and national insurance if held for five years. further details on share options and the share incentive plan are set out in note 22 to the financial statements. in January 2013, the Board authorised options over 39,000,000 of the company’s ordinary shares. The options were to have an exercise period of two years from date of grant, expirations between 1 June 2016 and 1 June 2019, and strike prices between £0.02 and £0.05. of the total, 15,000,000 options were authorised for issue to executive directors and 7,000,000 options to non-executive directors. The remaining 17,000,000 were to be issued at the Board’s discretion to key staff and project managers. These remained unissued at year end. After the year end, all 39,000,000 options were cancelled as the directors determined that this would be in the best interests of the shareholders to avoid further dilution of shares. Management notes that the expense relating to these options of approximately £53,000 had not been recorded due to their subsequent cancellation and the value was not deemed material. Directors’ remuneration report The remuneration of the executive directors paid during the year was fixed on the recommendation of the Remuneration committee. The remuneration of the non-executive directors paid during the year was fixed on the recommendation of the executive directors. This has been achieved acknowledging the need to maximise the effectiveness of the company’s limited resources during the year. A fee was paid to each director for the year ended 30 June 2013. in addition, in each case fees and expenses were paid to businesses with which the directors are associated as set out in note 7 to the financial statements. each director is entitled to participate in the share incentive plan. The company also has a Group personal pension scheme for all eligible employees, including the directors. The scheme is an insured, defined contribution arrangement with all members entitled to an employer pension contribution equivalent to 9% of basic salary, subject to the individual agreeing to make a minimum contribution to the scheme equivalent to 4% of basic salary (subject to statutory and regulatory conditions). The scheme is available on a salary sacrifice basis, with 100% of the employer’s national insurance saving passed on to the member by way of an enhanced employer contribution to the scheme of an equivalent amount. effective 1 July 2013, the employer pension contribution was reduced to 4.5% from 9%. The company is closely associated with Regency Mines plc, which had a 11.39% interest in the company as at 30 June 2013. The company had a 3.06% interest in Regency Mines plc as at 30 June 2013. Two directors, Andrew Bell and John watkins, are also directors of and are paid by Regency Mines plc. The amount of their remuneration is not required to be disclosed in the company financial statements, but is fully disclosed in the financial statements of Regency Mines plc. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e Corporate governance statement A corporate governance statement follows on pages 22 to 23. Control procedures The Board has approved financial budgets and cash forecasts; in addition, it has implemented procedures to ensure compliance with accounting standards and effective reporting. i f n A n c A l i s T A T e M e n T s 20 | Red Rock ResouRces plc Annual report and accounts 2013 Directors’ report continued for the year ended 30 June 2013 Environmental responsibility The company is aware of the potential impact that its subsidiary companies may have on the environment. The company policy is to follow the best international practice in mitigating and minimising impacts through exploration and mining activities. The company ensures that it and its subsidiaries comply with the local regulatory requirements and the revised equator principles, and the industry standard for environmental and social risk management. The company is continuing its environmental and social impact Assessment (“esiA”) for the tailings retreatment project in compliance with kenya’s environmental Management and co-ordination Act of 1999. The company established a tree nursery over a year ago on its Migori project in kenya to promote environmental conservation and has donated batches of seedlings of different species to landowners within the licence areas. Employment policies The Group is committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success of the business. employees and those who seek to work within the Group are treated equally regardless of sex, marital status, creed, colour, race or ethnic origin. Health and safety The Group’s aim is to achieve and maintain a high standard of workplace safety. in order to achieve this objective the Group provides training and support to employees and sets demanding standards for workplace safety. Going concern The Group has incurred a loss of £22.1 million for the year ended 30 June 2013, at that date there was a net current liability of £7.2 million. The loss resulted mainly from impairments of £16.6 million. whilst the directors have instituted measures to preserve cash and secure additional finance, these circumstances create material uncertainties over future trading results and cash flows. The Group has been able to improve the operating efficiencies at its colombian gold mine asset, reducing costs, boosting production and becoming more cash generative. The Group has also implemented plans to minimise its cash outflows by reducing its cost base by such measures as reducing staff numbers, marketing costs and other overheads. And, subsequent to year end, the Group has paid off £1.6 million of its borrowings through the sale of Jupiter shares and renegotiated the terms of its remaining borrowings of £0.7 million, extending the repayments to november 2014. As explained on the chairman’s statement, the directors are seeking to sell approximately half of its Greenland asset for £6.6 million to provide the necessary working capital. The Group is in negotiations with a potential purchaser, but there can be no certainty that a sale will proceed. Based on negotiations conducted to date the directors have a reasonable expectation that it will proceed successfully, but if not the Group will need to secure additional finance facilities. The Group has a facility of approximately £4.8 million available under their sedA backed facility with YA Global. The directors do not anticipate any difficulty in raising new finance from stock markets if this is required during 2014 and the Group has demonstrated a consistent ability to do so. This includes the recent issue of £1.1 million in convertible bonds subsequent to year end and an additional public offering of 54 million shares for a total consideration of £0.35 million. furthermore, the Group expects to confirm additional debt facilities of £0.5 million shortly. The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Group’s ability to continue as a going concern. nevertheless after making enquiries, and considering the uncertainties described above, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. for these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts. By order of the Board signed by: Andrew Bell Executive Chairman 28 November 2013 www.RRRplc.coM Annual report and accounts 2013 | 21 Statement of Directors’ responsibilities The directors are responsible for preparing the directors’ Report and the financial statements in accordance with applicable law and regulations. company law requires the directors to prepare Group and company financial statements for each financial year. The directors are required by the AiM Rules of the london stock exchange to prepare Group financial statements in accordance with international financial Reporting standards (“ifRs”) as adopted by the european union (“eu”) and have elected under company law to prepare the company financial statements in accordance with ifRs as adopted by the eu. under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the company and of the profit or loss of the Group and company for that period. in preparing the Group and company financial statements, the directors are required to: » select suitable accounting policies and then apply them consistently; » make judgements and accounting estimates that are reasonable and prudent; » state whether applicable ifRss have been followed, subject to any material departures disclosed and explained in the financial statements; and » prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that: » so far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware; and » the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Red Rock Resources plc website. legislation in the united kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 22 | Red Rock ResouRces plc Annual report and accounts 2013 Corporate governance statement The Board is committed to maintaining high standards of corporate governance. The listing Rules of the financial services Authority incorporate the uk corporate Governance code, which sets out the principles of good governance, and the code of Best practice for listed companies. The uk corporate Governance code does not apply to AiM companies. However, shareholders expect companies in which they invest to be properly governed and tend to use the uk corporate Governance code as a starting point. This is inappropriate for many AiM companies but there is no alternative code. The company’s corporate governance procedures take due regard of the principles of good governance set out in the uk corporate Governance code in relation to the size and the stage of development of the company. Role of the Board The Board has a responsibility to govern the company rather than to manage it and in doing so act in the best interests of the company as a whole. each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a director. non-executive directors receive formal letters of appointment setting out the key terms, conditions and expectations of their appointment. Responsibilities of the Board The Board is responsible for formulating, reviewing and approving the company’s strategy, financial activities and operating performance. day to day management is devolved to the executive directors who are charged with consulting the Board on all significant financial and operational matters. Board of Directors The Board of directors comprises five directors, two of whom are executive directors as of the year end; of these, one is executive chairman and chief executive. There is one independent non-executive director, being James ladner, and two non-executive directors who additionally provide professional services to the company and who therefore do not qualify as independent. The directors are of the opinion that the Board comprises a suitable balance and that the recommendations of the uk corporate Governance code have been implemented to an appropriate level. The Board, through the executive chairman, the executive director and the non-executive directors, maintains regular contact with its advisers and public relations consultants in order to ensure that the Board develops an understanding of the views of major shareholders about the company. All directors have access to the advice of the company’s solicitors and the company secretary, necessary information is supplied to the directors on a timely basis to enable them to discharge their duties effectively, and all directors have access to independent professional advice, at the company’s expense, as and when required. Executive Chairman The Board acknowledges that, in having an executive chairman who is also the chief executive officer, best practice, as stated in the listing rules of the financial services Authority applicable to the main market, is not being followed. However, it is the opinion of the Board as a whole that the current arrangements are appropriate to the company and Group at this stage of development. Board meetings The Board meets regularly throughout the year. during the year ended 30 June 2013 the Board met six times in relation to normal operational matters. Board committees The Board has established the following committees, each of which has its own terms of reference: Audit Committee The Audit committee considers the Group’s financial reporting, including accounting policies, and internal financial controls. it is responsible for ensuring that the financial performance of the Group is properly monitored and reported on. The Audit committee meets at least twice a year, once with the auditor, and is comprised of James ladner, independent non-executive director, as chairman and John watkins, non-executive director. The executive chairman and senior personnel attend the committee as requested by the committee. it is the responsibility of the committee to review the annual and half-yearly financial statements, to ensure that they adequately comply with appropriate accounting policies, practices and legal requirements, to recommend to the Board their adoption, and to consider the independence of and to oversee the management’s appointment of the external auditor. Remuneration Committee The Remuneration committee is responsible for making recommendations to the Board on executive directors’ remuneration. it comprises two suitably qualified non-executive directors: John watkins as chairman and Michael nott. The executive chairman and other senior personnel attend meetings as requested by the committee which meets at least twice a year. Nominations Committee The Board has not established a nominations committee. The Board considers that a separately established committee is not warranted at this stage of the Group’s development and that the functions of such a committee are being adequately discharged by the Board as a whole. www.RRRplc.coM Annual report and accounts 2013 | 23 Ethical decision making Confidentiality in accordance with legal requirements and agreed ethical standards, directors and all staff have agreed to maintain confidentiality of non-public information except where disclosure is authorised or legally mandated. Bribery in accordance with the provisions of the Bribery Act, all directors and staff have been informed and have acknowledged that it is an offence under the act to engage in any form of bribery. The company has an anti-bribery and whistleblowing policy in force. Internal controls The directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in the light of increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. Insurance The Group maintains insurance in respect of its directors and officers against liabilities in relation to the company. Treasury policy The Group finances its operations through equity, loans and sales of investments. The Group holds its cash as a liquid resource to fund the obligations of the Group. decisions regarding the management of these assets are approved by the Board. Securities trading and share dealing The Board has adopted the share dealing code contained within the AiM rules that applies to directors, senior management and any employee who is in possession of “inside information”. All such persons are prohibited from trading in the company’s securities if they are in possession of “inside information”. subject to this condition and trading prohibitions applying to “close periods” (usually two months prior to the publication of the interim and final audited accounts), trading can occur provided the relevant individual has received the appropriate prescribed clearance. All directors and staff are required to advise the executive chairman, or other designated person, of their intention to undertake a transaction in the company’s shares. such a transaction will be prohibited if the director or employee is considered to be in possession of non-public material information. Relations with shareholders The Board recognises that it is accountable to shareholders for the performance and activities of the company and Group and to this end is committed to providing effective communication with the shareholders of the company. significant developments are disseminated through stock exchange announcements and regular updates of the company website where descriptions of the Group projects are available and updated regularly. in addition, copies of press comments, broker notes, video updates and presentations are available. on the website, shareholders may sign up to receive news releases directly by email. The Board views the Annual General Meeting as an important forum for communication between the company and its shareholders and encourages shareholders to express their views on the Group’s business activities and performance. The company has held an open day for shareholders to visit the company offices and gain an insight into the company’s activities. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 24 | Red Rock ResouRces plc Annual report and accounts 2013 Independent auditor’s report to the members of Red Rock Resources plc we have audited the financial statements of Red Rock Resources plc for the year ended 30 June 2013 which comprise the consolidated and company statements of financial position, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flow and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and international financial Reporting standards (“ifRs”) as adopted by the european union and, as regards the company financial statements, as applied in accordance with the provisions of the companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with chapter 3 of part 16 of the companies Act 2006. our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditor As explained more fully in the statement of directors’ responsibilities set out on page 21 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and international standards on Auditing (uk and ireland). Those standards require us to comply with the Auditing practices Board’s (“ApB’s”) ethical standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the ApB’s website at www.frc.org.uk/apb/scope/private.cfm. Opinion on financial statements in our opinion: » the financial statements give a true and fair view of the state of the Group’s and of the company’s affairs as at 30 June 2013 and of the Group’s loss for the year then ended; » the Group financial statements have been properly prepared in accordance with ifRs as adopted by the european union; » the company financial statements have been properly prepared in accordance with ifRs as adopted by the european union and as applied in accordance with the provisions of the companies Act 2006; and » the financial statements have been prepared in accordance with the requirements of the companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 in our opinion the information given in the directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception we have nothing to report in respect of the following matters where the companies Act 2006 requires us to report to you if, in our opinion: » adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or » the company financial statements are not in agreement with the accounting records and returns; or » certain disclosures of directors’ remuneration specified by law are not made; or » we have not received all the information and explanations we require for our audit. www.RRRplc.coM Annual report and accounts 2013 | 25 Emphasis of matter – going concern in forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1.5, of the accounting policies, to the financial statements concerning the Group’s ability to continue as a going concern. The Group incurred a net loss of £22.1 million during the year ended 30 June 2013 of which £16.6 million resulted from impairments of available for sale investments and fixed assets. As explained in note 1.5 of the accounting policies, the Group is in the process of selling approximately half of its Greenland asset for £6.6 million to provide the necessary working capital. The Group is in negotiations with a potential purchaser, but there is uncertainty as to whether a sale will proceed. if not successful, the Group will need to secure additional finance facilities. The directors will also consider alternative sources of funding, such as raising new finance from stock markets if this is required during 2014. These conditions, along with the other matters explained in note 1.5, of the accounting policies, to