Red Rock Resorts
Annual Report 2021

Plain-text annual report

Registration Number: 05225394 Red Rock Resources Plc Annual Report and Accounts 2021 Red Rock Resources Plc Annual Report and Accounts 2021 1 STRATEGIC REPORT .................................................................................................................................................................... 3 COMPANY INFORMATION ..................................................................................................................................................................... 3 CHAIRMAN’S STATEMENT ..................................................................................................................................................................... 4 STRATEGIC REVIEW .............................................................................................................................................................................. 7 GOVERNANCE ........................................................................................................................................................................... 10 BOARD OF DIRECTORS ........................................................................................................................................................................ 10 DIRECTORS’ REPORT .......................................................................................................................................................................... 11 STATEMENT OF DIRECTORS’ RESPONSIBILITIES ........................................................................................................................................ 15 CORPORATE GOVERNANCE STATEMENT ................................................................................................................................................. 16 FINANCIAL STATEMENTS .......................................................................................................................................................... 19 INDEPENDENT AUDITOR’S REPORT........................................................................................................................................................ 19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................................................................... 24 CONSOLIDATED INCOME STATEMENT .................................................................................................................................................... 25 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY................................................................................................................................ 26 CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................................................................... 28 COMPANY STATEMENT OF FINANCIAL POSITION ...................................................................................................................................... 29 COMPANY STATEMENT OF CHANGES IN EQUITY ...................................................................................................................................... 30 COMPANY STATEMENT OF CASH FLOWS ................................................................................................................................................ 32 NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................................................. 33 Red Rock Resources Plc Annual Report and Accounts 2021 2 Strategic Report Company Information Directors Andrew Bell Scott Kaintz Alex Borrelli Sam Quinn Executive Chairman and CEO Director and CFO Independent Non-Executive Director Non-Executive Director all of: Red Rock Resources Plc 71-91 Aldwych House London WC2B 4HN Tel: 020 7747 9990 Company Secretary Stephen Ronaldson Company Number 05225394 Website www.rrrplc.com Registered Address Salisbury House London Wall London EC2M 5PS Company’s Solicitors Druces LLP Salisbury House London Wall London EC2M 5PS Nominated Adviser Beaumont Cornish Limited Building 3 566 Chiswick High Road London W4 5YA Broker First Equity Limited Salisbury House London Wall London EC2M 5QQ Auditors PKF Littlejohn LLP 15 Westferry Circus London E14 4HD Accountants Silvertree Partners LLP 3rd Floor, 14 Hanover Street London W1S 1YH Tax Advisers Cameron & Associates Ltd 35-37 Lowlands Road Harrow-on-the-Hill Middlesex HA1 3AW Registrars Share Registrars Limited Molex House, Millennium Centre Crosby Way Farnham Surrey GU9 7DR Bankers Coutts & Co 440 Strand London WC2R 0QS Red Rock Resources Plc Annual Report and Accounts 2021 3 Chairman’s Statement Dear Shareholders, The year from July 2020 to June 2021 we expected to be one of activity across the board for us, and so it was. We progressed exploration in every principal country of operation, and had it not been for the continuance of the travel and work restrictions imposed by various countries in response to the Covid-19 pandemic of early 2020, those advances would have been greater and faster. This has culminated in three important drill programmes that have kept us constantly busy since the end of June 2021. We were drilling first for copper and cobalt in Congo, then also for gold in Kenya. Just as the first phase of drilling in Kenya ended in December 2021, diamond drilling for gold began in Australia. We expect positive results from all three programmes, which will come over the next few weeks. If we divide the Company’s exploration activities into those conducted on Legacy Exploration Assets and activities on New Exploration Assets, the progress over the last eighteen months and our success in creating a project pipeline is more easily explained. Progress on the Legacy Exploration Assets was slowed in various ways by Covid-19 factors, though not critically. The New Exploration Assets were the direct product of opportunities that arose as a result of Covid-19, so in this respect the virus worked in our favour, but the impact is lagged and will be felt more fully during the course of 2022. ACTIVITY ON LEGACY EXPLORATION ASSETS During the year we conducted extensive geophysics over key licenses in the Congo and Kenya, in the latter country with our own trained crew and equipment, and were then able to start drill programmes in both countries as well as to plan future work. These programmes have only recently concluded, and we end the calendar year awaiting final laboratory results from Congo and from the first half of the samples sent from Kenya. Kenya In Kenya, following the restoration of our licenses in August 2020, we repaired the camp and vehicles, recruited a new team in Migori and in London, and with them and with consultants CSA Global Ltd, shared and discussed data on numerous Zoom calls as we prepared to announce in February 2021 a new Estimated Mineral Resource under the JORC 2012 Code of 723,000 oz of Gold at 1.49 grams per ton. The detailed work done in revisiting our data on the Kenya licenses, then 3.18 terabytes and now 3.65 terabytes, fed into the targeting for the 2,000 metre initial reverse circulation drill programme which we began shortly after the June year end after completing an Environmental Impact Assessment. This programme has just finished and a new EIA is already being carried out for the next phases of exploration planned for 2022. Congo In the Democratic Republic of Congo, we followed a similar path, completing geophysics and then starting just before the end of the Financial Year what became a 2,300 metre reverse circulation drill programme. In this case the targets were copper and cobalt. ACTIVITY ON NEW EXPLORATION ASSETS Australia The initial period of lockdown in 2020 initially froze much of our activity, but by eliminating travel time and regular hours it provided us with the leisure to engage in strategic thinking. We studied opportunities including an intensive analysis of the Victoria Goldfields in Victoria, Australia, produced a white paper, and concluded that a rising gold price and an increase in exploration interest would lead to new discoveries in underexplored and historically rich gold terrain that could benefit from the application of new techniques. We applied for substantial acreage centred on the key historic mining district of Ballarat; our applications sometimes beating other applications only by a day or two, and were just in time to take a strategic position that only a few weeks later would have already become impossible. There is no doubt that the restrictions on travel in Australia slowed the competition, and provided us with a window of which we were able to take full advantage. Because of the initial perceived risk in this step into a new area, we teamed up with Power Metal Resources Plc in a joint venture. By September 2020 we had an independent geological report prepared, but due to the extremely rigorous lockdowns, and home working by officials, in Victoria, the process of license grant was not as rapid as we hoped, and as gold drifted off the July 2020 high of $2115 per ounce to just under $1800, the pandemic excitement surrounding gold stocks dissipated. Our first grants came in February 2021, totalling 215 square kilometres, and only in the last few days has an updated geological report been completed and the total acreage of granted licenses gone above 1,000 sq km to 1,501 sq km. An excellent local team of geologists has been assembled by Dave Holden, an experienced geologist and manager living on the license, and previously known to us, and the detailed exploration work they have been doing has enabled us already to identify promising drill-ready targets. A 2,000 metre drilling campaign began on 13 December 2021 on the first of three initial targets, and progress continues towards a listing for New Ballarat Gold Corporation Plc, the new holding company for our joint venture assets in Australia, in the New Year. Red Rock Resources Plc Annual Report and Accounts 2021 4 Côte d’Ivoire and Burkina Faso At a time when both Kenya and the DRC were on the UK’s Red List for travel, meaning that a ten-day sojourn in a Government-run hotel would be required on return to London, we decided at the end of one trip on the alternative of revisiting Abidjan to see if it might be an opportune moment to breathe new life into our former gold ventures there. Considerably assisted by the fact that our recently recruited database manager and geologist in London, of Burkinabe extraction, had been born and worked in the Côte d’Ivoire, we made contact with experienced geologists in both countries, and from among them found suitable hard working and conscientious local partners and managers. After writing on our return a white paper, we concluded that the West African Gold belts were still immature gold plays that presented a very great opportunity if one were working with experienced partners. We established new local subsidiaries, and having reviewed and analysed a long list of opportunities, we whittled them down to short lists, and made applications for those licenses we believe to be most prospective for commercial discoveries. We expect early grant of some of these. OTHER ASSETS Our strategic investments included listed holdings in manganese producer Jupiter Mines Ltd (ASX:JMS), diversified explorer Power Metal Resources PLC (AIM:POW), and iron ore developer Juno Mines Ltd (ASX:JNO), as well as royalty interests in Mt Ida (iron project, Australia), various gold projects, and the El Limon gold mine in Colombia. An unlisted holding whose value started to become apparent was Elephant Oil Corporation, formerly Elephant Oil Ltd, which holds onshore oil acreage in Benin and Namibia, and which has just filed its Form S1 with NASDAQ as part of the final preparation for an expected listing. In the Congo, we are acting with despatch to assert our rights over valuable properties forming part of a joint venture, with a freezing order now in place as we move towards the judgement phase of proceedings. We may have other causes of action in various jurisdictions, and look to various possible forms of compensation and damages. At the end of calendar 2020, we provided some assistance to the Australian Administrator of Vector Mines Ltd (In Administration) in order to provide time and space to mediate a solution in relation to a significant but disputed Congolese gold asset. Knowing all the main parties involved, and the potential of the asset, we believe that an outcome is possible in which we would play a part and that would be beneficial to the parties in dispute. PERSONNEL, ESG, AND ADMINISTRATION We embrace the new emphasis worldwide on companies showing environmental and social neighbourliness, and ensuring they offer a career open to the talents that offers training where it is needed, widens experience where it is lacking, and gives responsibility to the capable without consideration of cultural background. We embrace it because we have always tried to behave in these ways, for business as well as ethical reasons. Among our first hires both in Australia and in Kenya have been environmental and community relations officers, in Kenya now supplemented by an expert adviser on the Mining Law and Governmental relations. We know how key it is now for what is sometimes termed a social license to operate, that we are not only doing the right things but are doing them in a quite visible way. The key to our operations is local management. In Australia we are Australian, with a local and very competent and well-regarded team built by the New Ballarat Gold Corporation CEO. In Kenya our management is headed by our able Kenyan Project Manager who has built the local team, trained our geophysics team, and works with our Kenyan Camp Manager and Kenyan geologists, so that we appear Kenyan while doing things in an international manner and to international standards. On 17 December 2021 two of our geological team were awarded their MSc degrees, a source of pride to us all. We were also proud to be told recently by a very senior and respected mining official that he held us out frequently as an example of how a company should conduct itself in carrying out systematic and professional exploration in Kenya. In Congo we have not yet fully built out the team, but the nucleus now, after some earlier challenges, consists of extremely capable and reliable professionals. In Côte d’Ivoire and Burkina Faso the local managers and our partners are chosen for their integrity, diligence, and long experience. They are working with us because they know that they and our Burkinabe manager in London will remain in key management and directorial positions as we move towards a listing on these properties. We have worked hard with all these people in the last year, and not just on geology and community relations. We have together been setting up companies and offices and bank accounts, building a small camp in Congo, renewing and expanding the camp in Kenya, and establishing an administrative structure in Australia. We thank them all, for we know how much we owe them in what have not always been easy circumstances, and all of them have been willing to go the extra mile when required. Year Under Review – Financial Results In the year to 30 June 2021, reported group loss for the year was £1.699 million after a reported profit of £5.156 million in the previous year. This reflected primarily an increase in administrative and expensed project development costs during the period, after the one- off 2020 write-back of the Company’s interest in the Kenyan gold assets in the previous year. Dividend income received during the year dropped from £0.419 million to £0.125 million, reflecting a lower payout and ongoing reductions in Jupiter Mines Ltd holding. Group payroll and related costs increased reflecting the additional activity in Australia, Kenya, London and Congo. We ended the June 2021 financial year with our cash supplemented by £1,581,000 in marketable investments and a holding in Elephant Oil, where we expect a listing in the New Year, held at a value of £173,846 but likely to be traded at a much higher valuation once listed. Red Rock Resources Plc Annual Report and Accounts 2021 5 Outlook After a successful year in which the Company took the many challenges associated with the COVID-19 pandemic, and turned them into operational advantages, we look forward to continued nurturing of the seeds planted during the period in the year ahead. Our key Kenyan asset will remain a particular focus, as we believe we have the potential to build a large gold resource here, comparable to the better-known mines in Tanzania to the south. Red Rock remains intent on creating value for all stakeholders through development of its projects and investments, including through listings of Elephant Oil and New Ballarat Gold Corporation, and through possible sales and joint ventures as well as exploration, and we expect investors to be materially rewarded for their support over the course of 2022. Andrew Bell Chairman and CEO 28 December 2021 Red Rock Resources Plc Annual Report and Accounts 2021 6 Strategic Review Overview of the Business The Company is listed on London’s AIM market (AIM:RRR) and manages a diverse portfolio of producing and exploration stage natural resources assets, located around the world. Business Strategy The Company’s strategy involves seeking out, assessing and investing in natural resource projects, where it can actively add value through exploration, technical development and corporate transactions. Principal Risks and Risk Management Exploration and development is an inherently high-risk business, and outlined here are some of the primary risks identified: Exploration Risk The Group’s business is mineral exploration and evaluation, which are speculative activities. There is no certainty that Red Rock will proceed to the development of any of its projects or otherwise realise their full value. The Group aims to mitigate this risk, when evaluating new business opportunities by targeting areas of potential, where there is at least some historical drilling or geological data available, and where leading exploration consultants believe there is strong evidence of high class mineral deposits. Resource Risk All mineral projects have risk associated with defined grade and continuity. Mineral Reserves and Resources are calculated by the Group in accordance with accepted industry standards and codes but are always subject to uncertainties in the underlying assumptions, which include geological projection and commodity price assumptions. This may include variations in the style of mineralisation encountered as well as the failure to achieve economic deposits. Environmental Risk Exploration of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Any disturbance to the environment during exploration, on any of the licence areas, will be rehabilitated in accordance with the prevailing local regulations. Financing & Liquidity Risk The Group has from time to time a requirement to fund its activities through the equity capital markets. There is no certainty such funds will be available when needed. To date the Group has managed to raise the required funds, primarily through equity placements, despite difficult markets that currently exist for raising funding in the junior mining industry. The cost of available capital may fluctuate significantly, and can include high interest rates and the requirement to offer new equity at a discount to current prices. The Company can be affected by international markets and risk appetite, and low projections of future world GDP growth may depress commodity prices and perceived future levels of demand. Supply and demand of individual commodities may also impact valuations of current and future resources and projects in the Group portfolio. Corporate finance planning and analysis considers multiple avenues to acquire and deploy capital, including from internal sources of cash flow. Expansion of capital reserves and ongoing cost reduction efforts provide the Company with additional resilience during sector downturns. The Directors have prepared cash flow forecasts for at least the next 12 months from the date of this report and are confident that the Company can raise additional funds through asset sales or equity funding if required. Nevertheless, in the event that the Group is unable to secure further financial resources, it may have a detrimental impact on the Group’s exploration activities and viability of its exploration licences and ability to monetise and realize value from them. Political Risk All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social risks, risks of strikes and changes to taxation, whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets. The Company has working knowledge of the countries in which it holds exploration licences and has appointed experienced local operators to assist the Company in its activities in order to help reduce possible political risk. COVID-19 The Company recognises the uncertainty, volatility, and risks caused by the ongoing COVID-19 pandemic. The health and safety of our staff and associates is of major concern and we have taken steps to mitigate this risk utilising where appropriate alternatives to face to face meetings including through the greater adoption of video-conferencing services.. This year’s AGM format will reflect the current business environment and ongoing risks associated with the COVID-19 pandemic. Red Rock Resources Plc Annual Report and Accounts 2021 7 Operationally, COVID-19 has not caused significant disruptions to the Company’s projects during the year, however, the inability to travel to some project sites and the associated slowdown in government processing of licenses will have delayed progress in some instances. Internal Controls & Risk Management The Directors are responsible for the Group’s system of internal financial control. Although no system of internal financial control can provide absolute assurance against material misstatement or loss. The Group’s system is designed to provide reasonable assurance that problems are identified on a timely basis and dealt with appropriately. In carrying out their responsibilities, the Directors have put in place a framework of controls to ensure as far as possible that ongoing financial performance is monitored in a timely manner, that corrective action is taken and that risk is identified as early as practically possible, and they have reviewed the effectiveness of internal financial controls. Key Performance Indicators (KPIs) At this stage in the Company’s development, the Directors regularly monitor key performance indicators, associated with liquidity, primary cash flows and bank balances, general administrative expenses as well as share price performance and appreciation. Corporate Responsibility The Company takes its responsibilities as a corporate citizen seriously and has in place a Corporate Social Responsibility (“CSR”) policy. The Board’s primary goal is to create shareholder value but in a responsible way, which serves all stakeholders. The Company recognises that as a junior exploration and development business, the Company has a responsibility to local communities in which it works, ensuring that the projects it operates are associated with responsible behaviours. The Company’s framework for CSR places emphasis on stakeholder engagement and information dissemination, ensuring that the local communities are aware of plans and activities being conducted. Where appropriate, the Company also undertakes sustainable development projects, including capacity building, scholarships and related ventures. Governance The Board considers sound governance as a critical component of the Company’s success and the highest priority. The Company has an effective and engaged Board, with a strong non-executive presence drawn from diverse backgrounds and with well-functioning governance committees. Through the Company’s compensation policies and variable components of employee remuneration, the Remuneration Committee of the Board seeks to ensure that the Company’s values are reinforced in employee behaviour and that effective risk management is promoted. Analysis by Gender Category Directors Other Employees Male 4 1 Female 0 1 Employees and Their Development The Company is dependent upon the qualities and skills of its employees and their commitment plays a major role in the Company’s business success. Employees’ performance is aligned to the Company’s goals through an annual performance review process and via incentive programmes. The Company provides employees with information about its activities through regular briefings and other media. The Company operates a Share Option Scheme, operated at the discretion of the Remuneration Committee and an employee Share Incentive Plan operated by the Share Incentive Plan Trustees. Diversity and Inclusion The Company does not discriminate on the grounds of age, gender, nationality, ethnic or racial origin, non-job-related-disability, sexual orientation or marital status. The Company gives due consideration to all applications and provides training and the opportunity for career development wherever possible. The Board does not support discrimination of any form, positive or negative, and all appointments are based solely on merit. Health and Safety The Company includes Health and Safety (“H&S”) procedures and frameworks in all of its planning and field activities, with emphasis on top-down as well as bottom-up ownership and responsibility, quality training of all personnel and risk assessments that go beyond regulatory compliance. 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. Red Rock’s H&S strategy includes project and location specific training as well as H&S inductions, Emergency Response Plans and field team reporting procedures. Section 172 Statement Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company’s employees and other stakeholders, the impact of its activities on the community, the environment and the Company’s reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term. We explain in this annual report, and referenced herein, how the Board engages with stakeholders. Red Rock Resources Plc Annual Report and Accounts 2021 8 Signed by order of the Board. Andrew Bell Chairman and CEO 28 December 2021 Red Rock Resources Plc Annual Report and Accounts 2021 9 Governance Board of Directors The Board of Directors makes decisions on shareholders’ behalf. Red Rock has one Executive Director, one Director and two Non- Executive Directors. Andrew Bell, MA, LLB Chairman and CEO Andrew Bell began his career as a natural resources analyst at the leading Merchant Bank 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 is also a former director of various listed resource sector companies: Chairman and Director of Power Metal Resources Plc (AIM), Non-Executive Director of Jupiter Mines Ltd (ASX), Chairman of Star Striker Ltd (now Intiger Group Ltd) (ASX) and Non-Executive Chairman of Greatland Gold Plc (AIM). Andrew Bell has considerable sector experience and his skills also include financial, business and legal analysis as well as experience of public markets. Andrew Bell is a French speaker. Scott Kaintz, BS, MBA Director Scott Kaintz has over 10 years of experience managing and operating natural resource development companies. He has a degree in Russian Language and Russian Area Studies from Georgetown University and MBA degrees from London Business School and Columbia Business School. He started his career as a US Air Force Officer and analyst working across Europe, the Middle East and Central Asia. Scott has held operational and managerial roles in the defense industry and worked in corporate finance and investment funds in London, focusing primarily on capital raising efforts and debt and equity investments in small-cap companies. He joined Red Rock Resources Plc in 2011, and he is also an Executive Director of Corcel Plc and Curzon Energy Plc. Michael Alexander Borrelli, FCA Independent Non-Executive Director Michael Alexander Borrelli initially studied medicine and then qualified as a chartered accountant with Deloitte, Haskins & Sells, London in 1982. He then worked in corporate finance at Guinness Mahon, Samuel Montagu and as a corporate finance and main board director at Charterhouse. His subsequent investment banking business included nine years as a Head of Corporate Finance and AIM Nomad qualified executive at a specialist investment bank. He has acted on a wide variety of corporate transactions in a senior role for over 20 years, including flotations, takeovers, mergers and acquisitions for private and quoted companies. For the last 15 years, he has been acting as chairman and director of various listed companies, including AIM-listed Greatland Gold Plc, Xpediator Plc, Tiger Royalties and Investments Plc and most recently Bradda Head Lithium Limited. Sam Quinn Non-Executive Director Sam Quinn has a Bachelor of Laws and Bachelor of Arts degrees and is a qualified lawyer in Western Australia and in England & Wales. He has served as Legal Counsel for and as part of the executive management team of several listed and non-listed gold, silver, copper, iron-ore and diamond exploration and development companies with operations in various jurisdictions. Mr Quinn is an Executive Director of Tectonic Gold Plc, listed on Aquis, and is a Non-Executive Director of Blencowe Resources Plc, listed on the LSE. Sam Quinn has strong legal expertise as well as significant experience in public markets, the resources sector and in corporate finance. Sam Quinn is the former legal counsel to the Dragon Group, a mining finance boutique and a partner of Corporate Service Providers Silvertree Partners. Responsibilities of the Board • • • • Focus on governance over management; Formulate, review and approve the Company strategy; Oversee financial activities and operational performance; and Approval of annual budget and periodic fiscal reviews. Focus Areas for 2022 • • Continued exploration and development of Kenyan gold assets; IPO or transaction involving the New Ballarat Gold Corporation Plc joint venture (formerly Red Rock Australasia Ltd joint venture) and the Australian gold licenses; IPO or transaction involving Company’s Côte d’Ivoire and Burkina Faso assets; Settlement of the Company’s claims in the DRC; and Bolstering Company’s financial resources and balance sheet. • • • Red Rock Resources Plc Annual Report and Accounts 2021 10 Red Rock Resources Plc - Company Number: 05225394 Directors’ Report for the year ended 30 June 2021 The Directors present their annual report on the affairs of the Group and Parent Company, together with the Group Financial Statements for the year ended 30 June 2021. Results and Dividends The Group’s results are set out in the Consolidated Income Statement on page 25. The audited Financial Statements for the year ended 30 June 2021 are set out on pages 24 to 65. The Group made a post-tax loss of £1.699 million (2020: profit of £5.156 million). The Directors do not recommend the payment of a dividend (2020: nil). Business Review and Future Developments The business review and future developments are dealt with in the Chairman’s Statement and in the Strategic Review on pages 4 to 9. Fundraising and Share Capital During the year, the Company raised £2,000,000 in new equity (2020: nil); further details are given in note 20. Directors The Directors who served at any time during the period and to date are as follows: Andrew R M Bell Michael C Nott (Resigned 12 February 2021) Scott Kaintz Sam Quinn Alex Borrelli (Joined after the period end on 26 July 2021) The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2021 were as follows: Andrew R M Bell Scott Kaintz Sam Quinn Ordinary shares Direct 31,238,520 2,517,807 2,206,766 Beneficial 15,396,487 15,396,487 13,421,944 As percentage of issued share capital Total 46,635,007 17,914,294 15,628,710 Options Warrants 3.83% 28,760,000 1.47% 20,180,000 3,900,000 1.28% — — — The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2020 were as follows: Andrew R M Bell Michael C Nott Scott Kaintz Sam Quinn Ordinary shares Direct 31,238,520 1,471,807 2,517,807 2,206,766 Beneficial 11,552,617 11,235,652 11,552,617 9,605,944 As percentage of issued share capital Total 42,791,137 12,707,459 14,070,424 11,812,710 Options Warrants 