the financial statements indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern. Christopher Smith Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 28 November 2013 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 26 | Red Rock ResouRces plc Annual report and accounts 2013 Consolidated statement of financial position as at 30 June 2013 ASSETS Non-current assets property, plant and equipment investments in associates and joint ventures Available for sale financial assets non-current receivables other financial assets deferred tax assets Total non-current assets Current assets cash and cash equivalents other receivables current tax receivable Total current assets Assets classified as held for sale TOTAL ASSETS EQUITY AND LIABILITIES equity attributable to owners of the parent called up share capital share premium account other reserves Retained earnings Total non-controlling interest Total equity LIABILITIES Current liabilities Trade and other payables short-term borrowings Total current liabilities liabilities directly associated with the assets classified as held for sale Non-current liabilities long-term borrowings deferred tax liabilities Total non-current liabilities TOTAL EQUITY AND LIABILITIES notes 30 June 2013 £ 30 June 2012 £ 10 12 13 16 14 19 15 17 5 8,173,525 4,035,728 3,136,448 6,484,534 — — 38,240 4,496,053 8,809,866 5,905,944 150,413 153,098 21,830,235 19,553,614 21,081 2,949,415 — 347,925 1,628,900 219,484 2,970,496 2,196,309 8 3,168,735 15,387,802 27,969,466 37,137,725 20 18 18 8 18 19 1,279,769 20,558,401 243,716 884,150 16,938,435 (7,872,920) (7,783,544) 11,892,745 14,298,342 21,842,410 130,137 2,559,410 14,428,479 24,401,820 4,528,558 5,602,840 1,526,869 1,209,730 10,131,398 2,736,599 — 7,706,306 245,588 3,164,001 2,293,000 — 3,409,589 2,293,000 27,969,466 37,137,725 These financial statements on pages 26 to 67 were approved by the Board of directors and authorised for issue on 28 november 2013 and are signed on its behalf by: Andrew Bell Executive Chairman The accompanying notes form an integral part of these financial statements. www.RRRplc.coM Annual report and accounts 2013 | 27 Consolidated income statement for the year ended 30 June 2013 Revenue sale of minerals Total revenue loss on sales of investments Gain on sale of royalty interest cost of sale of minerals Gain on dilution of interest in associate impairment of investment in associate impairment of available for sale investment impairment of fixed assets financial assets at fair value through profit and loss exploration expenses impairment of exploration assets Administrative expenses share of losses of associates write-off of associate investment reserve dividend income finance (costs)/income, net loss for the year before taxation from continuing operations Tax credit Loss for the year (Loss)/profit for the year attributable to: equity holders of the parent non-controlling interest Loss per share attributable to owners of the Parent: Basic diluted notes 24 Year to 30 June 2013 £ Year to 30 June 2012* £ 2,564,688 5,215,581 2,564,688 5,215,581 (2,468,814) (619,313) — 3,686,211 (3,101,693) 12,204 (358,188) (716,605) — (3,945,283) (356,455) (7,077) (3,916,661) (312,043) — 22,890 79,786 (1,913,960) 12 17,942 12 — 13 (12,667,999) 10 (3,947,609) 14 (150,413) (285,564) — (4,751,948) (326,240) (126,226) — (431,860) 12 4 3 (24,488,003) 5 2,382,441 (4,316,646) 2,353,764 (22,105,562) (1,962,882) (19,676,289) (2,429,273) 8 (2,183,162) 220,280 (22,105,562) (1,962,882) 9 (1.83) pence (0.28) pence 9 (1.83) pence (0.28) pence * certain amounts shown here do not correspond to the 2012 financial statements to re-present the results of an entity previously presented in discontinued operations. The accompanying notes form an integral part of these financial statements. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 28 | Red Rock ResouRces plc Annual report and accounts 2013 Consolidated statement of comprehensive income for the year ended 30 June 2013 Loss for the year Other comprehensive income deficit on revaluation of available for sale investment Revaluation reserve transferred to the income statement on impairment of available for sale investments deferred tax (charge)/credit on revaluation of available for sale investments write-off of associate investment reserve to income statement unrealised foreign currency (loss)/profit arising upon retranslation of foreign operations Total other comprehensive income/(expense) net of tax for the year Total comprehensive expense net of tax for the year Total comprehensive expense net of tax attributable to: owners of the parent non-controlling interest The accompanying notes form an integral part of these financial statements. notes 13 13 19 19 30 June 2013 £ 30 June 2012 £ (22,105,562) (1,962,882) (2,229,255) 12,603,355 (2,323,323) 126,226 (60,367) (14,110,502) — 3,386,520 — 82,915 8,116,636 (10,641,067) (13,988,926) (12,603,949) (11,559,653) (2,429,273) (12,824,229) 220,280 (13,988,926) (12,603,949) www.RRRplc.coM Annual report and accounts 2013 | 29 Consolidated statement of changes in equity for the year ended 30 June 2013 The movements in equity during the period were as follows: As at 30 June 2011 723,983 13,041,125 13,988,004 2,751,616 30,504,728 2,339,130 32,843,858 share capital £ share premium account £ Retained earnings £ other reserves £ Total attributable to owners of the parent £ non-controlling interest £ Total equity £ Changes in equity for 2012 (loss)/profit for the year Other comprehensive expense for the year Transactions with owners issue of shares share issue costs share issue in relation to sip share-based payment charge share-based payment transfer Changes in equity for 2013 loss for the year Other comprehensive expense for the year Transactions with owners issue of shares share issue costs share issue in relation to sip — — — (2,183,162) — — (10,641,067) — (2,183,162) (10,641,067) 220,280 (1,962,882) — (10,641,067) 156,697 — 3,470 — — 4,279,808 (464,047) 81,549 — — — — — — 87,903 87,903 — 4,436,505 (464,047) — 85,019 — 104,434 104,434 — (87,903) — — — — — 4,436,505 (464,047) 85,019 104,434 — 16,531 4,161,911 — 4,161,911 Total transactions with owners 160,167 3,897,310 As at 30 June 2012 884,150 16,938,435 11,892,745 (7,872,920) 21,842,410 2,559,410 24,401,820 — — — (19,676,289) — — 8,116,636 — (19,676,289) 8,116,636 (2,429,273) (22,105,562) — 8,116,636 382,064 — 13,555 3,696,111 (210,276) 134,131 — — — — — 4,078,175 (210,276) — 147,686 — — 4,078,175 — (210,276) — 147,686 — 4,015,585 — 4,015,585 Total transactions with owners 395,619 3,619,966 As at 30 June 2013 1,279,769 20,558,401 (7,783,544) 243,716 14,298,342 130,137 14,428,479 Available for sale trade investments reserve £ Associate investments reserve £ foreign currency translation reserve £ share-based payment reserve £ Total other reserves £ As at 30 June 2011 2,667,162 (126,226) (56,367) 267,047 2,751,616 Changes in equity for 2012 Other comprehensive (expense)/income for the year Transactions with owners share-based payment charge share-based payment transfer Total transactions with owners As at 30 June 2012 Changes in equity for 2013 Other comprehensive income/(expense) for the year (10,723,982) — — — — — — — 82,915 — (10,641,067) — — — 104,434 (87,903) 104,434 (87,903) 16,531 16,531 (8,056,820) (126,226) 26,548 283,578 (7,872,920) 8,050,777 126,226 (60,367) — 8,116,636 As at 30 June 2013 (6,043) — (33,819) 283,578 243,716 see note 21 for a description of each reserve included above. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 30 | Red Rock ResouRces plc Annual report and accounts 2013 Consolidated statement of cash flows for the year ended 30 June 2013 Cash flows from operating activities loss before tax decrease/(increase) in receivables increase/(decrease) in payables share of losses in associates write-off of associate asset reserve interest receivable and finance income dividend income interest payable impairment of exploration properties share-based payments unrealised foreign exchange loss impairment of associate impairment of available for sale investment impairment of fixed assets Gain on dilution of interest in associates loss on sale of investments non-cash proceeds on sale of royalty interest financial assets at fair value through profit and loss depreciation Net cash outflow from operations corporation tax reclaimed/(paid) Net cash used in operations Cash flows from investing activities interest received dividend income proceeds of sale of investments payments to acquire associate company and joint venture investments payments to acquire available for sale investments exploration expenditure payments to acquire property, plant and equipment Net cash outflow from investing activities Cash flows from financing activities proceeds from issue of shares Transaction costs of issue of shares interest paid proceeds of new borrowings Repayments of borrowings Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents cash and cash equivalents at the beginning of period Cash and cash equivalents at end of period The accompanying notes and accounting policies form an integral part of these financial statements. Year to 30 June 2013 £ Year to 30 June 2012 £ notes (24,488,003) (4,316,646) 17,231 2,003,737 326,240 126,226 (298,752) — 730,612 — 122,067 2,661 — 12,667,999 3,947,609 (17,942) 2,468,814 (3,177,032) (1,056,292) 312,043 — (847,912) (22,889) 768,126 7,077 184,114 114,159 358,188 716,605 — (12,204) 619,313 — (1,315,901) 3,945,283 682,200 150,413 928,853 (1,312,235) (3,041,768) 219,592 (110,723) (1,092,643) (3,152,491) 316,736 — 1,110,706 (2,632,673) (200,000) — (104,629) 378,254 22,889 1,919,338 (2,914,950) (387,603) (769,413) (464,083) (1,509,860) (2,215,568) 4,103,795 (210,276) (730,612) 1,405,445 (2,297,606) 4,441,844 (464,047) (768,126) 5,503,252 (3,260,814) 2,270,746 5,452,109 (331,757) 352,838 84,050 268,788 15 21,081 352,838 www.RRRplc.coM Annual report and accounts 2013 | 31 Company statement of financial position as at 30 June 2013 ASSETS Non-current assets property, plant and equipment investments in subsidiaries investments in associates and joint ventures Available for sale financial assets non-current receivables other financial assets deferred tax assets Total non-current assets Current assets cash and cash equivalents other receivables current tax receivable Total current assets Assets classified as held for sale TOTAL ASSETS EQUITY AND LIABILITIES called up share capital share premium account other reserves Retained earnings Total equity LIABILITIES Current liabilities Trade and other payables short-term borrowings Total current liabilities Non-current liabilities long-term borrowings Total non-current liabilities TOTAL EQUITY AND LIABILITIES notes 30 June 2013 £ 30 June 2012 £ 10 11 12 13 16 14 19 15 17 5 19,466 947,149 5,173,794 3,136,448 6,484,534 — — 37,913 — 5,325,821 8,809,866 5,905,944 150,413 1,981 15,761,391 20,231,938 8,230 3,691,685 — 346,516 1,625,490 219,484 3,699,915 2,191,490 8 3,168,735 5,968,370 22,630,041 28,391,798 20 18 18 18 1,279,769 20,558,401 278,886 884,150 16,938,435 (7,771,891) (5,552,141) 13,317,715 16,564,915 23,368,409 3,508,113 2,557,013 1, 520,659 1,209,730 6,065,126 2,730,389 — 2,293,000 — 2,293,000 22,630,041 28,391,798 These financial statements on pages 26 to 67 were approved by the Board of directors and authorised for issue on 28 november 2013 and are signed on its behalf by: Andrew Bell Executive Chairman The accompanying notes form an integral part of these financial statements. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 32 | Red Rock ResouRces plc Annual report and accounts 2013 Company statement of changes in equity for the year ended 30 June 2013 The movements in equity during the period were as follows: As at 30 June 2011 723,983 13,041,125 14,699,021 2,935,560 31,399,689 share capital £ share premium account £ Retained earnings £ other reserves £ Total equity £ Changes in equity for 2012 loss for the year Other comprehensive expense for the year Transactions with owners issue of shares share issue costs share issues in relation to sip share-based payment charge share-based payment transfer Total transactions with owners As at 30 June 2012 Changes in equity for 2013 loss for the year Other comprehensive income for the year Transactions with owners issue of shares share issue costs share issues in relation to sip Total transactions with owners As at 30 June 2013 As at 30 June 2011 Changes in equity for 2012 Other comprehensive expense for the year Transactions with owners share-based payment charge share-based payment transfer Total transactions with owners As at 30 June 2012 Changes in equity for 2013 Other comprehensive income for the year As at 30 June 2013 see note 21 for a description of each reserve included above. — — — (1,469,209) — — (10,723,982) — (1,469,209) (10,723,982) 156,697 — 3,470 — — 4,279,808 (464,047) 81,549 — — 160,167 3,897,310 — — — — 87,903 87,903 — 4,436,505 — (464,047) — 85,019 104,434 104,434 (87,903) — 16,531 4,161,911 884,150 16,938,435 13,317,715 (7,771,891) 23,368,409 — — — (18,869,856) — — 8,050,777 — (18,869,856) 8,050,777 382,064 — 13,555 3,696,111 (210,276) 134,131 395,619 3,619,966 — — — — — 4,078,175 — (210,276) — 147,686 — 4,015,585 1,279,769 20,558,401 (5,552,141) 278,886 16,564,915 Available for sale trade investments reserve £ share-based payment reserve £ Total other reserves £ 2,668,513 267,047 2,935,560 (10,723,982) — (10,723,982) — — — 104,434 (87,903) 104,434 (87,903) 16,531 16,531 (8,055,469) 283,578 (7,771,891) 8,050,777 — 8,050,777 (4,692) 283,578 278,886 www.RRRplc.coM Annual report and accounts 2013 | 33 Company statement of cash flows for the year ended 30 June 2013 30 June 2013 £ 30 June 2012 £ Cash flows from operating activities loss before taxation increase in receivables increase/(decrease) in payables interest receivable and finance income dividend income interest payable share-based payments impairment of subsidiary impairment of associate impairment of available for sale investment loss on sale of investments non-cash proceeds on sale of royalty interest financial assets at fair value through profit and loss unrealised foreign exchange (gains)/loss depreciation Net cash outflow from operations corporation tax received/(paid) Net cash used in operations Cash flows from investing activities interest received dividend income proceeds of sale of investments payments to acquire associate company investments payments to acquire available for sale investments exploration expenditure payments to acquire property, plant and equipment Net cash outflow from investing activities Cash flows from financing activities proceeds from issue of shares Transaction costs of issue of shares interest paid proceeds of new borrowings Repayments of borrowings Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents cash and cash equivalents at the beginning of period Cash and cash equivalents at end of period The accompanying notes and accounting policies form an integral part of these financial statements. (21,191,306) (1,064,525) 1,969,472 (298,726) — 436,688 122,067 3,056,923 — 12,667,999 2,468,814 (3,637,504) (3,035,770) (549,411) (847,701) (22,889) 558,983 184,114 — 358,188 716,605 619,313 — (1,315,901) 3,945,283 42,571 16,259 150,413 38,484 18,447 (1,625,250) (2,967,860) 219,592 (84,085) (1,405,658) (3,051,945) 316,709 — 1,110,706 (2,632,673) (200,000) — — 378,043 22,889 1,919,338 (2,914,950) (387,603) (762,336) (27,607) (1,405,258) (1,772,226) 4,103,795 (210,276) (436,688) 998,025 (1,982,226) 4,441,844 (464,047) (558,983) 4,970,521 (3,260,814) 2,472,630 5,128,521 (338,286) 346,516 304,350 42,166 8,230 346,516 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 34 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements for the year ended 30 June 2013 1 Principal accounting policies 1.1 Authorisation of financial statements and statement of compliance with IFRS The Group financial statements of Red Rock Resources plc for the year ended 30 June 2013 were authorised for issue by the Board on 28 november 2013 and the statement of financial position signed on the Board’s behalf by Andrew Bell. Red Rock Resources plc is a public limited company incorporated and domiciled in england and wales. The company’s ordinary shares are traded on AiM. 1.2 Basis of preparation The financial statements have been prepared in accordance with international financial Reporting standards and ifRic interpretations as endorsed by the eu (“ifRs”) and the requirements of the companies Act applicable to companies reporting under ifRs. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below. Company statement of comprehensive income As permitted by section 408 companies Act 2006, the company has not presented its own income statement or statement of comprehensive income. The company’s loss for the financial year was £18,869,856 (2012: £1,469,209). The company’s other comprehensive income for the financial year was £8,050,777 (2012: loss of £10,723,982). Amendments to published standards effective for the year ended 30 June 2013 The following standards have been adopted during the year: » iAs 12 “income Taxes (Amendment) – deferred Taxes: Recovery of underlying Assets”; and » iAs 1 “Amendment – presentation of items of other comprehensive income”. Although the adoption of these amendments has had no impact on the financial position and performance of the Group, additional disclosures have been provided to comply with the revised standards. Standards adopted early by the Group The Group has not adopted any standards or interpretations early in either the current or the preceding financial year. Adoption of standards and interpretations As at the date of authorisation of these financial statements, there were standards and interpretations in issue but that are not yet effective and have not been applied in these financial statements, as listed below. Standards, amendments and interpretations in issue but not effective effective for annual periods beginning on or after 1 January 2013: » ifRs 13 “fair value Measurement”; » iAs 19 “employee Benefits (revised)”; and » iAs 28 “investments in Associates and Joint ventures”. effective for annual periods beginning on or after 1 January 2014: » ifRs 10 “consolidated financial statements”; » ifRs 11 “Joint Arrangements”; and » ifRs 12 “disclosure of interests in other entities”. effective for annual periods beginning on or after 1 January 2015: » ifRs 9 “financial instruments: classification and Measurement”. The directors do not anticipate that the adoption of these standards and interpretations in future periods could have a material effect on the financial position or performance of the Group and company, other than the introduction of ifRs 10 which could affect the financial position and performance, and ifRs 11, ifRs 12 and iAs 28 which are likely to change or increase the level of disclosure required in respect of the Group’s investments. The Group intends to adopt these standards when they become effective. ifRs 10 is a new standard which establishes principles for the presentation and preparation of consolidated financial statements. As a result of its publication, the directors will be required to consider the application of the revised definition of control to determine whether additional entities will need to be consolidated and whether consolidation is still appropriate for those that currently are. www.RRRplc.coM Annual report and accounts 2013 | 35 1 Principal accounting policies continued 1.2 Basis of preparation continued Standards, amendments and interpretations in issue but not effective continued The new definition of control will require the directors to consider whether the company has: a) power over the investee; b) exposure, or rights, to variable returns from involvement with the investee; and c) the ability to use power over the investee to affect the amount of the investor’s returns. The financial effect of such changes on the Group has not yet been reliably estimated. However, it is widely expected, irrespective of industry sector and without specific reference to the Group that the adoption of ifRs 10 is likely to result in more entities being consolidated. ifRs 11 replaces iAs 31 “interests in Joint ventures” and sic-13 “Jointly controlled entities – non-monetary contributions by venturers”. it removes the option to account for jointly controlled entities (“Jces”) using proportionate consolidation. instead, Jces that meet the definition of a joint venture must be accounted for using the equity method. Jces under current iAs 31 that will be classified as joint ventures under ifRs 11 will transition from proportionate consolidation to the equity method by aggregating the carrying values previously recorded, testing that amount for impairment and then using that amount as deemed cost for applying the equity method going forward. The Group recognises its interest in jointly controlled entities using the equity method of accounting. The application of this new standard will not impact the financial position of the Group. ifRs 12 includes all of the disclosures that were previously in iAs 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in iAs 31 and iAs 28. These disclosures related to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The adoption of ifRs 12 is likely to change or increase the level of disclosure required in respect of the Group’s investments. As a consequence of the new ifRs 11 and ifRs 12, iAs 28 has been renamed iAs 28 “investments in Associates and Joint ventures” and describes the application of the equity method to investments in joint ventures in addition to associates. The application of this new standard will not impact the financial position of the Group. 