6.14% 17,760,000 900,000 1.82% 2.02% 15,680,000 3,900,000 1.70% 3,125,000 — — — Events After the Reporting Period The events after the reporting period are set out in note 27 to the Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 11 Directors’ Report (continued) Substantial Shareholdings On 30 June 2021 and 1 December 2021, the following were registered as being interested in 3% or more of the Company’s Ordinary share capital: 30 June 2021 Ordinary shares of £0.0001 each Percentage of issued share capital HSBC Global Custody Nominee (UK) Limited – Designation 941346 Interactive Investor Services Nominees Limited – Designation SMKTNOMS Interactive Investor Services Nominees Limited – Designation SMKTISAS Barclays Direct Investing Nominees Limited – Designation CLIENT1 Red Rock Resources Plc Share Incentive Plan Hargreaves Lansdown (Nominees) Limited – Designation 15942 Hargreaves Lansdown (Nominees) Limited – Designation VRA JIM Nominees Limited – Designation JARVIS Nomura PB Nominees Limited – Designation PBNOMS Mr John Geoffrey Bolitho Hargreaves Lansdown (Nominees) Limited – Designation HLNOM Nomura Custody Nominees Limited – Designation CUSTNOMS Total number of shares in issue 287,111,760 23.60% 9.76% 118,797,053 6.94% 84,478,889 5.42% 65,977,332 5.14% 62,580,977 4.57% 55,616,126 3.63% 44,140,766 3.43% 41,785,232 3.26% 39,702,381 3.15% 38,357,187 3.13% 38,137,282 - - 1,216,708,801 1 December 2021 Ordinary shares of £0.0001 each 287,227,494 88,486,067 88,486,067 55,383,244 62,680,977 53,740,240 49,905,477 29,480,482 - 38,357,187 40,810,859 39,702,381 1,216,708,801 Percentage of issued share capital 23.44% 8.70% 7.27% 4.55% 5.14% 4.42% 4.10% 2.42% - 3.15% 3.35% 3.26% Management Incentives In the year to 30 June 2021, the Company has granted 21,000,000 options over its Ordinary shares (2020: nil). As at 30 June 2021, 63,320,000 options were outstanding (2020: 42,320,000). In January 2012, the Company implemented 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 £150 per month with Trustees, who invest the monies in the Company’s shares (“Partnership Shares”); The Company to match the employee’s investment by contributing an amount equal to double the employee’s investment (“Matching Shares”); The Company to award free shares to a maximum of £3,600 per employee per annum (“Free Shares”); and All shares awarded under the Plan are held by the Share Incentive Plan Trustees and such shares cannot be released to participants until five years after the date of award, except in specific circumstances. The subscriptions remain free of taxation and national insurance if held for five years. In January 2016, the Directors approved an EMI (enterprise management incentive) Scheme, and all options granted by the Company in the year to 30 June 2021 to Directors and full-time employees have been granted under the EMI Scheme. Further details on share options and the Share Incentive Plan are set out in note 22 to the Financial Statements. 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. When conducting annual reviews of Executive and Non-Executive remuneration, the Company’s strategy of natural resource development and investment, as well as KPIs such as Company liquidity and share price performance and overall project development are taken into consideration and directly affect ongoing remuneration levels. The Remuneration Committee may set annual targets based on these KPIs to provide additional and more specific goals by which to assess annual Executive performance. A fee was paid to each Director for the year ended 30 June 2021. In addition, certain fees and expenses were paid to businesses with which the Directors are associated as set out in note 9 to the Financial Statements. Each Director is entitled to participate in the Share Incentive Plan. Red Rock Resources Plc Annual Report and Accounts 2021 12 Directors’ Report (continued) 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 8% of basic salary, subject to the individual making contribution to the Scheme (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. The Company is closely associated with Power Metal Resources Plc. The Company had a 2.18% interest in Power Metal Resources Plc as at 30 June 2021 (2020: 4.52%) and was jointly invested in the Red Rock Australasia (now New Ballarat Gold Corporation) joint venture with Power Metal Resources Plc. One Director, Andrew Bell, was also a Director of, and was paid by, Power Metal Resources Plc as of 30 June 2021. The amount of Andrew Bell’s remuneration is not required to be disclosed in the Company Financial Statements, but is fully disclosed in the Financial Statements of Power Metal Resources Plc. Corporate Governance Statement A corporate governance statement follows on pages 16 to 18. 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. 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 industry standards for environmental and social risk management. 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. Suppliers, Customers and Regulatory Authorities The Board acknowledges that a strong business relationship with suppliers and customers is a vital part of the growth. Whilst day to day business operations are delegated to the executive management, the Board sets directions with regard to new business ventures. The Board upholds ethical behaviour across all sectors of the business and encourages management to seek comparable business practices from all suppliers and customers doing business with the Company. We value the feedback we receive from our stakeholders, and we take every opportunity to ensure that, where possible, their wishes are duly considered. Going Concern It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 30 June 2021, the Group had cash and cash equivalents of £0.457 million and £0.969 million of borrowings and, as at the date of signing these Financial Statements, the cash balance was £0.062 million. The Directors anticipate having to raise additional funding over the course of the financial year. Having considered the prepared cashflow forecasts and the Group budgets, which includes the possibility of Directors reducing or foregoing their salaries if required, the progress in activities post year-end, including the anticipated asset sales of £0.953 million, the Directors consider that they will have access to adequate resources in the 12 months from the date of the signing of these Financial Statements. As a result, they consider it appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements. Should the Group be unable to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities, which might arise, and to classify non-current assets as current. The Financial Statements have been prepared on the going concern basis and do not include the adjustments that would result if the Group was unable to continue as a going concern. Red Rock Resources Plc Annual Report and Accounts 2021 13 Directors’ Report (continued) Provision of Information to Auditor 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. Auditor A resolution, proposing the re-appointment of PKF Littlejohn LLP as auditor, is contained in the Notice of Annual General Meeting and will be put to shareholders at the Annual General Meeting. By order of the Board. Signed by: Andrew Bell Chairman and CEO 28 December 2021 Red Rock Resources Plc Annual Report and Accounts 2021 14 Statement of Directors’ Responsibilities The Directors are responsible for preparing the Strategic Report, 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. Under that law, the Directors have elected to prepare the Group and Company Financial Statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. 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 for that period. In preparing the Group and the 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 international accounting standards in conformity with the requirements of the Companies Act 2006 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 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. The Company is compliant with AIM Rule 26 regarding the Company’s website. The Directors have confirmed that they have complied with the above requirements in preparing the Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 15 Corporate Governance Statement “Good corporate governance provides a sound framework through which we can successfully deliver our strategy and return value to our stakeholders.” Dear Shareholders The Board is committed to maintaining high standards of corporate governance and in this it is guided by the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”). The QCA Code sets out 10 principles that define Red Rock’s own governance policies, several of which, are expanded on below. Strategy and Risks Business Model and Strategy for Promotion of Long-Term Value The Board considers that the highest medium and long-term value can be delivered to its shareholders by creating a diverse portfolio of holdings with exposure to commodities across multiple stages of the natural resource cycle, from exploration to production, and with a degree of geographical and commodity diversity. The Company’s objective focusses on opportunities to add and realise value in reasonably short timeframes, and considers the generation of multiple sustainable income streams to be its prime task as this can underpin value and underwrite the higher risk parts of its project pipeline such as mineral exploration. Cash flows from dividends and buy-backs, royalties and operations are supplemented by the conversion of its unlisted asset interests, once they have reached a stage of maturity, where this is possible, to more liquid and more fungible forms. 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. The Board approves the annual budget and amendments to it, issues of shares or other securities and all significant acquisitions and disposals. Board of Directors The Board of Directors comprises four Directors, one of whom is Chairman and CEO as of the year end. In addition, there is Scott Kaintz, who also serves as CFO, an Independent Non-Executive Director, Alexander Borrelli and a Non-Executive Directors, Sam Quinn. The Directors are of the opinion that the Board comprises a suitable balance of resource sector, technical, financial, accounting, legal and public markets skills as well as experience of the Board as a whole and that the recommendations of the QCA Corporate Governance Code have been implemented to an appropriate level. The Board shall review annually and when required the appropriateness of its mix of skills and experience, to ensure that it meets the changing business needs. The Board recognises that it has limited ethnic diversity and will give this factor due consideration if the Board concludes that replacement or additional directors are required. It notes that it is only in the last year that operational teams have been able to be rebuilt and that managers and senior staff recruited during the year at Group level reflect a wide and diverse mix of nationalities and ethnicities and that local boards and operations are representative of their communities. The Board, through the Chairman and 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 a 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 in its present form and at the current stage of development. Board Meetings The Board meets regularly throughout the year. During the year ended 30 June 2021, the Board had 6 scheduled meetings together with additional ad hoc meetings as and when the business required. Red Rock Resources Plc Annual Report and Accounts 2021 16 Corporate Governance Statement (continued) Board Meeting Attendance The Director’s attendance at scheduled and ad hoc Board meetings and Board Committees during the year ended 30 June 2021 is detailed in the table below: Director Andrew Bell, Chairman and CEO Scott Kaintz, Director and CFO Michael Nott, Non-Executive Director** Sam Quinn, Non-Executive Director Total Meetings Board Scheduled Meetings (6) 6 6 4 6 6 Board Ad Hoc Meetings (16)* 16 16 8 16 16 Audit Committee (1) 1 1 1 1 1 Remuneration Committee (2) - 1 1 2 2 * Ad hoc meetings: Meetings called for a specific matter generally of a more administrative or transactional nature often not requiring full Board attendance. **On 12 February 2021, Michael Nott retired from his role as a Non-Executive Director of Red Rock Resources Plc. 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 as required, at least once with the auditor, and is comprised of Alexander Borrelli, Independent Non-Executive Director, as Chairman and Sam Quinn, Non-Executive Director. The 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: Sam Quinn as Chairman and Alexander Borrelli. The Chairman and other senior personnel attend meetings as requested by the Committee, which meets as required during the 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. Board Evaluation The internal evaluation of the Board, the Committees and individual Directors, including any succession planning, is undertaken on an annual basis to determine the effectiveness of their performance and suitability to the changing business requirements. The assessment criteria are based on the need to promote the Company’s Business Model, industry practices and the need for balance, the Company’s immediate aspirations as well as the specific skills, knowledge and capabilities that are required to perform certain roles. The results and recommendations that come out of the appraisals of the Directors and members of the Committees, identify the required changes and actions for the Board and the Committees as units as well as individually for the Directors and members of the Committees. 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. The strong law-based culture of the Company is reflected in a willingness occasionally to litigate to protect its interests rather than to negotiate. Red Rock Resources Plc Annual Report and Accounts 2021 17 Corporate Governance Statement (continued) 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 In accordance with the AIM Rules and MAR, the Board has adopted the Share Dealing Code 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” (30 days 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. Culture The Company aims to deliver long-term value to its shareholders through a diverse portfolio of revenue generating mineral exploration projects and investments, corporate transactions, JVs and partnerships. Therefore, the Company aims to ensure an open and respectful dialogue with shareholders and other interested parties for them to have the opportunity to express their views and expectations for the Company. In this dialogue, the importance of sound ethical values and behaviour is emphasised, both because it is important if the Company is to successfully achieve its corporate objectives that this culture is transmitted through the whole organization, and also to set a benchmark and send a signal of what it will and will not do in some of the jurisdictions in which the Company operates. 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 e- mail. 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. Red Rock Resources Plc Annual Report and Accounts 2021 18 Financial Statements Independent Auditor’s Report to the Members of Red Rock Resources Plc Opinion We have audited the Financial Statements of Red Rock Resources Plc (the “Company” or the “Parent Company”) and its subsidiaries (the “Group”) for the year ended 30 June 2021, which comprise the Consolidated Statement of Financial Position, the Consolidated Income Statement and Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Parent Company Statement of Financial Position, the Parent Company Statement of Changes in Equity, the Parent Company Statement of Cash Flows and notes to the Financial Statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006 and as regards the Parent Company Financial Statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: • • • • The Financial Statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 June 2021 and of the Group’s loss for the year then ended; The Group Financial Statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; The Parent Company Financial Statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and prepared in accordance with the requirements of the Companies Act 2006 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. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to note 1.2 in the Financial Statements, which indicates that the Group is required to raise funds within the going concern period. As stated in note 1.2, these events or conditions, along with the other matters as set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the Financial Statements, we have concluded that the Director’s use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: • • Challenging the forecasts prepared by the directors in their assessment of the Group's and Parent Company’s ability to meet their financial obligations as they fall due for a period of at least 12 months from the date of approval of the financial statements. The forecasts demonstrated that the Group and Parent Company will require additional funding, or will need to dispose of investments, to meet their liabilities as and when they fall due. The forecasts also indicated that the current funding will not be sufficient to meet the planned additional investments and exploration activities. Our responsibilities and the responsibilities of the Directors, with respect to going concern, are described in the relevant sections of this report. Our Application of Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we consider gross assets to be most significant determinant of the group’s financial performance and most relevant to investors and shareholders for an exploration group with a number of investments and early-stage projects. Materiality of the parent company was based upon the loss before tax in order to achieve sufficient coverage of expenditure in our testing. Red Rock Resources Plc Annual Report and Accounts 2021 19 Independent Auditor’s Report to the Members of Red Rock Resources Plc (continued) We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level of uncorrected misstatements that would be material for the financial statements as a whole. We determined the group and parent company materiality for the financial statements as a whole to be £209,000 and £106,000 (2020: £114,000 and £102,600) respectively. Performance materiality was set at 60% of overall materiality for the group and parent company at £125,400 and £63,600 (2020: £68,400 and £61,560) respectively, whilst the threshold for reporting unadjusted differences to those charged with governance was set at £10,450 for the group and £5,300 (2020: £5,700 and £5,130) for the parent company. We also agreed to report differences below that threshold that, in our view, warranted reporting on qualitative grounds. The component materiality was set at group performance materiality of £125,400. Our Approach to the Audit In designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial Statements. In particular, we looked at areas involving significant accounting estimates and judgement by the Directors and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The accounting records of the Parent Company and all subsidiary undertakings are centrally located and audited by us based upon materiality or risk. The key audit matters, and how these were addressed, are outlined below. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How Our Scope Addressed This Matter Recoverability of exploration assets (see notes 1.5 and 13) Exploration assets have a carrying value in the Financial Statements of £13,515,000 at 30 June 2021 (2020: £11,858,000). We identified an audit risk that exploration assets are incorrectly valued because an impairment exists that has not been recognised, and additions expenditure had been capitalised which do not meet the eligibility criteria under IFRS 6. This was assessed to be a key audit matter because exploration assets represent 70% of the Group’s total assets and management are required to use their judgement in assessing their recoverability. Our work in this area included the following: • Obtaining and challenging management’s impairment review, together with evaluating announcements and progress on the license areas, including exploration results and updated mineral resource estimates; • Obtaining copies of the exploration licenses to ensure good title and check, where applicable, that any specific terms or conditions therein have been adequately met; • Performed an independent assessment for indicators of impairment in accordance with the requirements of IFRS 6; • Assessing the appropriateness of the disclosures made in respect of management’s judgement on whether impairment indicators exist; and Testing additions in the period to ensure they meet the eligibility criteria under IFRS 6. • Red Rock Resources Plc Annual Report and Accounts 2021 20 Independent Auditor’s Report to the Members of Red Rock Resources Plc (continued) Recoverability of non-current assets (see notes 1.5 and 17) Non-current assets has a carrying value in the Financial Statements of £1,344,000 at 30 June 2021 (2020: £1,432,000). Non-current assets represent amounts expected to be receivable through a net smelter royalty, following the sale of MFP in a previous accounting period. The asset is measured at fair value based on the net present value of future cash flows expected to be received in respect of the royalty proceeds. We identified an audit risk that these assets are not recoverable and, therefore, are incorrectly valued in the Financial Statements. This was assessed to be a key audit matter because non- current assets are financially significant and management are required to use their judgement and estimation in preparing the net present value of future cash flows from the royalty stream. Our work in this area included the following: • Obtaining management’s working for the valuation of the MFP sales proceeds and ensuring arithmetical accuracy of the workings; • Evaluating publicly available information on production activities at the mine; • Reviewing all model inputs and assumptions and ensuring they are reasonable and appropriate; • Considering whether management have included all possible factors which could impact the valuation; and • Considering whether there are indications of impairment in the valuation or whether there are indications that the balance is not recoverable. Key Observations In reviewing the calculations prepared by management, we noted the following assumptions as key: • • • Estimate production rate; Discount rate; and Gold price. Commissioning and initial production at the mine commenced during 2021 with production expected to ramp up to commercial levels during the forthcoming year. Management anticipate significant growth rates in production from 2022 onwards. We draw to the users attention the disclosure in note 1.5, which lists the key assumptions in the calculation of fair value of non- current assets. The Financial Statements do not include the adjustments that would be required if the assumptions used are not accurate. Other Information The other information comprises the information included in the annual report, other than the Financial Statements and our auditor’s report thereon. The Directors are responsible for the other information, contained within the annual report. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine, whether this gives rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on Other Matters Prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • • The information, given in the Strategic Report and the Directors’ Report for the financial year for which the Financial Statements are prepared, is consistent with the Financial Statements; and The Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Red Rock Resources Plc Annual Report and Accounts 2021 21 Independent Auditor’s Report to the Members of Red Rock Resources Plc (continued) Matters on Which We are Required to Report by Exception In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent 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. Responsibilities of Directors As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group and parent company financial statements, the Directors are responsible for assessing the group’s and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the Group and Parent Company and the sector, in which they operate, to identify laws and regulations that could reasonably be expected to have a direct effect on the Financial Statements. We obtained our understanding in this regard through discussions with management and our cumulative audit knowledge and experience of the sector. • We determined the principal laws and regulations relevant to the Group and Parent Company in this regard to be those arising from international accounting standards, the Companies Act 2006 and the local laws and regulations in the jurisdictions in which the Group operates. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the Group and Parent Company with those laws and regulations. These procedures included, but were not limited to, enquiries of management, review of Board minutes and a review of legal or regulatory correspondence. • We also identified the risks of material misstatement of the Financial Statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the risk of fraud related to the estimates, judgements and assumptions applied by management in their assessment of impairment of intangible assets, the valuation of unlisted investments and the recoverability of non-current receivables. Refer to the Key Audit Matters section above on how our audit scope addressed these matters. • We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals, reviewing accounting estimates for evidence of bias, and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. Red Rock Resources Plc Annual Report and Accounts 2021 22 Independent Auditor’s Report to the Members of Red Rock Resources Plc (continued) Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the Financial Statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the Financial Statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of Our Report 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. David Thompson (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 28 December 2021 15 Westferry Circus Canary Wharf London E14 4HD Red Rock Resources Plc Annual Report and Accounts 2021 23 Consolidated Statement of Financial Position as at 30 June 2021 ASSETS Non-current assets Investments in associates and joint ventures Exploration assets Mineral tenements Financial instruments - fair value through other comprehensive income (FVTOCI) Non-current receivables Total non-current assets Current assets Cash and cash equivalents Loans and receivables Financial instruments with fair value through profit and loss (FVTPL) Other receivables Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to owners of the Parent Called up share capital Share premium account Other reserves Retained earnings Total equity attributable to owners of the Parent Non-controlling interest Total equity LIABILITIES Non-current liabilities Trade and other payables Borrowings Total non-current liabilities Current liabilities Trade and other payables Short-term borrowings Total current liabilities TOTAL EQUITY AND LIABILITIES Notes 12 13 14 17 16 15 18 20 19 19 19 19 30 June 2021 £’000 1,585 13,515 124 1,755 1,344 18,323 457 161 — 399 1,017 19,340 2,835 30,924 1,627 (18,741) 16,645 (199) 16,446 119 731 850 1,075 969 2,044 19,340 30 June 2020 £’000 1,584 11,858 31 2,755 1,432 17,660 53 — 3 544 600 18,260 2,783 26,909 1,460 (17,187) 13,965 (135) 13,830 7 — 7 3,345 1,078 4,423 18,260 These Financial Statements on pages 24 to 65 were approved by the Board of Directors and authorised for issue on 28 December 2021 and are signed on its behalf by: Andrew Bell Chairman and CEO The accompanying notes form an integral part of these Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 24 Consolidated Income Statement for the year ended 30 June 2021 Continuing operations Administrative expenses Exploration expenses Project development Other project costs Share based payments Impairment of financial assets carried at amortised cost Reversal of previously impaired financial assets Loss on revaluation of FVTPL financial assets Currency gains Share of profits/(losses) of associates Other gains Dividend income Finance income, net Profit/(loss) for the year before taxation Tax Profit/(loss) for the year Profit/(loss) for the year attributable to: Equity holders of the Parent Non-controlling interest Earnings per share attributable to owners of the Parent: Basic earnings per share, pence Diluted earnings per share, pence Consolidated Statement of Comprehensive Income for the year ended 30 June 2021 Profit/(loss) for the year Other comprehensive income Items that will not be reclassified to profit or loss (Deficit) / surplus on revaluation of FVTOCI financial assets Losses and transfer of FVTOCI financial assets on disposal Items that may be reclassified subsequently to profit or loss Unrealised foreign currency (loss) / gain arising upon retranslation of foreign operations Total other comprehensive income net of tax for the year Total comprehensive income, net of tax for the year Total comprehensive income net of tax attributable to: Owners of the Parent Non-controlling interest The accompanying notes form an integral part of these Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 Year to 30 June 2021 £’000 Year to 30 June 2020 £;000 Notes 4 6 6 1.5 1.5 15 12 5 5 5 7 10 10 Notes 14 (699) (105) (559) (305) (350) — — — 34 — 290 126 (131) (1,699) — (1,699) (1,625) (74) (1,699) (0.18) (0.18) (597) (10) (42) (319) — (250) 5,280 (53) 32 — 143 419 553 5,156 — 5,156 5,164 (8) 5,156 0.76 0.64 30 June 2021 £’000 (1,699) 30 June 2020 £’000 5,156 (330) (330) 19 (641) (2,340) (2,266) (74) (2,340) (806) (82) (4) (892) 4,264 4,378 (114) 4,264 25 Consolidated Statement of Changes in Equity for the year ended 30 June 2021 The movements in equity during the period were as follows: As at 1 July 2019 Changes in equity for 2020 Profit for the year Partial disposal of a subsidiary Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Losses on sale of FVTOCI taken directly to reserves Unrealised foreign currency (loss) / gain arising upon retranslation of foreign operations Total comprehensive income for the year Transactions with owners Issue of shares Share issue in relation to SIP Total transactions with owners As at 30 June 2020 Changes in equity for 2021 Loss for the year Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Unrealised foreign currency (loss) / gain arising upon retranslation of foreign operations Losses on sale of FVTOCI taken directly to reserves Total comprehensive income for the year Transactions with owners Issue of shares Share issue costs Share based payments Issue of warrants Total transactions with owners Share capital £’000 2,781 Share premium account £’000 Retained earnings £’000 26,853 (22,668) Other reserves £’000 2,563 Total attributable to owners of the Parent £’000 Non-controlling interest £’000 Total equity £’000 9,529 (21) 11,215 — — — — — — — 1 1 2 — — — — — — — 35 21 56 5,164 106 — — 5,164 106 (8) (106) 5,156 — — — (293) (293) (806) (806) 211 — 211 — (4) (4) — — — — (293) (806) 211 (4) 5,481 (1,103) 4,378 (114) 4,264 — — — — — — 36 22 58 — — — 36 22 58 2,783 26,909 (17,187) 1,460 13,965 (135) 13,830 — — (1,625) — (1,625) (74) (1,699) — — — — — 52 — — — 52 — — — — — 4,163 (110) — (38) 4,015 — — — 71 (401) (401) (330) (330) 19 — 19 71 — — — — (401) (330) 19 71 (1,554) (712) (2,266) (74) (2,340) — — — — — — — 66 813 879 4,215 (110) 66 775 4,946 16,645 — — — — — (199) 4,215 (110) 66 775 4,946 16,446 As at 30 June 2021 2,835 30,924 (18,741) 1,627 Red Rock Resources Plc Annual Report and Accounts 2021 26 Consolidated Statement of Changes in Equity Continued for the year ended 30 June 2021 As at 1 July 2019 Changes in equity for 2020 Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Unrealised foreign currency gains on translation of foreign operations Total comprehensive income / (expense) for the year As at 30 