1.3 Basis of consolidation The consolidated financial statements of the Group incorporate the financial statements of the company and subsidiaries controlled by the company made up to 30 June each year. Subsidiaries subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. subsidiaries are consolidated from the date on which control is obtained, the acquisition date, up until the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. costs directly attributable to the acquisition are expensed as incurred. identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date. provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances existing at the acquisition date. other changes in provisional fair values are recognised through profit or loss. non-controlling interests in subsidiaries are measured at the proportionate share of the fair value of their identifiable net assets. intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment. for the year ended 30 June 2013, the consolidated financial statements combine those of the company with those of its subsidiaries, Red Rock Australasia pty ltd, American Gold Mines limited and four points Mining sAs (“fpM”) (formerly “Mineras four points sA”). The Group’s dormant subsidiary, intrepid Resources limited, has been excluded from consolidation on the basis of the exemption provided by section 405(2) of the companies Act 2006 that its inclusion is not material for the purpose of giving a true and fair view. Non-controlling interests profit or loss and each component of other comprehensive income are allocated between the aims of the parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in equity. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 36 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 1 Principal accounting policies continued 1.4 Summary of significant accounting policies 1.4.1 Property, plant and equipment Assets in the course of construction are stated at cost, less any identified impairment loss. depreciation of these assets commences when the assets are ready for their intended use. field equipment and fixtures and fittings are stated at cost less accumulated depreciation and any recognised impairment loss. depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight line method, on the following bases: Mines field equipment fixtures and fittings Assets under construction 5% per annum 33% per annum 10% per annum not depreciated until brought into use 1.4.2 Investment in associates An associate is an entity over which the Group is in a position to exercise significant influence, but not control or jointly control, through participation in the financial and operating policy decisions of the investee. investments in associates are recognised in the consolidated financial statements using the equity method of accounting. The Group’s share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income are recognised directly in other comprehensive income. The carrying value of the investment, including goodwill, is tested for impairment when there is objective evidence of impairment. losses in excess of the Group’s interest in those associates are not recognised unless the Group has incurred obligations or made payments on behalf of the associate. where a Group company transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group’s interest in the relevant associate. unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment. in the company accounts investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment when there is objective evidence of impairment. 1.4.3 Interests in joint ventures The Group has a contractual arrangement with north Atlantic Mining Associates limited which represents a joint venture established through an interest in a jointly controlled entity, nAMA Greenland limited (“nGl”). The Group recognises its interest in the entity‘s assets and liabilities using the equity method of accounting. under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group‘s share of its net assets, less distributions received and less any impairment in value of individual investments. The Group income statement reflects the share of the jointly controlled entity‘s results after tax. Any goodwill arising on the acquisition of a jointly controlled entity is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity‘s identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group‘s share of the entity‘s profit or loss in the period in which the investment is acquired. financial statements of the jointly controlled entity are prepared as at and for the year ended 30 november 2012. The joint venture entity prepares, for the use of the Group, financial statements as of the same date as the financial statements of the Group. where necessary, adjustments are made to bring the accounting policies used into line with those of the Group and to reflect impairment losses where appropriate. Adjustments are also made in the Group‘s financial statements to eliminate the Group‘s share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture. 1.4.4 Exploration assets exploration assets comprise exploration and development costs incurred on prospects at an exploratory stage. These costs include the cost of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects. These costs are carried forward in the statement of financial position as non-current intangible assets less provision for identified impairments. Recoupment of exploration and development costs is dependent upon successful development and commercial exploitation of each area of interest and will be amortised over the expected commercial life of each area once production commences. The Group and the company currently have no exploration assets where production has commenced. www.RRRplc.coM Annual report and accounts 2013 | 37 1 Principal accounting policies continued 1.4 Summary of significant accounting policies continued 1.4.4 Exploration assets continued The Group adopts the “area of interest” method of accounting whereby all exploration and development costs relating to an area of interest are capitalised and carried forward until abandoned. in the event that an area of interest is abandoned, or if the directors consider the expenditure to be of no value, accumulated exploration costs are written off in the financial year in which the decision is made. All expenditure incurred prior to approval of an application is expensed, with the exception of refundable rent, which is raised as a receivable. upon disposal, the difference between the fair value of consideration receivable for exploration assets and the relevant cost within non-current assets is recognised in the statement of income. All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred. 1.4.5 Non-current assets held for sale non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised. 1.4.6 Taxation corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense. The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date. deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit. deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date. deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income. deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax relates to income tax levied by the same tax authorities on either: » the same taxable entity; or » different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected to be realised or settled. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 38 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 1 Principal accounting policies continued 1.4 Summary of significant accounting policies continued 1.4.7 Foreign currencies Both the functional and presentational currency of Red Rock Resources plc is sterling (£). each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The functional currency of the foreign subsidiaries are Australian dollars (“Aud”) and colombian pesos. Transactions in currencies other than the functional currency of the company are initially recorded at the exchange rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the exchange rate prevailing at the reporting date. non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income. on consolidation, the assets and liabilities of the Group’s overseas operations are translated into the Group’s presentational currency at exchange rates prevailing at the reporting date. income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group’s foreign currency translation reserve. 1.4.8 Revenue Revenue is recognised when revenue and associated costs can be measured reliably and future economic benefits are probable. Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts, vAT and other sales related taxes. sales of minerals are recognised when goods are delivered and title has passed. delivery occurs when the products have arrived at the specified location and the risks and rewards of ownership have been transferred to the customer. extracted minerals are made available for sale for a designated period each month and sold immediately. Revenue from management services is recognised on an accruals basis when the services have been delivered and any associate costs have been incurred. 1.4.9 Share-based payments The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted. The fair value of options granted to directors and others in respect of services provided is recognised as an expense in the statements of income with a corresponding increase in equity reserves – the share-based payment reserve. on exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is transferred to retained earnings. on exercise, equity is also increased by the amount of the proceeds received. The fair value is measured at grant date and charged over the vesting period during which the option becomes unconditional. The fair value of options is calculated using the Black-scholes model taking into account the terms and conditions upon which the options were granted. There are no market vesting conditions. The exercise price is fixed at the date of grant. for other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price. 1.4.10 Pension The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered fund. contributions to the defined contribution scheme are charged to the profit and loss account as they become payable. 1.4.11 Finance costs/revenue Borrowing costs are recognised on an accruals basis using the effective interest method. finance revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. www.RRRplc.coM Annual report and accounts 2013 | 39 1 Principal accounting policies continued 1.4 Summary of significant accounting policies continued 1.4.12 Financial instruments financial assets and financial liabilities are recognised where the Group has become party to the contractual provisions of the instrument. Financial assets Investments investments in subsidiary companies are classified as non-current assets and included in the statement of financial position of the company at cost at the date of acquisition less any identified impairments. investments in associate companies are classified as non-current assets and included in the statement of financial position of the company at cost at the date of acquisition less any identified impairments. for acquisitions of subsidiaries or associates achieved in stages, the company re-measures its previously held equity interests in the acquiree at its acquisition date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses previously recognised in other comprehensive income are transferred to profit and loss. Available for sale financial assets equity investments intended to be held for an indefinite period of time are classified as available for sale investments. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other comprehensive income and debited or credited to the available for sale trade investments reserve. where the fair value cannot be reliably measured, the investment is carried at cost or a lower valuation where the directors consider the value of the investment to be impaired. Available for sale investments are included within non-current assets. on disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the statement of income. income from available for sale investments is accounted for in the statement of income when the right to receive it has been established. The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. when there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement – is removed from other comprehensive income and recognised in the income statement. impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income. Derivative financial instruments The company enters into certain derivative agreements in order to manage certain risks. The derivative instruments are all cash-settled. The fair value of the derivatives is to be calculated using a discounted cash flow model taking into consideration discount factor and counterparty credit risk. please refer to note 24 for settled derivative transactions during the year. The company have loan notes from Ascot Mining plc (“Ascot”), repayable by 2015 or convertible at the company’s discretion into 7,500,000 shares in Ascot. The company also has outstanding warrants over 9,500,000 Ascot shares. The warrants and embedded derivative contained within the £1.5 million loan (i.e. the option to convert to equity) were fair valued at inception and classified as other financial assets at fair value through profit and loss in accordance with iAs 39. As such, they are shown separately in the statement of financial position and revalued accordingly at each reporting date, with gains and losses going to the income statement. The loan element is included within trade and other receivables at amortised cost. All derivative financial instruments are initially and subsequently recognised in the statement of financial position at fair value. changes in the fair value are recognised in profit and loss in accordance with iAs 39. Cash and cash equivalents cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits. for the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Trade and other receivables Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectable amounts. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified. After initial recognition these assets are measured at amortised cost using the effective interest method less provision for impairment. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 40 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 1 Principal accounting policies continued 1.4 Summary of significant accounting policies continued 1.4.12 Financial instruments continued Financial liabilities and equity Trade and other payables Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Borrowings Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in profit or loss over the term of the instrument using an effective rate of interest. Deferred and contingent consideration where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter, with any change in the estimated liability being reflected in the income statement. where deferred consideration is payable after more than one year the estimated liability is discounted using an appropriate rate of interest. Equity instruments equity instruments issued by the company are recorded at fair value at initial recognition net of issue costs. 1.5 Significant accounting judgements, estimates and assumptions The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Significant judgements in applying the accounting policies in the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements: Going concern As described in the directors’ report on page 20, the Group has incurred a loss of £22.1 million for the year ended 30 June 2013, at that date there was a net current liability of £7.2 million. The loss resulted mainly from impairments of available for sale investments and fixed assets of £16.6 million. whilst the directors have instituted measures to preserve cash and secure additional finance, these circumstances create material uncertainties over future trading results and cash flows. The Group has been able to improve the operating efficiencies at its colombian gold mine asset, reducing costs, boosting production and becoming more cash generative. The Group has also implemented plans to minimise its cash outflows by reducing its cost base by such measures as reducing staff numbers, marketing costs and other overheads. And, subsequent to year end, the Group has paid off £1.6 million of its borrowings through the sale of Jupiter shares and renegotiated the terms of its remaining borrowings of £0.7 million, extending the repayments to november 2014. As explained on the chairman’s statement, the directors are seeking to sell approximately half of its Greenland asset for £6.6 million to provide the necessary working capital. The Group is in negotiations with a potential purchaser, but there can be no certainty that a sale will proceed. Based on negotiations conducted to date the directors have a reasonable expectation that it will proceed successfully, but if not the Group will need to secure additional finance facilities. The Group has a facility of approximately £4.8 million available under their sedA backed facility with YA Global. The directors do not anticipate any difficulty in raising new finance from stock markets if this is required during 2014 and the Group has demonstrated a consistent ability to do so in the recent past. This includes the recent issue of £1.1 million in convertible bonds subsequent to year end and an additional public offering of 54 million shares for a total consideration of £0.35 million. furthermore, the Group expects to confirm additional debt facilities of £0.5 million shortly. The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Group’s ability to continue as a going concern. nevertheless after making enquiries, and considering the uncertainties described above, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. for these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts. www.RRRplc.coM Annual report and accounts 2013 | 41 1 Principal accounting policies continued 1.5 Significant accounting judgements, estimates and assumptions continued Significant judgements in applying the accounting policies continued Assets classified as held for sale in July 2012, the Group publicly announced the proposed disposal of interest in four points Mining sAs (“fpM”). Hence, fpM was classified as a disposal group held for sale and as a discontinued operation in the financial statements for the year ended 30 June 2012. The Board considers that the subsidiary does not meet the criteria to be classified as held for sale as at 30 June 2013 for the following reasons: » The company received a proposal from Ashmont Resources corporation (“Ashmont”), a private canadian company, in May 2012 to acquire the company’s wholly owned subsidiary, American Gold Mines ltd, which holds 50.002% interest in fpM. since due diligence was completed in september 2012 there has been no further progress on the