June 2020 Changes in equity for 2021 Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Unrealised foreign currency gains on translation of foreign operations Share based payments Warrants issued in the year Total comprehensive income / (expense) for the year As at 30 June 2021 FVTOCI financial instruments revaluation reserve £’000 Foreign currency translation reserve £’000 Share-based payment reserve £’000 2,256 143 164 Warrant reserve £’000 — (293) (806) — (1,099) 1,157 (401) (330) — — — (731) 426 — — (4) (4) 139 — — 19 — — 19 — — — — 164 — — — 66 — 66 158 230 — — — — — — — — — 813 813 813 Total other reserves £’000 2,563 (293) (806) (4) (1,103) 1,460 (401) (330) 19 66 813 148 1,627 See note 21 for a description of each reserve included above. Red Rock Resources Plc Annual Report and Accounts 2021 27 Consolidated Statement of Cash Flows for the year ended 30 June 2021 Cash flows from operating activities Profit/(loss) before tax Increase in receivables Increase in payables Share of (profit)/losses in associates Interest receivable and finance income, including income from MFP Dividend income Interest expense Share-based payments Foreign exchange gain/loss Change in value in FVTPL financial assets Reversal of previously impaired exploration asset Impairment of loans and other receivables Write back of trade creditors Net cash outflow from operations Corporation tax reclaimed/(paid) Net cash used in operations Cash flows from investing activities Proceeds from sale of FVTOCI financial assets Dividends received Payments to acquire exploration asset Payments to increase interest in associate Payments for tenements Payments to set up new joint ventures Net cash (outflow) / inflow from investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Interest paid Proceeds from new borrowings Repayments of borrowings Net cash inflow / (outflow) from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of period Exchange (losses)/gains on cash and cash equivalents Cash and cash equivalents at end of period Major non-cash transactions are disclosed in note 24. Year to 30 June 2021 £’000 (1,699) (281) 143 — (152) (126) 128 350 (50) 3 — — — (1,684) — (1,684) 403 126 (215) (370) (93) — (149) 1,957 (110) (101) 545 (50) 2,241 408 53 (4) 457 Notes 12 5 5 5 22 1.5 1.5 3 14 24 24 24 16 The accompanying notes and accounting policies form an integral part of these Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 Year to 30 June 2020 £’000 5,156 (24) 322 — (330) (419) 196 — (32) 53 (5,280) 250 (552) (660) — (660) 504 419 (43) — (31) (4) 845 — — (130) 103 (175) (202) (17) 64 6 53 28 Company Statement of Financial Position as at 30 June 2021 ASSETS Non-current assets Investments in subsidiaries Investments in associates and joint ventures Financial instruments - fair value through other comprehensive income (FVTOCI) Exploration property Exploration assets Non-current receivables Total non-current assets Current assets Cash and cash equivalents Financial assets (FVTPL) Loans and other receivables Total current assets 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 Intra-group borrowings Short-term external borrowings Total current liabilities TOTAL EQUITY AND LIABILITIES Notes 30 June 2020 £’000 30 June 2020 £’000 11 12 14 13 13 17 16 15 18 20 19 19 19 39 1,666 778 12,948 567 1,950 17,948 366 — 365 731 19 1,665 1,771 11,507 351 1,429 16,742 32 3 715 750 18,679 17,492 2,835 30,924 1,043 (19,003) 15,799 2,783 26,909 645 (17,362) 12,975 1,043 1,079 758 2,880 3,316 276 925 4,517 18,679 17,492 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)/profit for the financial year was (£1.578 million) (2020: profit of £5.080 million). The Company’s total comprehensive income for the financial year was (£2.122 million) (2020: income of £4.232 million). These Financial Statements on pages 24 to 65 were approved by the Board of Directors and authorised for issue on 28 December 2021 and are signed on its behalf by: Andrew Bell Chairman and CEO The accompanying notes and accounting policies form an integral part of these Financial Statements. Red Rock Resources Plc Annual Report and Accounts 2021 29 Company Statement of Changes in Equity for the year ended 30 June 2021 The movements in equity during the period were as follows: As at 1 July 2019 Changes in equity for 2020 Profit for the year Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Losses on sale of FVTOCI taken directly to reserves Total comprehensive income for the year Transactions with owners Issue of shares Share issues in relation to SIP Total transactions with owners As at 30 June 2020 Changes in equity for 2021 Loss for the year Other comprehensive income for the year Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Transfer of FVTOCI reserve relating to disposals Losses on sale of FVTOCI taken directly to reserves Total comprehensive income for the year Transactions with owners Issue of shares Share issuance costs Share based payments Issue of warrants Total transactions with owners As at 30 June 2021 Share capital £’000 2,781 Share premium account £’000 26,853 Retained earnings £’000 (22,590) Other reserves £’000 1,641 Total equity £’000 8,685 — — — — — 1 1 2 — — — — — 35 21 56 5,080 — 5,080 — (312) (312) — 148 5,228 — — — (684) — (996) — — — 645 (684) 148 4,232 36 22 58 12,975 2,783 26,909 (17,362) — — — — — 52 — — — 52 2,835 — (1,578) — (1,578) — — — — 4,163 (110) — (38) 4,015 30,924 — — (63) (1,641) — — — — — (631) 150 — (481) — — 66 813 879 (19,003) 1,043 (631) 150 (63) (2,122) 4,215 (110) 66 775 4,946 15,799 Red Rock Resources Plc Annual Report and Accounts 2021 30 Company Statement of Changes in Equity for the year ended 30 June 2021 As at 1 July 2019 Changes in equity for 2020 Other comprehensive income for the year Transfer of FVTOCI reserve relating to disposals Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Total Other comprehensive income As at 30 June 2020 Changes in equity for 2020 Other comprehensive income for the year Transfer of FVTOCI reserve relating to impaired FVTOCI financial assets Transfer of FVTOCI reserve relating to disposals Share based payments Issue of warrants Total Other comprehensive income As at 30 June 2021 See note 21 for a description of each reserve included above. FVTOCI financial assets revaluation reserve £’000 Share-based payment reserve £’000 1,477 164 Warrant reserve £’000 — Total other reserves £’000 1,641 (312) (684) (996) 481 (631) 150 — — (481) — — — — 164 — — 66 — 66 230 — — — — — — — 813 813 813 (312) (684) (996) 645 (631) 150 66 813 398 1,043 Red Rock Resources Plc Annual Report and Accounts 2021 31 Company Statement of Cash Flows for the year ended 30 June 2021 Cash flows from operating activities Profit/(loss) before taxation Increase in receivables (Decrease) / Increase in payables Dividend income Interest income and other finance income Interest expense Share-based payments Reversal of previously impaired exploration asset Income from forgiven creditors Impairment of loans and receivables Change in value in FVTPL financial assets Foreign exchange loss / (gain) Net cash outflow from operations Corporation tax Net cash used in operations Cash flows from investing activities Dividends received Proceeds from sale of FVTOCI financial assets Payments to acquire exploration asset 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 from new borrowings Re-payments of borrowings Net cash inflow from financing activities Net increase/(decrease) 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. 30 June 2020 £’000 (1,578) (239) (440) (125) (185) 128 350 — — — 3 118 (1,968) — (1,968) 126 150 (215) 61 1,957 (110) (101) 545 (50) 2,241 334 32 366 30 June 2020 £’000 5,080 (55) 308 (310) (330) 196 — (5,280) (552) 250 53 (39) (679) — (679) 310 501 (43) 768 — — (130) 205 (175) (100) (11) 43 32 Red Rock Resources Plc Annual Report and Accounts 2021 32 Notes to the Financial Statements 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 2021, were authorised for issue by the Board on 28 December 2021 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 accounting standards in conformity with the requirements of the Companies Act 2006. The Financial Statements have been prepared on the cost basis, except for certain financial instruments, which are carried as described in the respective sections in the policies below. The principal accounting policies adopted are set out below. Going Concern It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 30 June 2021, the Group had cash and cash equivalents of £0.457 million and £0.969 million of borrowings and, as at the date of signing these Financial Statements, the cash balance was £0.062 million. The Directors anticipate having to raise additional funding over the course of the going concern period. Having considered the prepared cashflow forecasts and the Group budgets, which includes the possibility of Directors reducing or foregoing their salaries if required, the progress in activities post year-end, including the anticipated asset sales of £0.953 million, the Directors consider that they will have access to adequate resources in the 12 months from the date of the signing of these Financial Statements. As a result, they consider it appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements. Should the Group be unable to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities, which might arise, and to classify non-current assets as current. The Financial Statements have been prepared on the going concern basis and do not include the adjustments that would result if the Group was unable to continue as a going concern. Amendments to Published Standards Effective for the year Ended 30 June 2021 New Standards, Amendments and Interpretations The Group and the Parent Company have adopted all of the new and amended standards and interpretations, issued by the International Accounting Standards Board that are relevant to its operations and effective for accounting periods commencing on or after 1 July 2020. The following new IFRS standards and/or amendments to IFRS standards were adopted for the first time during the year, none of which had a material impact on the Financial Statements: • • • Amendments to IFRS 3: Business Combinations (effective 1 January 2020); Amendments to IAS 1 and IAS 8: Definition of Material (effective 1 January 2020); and Amendments to IFRS 9, IAS 39 and IFRS 17: Interest Rate Benchmark Reform (effective 1 January 2020). No standards or interpretations, that came into effect for the first time for the financial year beginning 1 July 2020, have had an impact on the Group or the Company. New Standards, Amendments and Interpretations Not Yet Adopted At the date of approval of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements were in issue but not yet effective: • • • • Amendments to IAS 1: Presentation of Financial Statements – Classification of Liabilities as Current or Noncurrent (effective date not yet confirmed); Amendments to IFRS 3: Business Combinations – Reference to Conceptual Framework (effective 1 January 2022); Amendments to IAS 16: Property, Plant and Equipment (effective 1 January 2022); Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1 January 2022); Red Rock Resources Plc Annual Report and Accounts 2021 33 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.2 Basis of Preparation (continued) • • • Annual Improvements to IFRS Standards 20182020 Cycle (effective 1 January 2022); Amendments to IAS 8: Accounting Policies, Changes to Accounting Estimates and Errors (effective date not yet confirmed); and Amendments to IAS 12: Income Taxes – Deferred Tax arising from a Single Transaction (effective date not yet confirmed). The effect of these new and amended standards and interpretations, which are in issue but not yet mandatorily effective, is not expected to be material. 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. 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 the Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment. At 30 June 2021, the Consolidated Financial Statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd, RRR Coal Ltd, Red Rock Resources Congo S.A.U., RedRock Kenya Ltd and Red Rock Resources (HK) Ltd. The Group’s dormant subsidiary Intrepid Resources Ltd, Red Rock Resources Inc., RRR Kenya Ltd., Ivory Coast, Red Rock Cote D’Ivoire SARL and Basse Terre SARL, have been excluded from consolidation on the basis of the exemption provided by Section 405(2) of the Companies Act 2006 that their 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 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. 1.4 Summary of Significant Accounting Policies 1.4.1 Mineral Tenements and Exploration Property Exploration licence and property acquisition costs are capitalised in intangible assets. Licence costs, paid in connection with a right to explore in an existing exploration area, are capitalised and amortised over the term of the permit. Licence and property acquisition costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. If no future activity is planned or the licence has been relinquished or has expired, the carrying value of the licence and property acquisition costs are written off through the statement of profit or loss and other comprehensive income. 1.4.2 Investment in Associates An associate is an entity over which the Group has the power to exercise significant influence, but not controlled or jointly controlled by the Group, through participation in the financial and operating policy decisions of the investee. Red Rock Resources Plc Annual Report and Accounts 2021 34 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) 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 is 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 the Group 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 Financial Statements, 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 recognises its interest in the jointly controlled 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 Statement of Financial Position 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. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group’s 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 Taxation Corporation tax is provided on taxable profits or losses at the current rate. The tax expense/credit represents the sum of the current tax expense/credit and deferred tax. The tax currently payable/receivable is based on taxable profit or loss for the year. Taxable profit or loss differs from accounting profit or loss 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 or loss 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 or loss nor the accounting profit or loss. 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. Red Rock Resources Plc Annual Report and Accounts 2021 35 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) 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. 1.4.5 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”), the Congolese Franc, and Kenyan Shillings. Transactions in currencies other than the functional currency of the relevant entity 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 translated 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 translation, 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. 1.4.6 Share-Based Payments Share Options 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 Income Statement, with a corresponding increase in equity reserves – the share-based payment reserve, until the award has been settled and then make a transfer to share capital. 