sale terms. » no further offers have, as yet, been received from interested parties. » The company is focussing its efforts into improving the operating efficiencies at the mine and will attempt to prove up a gold resource with a view to maximising the value of any future potential sale. Given the developments, the directors no longer believe this asset group meets the definition as held for sale, and therefore has reclassified these as continuing operations in the statement of financial position and income statement. further, on 28 november 2012, the company announced that it had received an offer (subject to due diligence and contract, and any necessary Red Rock shareholder consent) from international Media projects ltd., a private British virgin island based company, on behalf of its industrial partner, to acquire 51% of the outstanding share capital of the company’s joint venture, nAMA Greenland limited (“nGl”), which holds direct ownership of the Melville Bugt iron ore project in Greenland (“offer”). The offer letter was accepted by Red Rock on 27 november 2012. A condition precedent of the offer requires the company to announce a mineral resource estimate upon completion of the project’s 2012 exploration programme for the company to be issued an additional 35% of nGl to bring its total holding to 60%. on 19 december 2012, the company announced a JoRc Mineral Resource estimate on the project, satisfying the terms of its farm-in and earning the additional 35% shares in nGl. in february 2013, the company received its additional 35% shareholding in nGl bringing its interest up to 60%. The company was also advised then that technical due diligence has been completed satisfactorily. in August 2013, the company has been advised by the lawyers acting for the offerors that terms have been approved and initialled, and formal signature and closing are expected, which will allow a fully funded offer to proceed. Having met the criteria of an asset held for sale and taking into consideration the principles of the amended iAs 28 in applying the appropriate accounting policy, the company applied ifRs 5 to the portion of its investment in the joint venture under offer. Hence, 51% of the cost of the company’s investment in nGl (£3,168,735) has been reclassified as an asset held for sale as at 30 June 2013. Recognition of holdings less than 20% as an associate The company owns 15% of the issued share capital of Mid Migori Mining company limited (“MMM”). Andrew Bell is a member of the board of MMM. in accordance with iAs 28, the directors of the company consider this, and the input of resource by the company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the standard. As such, MMM has been recognised as an associate for the year ended 30 June 2013. The effect of recognising MMM as an available for sale financial asset would be to increase the profit by £916. Significant judgements in applying the accounting policies Recognition of holdings greater than 20% as available for sale financial assets At 30 June 2013, the company held 33.02% of the issued share capital of kansai Mining corporation limited (“kansai”), with options to own a further 4.94%. The company has the option to own and control 37.96% of the total issued and outstanding common shares of kansai. The company has no presence on the board of kansai and has no participation in its policy making process. furthermore, there are no significant transactions between the two entities. Therefore the presumption of significant influence has been rebutted in accordance with iAs 28 and kansai has been recognised as an available for sale financial asset. Transfer of investments between available for sale financial assets and investments in associate The directors classify, as an associate, equity investments where the company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. significant influence is presumed when the company holds greater than 20% of the voting power of the investee, unless it can be clearly demonstrated that this is not the case. conversely, if the company holds less than 20% of the voting power of an investee, it is presumed that the company does not have significant influence, unless such influence can be clearly demonstrated. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i where significant influence exists, the entity is accounted for as an associate. where significant influence does not exist, the entity is accounted for as an available for sale financial asset. for acquisitions of associates in stages, the company re-measures its previously held equity interests in the acquiree at its acquisition date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses previously recognised in other comprehensive income are transferred to profit and loss. s T A T e M e n T s 42 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 1 Principal accounting policies continued 1.5 Significant accounting judgements, estimates and assumptions continued Significant judgements in applying the accounting policies continued Transfer of investments between available for sale financial assets and investments in associate continued where the company’s holding is diluted to less than 20%, and significant influence is deemed to have been lost, the company recognises a gain or loss on dilution in profit and loss. This is calculated as the difference between the company’s share of proceeds received for the dilutive share issue and the value of the company’s effective disposal. on recognition as an available for sale financial asset, the company’s holding in the investment is measured at fair value, with any gain or loss being recognised in profit and loss. subsequent re-measurements at each reporting period are recognised in equity in accordance with iAs 39. Significant accounting estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period include the impairment determinations, the selling price of assets held for sale, the useful lives of property plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-scholes model. Impairment of available for sale financial assets The Group follows the guidance of iAs 39 to determine when a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. in making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost. in the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. “significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment. with respect to the major investment of the company, Jupiter Mines limited, which represents nearly 80% of its total available for sale assets, management’s expectation of a prolonged decline in the fair value of the investment was to exist for a period approximating to three years from the date of the asset becoming an available for sale financial asset, during which time the investment would be in a pre-production phase. during this period, management would consider a significant decline in the fair value of this investment to have occurred when the fair value of the investment has declined by approximately 20% of its cost. during the year the value of the available for sale investment in Jupiter mines had decreased beyond the significant threshold previously set by management and as such, management recorded an impairment of £12.2 million. The amount that had previously been recorded as a reserve in other comprehensive income was transferred to the income statement and is included in the impairment charge in the income statement. Impairment of investment in associates After the application of the equity method, the Group follows the guidance of iAs 39 to determine whether it is necessary to recognise an additional impairment loss on its investment in associates. The Group assesses at each reporting date whether there is an objective evidence that the investment in associate is impaired. if this is the case, the Group estimates the amount of impairment by comparing its recoverable amount with its carrying value and recognises the impairment amount in the income statement. As a result of the Group’s evaluation, no impairment loss was deemed necessary. Impairment of non-financial assets The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. if any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (cGu) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. when the carrying amount of an asset or cGu exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. in determining fair value less costs to sell, recent market transactions are taken into account. if no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. www.RRRplc.coM Annual report and accounts 2013 | 43 1 Principal accounting policies continued 1.5 Significant accounting judgements, estimates and assumptions continued Significant judgements in applying the accounting policies continued Significant accounting estimates and assumptions continued Impairment of non-financial assets continued The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group’s cGus to which the individual assets are allocated. These projections generally cover a period of five years with a terminal value or salvage value applied. impairment losses of continuing operations are recognised in the income statement in expense categories consistent with the function of the impaired asset, except for a property previously revalued when the revaluation was taken to other comprehensive income. in this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. 2 Segmental analysis The Group’s main focus of operations includes the analysis of margins, revenues and overheads from the Group’s colombian subsidiary as well as monitoring exploration expenditure and ensuring there is adequate cash available to meet operational obligations and provide for investment opportunities. sources of funds available to the Group include consultancy fees and loan interest payments from the colombian subsidiary. in addition, funds can be raised by issues of new equity and sales of exploration rights, investments or other assets. Therefore, in addition to monitoring the current market perception of the company by shareholders, brokers and other possible providers of equity finance, constant attention is paid to: » available cash; » the balance available in the standby equity distribution Agreement (“sedA”) with YA Global Master spv limited advised by Yorkville Advisors llc; and » the market value of the Group’s listed investments. At 30 June 2013 the Group had cash and cash equivalents of £21,081 and undrawn facilities available in the sedA of £4.8 million. The market values of the most significant of Group’s listed investments at 30 June 2013 are as follows: » Jupiter Mines limited: £2,534,208; » Regency Mines plc: £128,820; and » Resource star limited: £225,675. The Group has disclosed its mining and exploration activities as separate segments. These are in addition to the investment activities which continue to form a significant segment of the business. The Group has made a strategic decision to concentrate on two commodities, gold and iron ore. However, as the Group is currently only in the production phase of gold, a further segmental analysis by commodity has not been presented. Year to 30 June 2013 Segment revenue Sale of minerals loss on sales of investments Gain on dilution of interest in associate cost of sale of minerals impairment of available for sale investments impairment of fixed assets financial assets at fair value through profit and loss exploration expenses Administrative expenses* currency (loss)/gain shares of losses in associates write-off of associate investment reserves finance income/(cost), net investment Jupiter Mines limited £ Ascot Mining plc £ other investments £ Mining colombian Mining £ exploration other Australian exploration £ African exploration £ corporate and unallocated £ Total £ — (2,468,814) — — — — — — — 2,564,688 — — 17,942 — — (1,913,960) (12,191,284) — (96,000) — (380,715) — — (3,947,609) — — — — — — — (150,413) — (919,471) — — — — (230,502) — (1,401,799) (177,230) — — (326,240) — — 250,512 (126,226) (7,313) — (240,634) — — — — — — — (800) (5,953) (1,400) — — — — — — — — — — 2,564,688 — (2,468,814) 17,942 — — (1,913,960) — (12,667,999) — (3,947,609) — (6,074) — (48,188) — (2,299,687) 53,592 — (150,413) (285,564) (4,626,910) (125,038) — — — — (326,240) — (434,425) (126,226) (431,860) Net (loss)/profit before tax from continuing operations (14,660,098) (915,372) (822,552) (5,347,046) (8,153) (6,074) (2,728,708) (24,488,003) * included in administrative expense is depreciation charge of £928,853. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 44 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 2 Segmental analysis continued Year to 30 June 2012* Segment revenue Sale of minerals loss on sales of investments Gain on sale of royalty interest Gain on dilution of interest in associate cost of sale of minerals impairment of associate investment impairment of available for sale investments financial assets at fair value through profit and loss exploration expenses impairment of exploration assets Administrative expenses** currency (loss)/gain shares of losses in associates dividend income finance income/(cost), net Net (loss)/profit before tax from continuing operations investment Jupiter Mines limited £ Ascot Mining plc £ other investments £ Mining colombian Mining £ exploration other Australian exploration £ African exploration £ corporate and unallocated £ Total £ — — — 5,215,581 — 3,686,211 (24,518) — (594,795) — — — — — — — 12,204 — — (3,101,693) — — — (358,188) (478,848) (237,757) — — — — — — — — — — — — — — — — — 5,215,581 (619,313) — — 3,686,211 12,204 — — (3,101,693) — — (358,188) (716,605) — (3,945,283) — — — — — (279,489) — — — — — — — (592,014) — — — 287,913 — — — (1,611,007) (40,551) — — (312,043) — 22,890 338,672 (3,162) — (27,649) (7,077) (15,209) (4,711) — — 2,120 — (3,548) — (3,945,283) (356,455) (45,769) — — — (1,777,843) 124,674 — — — — — (545,757) — (7,077) (3,996,073) 79,412 (312,043) 22,890 79,786 3,686,211 (4,752,750) (1,470,851) 521,513 (52,526) (3,548) (2,244,695) (4,316,646) * certain amounts shown here do not correspond to the 2012 financial statements to re-present the results of an entity previously presented in discontinued operations. ** included in administrative expense is depreciation charge £682,200. Information by geographical area presented below is certain information by the geographical area of the Group’s activities. Revenue from investment sales and the sale of exploration assets is allocated to the location of the asset sold. Year ended 30 June 2013 Revenue sale of minerals loss on sales of investments Total segment revenue and other gains Non-current assets property, plant and equipment investments in associates and joint ventures Total segment non-current assets Available for sale financial assets non-current receivables Total non-current assets uk £ Australia £ colombia £ Greenland £ other £ Total £ — (2,468,814) (2,468,814) 19,466 — 19,466 — 2,564,688 — — — 2,564,688 — — — — 2,564,688 — (2,468,814) — 95,874 246 — 246 8,153,813 — — 3,044,471 — 8,173,525 4,035,728 991,257 8,153,813 3,044,471 991,257 12,209,253 3,136,448 6,484,534 21,830,235 www.RRRplc.coM Annual report and accounts 2013 | 45 2 Segmental analysis continued Information by geographical area continued Year ended 30 June 2012* Revenue sale of minerals (loss)/gain on sales of investments Gain on sale of royalty interest uk £ Australia £ colombia £ Greenland £ other £ Total £ — (313,807) 2,175 — 3,686,211 — 5,215,581 — — — — — — (307,681) — 5,215,581 (619,313) — 3,686,211 (307,681) 8,282,479 Total segment revenue and other gains (313,807) 3,688,386 5,215,581 Non-current assets property, plant and equipment investments in associates and joint ventures Total segment non-current assets Available for sale financial assets non-current receivables other financial assets deferred tax assets Total non-current assets 37,913 — 37,913 327 299,220 299,547 — — — 3,757,321 — 439,512 38,240 4,496,053 — 3,757,321 439,512 4,534,293 8,809,866 5,905,944 150,413 153,098 19,553,614 * certain amounts shown here do not correspond to the 2012 financial statements to re-present the results of an entity previously presented in discontinued operations. 3 Loss for the year before taxation loss for the year before taxation is stated after charging/(crediting): Auditor’s remuneration: – fees payable to the company’s auditor for the audit of consolidated and company financial statements – fees payable to subsidiary auditors for the audit of subsidiary financial statements directors’ emoluments share-based payments – directors share-based payments – staff depreciation currency losses/(gains) 4 Finance (costs)/income, net interest income interest expense change in fair value of deferred consideration 2013 £ 2012 £ 32,950 — 354,365 29,250 92,817 928,853 125,038 22,500 2,344 416,484 106,124 77,990 682,200 (79,412) 2013 £ 316,736 (730,612) (17,984) 2012 £ 378,254 (768,126) 469,658 (431,860) 79,786 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 46 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 5 Taxation Current period taxation on the Group uk corporation tax at 23.75% (2012: 25.50%) on profits for the period over provision in prior years foreign tax Deferred tax origination and reversal of temporary differences deferred tax assets not recognised Tax credit Factors affecting the tax charge for the year loss on ordinary activities before taxation loss on ordinary activities at the average uk standard rate of 23.75% (2012: 25.50%) impact of subsidiaries and associates under/(over) provision of deferred tax in prior years effect of expenditure not deductible/(income not taxable) effect of losses carried forward not recognised Tax credit notes 2013 £ — (108) — (108) 2012 £ — (219,484) 26,638 (192,846) (2,535,431) 153,098 (2,160,918) — (2,382,441) (2,353,764) (24,488,003) (4,316,646) (5,815,901) 487,470 152,990 2,070,938 722,062 (1,100,745) (146,542) (219,484) (1,093,730) 206,737 (2,382,441) (2,353,764) in addition to the amounts credited to the consolidated statement of income, deferred tax amounting to £2,323,323 (2012: £3,386,520 credit) relating to the Group’s investments was recognised in the statement of comprehensive income. legislation in finance Act 2012 set the main rate of corporation tax at 23% with effect from 1 April 2013. finance Act 2013 set the main rate of corporation tax at 21% from 1 April 2014 and at 20% from 1 April 2015. Therefore deferred tax assets/(liabilities) are calculated at 23% (2012: 24%). 6 Staff costs The company’s staff are employed both by the company and Regency Mines plc. The aggregate employment costs of staff (including directors) for the year in respect of the Group was: wages and salaries pension social security costs employee share-based payment charge Total staff costs The average number of Group employees (including directors) during the year was: executives Administration exploration 2013 £ 882,387 63,962 102,810 122,067 2012 £ 691,020 31,858 94,946 184,114 1,171,226 1,001,938 2013 Number 2012 number 5 17 9 31 5 26 9 40 The company established its own payroll in november 2011. prior to that, Regency Mines plc, a related party, provided the services of its staff as necessary at cost. The company’s staff also work for Regency Mines plc and staff costs of £67,917 (2012: £27,212) were recharged during the year. such charges are offset against administration expenses in the income statement. in addition, professional staff employed by Regency Mines plc are sub-contracted to the company to work on specific assignments as necessary. during the year, the total charge before the addition of vAT was £349,964 (2012: £618,004). The average number of employees shows average monthly numbers for the period after the payroll was established. The number includes seven (2012: 16) administration employees of the four points Mining sAs, a subsidiary company, which runs its own payroll for administrative staff. The key management personnel are the directors and their remuneration is disclosed within note 7. www.RRRplc.coM Annual report and accounts 2013 | 47 7 Directors’ emoluments 2013 Executive Directors A R M Bell M G R Yannaghas Other Directors J f ladner M c nott J watkins 2012 Executive Directors A R M Bell M G R Yannaghas Other Directors J f ladner M c nott J watkins share-based payments directors’ fees £ consultancy fees £ share options £ share incentive plan £ pension contributions £ social security costs £ Total £ 110,000 117,500 16,000 16,000 16,000 15,000 — 9,000 9,000 2,250 275,500 35,250 — — — — — — 6,000 5,250 6,000 6,000 6,000 12,936 9,342 — 1,528 — 10,810 6,205 154,746 138,297 961 872 961 31,961 33,400 25,211 29,250 23,806 19,809 383,615 share-based payments directors’ fees £ consultancy fees £ share options £ share incentive plan £ pension contributions £ social security costs £ Total £ 159,167 130,000 15,500 15,500 15,500 335,667 15,000 — 9,500 13,000 9,500 47,000 22,545 40,268 — 13,874 6,937 83,624 4,500 4,500 4,500 4,500 4,500 6,468 6,228 — 764 — 14,049 4,458 221,729 185,454 1,388 220 242 30,888 47,858 36,679 22,500 13,460 20,357 522,608 The number of directors who exercised share options in the year was nil (2012: two). during the year, the company contributed to a share incentive plan more fully described in the directors’ Report on page 16. 157,894 (2012: 122,448) free shares were issued to each employee, including directors, making a total of 789,470 (2012: 612,240) to directors. in addition to director’s fees, consultancy fees in respect of the services of Andrew Bell were paid to a consultancy which provided his services. in addition to director’s fees, consultancy fees in respect of the services of James ladner were paid to him acting as a consultant. in addition to director’s fees, consultancy fees in respect of Mike nott were payable to woodridge Associates, a business which provided his services. in addition to director’s fees, consultancy fees in respect of John watkins were payable to his business as a chartered accountant in practice. 8 Assets classified as held for sale in July 2012, the Group publicly announced the proposed disposal of interest in four points Mining sAs (“fpM”). The company received a proposal from Ashmont Resources corporation (“Ashmont”), a private canadian company, in May 2012 to acquire the company’s wholly owned subsidiary, American Gold Mines ltd, which holds 50.002% interest in fpM. due diligence was completed in september 2012. As at 30 June 2012, fpM was classified as a disposal group held for sale and, consequently, a discontinued operation. As disclosed in note 1.5, there has been no progress on the sale since september 2012. As the Group has committed to improving operating efficiencies and running the mine as a continuing operation, fpM was reclassified back to continuing operations as at 30 June 2013. The consolidated income statement for 2012 has been re-presented to reflect the change. on 28 november 2012, the company announced that it had received an offer (subject to due diligence and contract, and any necessary Red Rock shareholder consent) from international Media projects ltd., a private British virgin island based company, on behalf of its industrial partner, to acquire 51% of the outstanding share capital of the company’s joint venture, nAMA Greenland limited (“nGl”), which holds direct ownership of the Melville Bugt iron ore project in Greenland (“offer”). The offer letter was accepted by Red Rock on 27 november 2012. A condition precedent of the offer requires the company to announce a mineral resource estimate upon completion of the project’s 2012 exploration programme for the company to be issued an additional 35% of nGl to bring its total holding to 60%. on 19 december 2012, the company announced a JoRc Mineral Resource estimate on the project, satisfying the terms of its farm-in and earning the additional 35% shares in nGl. in february 2013, the company received its additional 35% shareholding in nGl bringing its interest up to 60%. The company was also advised then that technical due diligence had been completed satisfactorily. in August 2013, the company was advised by the lawyers acting for the offerors that terms have been approved and initialled, and formal signature and closing are expected, which will allow a fully funded offer to proceed. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 48 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 8 Assets classified as held for sale continued Having met the criteria of an asset held for sale and taking into consideration the principles of the amended iAs 28 in applying the appropriate accounting policy, the company applied ifRs 5 to the portion of its investment in the joint venture under offer. Hence, 51% of the cost of the company’s investment in nGl (£3,168,735) has been reclassified as an asset held for sale as at 30 June 2013. The major classes of assets and liabilities classified as held for sale as at 30 June 2013 are as follows: Group Assets property, plant and equipment investment in joint ventures inventory Trade and other receivables cash and cash equivalents Assets classified as held for sale Liabilities Trade and other payables long-term borrowings deferred tax liabilities Liabilities directly associated with assets classified as held for sale net assets directly associated with disposal group non-controlling interest Net assets directly associated with disposal group attributable to owners of the Parent company Assets investment in subsidiary investment in joint ventures Amounts due from subsidiary Receivables Assets classified as held for sale The net cash flows of discontinued operations are as follows: operating investing financing Net cash inflows/(outflows) 30 June 2013 £ 30 June 2012 £ — 13,082,517 — 3,168,735 90,596 — — 2,209,776 4,913 — 3,168,735 15,387,802 (979,966) — — (3,350,231) — (3,376,109) — (7,706,306) 3,168,735 7,681,496 — (2,559,410) 3,168,735 5,122,086 30 June 2013 £ 30 June 2012 £ — 4,004,072 — 3,168,735 458,424 — — 1,505,874 3,168,735 5,968,370 30 June 2013 £ — — — — 30 June 2012 £ (363,426) (115,100) 293,930 (184,596) 9 (Loss)/earnings per share The basic (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the parent by the weighted average number of shares in issue. diluted (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares. www.RRRplc.coM Annual report and accounts 2013 | 49 9 (Loss)/earnings per share continued The following reflects the (loss)/profit and share data used in the basic and diluted earnings per share computations: loss attributable to equity holders of the parent weighted average number of ordinary shares of £0.001 in issue loss per share – basic weighted average number of ordinary shares of £0.001 in issue inclusive of outstanding dilutive options* loss per share – fully diluted 2013 2012 £(19,676,289) 1,076,285,074 (1.83) pence 1,076,285,074 (1.83) pence £(2,183,162) 786,916,478 (0.28) pence 786,916,478 (0.28) pence The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows: earnings per share denominator weighted average number of exercisable share options Diluted earnings per share denominator* 2013 2012 1,076,285,074 — 786,916,478 — 1,076,285,074 786,916,478 * The Group’s weighted average share options of 24,250,000 (2012: 12,121,198) are non-dilutive because their conversion to ordinary shares would decrease loss per share. in accordance with iAs 33, the diluted earnings per share denominator takes into account the difference between the average market price of ordinary shares in the year and the weighted average exercise price of the outstanding options. 10 Property, plant and equipment Group Cost At 1 July 2011 Additions currency exchange Reclassification to assets held for sale At 30 June 2012 Reclassification from assets held for sale Additions Transfers disposals currency exchange At 30 June 2013 Depreciation and impairment At 1 July 2011 depreciation charge currency exchange Reclassification to assets held for sale At 30 June 2012 Reclassification from assets held for sale depreciation charge Impairment charge disposal currency exchange At 30 June 2013 Net book value At 30 June 2013 At 30 June 2012 field equipment and machinery £ 669,906 109,732 11,933 (756,441) Mines £ 12,855,013 — 35,367 (12,890,380) — 35,130 12,890,380 — 212,387 — (132,683) 756,441 40,429 186,684 (16,446) (34,090) fixtures and fittings £ Assets under construction £ Total £ 95,140 11,201 (29,031) (48,661) 28,649 48,661 15,642 — (2,664) (2,191) 435,039 343,150 (4,775) (773,414) 14,055,098 464,083 13,494 (14,468,896) — 63,779 773,414 48,558 (399,071) — (20,355) 14,468,896 104,629 — (19,110) (189,319) 12,970,084 968,148 88,097 402,546 14,428,875 (657,214) (642,751) 6,499 1,293,466 (61,504) (31,371) (13,082) 92,913 (8,834) (8,078) 4,417 — — (727,552) — (682,200) — (2,166) — 1,386,379 — (13,044) (12,495) — (25,539) (1,293,466) (687,658) (3,947,609) — 1,992 (92,913) (201,882) — 16,446 10,719 — (39,313) — 2,664 1,209 — (1,386,379) — (928,853) — (3,947,609) — 19,110 — 13,920 (5,926,741) (280,674) (47,935) — (6,255,350) 7,043,343 687,474 — 22,086 40,162 16,154 402,546 8,173,525 — 38,240 depreciation is included within administrative expenses in the income statement. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 50 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 10 Property, plant and equipment continued The Group recognised an impairment loss of £3,947,609 in the income statement representing the write-down of the mine and related fixed assets in the Group’s mining segment in colombia. The recoverable amount was based on the value in use of four points Mining sAs as a single cash-generating unit (cGu). in determining value in use for the cGu, the cash flows were discounted at a rate of 15% on a pre-tax basis. The cash flows are derived from the projections for the next five years and do not include capital expenditures that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cGu being tested. The recoverable amount is most sensitive to forecasted gold price, grade and cash costs estimates as well as the expected production levels and the growth rate used for extrapolation purposes. company Cost At 1 July 2011 Additions At 30 June 2012 Additions At 30 June 2013 Depreciation At 1 July 2011 charge At 30 June 2012 charge At 30 June 2013 Net book value At 30 June 2013 At 30 June 2012 11 Investments in subsidiaries company Cost At 1 July 2012 Reclassification from assets held for sale Reclassification to assets held for sale At 30 June 2013 Impairment At 1 July 2012 charge in the year At 30 June 2013 Net book value field equipment and machinery £ 7,000 27,607 34,607 — 34,607 (4,666) (8,181) (12,847) (10,369) fixtures and fittings £ 28,649 — 28,649 — 28,649 (4,418) (8,078) (12,496) (8,078) Total £ 35,649 27,607 63,256 — 63,256 (9,084) (16,259) (25,343) (18,447) (23,216) (20,574) (43,790) 11,391 21,760 8,075 16,153 19,466 37,913 2013 £ 2012 £ 482 4,004,072 4,004,554 — — (4,004,072) 4,004,554 482 (482) (3,056,923) (3,057,405) 947,149 (482) — (482) — The company recognised an impairment loss of £3,056,923 in the income statement based on the value in use of four points Mining sAs. please refer to note 10 for further details. As at 30 June 2013, the company held interests in the following subsidiary companies: company American Gold Mines limited intrepid Resources limited four points Mining sAs (“fpM”)* Red Rock Australasia pty limited country of registration cayman islands Zambia colombia Australia class ordinary ordinary ordinary ordinary proportion held 100% 100% 50.002% 100% nature of business Holding company dormant Mineral exploration Mineral exploration * The company holds 50.002% of the share capital of four points Mining sAs (formerly “Mineras four points sA”) through its holding in American Gold Mines limited. in 2012, this was classified as held for sale as detailed further in note 8. www.RRRplc.coM Annual report and accounts 2013 | 51 12 Investments in associates and joint ventures Cost At 30 June 2012 Additions during the year Transferred from exploration assets Gain on dilution of interest disposals in the year Transfer to assets held for sale At 30 June 2013 Impairment At 30 June 2012 losses during the year impairment in the year At 30 June 2013 Net book amount Group 2013 £ 2012 £ company 2013 £ 2012 £ 5,989,757 1,799,205 5,850,855 1,672,507 3,183,502 3,183,502 2,914,950 2,914,950 — 1,263,398 — 1,263,398 12,204 — — — — (166,794) — (3,168,735) — 17,942 (166,794) (3,168,735) 5,855,672 5,989,757 5,698,828 5,850,855 (1,493,704) (326,240) — (823,473) (312,043) (358,188) (525,034) — — (166,846) — (358,188) (1,819,944) (1,493,704) (525,034) (525,034) 4,035,728 4,496,053 5,173,794 5,325,821 The company, at 30 June 2013, had holdings amounting to 20% or more of the issued share capital of the following companies which amounted to significant influence or joint control: company Red Rock Zambia limited* Resource star limited nAMA Greenland limited * financial information was not available for this company. country of incorporation class of shares held percentage of issued capital Zambia Australia england ordinary ordinary ordinary 28.40% 38.63% 60.00% Accounting year ended 30 June 2013 30 June 2013 30 november 2013 The company, at 30 June 2013, had significant influence by virtue other than shareholding over 20% over the following company: company country of incorporation class of shares held percentage of issued capital Accounting year ended Mid Migori Mining company limited kenya ordinary 15% 30 september 2012 summarised financial information for the company’s associates and joint ventures, where available, as at 30 June 2013 is given below: company Mid Migori Mining company limited Resource star limited nAMA Greenland limited Revenue £ loss £ Assets £ liabilities £ — (6,106) — (2,263,047) (13,189) — 2,851,638 79,468 5,853,879 (3,425,934) (252,366) (72,291) o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 52 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 12 Investments in associates and joint ventures continued Mid Migori Mining company limited £ Red Rock Zambia limited £ Resource star limited £ Arctic and equatorial drilling services limited £ nAMA Greenland limited £ Cost At 30 June 2012 Additions during the year disposals Transferred to assets held for sale Gain on dilution of interest 493,937 550,829 — — — 140,596 — — — — 1,597,903 9,993 — — 17,942 166,794 (166,794) 3,590,527 — 2,622,680 — — (3,168,735) — — Total £ 5,989,757 3,183,502 (166,794) (3,168,735) 17,942 At 30 June 2013 1,044,766 140,596 1,625,838 — 3,044,472 5,855,672 Impairment and losses during the year At 30 June 2012 Gains/(losses) during the year At 30 June 2013 Carrying amount At 30 June 2013 At 30 June 2012 (54,425) 915 (140,596) — (1,298,683) (327,155) (53,510) (140,596) (1,625,838) — — — — (1,493,704) — (326,240) — (1,819,944) 991,256 439,512 — — — — 3,044,472 4,035,728 299,220 166,794 3,590,527 4,496,053 Mid Migori Mining Company Limited The company owns 15% of the issued share capital of Mid Migori Mining company limited (“MMM”). The company has entered into an agreement whereby it manages and funds a number of MMM’s development projects and has representation on the MMM board. in accordance with iAs 28, the involvement with MMM meets the definition of significant influence and therefore has been accounted for as an associate (note 1.5). Red Rock Zambia Limited The book value of Red Rock Zambia limited was fully written off in previous years. Resource Star Limited during the year the company purchased 1,000,000 shares in Resource star limited taking the number of shares held to 46,908,553. Resource star limited also issued 7,583,390 shares in the year which the company did not take up; therefore its interest was diluted, recognising a gain of £17,942 (2012: 12,204) on dilution. in the application of the equity method, the associate’s loss exceeded the remaining net book value of the investment and therefore the investment’s value was reduced to £nil. The market value as at 30 June 2013 of the company’s investments in listed associates was as follows: Resource star limited 2013 £ 2012 £ 225,675 239,679 Arctic and Equatorial Drilling Services Limited Arctic and equatorial drilling services limited (“Arctic”) was incorporated in england in september 2011 principally as a drill equipment lessor in Greenland. The company had a 50% shareholding in Arctic, had board presence and had agreements over significant transactions with the investee. following the planned partial sale of the Group’s interest in nAMA Greenland, the primary purpose for which Arctic was created is no longer deemed necessary. Arctic never fully became operational and therefore the company disposed its interest in it. The previous cost of investment in Arctic is recoverable by the company from north Atlantic Mining Associates limited and is currently included within other receivables. NAMA Greenland Limited in consideration for funding the 2012 exploration programme of north Atlantic Mining Associates limited (“nAMA”), the company earned further shares in nAMA Greenland limited (“nGl”) bringing its interest up to 60% from 25%. The company continues to have a joint venture arrangement with nAMA making nGl a jointly controlled entity. The company is currently in the process of selling a portion of its interest in nGl. Having met the criteria of an asset held for sale and taking into consideration the principles of the amended iAs 28 in applying the appropriate accounting policy, the company applied ifRs 5 to the portion of its investment in the joint venture under offer. Hence, 51% of the cost of the company’s investment in nGl, £3,168,735, has been reclassified as an asset held for sale as at 30 June 2013. www.RRRplc.coM Annual report and accounts 2013 | 53 13 Available for sale financial assets opening balance Additions disposals Revaluations impairment of available for sale financial assets* Closing balance Group and company 2013 £ 2012 £ 8,809,866 200,000 (3,579,519) (2,229,255) (64,644) 24,472,120 2,743,907 (3,579,054) (14,110,502) (716,605) 3,136,448 8,809,866 * Total impairment charge for the year is £12,667,999. of this amount, £12,603,355 was transferred out from revaluation reserve account to the income statement. Market value of investments The market value as at 30 June 2013 of the company’s available for sale listed and unlisted investments was as follows: Quoted on london isdX and AiM Quoted on other foreign stock exchanges unquoted investments at cost** 2013 £ 2012 £ 132,795 2,534,208 2,667,003 469,445 395,650 7,912,736 8,308,386 501,480 3,136,448 8,809,866 ** no reliable information on the fair value of unlisted investments is available. As such, these investments are carried at cost which is deemed to be the best estimation of their fair value. 14 Other financial assets Fair value At 30 June 2012 fair value loss on re-measurement At 30 June 2013 Group and company 2013 £ 2012 £ 150,413 (150,413) 4,095,696 (3,945,283) — 150,413 in november 2010, the company made a loan to Ascot Mining plc (“Ascot”), convertible at the company’s discretion into 7,500,000 ordinary shares in Ascot. As part of the agreement, the company was granted warrants over 10,500,000 ordinary shares in Ascot, of which 1,000,000 were exercised in the prior years. in accordance with iAs 39 the convertible options and warrants will be held separately at fair value and re-measured at each reporting period. Any fair value gains or losses on re-measurement are taken to profit and loss. in accordance with iAs 39, the warrants and the convertible options will be held separately at fair value and re-measured at each reporting period. Any fair value gains or losses on re-measurement are taken to profit and loss. The re-measurement involves conducting a Black-scholes valuation which resulted in a loss for the year ended 30 June 2013 of £108,226 (2012: £3,945,283) due to the decline in the share price of Ascot from 7.5 pence at 30 June 2012 to 1.7 pence at 11 March 2013, after which date Ascot’s share trading was suspended. The company has decided to write off the resulting valuation of £42,187 due to the continued suspension of Ascot’s share trading. The losses were calculated as follows in the income statement: fair value as at 1 July 2012 Re-measurement to 30 June 2013 Total fair value loss in the income statement 2013 £ 2012 £ 150,413 — 4,095,696 (150,413) 150,413 3,945,283 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 54 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 15 Cash and cash equivalents Group cash in hand and at bank 30 June 2013 £ cash flow £ 30 June 2012 £ 21,081 (326,844) 347,925 for the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 30 June: cash in hand and at bank cash in hand and at bank attributable to asset held for sale (note 8) company cash in hand and at bank 16 Non-current receivables Amounts due from associates loan note 30 June 2013 £ 8,230 30 June 2013 £ 21,081 — 21,081 cash flow £ 30 June 2012 £ 347,925 4,913 352,838 30 June 2012 £ (338,286) 346,516 Group and company 2013 £ 2012 £ 6,334,534 150,000 5,905,944 — 6,484,534 5,905,944 included in non-current related party receivables is £4,481,389 (2012: £3,936,281) recoverable from Mid Migori Mining company limited under the terms of the joint venture, purchase and sale agreement entered into in August 2009 as detailed in note 27. The amount is unsecured and has no fixed repayment date. The loan note is receivable from north Atlantic Mining Associates limited on 30 september 2014 and bears an interest of 5% per annum payable at maturity. 