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. The exercise price is fixed at the date of grant. Non-market conditions are performance conditions that are not related to the market price of the entity’s equity instruments. They are not considered, when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period, based on the best available estimate of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date, based on factors such as a shortened vesting period, and the cumulative expense is “trued up” for both the change in the number expected to vest and any change in the expected vesting period. Market conditions are performance conditions that relate to the market price of the entity’s equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is accelerated in the period that the entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period. Red Rock Resources Plc Annual Report and Accounts 2021 36 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) 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. Warrants or options, issued to parties other than employees, are valued based on the value of the service provided. Share Incentive Plan Where shares are granted to employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares, granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date, and is recognised as an expense in the Income Statement on the date of the grant. For the partnership shares, the charge is calculated as the excess of the mid-market price on the date of grant over the employee’s contribution. 1.4.7 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 profit or loss as they become payable. 1.4.8 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. Recoverability 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. 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 Income Statement. 1.4.9 Impairment of Non-Financial Assets The carrying values of assets, other than those to which IAS 36 “Impairment of Assets” does not apply, are reviewed at the end of each reporting period for impairment, when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow. An impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income. When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 1.4.10 Finance Income/Expense Finance income and expense 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 or re-payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability. 1.4.11 Financial Instruments The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows: Red Rock Resources Plc Annual Report and Accounts 2021 37 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) Fair Value through Profit or Loss (FVTPL) This category comprises in-the-money derivatives and out-of-money derivatives, where the time value offsets the negative intrinsic value. They are carried in the Statement of Financial Position at fair value, with changes in fair value recognised in the Consolidated Statement of Comprehensive Income in the finance income or expense line. Other than derivative financial instruments, which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss. Amortised Cost These assets comprise the types of financial assets, where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost, using the effective interest rate method, less provision for impairment. Impairment provisions, for current and non-current trade receivables. are recognised, based on the simplified approach within IFRS 9, using a provision matrix in the determination of the lifetime expected credit losses. During this process, the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss, arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account, with the loss being recognised in the Consolidated Statement of Comprehensive Income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions, for receivables from related parties and loans to related parties, are recognised, based on a forward-looking expected credit loss model. The methodology, used to determine the amount of the provision, is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset, based on analysis of internal or external information. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses, along with the gross interest income, are recognised. For those that are determined to be credit impaired, lifetime expected credit losses, along with interest income on a net basis, are recognised. The Group considers a financial asset in default, when contractual payments are 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default, when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full, before taking into account any credit enhancements held by the Group. A financial asset is written off, when there is no reasonable expectation of recovering the contractual cash flows. The Group's financial assets, measured at amortised cost, comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and, for the purpose of the Statement of Cash Flows, bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the Consolidated Statement of Financial Position. Fair Value through Other Comprehensive Income (FVTOCI) The Group has a number of strategic investments in listed and unlisted entities, which are not accounted for as subsidiaries, associates or jointly controlled entities. For those investments, the Group has made an irrevocable election to classify the investments at fair value through other comprehensive income rather than through profit or loss as the Group considers this measurement to be the most representative of the business model for these assets. They are carried at fair value, with changes in fair value recognised in other comprehensive income, and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any balance, within fair value through other comprehensive income reserve, is reclassified directly to retained earnings and is not reclassified to profit or loss. Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which case, the full or partial amount of the dividend is recorded against the associated investments carrying amount. Purchases and sales of financial assets, measured at fair value through other comprehensive income, are recognised on settlement date with any change in fair value between trade date and settlement date, being recognised in the fair value through other comprehensive income reserve. Red Rock Resources Plc Annual Report and Accounts 2021 38 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • • In the principal market for the asset or liability; or In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured, using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement, of a non-financial asset, takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities, for which fair value is measured or disclosed in the Financial Statements, are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • • • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Group determines, whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Financial Liabilities The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired: Fair Value through Profit or Loss (FVTPL) This category comprises out-of-the-money derivatives, where the time value does not offset the negative intrinsic value or any liabilities held for trading. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income. The Group did not hold any such liabilities at the date of IFRS 9 adoption or at the end of the reporting year. Other Financial Liabilities Other financial liabilities include: • • • Borrowings, which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost, using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption as well as any interest or coupon payable while the liability is outstanding; Liability components of convertible loan notes are measured as described further below; and Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method. Red Rock Resources Plc Annual Report and Accounts 2021 39 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.4 Summary of Significant Accounting Policies (continued) 1.4.12 Investments Investments in subsidiaries 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. Investments in associates and joint ventures 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 impairment. 1.4.13 Dividend Income Dividends, received from strategic investments, are recognised, when they become legally receivable. In case of interim dividends, this is when declared. In case of final dividends, this is when approved by the shareholders at the Annual General Meeting. 1.4.14 Share Capital Financial instruments, issued by the Group, are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group’s ordinary shares are classified as equity instruments. 1.4.15 Convertible Debt The proceeds, received on issue of the Group's convertible debt, are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows, using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability, measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Convertible debt option reserve" within shareholders' equity, net of income tax effects. 1.4.16 Warrants Derivative contracts, that only result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity’s own equity instruments, are classified as equity instruments. When warrants are issued, attached to specific loan notes, the Company estimates the fair value of the issued warrants, using the Black-Scholes pricing model, taking into account the terms and conditions upon which the warrants were issued, value of such warrants is deducted from the balance of loan notes, a directly attributable transaction cost. Warrants, relating to equity finance and issued together with ordinary shares placement, are valued by residual method and treated as directly attributable transaction costs and recorded as a reduction of share premium account based on the fair value of the warrants. Warrants, classified as equity instruments, are not subsequently re-measured. 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: Recognition of Holdings Less Than 20% as an Associate The Company owns 15% of the issued share capital of Mid Migori Mining Company Ltd (“MMM”). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider that, the agreements whereby the Company owns the beneficial interest in the Kenyan assets, 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 years ended 30 June 2021, 30 June 2020 and 30 June 2019. The effect of recognising MMM as an FVTOCI financial asset would be to decrease the profit by £25 (2020: decrease the profit by £25). Red Rock Resources Plc Annual Report and Accounts 2021 40 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.5 Significant Accounting Judgements, Estimates and Assumptions (continued) 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 useful lives of property, plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities. Fair value of Mineras Four Points Sales Proceeds Receivable In estimating the fair value of the Company’s future gold royalties from Colombia, the Directors have made assumptions about the future cash flows, which include the following key assumptions: • • • Gold price (US$/oz) – US$1,750 (2020: US$1,800); Discount rate – 10% (2020: 10%); and Annual production rate – 10,000oz (2020: 10,530oz) The fair value is directly sensitive to any changes in the key assumptions. 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. The model has its strengths and weaknesses and requires six inputs as a minimum: 1) the share price; 2) the exercise price; 3) the risk-free rate of return; 4) the expected dividends or dividend yield; 5) the life of the option; and 6) the volatility of the expected return. The first three inputs are normally, but not always, straightforward. The last three involve greater judgement and have the greatest impact on the fair value. Impairment of Financial Assets 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 financial instruments with fair value movements through other comprehensive income (FVTOCI), 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. Impairment of Non-financial Assets The Group follows the guidance of IAS 36 to determine, when a non-financial asset is impaired. 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. 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. Red Rock Resources Plc Annual Report and Accounts 2021 41 Notes to the Financial Statements (continued) for the year ended 30 June 2021 1. Principal Accounting Policies (continued) 1.5 Significant Accounting Judgements, Estimates and Assumptions (continued) Impairment losses of continuing operations are recognised in the Income Statement in expense categories, consistent with the function of the impaired asset. For investments in associates and joint ventures, the Group assesses impairment after the application of the equity method. 2. Segmental Analysis The Group consider 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 several commodities, ranging from gold to manganese and copper/cobalt, and as such further segmental analysis by commodity has not been considered useful or been presented. Transfer prices, between operating segments, are on an arm’s length basis in a manner similar to transactions with third parties. Net profit/(loss) before tax from continuing operations (147) (143) (563) (129) (131) (970) (1,699) Year to 30 June 2021 Exploration expenses Administration expenses Project development Other project costs Share based payments Currency gain Other income Dividend income Finance income, net Year to 30 June 2020 Exploration expenses Administration expenses Project development Other project costs Currency gain Previous impairment reversal in relation to Kenyan licences Other income Impairment of loans and other receivables Gain/(Loss) on sales of FVTPL investments Finance income, net Net profit/(loss) before tax from continuing operations Red Rock Resources Plc Annual Report and Accounts 2021 Gold Exploration Australia £’000 Gold Exploration Kenya £’000 Copper Exploration DRC £’000 Corporate and unallocated £’000 Investments £’000 — — — (138) — (9) — — — (98) (5) — (40) — — — — — — (4) (559) — — — — — — — — — — — — — 126 (2) 124 Gold Exploration Australia £’000 Gold Exploration Kenya £’000 Copper Exploration DRC £’000 Corporate and unallocated £’000 Investments £’000 — (2) — — — — — — — — (10) (6) — (158) — 5,280 — — — — — — (32) — — — — — — — (2) 5,106 (32) — — — — — — — — — 419 419 Total £’000 (105) (699) (559) (305) (350) 34 290 126 Total £’000 (10) (597) (42) (319) 32 5,280 562 (250) (53) 553 (7) (690) — (127) (350) 43 290 — — (589) (10) (161) 32 — 562 (250) (53) 134 (335) 5,156 42 Notes to the Financial Statements (continued) for the year ended 30 June 2021 2. Segmental Analysis (continued) 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 2021 Non-current assets Investments in associates and joint ventures Mineral tenements Exploration properties Exploration assets FVTOCI financial assets Non-current receivables Total segment non-current assets Year ended 30 June 2020 Non-current assets Investments in associates and joint ventures Mineral tenements Exploration properties Exploration assets FVTOCI financial assets Non-current receivables Total segment non-current assets UK £’000 — — — — 736 1,341 2,077 UK £’000 — — — — 166 1,429 1,595 Africa £’000 Australia £’000 1,585 — 12,948 567 1,019 — 16,119 — 124 — — — 3 127 Africa £’000 Australia £’000 1,584 — 11,507 351 2,589 — 16,031 — 31 — — — 3 34 Total £’000 1,585 124 12,948 567 1,755 1,344 18,323 Total £’000 1,584 31 11,507 351 2,755 1,432 17,660 3. (Loss)/Profit for the Year Before Taxation (Loss)/profit for the year before taxation is stated after charging: Auditor’s remuneration: - fees payable to the Company’s auditor for the audit of consolidated and Company Financial Statements Directors’ emoluments (note 9) - Share Incentive plan – Directors - Share Incentive plan – staff Other gains - Write back of trade creditors more than 7 years old - Government support grant (COVID-19) 2021 £’000 2020 £’000 25 312 11 7 — — 24 257 14 — 552 10 Red Rock Resources Plc Annual Report and Accounts 2021 43 Notes to the Financial Statements (continued) for the year ended 30 June 2021 4. Administrative Expenses Staff costs Payroll Pension Consultants HMRC / PAYE Professional services Accounting and Audit Legal Marketing Other Regulatory compliance Travel Office and Admin General IT costs Rent Insurance Total administrative expenses 5. Finance Income/(Costs), Net Group Interest income (other than MFP finance income) Dividend income Interest expense Total finance income (other than MFP finance income) MFP finance expense / (income) Total finance income Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 307 20 15 28 42 15 64 — 105 24 22 8 35 13 699 234 18 15 19 73 11 35 1 85 27 19 5 48 7 597 307 20 15 28 40 14 64 — 105 24 17 8 35 13 690 2021 £’000 290 126 (131) 285 — 285 234 18 15 19 67 11 35 1 85 27 10 5 48 7 582 2020 £’000 311 419 (196) 534 19 553 Interest income (other than Mineras Four Points (“MFP”) finance income) comes from non-current receivables from an associate. Please refer to note 17 and note 18 respectively. Dividend income represents the money received from the Group’s 0.53% holding in Jupiter Mines Limited (2020: holding in Jupiter Mines Limited of 0.81%). 