17 Other receivables Current trade and other receivables prepayments Related party receivables: – due from subsidiaries – due from associates – due from key management other receivables Total Group 2013 £ 2012 £ company 2013 £ 2012 £ 584,185 196,000 280,552 196,000 — 49,098 10,022 2,306,110 — 1,248,653 49,098 10,022 2,103,360 449,230 8,066 975,604 — 449,230 8,066 972,194 2,949,415 1,628,900 3,691,685 1,625,490 included in other receivables is a loan due from Ascot Mining plc under the terms of the agreement detailed in note 14. The amortised cost of the loan at 30 June 2013 was £1,270,833 (2012: £1,184,028), less full impairment provision (2012: £592,014). Also included in other receivables is a loan of £1,629,198 (2012: £1,505,874 included within assets held for sale (note 8) due from Helm Bank panama in respect of the funding agreement as part of the acquisition of four points Mining sAs. The loan bears interest at 5% and was originally repayable in full on 30 June 2013. A revised repayment date is currently being negotiated. www.RRRplc.coM Annual report and accounts 2013 | 55 18 Trade and other payables Trade and other payables Accruals Related party payables: — due to associates — due to key management Trade and other payables short-term borrowings long-term borrowings Total Group 2013 £ 2012 £ company 2013 £ 2012 £ 3,628,074 436,229 1,063,550 430,481 2,607,629 436,229 1,059,917 427,904 437,839 26,416 32,838 — 437,839 26,416 32,838 — 4,528,558 5,602,840 10,131,398 245,588 1,526,869 1,209,730 2,736,599 2,293,000 3,508,113 2,557,013 1,520,659 1,209,730 6,065,126 2,730,389 — 2,293,000 10,376,986 5,029,599 6,065,126 5,023,389 YA Global Master SPV Limited A short-term loan of £1,600,359 (2012: £1,209,730) with YA Global Master spv limited remains outstanding as at the end of the year. Repayment of £662,631 was made after the year end. interest is charged on this loan at a rate of 9% per annum. The company has pledged 19,666,540 (2012: 29,666,540) of its shares in Jupiter Mines limited as security for this loan in addition to 17,900,000 shares in Regency Mines plc, 45,908,554 shares in Resource star limited and the entire issued share capital of American Gold Mines limited. Repayments are made either in cash or by issue of shares in the company in line with the terms of the agreement. After the year end, scheduled repayment of this borrowing was renegotiated extending it to november 2014. Cornhill Capital Limited A 24-month secured loan note of £2,293,000 was provided by cornhill capital limited in July 2011. interest is charged on this loan at a rate of 14% per annum payable semi-annually. As at 30 June 2013, the company has pledged 30,526,457 (2012: 44,526,457) of its shares in Jupiter Mines limited as security for this loan in addition to 384,394 warrants exercisable into new Red Rock shares at any time within two years of issue, subject to extension in certain circumstances. As at 30 June 2013, £956,654 of this loan was outstanding which was repaid fully after the year end. Helm Bank Panama upon the company’s acquisition of four points Mining sAs (“fpM”), a loan of us$3,500,000 was provided to fpM by Helm Bank panama under the terms of the secondary funding agreement, which formed part of the acquisition agreement of fpM. part of this funding was provided indirectly by the company via Helm Bank panama but, as each element has distinct terms, amounts are shown gross in trade and other receivables (2012: assets classified as held for sale) and within short-terms borrowings above (2012: liabilities directly associated with assets classified as held for sale). The loan bears interest at 5% and was originally repayable in full on 30 June 2013. As at 30 June 2013, this loan amounts to £2,302,553 (2012: £2,987,088). 19 Deferred tax The movement in the company’s and Group’s net deferred tax position is as follows: Group 2013 £ 2012 £ company 2013 £ 2012 £ deferred tax assets/(liabilities) as at 30 June 2012 deferred tax credit recognised in the statement of income deferred tax (charge)/credit recognised in the statement of comprehensive income Transferred from liabilities associated with assets held for sale Transferred to liabilities associated with assets held for sale 153,098 2,382,333 (2,323,323) (3,376,109) (8,770,449) 2,160,918 3,386,520 — — 3,376,109 1,981 2,321,342 (2,323,323) — — (5,333,349) 1,948,810 3,386,520 — — Deferred tax (liabilities)/assets as at 30 June 2013 (3,164,001) 153,098 — 1,981 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 56 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 19 Deferred tax continued The following are the major deferred tax liabilities and assets recognised by the Group and company and the movements thereon during the period: Group deferred tax (liabilities)/assets as at 30 June 2011 (charge)/credit to the statement of income for the year credit to the statement of comprehensive income for the year Transferred to liabilities associated with assets held for sale deferred tax (liabilities)/assets as at 30 June 2012 Transferred from liabilities associated with assets held for sale credit/(charge) to the statement of income for the year charge to the statement of comprehensive income for the year depreciation £ investments £ employee benefits £ Total £ (6,907) (2,192) (8,871,751) 2,260,239 — 3,386,520 — 3,376,109 (8,770,449) 108,209 2,160,918 (97,129) — 3,386,520 — 3,376,109 (9,099) 151,117 — (3,376,109) 2,384,314 — (2,323,323) 9,099 11,080 (11,080) 153,098 — (3,376,109) 2,382,333 — (2,323,323) Deferred tax liabilities as at 30 June 2013 — (3,164,001) — (3,164,001) company deferred tax (liabilities)/assets as at 30 June 2011 charge)/credit to the statement of income for the year credit to the statement of comprehensive income deferred tax (liabilities)/assets as at 30 June 2012 credit/(charge) to the statement of income for the year charge to the statement of comprehensive income depreciation £ investments £ employee benefits £ Total £ (6,907) (2,192) (5,434,651) 2,048,131 — 3,386,520 108,209 (97,129) (5,333,349) 1,948,810 — 3,386,520 (9,099) 9,099 — 2,323,323 — (2,323,323) 11,080 (11,080) 1,981 2,321,342 — (2,323,323) Deferred tax assets/(liabilities) as at 30 June 2013 — — — — 20 Share capital of the Company The authorised share capital and the called up and fully paid amounts were as follows: Authorised At incorporation on 8 september 2004 and as at 30 June 2013, ordinary shares of £0.001 each Called up, allotted and fully paid during the year As at 30 June 2012 issued 8 August 2012 at 1.9 pence per share issued 24 August 2012 at 2.0 pence per share issued 19 september 2012 at 1.7 pence per share issued 21 november 2012 at 1.0 pence per share issued 17 december 2012 at 1.0 pence per share issued 20 december 2012 at 1.1 pence per share issued 16 January 2013 at 1.0 pence per share issued 1 february 2013 at 1.1 pence per share issued 1 february 2013 at 1.0 pence per share issued 11 March 2013 at 0.9 pence per share issued 4 April 2013 at 0.8 pence per share issued 4 April 2013 at 0.6 pence per share issued 9 May 2013 at 0.4 pence per share As at 30 June 2013 number nominal £ 10,000,000,000 10,000,000 884,149,814 884,150 3,789,456 39,375,000 38,823,530 60,000,000 50,000,000 10,603,964 10,000,000 33,532,490 25,000,000 26,388,009 9,766,078 48,000,000 40,340,761 3,789 39,375 38,824 60,000 50,000 10,604 10,000 33,532 25,000 26,388 9,766 48,000 40,341 395,619,288 395,619 1,279,769,102 1,279,769 www.RRRplc.coM Annual report and accounts 2013 | 57 20 Share capital of the Company continued Capital management Management controls the capital of the Group in order to control risks, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets (note 23). There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. 21 Reserves Share premium The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs. Foreign currency translation reserve The translation reserve represents the exchange gains and losses that have arisen from the retranslation of overseas operations. Retained earnings Retained earnings represent the cumulative profit and loss net of distributions to owners. Available for sale trade investments reserve The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments. Associate investment reserve The associate investments reserve represents the cumulative share of gains and losses of associates recognised in the statement of other comprehensive income. Share-based payment reserve The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised. 22 Share-based payments Employee share options during the years ended 30 June 2007, 2009 and 2011, the company established employee share option plans to enable the issue of options as part of the remuneration of key management personnel and directors to enable them to purchase ordinary shares in the company. under the plan, the options were granted for no consideration; they were granted for the periods specified and vested immediately, other than those issued for 2.4226 pence which carry other vesting conditions. options granted under the plans carry no dividend or voting rights. under ifRs 2 “share-based payments”, the company determines the fair value of the options issued to directors and employees as remuneration and recognises the amount as an expense in the statement of income with a corresponding increase in equity. The expense was charged in full during the years ended 30 June 2007, 2009 and 2011. The expense was charged in full during the years ended 30 June 2007, 2009 and 2011. in January 2013, the Board authorised options over 39,000,000 of the company’s ordinary shares. The options were to have an exercise period of two years from date of grant, expirations between 1 June 2016 and 1 June 2019, and strike prices between £0.02 and £0.05. of the total, 15,000,000 options were authorised for issue to executive directors and 7,000,000 options to non-executive directors. The remaining 17,000,000 were to be issued at the Board’s discretion to key staff and project managers. These remained unissued at year end. After the year end, all 39,000,000 options were cancelled as the directors determined that this would be in the best interests of the shareholders to avoid further dilution of shares. Management notes that the expense relating to these options of approximately £53,000 had not been recorded due to their subsequent cancellation and the value was not deemed material. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 58 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 22 Share-based payments continued Employee share options continued The company has outstanding options to subscribe for ordinary shares as follows: A R M Bell M c nott J watkins M G R Yannaghas employees Total options issued 3 June 2009 exercisable at 1.1 pence per share expiring 3 June 2014 number 10,000,000 — — — — options issued 22 september 2010 exercisable at 3.2 pence per share expiring 21 september 2015 number options issued 22 september 2010 exercisable at 2.4226 pence per share expiring 21 september 2015 number Total number 3,250,000 2,000,000 1,000,000 1,000,000 3,000,000 — 13,250,000 — 2,000,000 — 1,000,000 5,000,000 — 3,000,000 4,000,000 10,000,000 10,250,000 4,000,000 24,250,000 The fair value of the above share options as expensed in 2013 is £10,219 (2012: £104,434). outstanding at the beginning of the period exercised expired Outstanding at the end of the end of the period Exercisable at the end of the period company and Group 2013 2012 Number of options 24,250,000 — — 24,250,000 24,250,000 Weighted average exercise price pence number of options 2.21 29,500,000 — (1,150,000) — (4,100,000) 2.21 24,250,000 2.21 24,250,000 weighted average exercise price pence 2.43 3.50 3.48 2.21 2.21 The options outstanding at 30 June 2013 have an exercise price of between 1.1 pence and 3.2 pence and a weighted average contractual life of 1.69 years. during the financial year no options were exercised (2012: 1,150,000). The weighted average share price on the date of exercise in prior year is 3.62 pence. during the financial year no options expired (2012: 4,100,000) due to expiry date or other vesting conditions not being met. The share options granted in January 2013 and subsequently cancelled after the year end are not included in the table above due to immateriality. The fair value of services received in return for options granted is measured by reference to the fair value of options granted. The estimate of the fair value of the services received is measured based on the Black-scholes option-pricing model. The contractual life of the options is used as an input into the model. The model assumes that an option is only capable of exercise at expiry. 3 June 2009 22 september 2010 22 september 2010 fair value per option pence 0.46 1.60 1.85 exercise price pence 1.1 3.2 2.4226 price of shares on grant pence 0.98 3.20 3.20 estimated volatility % 50 50 50 Risk free interest % 2.76 1.84 1.84 dividend % — — — The expected volatility is based on the historic volatility of the company and peer group entities (calculated on the weighted average remaining life of the share options), adjusted for any expected changes to volatility due to publicly available information and other factors indicating that expected future volatility might differ from past volatility. Risk free interest rates are based on five year government bonds. www.RRRplc.coM Annual report and accounts 2013 | 59 22 Share-based payments continued Share Incentive Plan The company implements a tax efficient share incentive plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including directors, who have served for three months or more at the time of issue. The terms of the plan provide for: » each employee to be given the right to subscribe any amount up to £125 per month with Trustees who invest the monies in the company’s shares; » the company to match the employee’s investment by contributing an amount equal to double the employee’s investment (“matching shares”); and » the company to award free shares to a maximum of £3,000 per annum. The subscriptions remain free of taxation and national insurance if held for five years. The fair value of services provided is recognised as an expense in the income statement at grant date and is determined indirectly by reference to the fair value of the free and matching shares granted. fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date. during the financial year, a total of 13,835,876 free and matching shares were awarded with fair values of 1.9 and 0.775 pence, resulting in a share-based payment charge of £122,067 in the income statement. 23 Financial instruments 23.1 Categories of financial instruments The Group and company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables and trade payables. The totals for each category of financial instrument, measured in accordance with iAs 39 as detailed in the accounting policies, are as follows: Group 30 June 2013 Non-current financial assets Available for sale financial assets non-current receivables Current financial assets Trade and other receivables Assets classified as held for sale cash and cash equivalents other non-financial assets Total assets Available for sale £ loans and receivables £ other non-financial assets £ Total £ 3,136,448 — — 6,484,534 — 3,136,448 — 6,484,534 — 2,365,230 — — 584,185 — 3,168,735 — 21,081 2,949,415 3,168,735 21,081 3,136,448 8,870,845 3,752,920 15,760,213 — — 12,209,253 12,209,253 3,136,448 8,870,845 15,962,173 27,969,466 The carrying value of non-current financial assets in the company equals that of the Group. The carrying value of current financial assets in the company is higher than that of the Group by £1,033,052 due to the company’s receivable from the group offset by additional receivables and cash deposits in subsidiary companies. Group 30 June 2013 Non-current financial liabilities long-term borrowings Current financial liabilities Trade and other payables short-term borrowings Total financial liabilities other non-financial liabilities Total liabilities The carrying value of non-current financial liabilities in the company equals that of the Group. other financial liabilities at amortised cost £ other non-financial liabilities £ Total £ (245,588) — (245,588) (4,092,329) (5,602,840) (436,229) (4,528,558) — (5,602,840) (9,940,757) (436,229) (10,376,986) — (3,164,001) (3,164,001) (9,940,757) (3,600,230) (13,540,987) o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 60 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 23 Financial instruments continued 23.1 Categories of financial instruments continued The carrying value of current financial liabilities in the company is less than that of the Group by £4,066,268 due to additional trade and other payables in subsidiary companies. Group 30 June 2012 Non-current financial assets Available for sale financial assets non-current receivables other financial assets Current financial assets Trade and other receivables Assets classified as held for sale cash and cash equivalents other non-financial assets Total assets Assets at fair value through profit or loss designated upon initial recognition £ Available for sale £ loans and receivables £ other non-financial assets £ Total £ — 8,809,866 — 150,413 — — 5,905,944 — — — 8,809,866 — 5,905,944 — 150,413 — — — — 1,432,900 — 2,004,876 347,925 — 196,000 13,382,926 — 1,628,900 15,387,802 347,925 150,413 8,809,866 9,691,645 13,578,926 32,230,850 — — — 4,906,875 4,906,875 150,413 8,809,866 9,691,645 18,485,801 37,137,725 The carrying value of non-current financial assets in the company equals that of the Group. The carrying value of current financial assets in the company is lower than that of the Group by £45,397 due to additional receivables and cash deposits in subsidiary companies. Group 30 June 2012 Non-current financial liabilities long-term borrowings Current financial liabilities Trade and other payables liabilities directly associated with assets held for sale short-term borrowings Total liabilities other financial liabilities at amortised cost £ other non-financial liabilities £ Total £ (2,293,000) — (2,293,000) (1,096,388) (4,330,197) (1,209,730) (430,481) (3,376,109) (1,526,869) (7,706,306) — (1,209,730) (8,929,315) (3,806,590) (12,735,905) The carrying value of non-current financial liabilities in the company equals that of the Group. The carrying value of current financial liabilities in the company is less than that of the Group by £4,333,830 due to liabilities directly associated with a subsidiary classified as disposal group held for sale and additional trade and other payables in subsidiary companies. 23.2 Fair values The carrying amount of the company’s financial assets and liabilities is not materially different to their fair value. fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. where a quoted price in an active market is available, the fair value is based on the quoted price at the end of the reporting period. in the absence of a quoted price in an active market, the Group determines fair value using a valuation technique that makes use of observable market inputs. Trade receivables, cash and cash equivalents, trade payables and borrowings The carrying amount is considered to be not materially different to its fair value. The fair value of loans and borrowings has been estimated by calculating present values at the reporting date, using fixed effective interest rates. www.RRRplc.coM Annual report and accounts 2013 | 61 23 Financial instruments continued 23.2 Fair values continued Available for sale and other financial assets The following table presents the other financial assets measured at fair value in the statement of financial position in accordance with the fair value hierarchy required by ifRs 7. The fair value hierarchy has the following levels: » level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; » level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and » level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows: Group and Company 30 June 2013 Available for sale financial assets – at market price (i) liabilities measured at fair value (iii) Group and company 30 June 2012 Available for sale financial assets – at market price (i) other financial assets (ii) liabilities measured at fair value (iii) level 1 £ 2,667,003 — level 1 £ level 2 £ — — level 2 £ level 3 £ Total £ — 2,667,003 376,884 376,884 level 3 £ Total £ 8,308,386 — — — 150,413 — — 8,308,386 — 150,413 358,900 358,900 (i) Available for sale assets at market price All listed equity securities have been issued by publicly traded companies, in the uk and other foreign markets. fair values for these securities have been determined by reference to their quoted bid prices at the reporting date. (ii) Other financial assets The fair value of other financial assets, which are share options and warrants, are estimated using a valuation technique. All significant inputs are based on observable market prices such as market rates of interest and volatility of past share price. Available for sale assets at cost As at 30 June 2013, £469,445 of the Group’s available for sale financial assets (2012: £501,480) are valued at cost due to the fact they are unlisted and no such data is available. These consist mainly of the company’s investment in kansai Mining corporation representing the company’s additional indirect holding in its kenyan associate, Mid Migori limited. There is currently no intention to dispose of this investment in the foreseeable future. The financial instruments can be reconciled from beginning to ending balances as follows: Available for sale financial assets Group and company Brought forward purchases impairment carried forward unlisted investments at cost 2013 £ 501,480 — (32,035) 2012 £ 312,933 188,547 — 469,445 501,480 (iii) Liabilities measured at fair value financial instruments, classified in level 3, use valuation techniques based on inputs that are not based on observable market data. it consists of deferred consideration on a previous acquisition of a subsidiary. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 62 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 23 Financial instruments continued 23.3 Financial risk management policies The directors monitor the Group’s financial risk management policies and exposures and approve financial transactions. The directors’ overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. its functions include the review of credit risk policies and future cash flow requirements. Specific financial risk exposures and management The main risks the Group is exposed to through its financial instruments are credit risk and market risk consisting of interest rate risk, liquidity risk, equity price risk and foreign exchange risk. Credit risk exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group. credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and counterparties to transactions are of sound creditworthiness. such monitoring is used in assessing receivables for impairment. Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the directors have otherwise cleared as being financially sound. other receivables which are neither past due nor impaired are considered to be of high credit quality. There are no amounts of collateral held as security in respect of trade and other receivables. The consolidated Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated Group. The Group has pledged 50,192,997 (2012: 74,192,997) of its shares in Jupiter Mines limited as security for two (2012: two) of its borrowings (see note 18). Liquidity risk liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms: » monitoring undrawn credit facilities; » obtaining funding from a variety of sources; and » maintaining a reputable credit profile. The directors are confident that adequate resources exist to finance operations for commercial exploration and controls over expenditure are carefully managed. As at 30 June 2013, the Group’s non-derivative financial liabilities of £10,376,984 have contractual maturities of less than six months. After the year end, scheduled repayment of £1,600,359 of the company’s short-term borrowings was renegotiated. The Group’s non-derivative financial liabilities now have contractual maturities of 0-6 months (£8,208,719), 7-12 months (£1,332,976), 1-2 years (£624,897) and 2-5 years (£210,392). Management intend to meet obligations as they become due through the sale of assets, the issuance of new shares, the collection of debts owed to the company and the drawing of additional credit facilities. www.RRRplc.coM Annual report and accounts 2013 | 63 23 Financial instruments continued 23.3 Financial risk management policies continued Market risk Interest rate risk The company is not exposed to any material interest rate risk. Equity price risk price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities, but also include political, economic, social, technical, environmental and regulatory factors. The Group’s exposure to price risk on listed investments is as follows: Group and company change in profit: – increase in listed investments by 10% – decrease in listed investments by 10% change in equity: – increase in listed investments by 10% – decrease in listed investments by 10% 2013 £ — — 2012 £ — — 269,900 (269,900) 830,839 (830,839) Foreign currency risk The Groups transactions are carried out in a variety of currencies, including sterling, Australian dollar, colombian peso, us dollar, kenyan shilling, canadian dollar and danish krone. To mitigate the Group’s exposure to foreign currency risk, non-sterling cash flows are monitored. The Group does not enter into forward exchange contracts to mitigate the exposure to foreign currency risk as amounts paid and received in specific currencies are expected to largely offset one another and the currencies most widely traded in are relatively stable. The directors consider the balances most susceptible to foreign currency movements to be the available for sale financial assets. These assets are denominated in the following currencies: Group and Company 30 June 2013 Available for sale investments Group and company 30 June 2012 Available for sale investments GBp £ Aud £ Total £ 602,240 2,534,208 3,136,448 GBp £ Aud £ Total £ 897,130 7,912,736 8,809,866 The following table illustrates the sensitivity of the value of investments in regards to the relative sterling and Australian dollar, and sterling and canadian dollar exchange rates. it assumes a +/-7% (2012: +/-10%) change in the Aud/GBp exchange rate for the year ended 30 June 2013. These percentages have been based on the average market volatility in exchange rates in the previous twelve months. Impact on available for sale financial assets 7% /10% increase in Aud fx rate against GBp 7% /10% decrease in Aud fx rate against GBp 2013 £ 2012 £ 177,395 (177,395) 791,274 (791,274) exposures to foreign exchange rates vary during the year depending on the volume and nature of overseas transactions. nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 64 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 24 Significant agreements and transactions The following are the significant agreements and transactions recently undertaken having an impact in the year under review and for the period to 28 november 2013. for the sake of completeness and of clarity, some events after the reporting period are included here and in note 26 on pages 66 to 67. North Atlantic Mining Associates Limited (“NAMA”) » on 28 november 2012, the company announced that it had received an offer (subject to due diligence and contract, and any necessary Red Rock shareholder consent) from international Media projects ltd., a private British virgin island based company, on behalf of its industrial partner, to acquire 51% of the outstanding share capital of the company’s joint venture, nAMA Greenland ltd (“nGl”), which holds direct ownership of the Melville Bugt iron ore project in Greenland (“offer”). The offer letter was accepted by Red Rock on 27 november 2012. A condition precedent of the offer requires the company to announce a mineral resource estimate upon completion of the project’s 2012 exploration programme for the company to be issued an additional 35% of nGl to bring its total holding to 60%. » on 19 december 2012, the company announced a JoRc Mineral Resource estimate on the project, satisfying the terms of its farm-in and earning the additional 35% shares in nGl. » The company received its additional 35% shareholding in nGl in february 2013 bringing its interest up to 60%. Jupiter Mines Limited » The company sold 50% of its 1.5% gross production royalty over any production from the Mt ida iron ore project (“project”) to Argo Royalties pty ltd, a member of the Anglo pacific Group plc (“Anglo pacific”). The company received a first tranche payment of us$6,000,000 (£3,686,211) 0.3% of the Gross Revenue iron ore Royalty (“GRR”) upon signing of the contract in April 2012 with the next tranches dependent upon certain progress stages. on 8 november 2012, Jupiter Mines limited announced a freeze on expenditure on the project, reflecting the increased cost environment and weak iron ore prices. JMs is evaluating the work done to date to optimise both project capital and operational expenditure strategies. The remaining tranches of the acquisition total us$8,000,000 and will be paid as follows: Tranche 2: us$4,000,000 payment for a further 0.225% GRR following the results of a positive definitive feasibility study (“dfs”), a formal decision to mine and that 20% of the pre-production capital costs outlined in the dfs are provided for; and Tranche 3: us$4,000,000 for a further 0.225% GRR following the commencement of commercial production, taking the total to 0.75% GRR. Four Points Mining SAS » on 17 July 2012, the Group publicly announced the proposed disposal of interest in four points Mining sAs (“fpM”). The company received a proposal from Ashmont Resources corporation (“Ashmont”), a private canadian company, in May 2012 to acquire the company’s wholly owned subsidiary, American Gold Mines ltd, which holds 50.002% interest in fpM. since due diligence was completed in september 2012, there has been no further progress on the sale terms. The company is focussing its efforts into improving the operating efficiencies at the mine and will attempt to prove up a gold resource with a view to maximising the value of any future potential sale. Cornhill Capital Limited » certain shares in Jupiter Mines limited (“JMs”) have been pledged as collateral for repayment of a 24 month secured loan note with cornhill capital limited (the “secured loan notes 2013”) together with interest thereon and any future sales of JMs shares will be subject to maintenance of minimum security covenants. The secured loan notes 2013 bear an annualised coupon of 14% payable semi-annually. cornhill has been issued with 384,394 warrants with an exercise price of £0.10406 per share, representing 2% of the principal amount of the issued secured loan notes 2013 in addition to a cash commission. These warrants may be exercised into new Red Rock ordinary shares at any time within two years of issue, subject to extension in certain circumstances. » on 10 october 2012, 14,000,000 of the pledged shares in JMs were sold for Aud0.11 per share raising net proceeds of Aud1,532,300. These funds were initially placed in an escrow account as collateral against the outstanding loan. in January 2013, the escrow account was applied to loan repayment. » The outstanding loan as at 30 June 2013 of £957,000 was fully paid in July 2013 following the sale of Jupiter Mines ltd shares. SEDA-backed loan » in July and August 2012, the company received us$1.4 million (£898k) representing remaining tranches of a sedA-backed loan for a total sum of us$3.3 million that the company entered into with YA Global Master spv in June 2012. 17,900,000 ordinary shares in the capital of Regency Mines plc and 45,908,554 ordinary shares in the capital of Resource star limited were pledged in relation to this loan. Share Incentive Plan » on 8 August 2012, the company issued 3,789,456 free shares under the company’s share incentive plan with reference to mid-market price of 1.9 pence on 3 August 2012. » on 3 April 2013, 129,032 free shares and 9,917,388 partnership and Matching shares, being a total of 10,046,420 shares have been awarded to employees under the company’s share incentive plan at mid-market closing price of 0.775 pence on 28 March 2013. The company was only required to issue 9,766,078 new shares as the sip Trustees held in trust certain shares which had previously been issued and admitted to trading and retained in the pool following employee departures before vesting. www.RRRplc.coM Annual report and accounts 2013 | 65 24 Significant agreements and transactions continued Share options » in January 2013, the Board authorised options over 39,000,000 of the company’s ordinary shares. The options were to have an exercise period of two years from date of grant, expirations between 1 June 2016 and 1 June 2019, and strike prices between £0.02 and £0.05. of the total, 15,000,000 options were authorised for issue to executive directors and 7,000,000 options to non-executive directors. The remaining 17,000,000 were to be issued at the Board’s discretion to key staff and project managers. These remained unissued at year end. After the year end, all 39,000,000 options were cancelled as the directors determined that this would be in the best interests of the shareholders to avoid further dilution of shares. YA Global Master SPV Limited (“YAGM”) » in August 2012 the company entered into new funding arrangements with YAGM whereby 37,500,000 ordinary shares in the company were subscribed for at a price of £0.02 per share for a total cash consideration of £750,500. separately, YAGM and the company have entered into an equity swap agreement (the “equity swap”) over a notional 37,500,000 shares in the company (this does not involve the issue of new shares). under the terms of the equity swap upon each of six monthly settlement dates the prevailing market price of the company’s shares, discounted by 10%, will be compared to a benchmark price of £0.02 per share (the “Benchmark price”). if the discounted market price exceeds the Benchmark price then a payment is made to the company by YAGM, with the overall payment depending on the amount by which the discounted market price exceeds the Benchmark price. if the discounted market price is less than the Benchmark price then the company will owe a payment to YAGM, with the size of such payment depending on the amount by which the discounted market price falls short of the Benchmark price. in order to satisfy any such payments under the equity swap, the company has deposited £625,000 in an escrow account. A portion of the escrowed funds was released to the company on each monthly settlement date after first deducting any payments that may be owed to YAGM. The swap was settled fully in december 2012 resulting in accounting losses of £308,750. » in January 2013, the company entered into another equity swap over a notional 20,642,199 shares. under the terms of the equity swap upon each of three monthly settlement dates starting in december 2013 the prevailing market price of the company’s shares will be compared to a benchmark price of £0.0109 per share. The swap was pre-terminated and settled fully in June 2013 resulting in accounting losses of £142,431. » equity swaps were entered into by the company to manage dilution of existing shareholders while managing liquidity risk. entering into the equity swaps allowed the company to issue shares at a premium, without the normal costs associated with market issuances. The swap arrangement locks in the number of shares thereby limiting dilution at the expense of potentially incurring losses in the event of a downward price movement. conversely, in a rising market, the equity swap would allow the company to share some of the upside in share performance over a period of time, rather than locking in what might be a much lower price. 25 Related party transactions » on 1 July 2006, the company agreed with Regency Mines plc, a company of which the directors Andrew Bell and John watkins are also directors, to enter into a sub-licence agreement and share the rental, service costs and other outgoings of an office including administrative staff at 115 eastbourne Mews, london w2 6lQ with Regency Mines plc and Greatland Gold plc, companies of which Andrew Bell and John watkins are also directors. The companies moved out of 115 eastbourne Mews on 11 May 2013, although rent was paid until 2 July 2013. on 5 April 2013, Red Rock Resources plc, Regency Mines plc and Greatland Gold plc entered into a joint lease at ivybridge House, 1 Adam street, london wc2n 6le. The total cost to the company during the year was £154,436 (2012: £137,399), of which £40,955 represented the company’s share of the office rent and the balance services provided (2012: £29,250). » in addition, professional staff employed by Regency Mines plc are sub-contracted to the company to work on specific assignments as necessary. during the year, the total charge before the addition of vAT was £349,964 (2012: £618,004). » The company’s staff are also sub-contracted to Regency Mines plc to work on specific assignments as necessary. during the year, staff costs of £67,917 (2012: £27,212) were recharged to Regency Mines plc. such charges are offset against administration expenses in the income statement. » The costs incurred on behalf of the company by Regency Mines plc are invoiced at each month end and settled as soon as may be possible. By agreement, the company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charge for the year was £9,115 (2012: £11,078). » The company provides technical support to fpM in order to increase production at the el limon mine facility for a fee payable quarterly in arrears. during the year, the company recorded £754,114 fee revenue (2012: £602,782). This revenue is eliminated in the consolidated income statement. As at 30 June 2013, fpM owes the company technical fees of £1,248,653 (2012: £458,424 included within assets classified as held for sale (note 8)). o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 66 | Red Rock ResouRces plc Annual report and accounts 2013 Notes to the financial statements continued for the year ended 30 June 2013 25 Related party transactions continued » Resource star limited, an associate, provides professional services to the company. Total fee charged during the year is £87,448 (2012: £174,860). of this amount, £87,448 is outstanding as at 30 June 2013 and is included in trade and other payables (2012: £32,838). » Related party receivables and payables are disclosed in notes 16 to 17 and 18, respectively. » The company held 33,900,000 shares in Regency Mines plc as at 30 June 2013 and 33,900,000 as at 31 october 2013. » The key management personnel are the directors and their remuneration is disclosed within note 7. 