6. Project Development and Other Project Expenses Project development expenses include costs, incurred during the assessment and due diligence phases of a project, when material uncertainties exist regarding, whether the project meets the Company’s investment and development criteria and, whether as a result, the project will be advanced further. Other Project Expenses include costs associated with current and previous projects and include remediation and administration expenses. Project development expenses VUP (Congo) Zlata Bana Galaxy (Congo) Kilbowe (Congo) Luanshimba (Congo) Kinsevere Power project (Zambia) Total project development expenses Red Rock Resources Plc Annual Report and Accounts 2021 Group and Company 2021 £’000 2020 £’000 392 42 14 — 19 92 — 559 — — — 32 — — 10 42 44 Notes to the Financial Statements (continued) for the year ended 30 June 2021 6. Project Development and Other Project Expenses (continued) Other project costs Mid Migori Mines (Kenya) Greenland Other Total other project expenses 7. Taxation Current period taxation on the Group UK corporation tax at 19.00% (2020: 19.00%) on profit/(loss) for the period Deferred tax Origination and reversal of temporary differences Deferred tax assets not recognised Tax credit Factors affecting the tax charge/(credit) for the year Profit/(loss) on ordinary activities before taxation Profit/(loss) on ordinary activities at the average UK standard rate of 19.00% (2020: 19.00%) Income not taxable Effect of expenditure not deductible Losses brought forward utilised in the current period Tax losses carried forward Tax charge 40 126 139 305 158 158 3 319 2021 £’000 2020 £’000 — — — — — (1,699) (323) — 67 — 256 — — — — — — 5,156 980 (1,115) 58 71 6 — No deferred tax asset, relating to the Group’s investments, was recognised in the Statement of Comprehensive Income (2020: £nil). No deferred tax charge has been made due to the availability of trading losses. Unutilised tax losses, arising in the UK, amount to £4.1 million (2020: £3.9 million). 8. Staff Costs 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 2021 £’000 322 20 28 66 436 2021 Number 4 1 1 6 2020 £’000 219 18 19 14 270 2020 Number 4 1 — 5 The key management personnel are the Directors and their remuneration is disclosed within note 9. 360,000 free shares were issued to five employees (2020: nil), including Directors. 4,589,418 partnership and 9,178,836 matching shares, making the total of 15,568,254, were issued in the year ended 30 June 2021 (2020: 4,905,930 partnership, 9,811,860 matching, 14,717,790 total). Red Rock Resources Plc Annual Report and Accounts 2021 45 Notes to the Financial Statements (continued) for the year ended 30 June 2021 9. Directors’ Emoluments 2021 Executive Directors A R M Bell Other Directors S Kaintz M C Nott S Quinn 2020 Executive Directors A R M Bell Other Directors S Kaintz M C Nott S Quinn Directors’ fees £’000 Directors' fees - discretionary bonus £’000 Consultancy fees £’000 Share Incentive Plan £’000 Pension contributions £’000 Social security costs £’000 88 65 15 19 187 17 15 7 7 46 15 — — — 15 7 7 7 7 28 7 6 1 2 16 10 7 1 2 20 Directors’ fees £’000 Directors' fees - discretionary bonus, £’000 Consultancy fees £’000 Share Incentive Plan £’000 Pension contributions £’000 Social security costs £’000 82 65 18 18 183 3 3 1 1 8 15 — — — 15 4 4 3 3 14 7 6 2 1 16 10 7 1 2 20 Total £’000 144 100 31 37 312 Total £’000 121 85 25 26 257 The number of Directors, who exercised share options in the year was nil (2020: nil). During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors’ Report on page 13. 10. Earnings Per Share The basic earnings/(loss) per share is derived by dividing the loss for the year, attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue. Diluted earnings/(loss) per share is derived by dividing the loss 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. 2021 2020 (Loss)/profit attributable to equity holders of the parent company, £ (1,698,983) 5,163,595 Adjusted for interest accrued on the convertible notes — 102,435 Adjusted (loss) / profit attributable to equity holders of the parent company used for diluted EPS calculation (1,698,983) 5,266,030 Weighted average number of ordinary shares of £0.0001 in 939,293,986 679,826,248 issue, used for basic EPS from potential ordinary shares that would have to be issued, if all loan notes, convertible at the discretion of the noteholder, converted at the beginning of the period or at the inception of the instrument, whichever is later Weighted average number of ordinary shares of £0.0001 in issue, including potential ordinary shares, used for diluted EPS — 144,640,518 939,293,986 824,466,766 Red Rock Resources Plc Annual Report and Accounts 2021 46 Notes to the Financial Statements (continued) for the year ended 30 June 2021 10. Earnings Per Share (continued) 2021 2020 (Loss)/earnings per share – basic (0.18 pence) 0.76 pence (Loss)/earnings per share – fully diluted (0.18 pence) 0.64 pence At 30 June 2021, the effect of all the instruments (fully vested and in the money) is anti-dilutive as it would lead to a further reduction of loss per share, therefore, they were not included into the diluted loss per share calculation. Options and warrants, that could potentially dilute basic EPS in the future, but were not included in the calculation of diluted EPS for the periods presented: 2021 2020 Share options granted to employees – either not vested and/or out of 63,320,000 48,320,000 the money Number of warrants given to shareholders as a part of placing equity 380,197,618 101,740,195 instruments – out of the money Total number of contingently issuable shares, that could potentially dilute basic earnings per share in future, and anti- dilutive potential ordinary shares, that were not included into the fully diluted EPS calculation 443,517,618 150,060,195 There were no ordinary share transactions such as share capitalisation, share split or bonus issue after 30 June 2021, that could have changed the EPS calculations significantly, if those transactions had occurred before the end of the reporting period. Red Rock Resources Plc Annual Report and Accounts 2021 47 Notes to the Financial Statements (continued) for the year ended 30 June 2021 11. Investments in Subsidiaries Company Cost At 1 July Investment in subsidiaries At 30 June Impairment At 1 July Charge in the year At 30 June Net book value As at 30 June 2021 and 30 June 2020, the Company held interests in the following subsidiary companies: 2021 £ 2020 £ 20 20 40 (1) — (1) 39 20 — 20 (1) — (1) 19 Company Red Rock Australasia Pty Ltd RedRock Kenya Ltd RRR Kenya Ltd Red Rock Resources Inc* Red Rock Resources (HK) Ltd Red Rock Resources Congo S.A.U. RRR Coal Ltd Jimano Ltd Red Rock Galaxy SA Country of registration Australia Kenya Kenya USA Hong Kong DRC UK Cyprus DRC Proportion Held At 30 June 2021 50,1% 87% 100% 100% 100% 100% 100% 100% 80% Class Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Proportion Held At 30 June 2020 Nature of business 100% Mineral exploration 87% Mineral exploration Mineral exploration Natural resources Holding company Holding company Holding company Royalty Holdings Holding company 100% 100% 100% 100% 100% — — * Red Rock Resources Inc incorporated on 12 November 2015 and dissolved on 10 March 2020. Red Rock Australasia Pty Ltd registered office is c/o Paragon Consultants PTY Ltd, PO Box 903, Claremont WA, 6910, Australia. RedRock Kenya Ltd registered office is PO Box 9306 – 003000, Nairobi, Kenya. RRR Kenya Ltd registered office is PO Box 9306 – 00300, Nairobi, Kenya. Red Rock Resources Inc registered office is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, United States of America. Red Rock Resources (HK) Ltd registered office is Suites 1601-1603, Kinwick Centre, 32 Hollywood Road, Central, Hong Kong. Red Rock Resources Congo S.A.U. registered office is Boulevard Du 30 Juin et Avenue Batetela, Immeuble Crown Tower, 5 Eme Niveau, Local 504, Gombe, Kinshasa. RRR Coal Ltd registered office is Salisbury House, London Wall, London EC2M 5PS. Jimano Ltd registered office Strovolou, 77 Strovolos Center, 4th Floor Office 401, Nicosia, Cyprus Red Rock Galaxy SA office is 1320 Av Meteo 2 Q/Meteo C/Lumbumbashi, DRC Red Rock Resources Plc Annual Report and Accounts 2021 48 Notes to the Financial Statements (continued) for the year ended 30 June 2021 12. Investments in Associates and Joint Ventures Cost At 1 July Additions during the year At 30 June Impairment At 1 July Profit/(loss) during the year At 30 June Group 2021 £’000 Company 2020 £’000 2021 £’000 2020 £’000 1,805 1 1,806 (221) — (221) 1,805 — 1,805 (221) — (221) 1,668 1,668 1 — 1,669 1,668 (3) — (3) (3) — (3) Net book amount at 30 June 1,585 1,584 1,666 1,665 The Company, at 30 June 2021 and at 30 June 2020, had significant influence by virtue other than shareholding over 20% over Mid Migori Mining Company Ltd. Company Mid Migori Mining Company Limited Country of incorporation Kenya Class of shares held Ordinary Percentage of issued capital 15.00% Accounting year ended 30 September 2020 Summarised financial information for the Company’s associates and joint ventures, where available, is given below: For the year as at 30 June 2021: Company Mid Migori Mining Company Limited For the year as at 30 June 2020: Company Mid Migori Mining Company Limited Revenue £’000 — Revenue £’000 — Loss £’000 — Profit £’000 — Assets £’000 2,559 Liabilities £’000 (2,623) Assets £’000 2,559 Liabilities £’000 (2,623) Mid Migori Mining Company Ltd The Company owns 15% of the issued share capital of Mid Migori Mining Company Ltd (“MMM”), incorporated in Kenya. The Company has entered into agreements under which it manages 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). VUP Musonoi Mining SA On 2 March 2019, Vumilia Pendeza S.A. ("VUP") and Bring Minerals S.A.U. ("B.Min"), the joint venture partners, Red Rock Resources Congo S.A.U. ("RRRC"), a wholly owned local subsidiary of the Company, signed the "Statutes of VUP Musonoi Mining SA" ("VMM S.A."), the joint venture company (incorporated in the Democratic Republic of Congo) through which the JV Project will be pursued. RRRC owns 50.1% of VMM S.A, however, the entity is operated jointly and managed by the board of Musonoi Mining S.A. with no party classified as having formal control. The Company announced on 16 November 2021 that it had served an Ordonnance de Saisie Conservatoire (precautionary attachment) order on VUP and taken other measures locally to protect its interests as relates to this joint venture. Red Rock Resources Plc Annual Report and Accounts 2021 49 Notes to the financial statements (continued) for the year ended 30 June 2021 12. Investments in Associates and Joint Ventures (continued) Cost At 1 July 2020 Additions during the year At 30 June 2021 Impairment and losses during the year At 1 July 2020 The Group’s share of profit/(loss) during the year At 30 June 2021 Carrying amount At 30 June 2021 and 30 June 2020 13. Exploration Assets Group and Company At 1 July Additions Amounts payable under earn-in agreement Reclassification from non-current financial assets At 30 June Exploration assets were capitalised: Mid Migori Mining Company Limited £’000 VUP Musonoi Mining SA £’000 1,082 1 1,083 (81) — (81) 583 — 583 — — — Total £’000 1,665 1 1,666 (81) — (81) 1,002 583 1,585 2021 £’000 11,858 1,657 — — 13,515 2020 £’000 235 116 2,028 9,479 11,858 • • For the Galaxy (DRC) project since 17 October 2018, when exploration commenced at the project license in the DRC; and For the VUP (DRC) project since 22 November 2018, when the joint venture agreement was finalised. Under a 2018 agreement with MMM partner Kansai Mining Corporation Ltd, in the event of a renewal or reissue of licenses, covering the relevant assets, the Company was within three months to make further payment of US$2.5 million (£2.028 million) to Kansai Mining Corporation Ltd. For further details of the payments see note 25. Management have considered the recoverability of this asset and have considered the recent announcement regarding the restoration of the Kenyan gold licenses as well as the potential to complete a transaction, involving these assets and considers the likely proceeds from such a transaction would exceed the value of the exploration property. Red Rock Resources Plc Annual Report and Accounts 2021 50 Notes to the Financial Statements (continued) for the year ended 30 June 2021 14. Financial Instruments with Fair Value Through Other Comprehensive Income (FVTOCI) Opening balance Additions Disposals Change in fair value At 30 June Group 2021 £’000 2,755 143 (401) (742) 1,755 Market Value of Investments The market value as at 30 June of the listed and unlisted investments was as follows: Quoted on London AIM Quoted on other foreign stock exchanges Unquoted investments at fair value Group 2021 £’000 562 1,019 174 1,755 2020 £’000 4,210 146 (795) (806) 2,755 2020 £’000 146 2,471 138 2,755 Company 2021 £’000 2020 £’000 1,711 143 (697) (379) 778 3,163 146 (853) (685) 1,771 Company 2021 £’000 2020 £’000 146 1,487 138 1,771 562 42 174 778 Jupiter Mines Limited During the reporting year, Jupiter Mines Limited has made distributions recognised as dividends and included into the Dividend line in the Consolidated Income Statement in the amount of £0.126 million (2020: £0.419 million). At 30 June 2021, Red Rock retains a 0.53% stake in the share capital of Jupiter Mines Limited (2020:0.81%). Elephant Oil Ltd Following discussions with the management team of Elephant Oil Ltd and internal analysis, conducted on the Company’s projects and prospects for onshore oil exploration activities in Benin, the fair value of the investment held is £173,866 (2020: £137,500). Corcel Plc During the reporting year, the Company sold 3,383,633 shares in Corcel Plc to maintain the Company’s working capital. Gain on sale of these shares recognised in the Statement of Other Comprehensive Income amounted to £65,606. Juno Minerals Limited At 30 June 2021, Red Rock retains a 0.29% stake in the share capital of Juno Minerals Limited (2020:nil). Details of the fair value measurement hierarchy are included in Note 23. Red Rock Resources Plc Annual Report and Accounts 2021 51 Notes to the Financial Statements (continued) for the year ended 30 June 2021 15. Financial Instruments with Fair Value Through Profit and Loss Group and Company Warrants in Soma Gold Corp. ordinary shares 30 June 2021 £’000 — — 30 June 2020 £’000 3 3 At 30 June 2021, the Company was holding no warrants in Soma Gold Corp. (formerly Para Resources Inc.) (2020: 232,500). The warrants held in Soma Gold Corp expired on 4 June 2021. Warrant exercise price CAD 0.30 Number of warrants 232,500 Grant date 4 June 2018 Expiry date 4 June 2021 Fair value of individual warrant CAD 0.024 The following information is relevant, in the determination of the fair value of the warrants, granted during the year: Valuation model Warrant exercise price, CAD$ Weighted average share price at valuation date, CAD$ Weighted average contractual life, years Expected volatility, % Expected dividend growth rate, % Risk-free interest rate (Canadian Government three-year bond), % Black-Scholes model 0.30 0.25 0.93 160% 0 0.158 Calculation of volatility involves significant judgement by the Directors and it is based on the Para Resources Inc trading data, directly preceding the grant date. 16. Cash and Cash Equivalents Group Cash in hand and at bank 30 June 2021 £’000 457 457 For the purpose of the statement of cash flows, cash and cash equivalents comprise cash at bank and in hand. Company Cash in hand and at bank Credit Risk 30 June 2021 £’000 366 366 30 June 2020 £’000 53 53 30 June 2020 £’000 32 32 The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from notes and other receivables. The Directors manage the Group’s exposure to credit risk by the application of monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Directors minimise credit risk by dealing exclusively with high credit rating counterparties. The Company defines default through a framework of qualitative “unlikeliness to pay” with a more objective 90 days past due timeline. The qualitative criteria allows the Company to identify exposure early on in the process, with the 90 day past due limit providing a clear final metric. Red Rock Resources Plc Annual Report and Accounts 2021 52 Notes to the Financial Statements (continued) for the year ended 30 June 2021 16. Cash and Cash Equivalents (continued) Credit Risk Concentration Profile The Group’s receivables do not have significant credit risk exposure to any single counterparty or any group of counterparties, having similar characteristics. The Directors define major credit risk as exposure to a concentration exceeding 10% of a total class of such asset. The Company maintains its cash reserves in Coutts & Co, which maintains an A-1 credit rating from Standard & Poor’s. 17. Non-Current Receivables MFP sale proceeds Group 2021 £’000 1,344 1,344 Group 2020 £’000 1,432 1,432 Company 2021 £’000 Company 2020 £’000 1,341 1,341 1,429 1,429 The Mineras Four Points (“MFP”) sale proceeds represent the fair value of the non-current portion of the deferred consideration receivable for the sale of MFP. The fair value was estimated based on the consideration offered by the buyer adjusted to its present value based on the timing for which the consideration is expected to be received. The most significant inputs are the offer price per tranches, discount rate and estimated royalty stream. The estimated royalty stream takes into account current production levels, estimates of future production levels and gold price forecasts. 