26 Events after the reporting period Board change » on 2 July 2013 the company announced that Manoli Yannaghas, who previously served as an executive director, has assumed the position of a non-executive director. Jupiter Mines Limited » on 5 July 2013 the company announced the sale of 40,526,457 Jupiter shares for gross proceeds of Aud2.8 million, bringing the company’s shareholding in Jupiter down to 19,674,375 shares (0.86% of the issued capital of JMs at the time of sale). part of the proceeds was used towards full repayment of debt to cornhill capital. » on 3 october 2013 Jupiter has announced that its directors have applied to the AsX to delist, and subject to AsX approval and any conditions that may be imposed, will seek a shareholder resolution in favour of delisting, with delisting one month after that resolution is passed. The principal reasons for delisting are the limited marketability and trading in Jupiter stock, and the lack of any price response to the transformation of Jupiter from an explorer into a significant manganese producer with a production history, and transport and marketing contracts in place. Jupiter has successfully brought a major asset into production and as it now moves to maximise the perceived and perhaps the acquisition value of its underlying assets, the fact that the public market so significantly undervalues that and the other assets of Jupiter is a significant limiting factor. » on 14 november 2013 the company announced that cornhill capital ltd has secured a subscription for 45,000,000 ordinary shares of 0.1 pence each in the company by a long-term investor (the “investor”) at a price of 0.66p per share. The gross proceeds of the subscription are £297,000 conditional on the issue and allotment of the shares and on the shares being admitted to trading on AiM. The proceeds of the subscription are being applied towards the purchase from the investor of 8,000,000 Jupiter shares at a price of Aud 0.056 per share and a total cost of Aud 448,000 (£261,414 approximately). following the subscription the company’s holding in Jupiter will be 27,674,375 shares (1.21%). Resource Star Limited » on 1 August 2013 Rsl entered into a binding term sheet with searex petroleum (Bvi) limited (“searex”) for the acquisition of an oil project in Abilene, Texas, usA. under the term sheet Rsl will acquire from searex a 50% shareholding in d-Bar leasing inc. (“d-Bar”), which holds a 100% working interest in eight oil producing leases totalling 2,732 acres together with 10 acres of freehold land and buildings, drill rigs and other equipment. » The leases are reported to contain 96 wells, and d-Bar has recently completed reworking four existing wells at an average cost of usd55,000 per well. each re-worked well is in the 2800ft–3000ft depth range and is currently producing 15 Bopd. The rework programme is planned to cover the 80 producing wells, and d-Bar plans to expand production by additional drilling and by taking up an option of further acreage. » The purchase consideration will be 65 million new Rsl shares and Aud1 million cash, and a further 41,000 performance shares in Rsl. each performance share converts to 10,000 new Rsl shares subject to the achievement of production milestones by performance dates. Rsl will in addition assume certain payment obligations of searex. » The transaction is subject to the raising of a minimum usd5 million by way of high yield debenture notes, regulatory and Rsl shareholder approvals, and the completion of successful due diligence by Rsl. » on 17 october 2013 Rsl announced that following initial due diligence of the d-Bar leasing assets, it has elected not to proceed with the acquisition based on the current terms. Rsl is unable to satisfy itself that the overall projected production volumes could be achieved in the timelines necessary to generate the internal cash flow necessary to complete the work program or to meet the investment criteria required for the high yield notes as indicated by third parties. while the current term sheet is no longer binding, Rsl believes that investors are attracted to this deal and that a well-structured equity raising program could easily generate sufficient working capital to help the d-Bar project achieve its goals. Rsl has expressed its willingness to continue negotiations with the vendors. www.RRRplc.coM Annual report and accounts 2013 | 67 26 Events after the reporting period continued Convertible loan note » on 8 August 2013 the company issued an unsecured convertible loan note of £275,000 to YAGM. The notes yield 10% per annum and are convertible into ordinary shares at the option of YAGM until 8 August 2014, after which the loan notes become repayable. The price of conversion will be determined by a formula equal to 97% of the six lowest daily volume weighted average prices during twelve consecutive trading days beginning on the first trading day immediately following the delivery of a notice of conversion by a bondholder. » on 27 August 2013 YAGM has converted £275,000 in unsecured convertible Bonds 2014 into 44,212,219 ordinary shares of 0.1 pence each in the company under the terms of the above convertible Bond instrument, at a price of £0.006220 per share. » on 18 september 2013 the company issued an unsecured convertible loan note of £300,000 to YAGM. The notes yield 10% per annum and are convertible into ordinary shares for up to one year. The price of conversion will be determined by a formula equal to 97% of the six lowest daily volume weighted average prices during twelve consecutive trading days beginning on the first trading day immediately following the delivery of a notice of conversion by the bondholder. The notes fall for repayment on 18 september 2014 if not previously converted. » on 9 october 2013 YAGM has converted £261,311.44 in unsecured convertible Bonds 2014 into 27,454,448 ordinary shares of 0.1 pence each in the company under the terms of the convertible Bond instrument as announced on 18 september 2013, at a price of £0.009518 per share. » on 21 november 2013 the company issued an unsecured convertible loan note of £500,000 to YAGM. The notes yield 10% per annum, and are convertible into ordinary shares for up to one year. The price of conversion will be determined by a formula equal to 97% of the six lowest daily volume weighted average prices during twelve consecutive trading days beginning on the first trading day immediately following the delivery of a notice of conversion by the bondholder with a price cap of 1 pence. The notes fall for repayment on 19 november 2014 if not previously converted. Share options » on 27 August 2013 the company announced that it will not issue 17,000,000 in options that were to be granted at the Board’s discretion to key staff and personnel. Additionally, 19,000,000 options that were granted to company’s executive and non-executive directors have also been waived by the grantees. Issue of new shares » on 8 August 2013 the company issued 54,134,776 new ordinary shares at 0.645 pence per share for a total consideration of £349,169. Annual General Meeting The company intends to issue a notice of Annual General Meeting of shareholders to be held on 30 december 2013 for the purpose of dealing with the usual business applicable at such a meeting. 27 Commitments As at 30 June 2013, the company had entered into the following commitments: » exploration commitments: ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits. no provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of the operations of the Group. » under the terms of the joint venture, purchase and sale agreement entered into in August 2009 between the company and kansai Mining corporation limited, the company is required to act as manager of the tenements held by Mid Migori Mining company limited in kenya, pay the costs of exploration and other costs except for the costs of licence renewal and rents, and keep the tenements in good standing. » on 5 April 2013, Red Rock Resources plc entered into a joint lease agreement with Regency Mines plc and Greatland Gold plc at ivybridge House, 1 Adam street, london wc2n 6le. The lease is non-cancellable until 1 december 2014. future minimum annual rental and service charges payable by the company is £54,390. 28 Control There is considered to be no controlling party. whereas Regency Mines plc originally held a controlling interest, this was reduced to below 50% during the year to 30 June 2007, since when it has been progressively reduced to 11.39% as at 30 June 2013 and reduced further to 10.37% as at 28 november 2013. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 68 | Red Rock ResouRces plc Annual report and accounts 2013 Notice of Annual General Meeting notice is hereby given that the Annual General Meeting of Red Rock Resources plc (the “company”) will be held at Grant Thornton uk llp, 30 finsbury square, london ec2p 2Yu on 30 december 2013 at 11.00am for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed as ordinary resolutions in the cases of resolutions 1–5 and as a special resolution in the case of resolution 6. Ordinary business Ordinary resolutions 1. To receive the report of the directors and the audited financial statements of the company for the year ended 30 June 2013. 2. To re-elect Andrew Bell as a director of the company, who retires by rotation under the Articles of Association of the company and, being eligible, offers himself for re-election. 3. To re-elect Michael nott as a director of the company, who retires by rotation under the Articles of Association of the company and, being eligible, offers himself for re-election. 4. To re-appoint Grant Thornton uk llp as auditors of the company to act until the conclusion of the next Annual General Meeting and to authorise the directors to determine the remuneration of the auditor. 5. That in substitution for all existing and unexercised authorities, the directors of the company be and they are hereby generally and unconditionally authorised for the purpose of section 551 of the companies Act 2006 (“the Act”) to exercise all or any of the powers of the company to allot equity securities (within the meaning of section 560 of the Act) up to a maximum nominal amount of £650,000 provided that this authority shall, unless previously revoked or varied by the company in general meeting, expire on the earlier of the conclusion of the next Annual General Meeting of the company or 15 months after the passing of this resolution, unless renewed or extended prior to such time except that the directors of the company may before the expiry of such period make an offer or agreement which would or might require relevant securities to be allotted after the expiry of such period and the directors of the company may allot relevant securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired. Special resolution 6. That in substitution for all existing and unexercised authorities and subject to the passing of the immediately preceding resolution, the directors of the company be and they are hereby empowered pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of the Act) pursuant to the authority conferred upon them by the preceding resolution as if section 561(1) of the Act did not apply to any such allotment provided that the power conferred by the resolution, unless previously revoked or varied by special resolution of the company in general meeting, shall be limited: (a) to the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders where the equity securities respectively attributable to the interest of all such shareholders are proportionate (as nearly as may be) to the respective numbers of the ordinary shares held by them subject only to such exclusions or other arrangements as the directors of the company may consider appropriate to deal with fractional entitlements or legal and practical difficulties under the laws of, or the requirements of any recognised regulatory body in, any territory; (b) the grant of a right to subscribe for, or to convert any equity securities into ordinary shares otherwise than under sub-paragraph (a) above, up to a maximum aggregate nominal amount of £200,000; and www.RRRplc.coM Annual report and accounts 2013 | 69 Ordinary business continued Special resolution continued (c) to the allotment (otherwise than pursuant to sub-paragraphs (a) and (b) above) of equity securities up to an aggregate nominal amount of £400,000 in respect of any other issues for cash consideration, and shall expire on the earlier of the date of the next Annual General Meeting of the company or 15 months from the date of the passing of this resolution save that the company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired. if you are a registered holder of ordinary shares in the company, whether or not you are able to attend the meeting, you may use the enclosed form of proxy to appoint one or more persons to attend and vote on a poll on your behalf. A proxy need not be a member of the company. A form of proxy is provided. This may be sent by facsimile transfer to 01252 719 232 or by mail using the reply paid card to: The company secretary Red Rock Resources plc c/o share Registrars limited suite e, first floor 9 lion and lamb Yard farnham, surrey Gu9 7ll in either case, the signed proxy must be received no later than 48 hours (excluding non-business days) before the time of the meeting, or any adjournment thereof. Registered office: Third floor 55 Gower street london wc1e 6HQ Registered in england and wales number: 5225394 By order of the Board Stephen Ronaldson Company Secretary 28 November 2013 o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 70 | Red Rock ResouRces plc Annual report and accounts 2013 Notice of Annual General Meeting continued Notes to the Notice of Annual General Meeting Entitlement to attend and vote 1. pursuant to Regulation 41 of the uncertificated securities Regulations 2001 and paragraph 18(c) of the companies Act 2006 (consequential Amendments) (uncertificated securities) order 2009, the company specifies that only those members registered on the company’s register of members 48 hours before the time of the Meeting shall be entitled to attend and vote at the Meeting. in calculating the period of 48 hours mentioned above no account shall be taken of any part of a day that is not a working day. Appointment of proxies 2. if you are a member of the company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. 3. A proxy does not need to be a member of the company but must attend the Meeting to represent you. details of how to appoint the chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. if you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the chairman) and give your instructions directly to them. 4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the registrars of the company, share Registrars limited on 01252 821 390. 5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. if no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. Appointment of proxy using hard copy proxy form 6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using the proxy form, the form must be: » » completed and signed; sent or delivered to share Registrars limited at suite e, first floor, 9 lion and lamb Yard, farnham, surrey Gu9 7ll or by facsimile transmission to 01252 719 232; and » received by share Registrars limited no later than 48 hours (excluding non-business days) prior to the Meeting. in the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form. Appointment of proxy by joint members 7. in the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. seniority is determined by the order in which the names of the joint holders appear in the company’s register of members in respect of the joint holding (the first-named being the most senior). Changing proxy instructions 8. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. note that the cut-off time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. where you have appointed a proxy using the hard copy proxy form and would like to change the instructions using another hard copy proxy form, please contact share Registrars limited on 01252 821 390. if you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. www.RRRplc.coM Annual report and accounts 2013 | 71 Notes to the Notice of Annual General Meeting continued Termination of proxy appointments 9. in order to revoke a proxy instruction you will need to inform the company using one of the following methods: By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to share Registrars limited at suite e, first floor, 9 lion and lamb Yard, farnham, surrey Gu9 7ll or by facsimile transmission to 01252 719 232. in the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. in either case, the revocation notice must be received by share Registrars limited no later than 48 hours (excluding non-business days) prior to the Meeting. if you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the Meeting and voting in person. if you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated. Issued shares and total voting rights 10. As at 28 november 2013, the company’s issued share capital comprised 1,405,570,545 ordinary shares of £0.001 each. each ordinary share carries the right to one vote at a general meeting of the company and, therefore, the total number of voting rights in the company as at 28 november 2013 is 1,405,570,545. Communications with the Company 11. except as provided above, members who have general queries about the Meeting should telephone Miss Rasa vaitkute on 020 7747 9990 (no other methods of communication will be accepted). You may not use any electronic address provided either in this notice of general meeting; or any related documents (including the chairman’s letter and proxy form), to communicate with the company for any purposes other than those expressly stated. CREST 12. cResT members who wish to appoint a proxy or proxies through the cResT electronic proxy appointment service may do so for the general meeting and any adjournment(s) thereof by using the procedures described in the cResT Manual. cResT personal Members or other cResT sponsored members, and those cResT members who have appointed a voting service provider(s) should refer to their cResT sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. in order for a proxy appointment or instruction made using the cResT service to be valid, the appropriate cResT message (a “cResT proxy instruction”) must be properly authenticated in accordance with euroclear uk & ireland limited’s specifications and must contain the information required for such instructions, as described in the cResT Manual (available via euroclear.com/cResT). The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (id: 7RA36) by the latest time(s) for receipt of proxy appointments specified above. for this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the cResT Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to cResT in the manner prescribed by cResT. After this time, any change of instructions to proxies appointed through cResT should be communicated to the appointee through other means. cResT members and, where applicable, their cResT sponsors or voting service providers should note that euroclear uk & ireland limited does not make available special procedures in cResT for any particular messages. normal system timings and limitations will therefore apply in relation to the input of cResT proxy instructions. it is the responsibility of the cResT member concerned to take (or, if the cResT member is a cResT personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her cResT sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of cResT by any particular time. in this connection, cResT members and, where applicable, their cResT sponsors or voting service providers are referred, in particular, to those sections of the cResT Manual concerning practical limitations of the cResT system and timings. The company may treat as invalid a cResT proxy instruction in the circumstances set out in Regulation 35(5)(a) of the uncertificated securities Regulations 2001. o v e R v i e w i B u s n e s s R e v i e w G o v e R n A n c e i f n A n c A l i s T A T e M e n T s 72 | Red Rock ResouRces plc Annual report and accounts 2013 Company information Broker SI Capital Limited 1 High street Godalming surrey Gu7 1AZ Beaufort Securities Ltd 131 finsbury pavement london ec2A 1nT Bankers Coutts & Co 440 strand london wc2R 0Qs Registrars Share Registrars Limited suite e, first floor 9 lion & lamb Yard farnham surrey Gu9 7ll 01252 821390 Registered number 05225394 Directors Andrew Bell executive chairman Manoli Yannaghas non-executive director James Ladner independent non-executive director Michael Nott non-executive director John Watkins non-executive director all of ivybridge House 1 Adam street london wc2n 6le 020 7747 9990 Secretary and Registered Office Stephen Ronaldson 55 Gower street london wc1e 6HQ Website www.rrrplc.com Auditor Grant Thornton UK LLP Grant Thornton House Melton street euston square london nw1 2ep Solicitors Ronaldsons LLP 55 Gower street london wc1e 6HQ Nominated adviser Grant Thornton UK LLP 30 finsbury square london ec2p 2Yu Accountants and tax advisers Baker Tilly Tax and Accounting Limited The clock House 140 london Road Guildford surrey Gu1 1uw Ivybridge House 1 Adam Street London WC2N 6LE www.rrrplc.com 

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