18. Other Receivables Current trade and other receivables Prepayments Related party receivables: – due from subsidiaries Short-term loan to related party: – due from a Director of a JV partner Other receivables Total Group 2021 £’000 2020 £’000 Company 2021 £’000 2020 £’000 42 — 85 272 399 17 — 37 490 544 42 162 85 76 365 17 327 37 334 715 Red Rock Resources Plc Annual Report and Accounts 2021 53 Notes to the Financial Statements (continued) for the year ended 30 June 2021 19. Trade and Other Payables Non-current liabilities Trade and other payables Short term borrowings Total non-current liabilities Current liabilities Trade payables Accruals Due to Partners in associate (note 26) Due to key management Total trade and other payables Intra-group borrowings Short-term borrowings Total current liabilities Group 2021 £’000 2020 £’000 Company 2021 £’000 2020 £’000 119 731 850 835 240 — — 1,075 — 969 2,044 7 — 7 1,042 273 2,029 1 3,345 — 1,078 4,423 — 731 731 803 240 — — 1,043 1,079 27 2,149 — — — 1,013 273 2,029 1 3,316 276 925 4,517 During the year, on 6 November 2020, the Company’s 100% owned subsidiary, RRR Coal Ltd, refinanced its existing loan facility with Riverfort Global Opportunities PCC Limited and YA II PN Ltd, increasing the total amount available for draw-down to USD 2.0 million, and drawing down an initial gross amount of USD 1.0 million with additional tranches available at the lenders’ absolute discretion. The notes are secured on 6,302,000 shares in Jupiter Mines Limited as well as 20,000,000 shares in Power Metal Resources Plc, which were transferred from the Company to an escrow account for the duration of the loan as well as by a corporate guarantee, executed by Red Rock Resources Plc. The notes carry an interest rate of 10% and come with a 7.5% implementation fee and are repayable over a six-month period, starting in June 2021. 20. Share Capital of the Company The share capital of the Group and the Company is as follows: Authorized, Issued and fully paid 1,216,708,801 (2020: 696,767,452) ordinary shares of £0.0001 each 2,371,116,172 deferred shares of £0.0009 each 6,033,861,125 A deferred shares of £0.000096 each As at 30 June 2021 £’000 122 2,134 579 2,835 2020 £’000 70 2,134 579 2,783 Red Rock Resources Plc Annual Report and Accounts 2021 54 Notes to the Financial Statements (continued) for the year ended 30 June 2021 20. Share Capital of the Company (continued) Movement in ordinary shares As at 30 June 2019 – ordinary shares of £0.0001 each Issued 10 March 2020 at 0.6 pence per share (non-cash, settlement for DRC interests) Issued 13 May 2020 at 0.145 pence per share (non-cash, SIP) As at 30 June 2020 – ordinary shares of £0.0001 each Issued 28 Sep 2020 at 0.8 pence per share (cash) Issued 18 Nov 2020 at 0.7 pence per share (non-cash, Kansai settlement for MMM) Issued 14 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion) Issued 18 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion) Issued 22 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion) Issued on 12 Feb 2021 at 1.05 pence per share (cash) Issued on 22 Mar 2021 at 1.05 pence per share (non-cash, Kansai settlement) Issued on 9 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) Issued on 12 Apr 2021 at 1 pence per share (non-cash, SIP) Issued on 12 Apr 2021 at 0.155 pence per share (non-cash, SIP) Issued on 15 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) Issued on 19 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) Issued on 20 Apr 2021 at 0.75 pence per share (cash, exercise of warrants) Issued on 4 Jun 2021 at 0.75 pence per share (cash, exercise of warrants) Number 676,049,662 6,000,000 14,717,790 696,767,452 125,000,000 3,571,429 42,493,333 34,313,378 70,466,665 95,238,095 101,550,000 980,392 1,800,000 13,768,254 1,838,235 980,392 980,392 26,960,784 Nominal £’000 68 1 1 70 13 — 4 3 7 10 10 — — 1 — — — 3 As at 30 June 2021 – ordinary shares of £0.0001 each 1,216,708,801 122 Ordinary shares represent the Company's basic voting rights and reflect the equity ownership of the Company. Ordinary shares carry one vote per share and each share gives equal right to dividends. These shares also give right to the distribution of the Company's assets in the event of winding-up or sale. Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the Company, or bought back for £1 and then cancelled. The deferred shares are not quoted and carry no rights whatsoever. Warrants At 30 June 2021, the Company had 380,197,618 warrants in issue (2020: 101,740,195) with a weighted average exercise price of £0.0015 (2020: £0.0087). Weighted average remaining life of the warrants, at 30 June 2021, was 582 days (2020: 631 days). All the warrants were issued by the Group to its shareholders in the capacity of shareholders and, therefore, are outside of IFRS 2 scope. Group and Company Outstanding at the beginning of the year Granted during the period Exercised during the period Cancelled during the period Lapsed during the period Outstanding at the end of the year 2021 number of warrants 101,740,195 323,322,618 (44,865,195) 2020 number of warrants 109,552,695 57,500,000 - — (57,500,000) — 380,197,618 (7,812,500) 101,740,195 Red Rock Resources Plc Annual Report and Accounts 2021 55 Notes to the Financial Statements (continued) for the year ended 30 June 2021 20. Share Capital of the Company Continued During the year ended 30 June 2021, the Company had the following warrants to subscribe for shares in issue: Grant date 10 Dec 2019 28 Sep 2020 6 Nov 2020 6 Nov 2020 18 Nov 2020 12 Feb 2021 1 Mar 2021 Total warrants in issue at 30 June 2021 Expiry date Warrant exercise price, £ Number of warrants 19 Dec 2022 27 Mar 2023 6 Nov 2023 6 Nov 2023 17 Nov 2023 12 Feb 2023 18 Mar 2023 0.009 0.012 0.016 0.024 0.007 0.020 0.020 56,875,000 137,500,000 8,000,000 8,000,000 71,428,571 47,619,047 50,775,000 380,197,618 The aggregate fair value, related to the share warrants granted during the reporting period, was £1,195,797 (2020: £nil). 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. Fair Value Through Other Comprehensive Income Financial Assets Revaluation Reserve The available for sale trade investments reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments. Share-Based Payment Reserve The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised. Warrant Reserve The warrant reserve represents the cumulative charge for warrants granted, still outstanding and not exercised. 22. Share-Based Payments Employee Share Options In prior years, 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 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. At 30 June 2021, the Company had outstanding options to subscribe for ordinary shares as follows: Red Rock Resources Plc Annual Report and Accounts 2021 56 Notes to the Financial Statements (continued) for the year ended 30 June 2021 22. Share-Based Payments (continued) Options issued 14 June 2016 exercisable at 0.45 pence per share expiring 29 January 2022 Number 5,760,000 4,680,000 900,000 1,080,000 12,420,000 Options issued 13 January 2017 exercisable at 0.8p per share, expiring on 13 January 2023 Options issued on 24 August 2020 at 0.2p per share, expiring on 19 August 2025 Options issued on 24 August 2020 at 0.25p per share, expiring on 19 August 2025 Total Number 12,000,000 11,000,000 3,000,000 3,000,000 29,000,000 Number 5,500,000 2,250,000 — 1,250,000 10,500,000 Number 5,500,000 2,250,000 — 1,250,000 10,500,000 Number 17,760,000 15,680,000 3,900,000 4,080,000 63,320,000 A R M Bell S Kaintz S Quinn Employees Total Outstanding at the beginning and the end of the year Options issued in the year Options lapsed in the year Of them vested and exercisable Company and Group 2021 2020 Number of options 48,320,000 21,000,000 (6,000,000) 63,320,000 Weighted average exercise price pence 0.70 0.225 0.80 0.46 Weighted average exercise price pence 0.70 - Number of options 48,320,000 — — 24,160,000 0.70 21,000,000 share options were granted by the Company in the reporting year (2020: none). The weighted average fair value of each option granted during the year was £0.002 (2020: nil). The exercise price of options, outstanding at 30 June 2021, ranged between £0.0020 and £0.0045 (2020: £0.0045 and £0.008). Their weighted average contractual life was 2.41 years (2020: 2.28 years). Share-based remuneration expense, related to the share options grant, is included in the administration expenses line in the Consolidated Income Statement in the amount of £42,000 (2020: nil). Share Incentive Plan In January 2012, the Company implemented 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 £150 per month with Trustees, who invest the monies in the Company’s shares (“Partnership 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 £3,600 per employee per annum (“Free Shares”). The subscriptions remain free of taxation and national insurance if held for five years. All such shares are held by Share Incentive Plan Trustees and the ordinary shares cannot be released to participants until five years after the date of the award. During the financial year, a total of 13,768,254 Partnership and Matching Shares were awarded and 1,800,000 Free Shares (2020: 14,717,790 Free, Partnership and Matching Shares were awarded) with a fair value of £0.00155 for the Partnership and the Matching Shares and £0.01 for the Free Shares (2020: £0.00145), resulting in a share-based payment charge of £39,341 (2020: £14,227), included in the administration expenses line in the Income Statement. Red Rock Resources Plc Annual Report and Accounts 2021 57 Notes to the Financial Statements (continued) for the year ended 30 June 2021 23. Financial Instruments 23.1 Categories of Financial Instruments The Group and the Company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables, borrowings and trade payables. The carrying amounts for each category of financial instrument are as follows: 30 June Financial assets Available for sale financial assets at fair value through OCI Unquoted equity shares Quoted equity shares Total available for sale financial assets at fair value through OCI Financial assets FVTPL (Para warrants) Total financial assets carried at fair value through profit and loss Cash and cash equivalents Loans and receivables Non-current receivables Other receivables – current Total loans and receivables carried at amortised cost Total financial assets Total current financial assets Total non-current financial assets Financial liabilities Short-term borrowings, including intra-group Long-term borrowings Trade and other payables, excluding accruals Total current financial liabilities Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 174 1,581 1,755 — — 457 1,344 560 1,904 138 2,617 2,755 3 3 53 1,432 544 1,976 174 604 778 — — 366 1,950 365 2,315 4,116 4,787 3,459 1,067 3,099 601 4,186 731 2,728 969 731 954 2,654 1,078 — 3,346 4,424 1,106 731 803 2,640 138 1,633 1,771 3 3 32 1,429 715 2,144 3,950 750 3,200 1,201 — 3,317 4,518 Other Receivables and Trade Payables Management assessed that fair values of other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Non-Current Receivables Long-term fixed-rate receivables are evaluated by the Group, based on parameters such as interest rates, recoverability and risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for any expected losses on these receivables. Loans and Borrowings The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer’s borrowing rate. The carrying value of current financial liabilities in the Company is not materially different from that of the Group. 23.2 Fair Values Financial assets and financial liabilities, measured at fair value in the Statement of Financial Position, are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement as follows: • • • Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Level 2: Valuation techniques for which the lowest level input, that is significant to the fair value measurement, is directly or indirectly observable; and Level 3: Valuation techniques for which the lowest level input, that is significant to the fair value measurement, is unobservable. Red Rock Resources Plc Annual Report and Accounts 2021 58 Notes to the Financial Statements (continued) for the year ended 30 June 2021 23. Financial Instruments (continued) 23.2 Fair Values (continued) The carrying amount of the Company’s financial assets and liabilities is not materially different to their fair value. The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. 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 uses valuation techniques, that are appropriate in the circumstances, and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities. Group 30 June 2021 FVTOCI financial assets – Unquoted equity shares – Quoted equity shares FVTPL (Para warrants) — 1,581 — Level 1 £’000 Level 2 £’000 — — — Level 3 £’000 174 — — Company 30 June 2021 FVTOCI financial assets – Unquoted equity shares – Quoted equity shares FVTPL (Para warrants) 23.2 Fair Values continued Group 30 June 2020 FVTOCI financial assets – Unquoted equity shares – Quoted equity shares FVTPL (Para warrants) Company 30 June 2020 FVTOCI financial assets – Unquoted equity shares – Quoted equity shares FVTPL (Para warrants) Level 1 £’000 Level 2 £’000 Level 3 £’000 — 604 — Level 1 £’000 — 2,617 — Level 1 £’000 — 1,633 — — — — 174 — — Level 2 £’000 Level 3 £’000 — — — 138 — 3 Level 2 £’000 Level 3 £’000 — — — 138 — 3 Total £’000 174 1,581 — Total £’000 174 604 — Total £’000 138 2,617 3 Total £’000 138 1,633 3 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 are 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 for 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. Red Rock Resources Plc Annual Report and Accounts 2021 59 Notes to the Financial Statements (continued) for the year ended 30 June 2021 23. Financial Instruments (continued) 23.3 Financial Risk Management Policies (continued) 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. The consolidated Group does have a material credit risk exposure with Mid Migori Mining Company Ltd, an associate of the Company. See note 1.5, “Significant accounting judgements, estimates and assumptions” for further details. 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; • • Maintaining a reputable credit profile. Obtaining funding from a variety of sources; and The Directors are confident that adequate resources exist to finance operations for commercial exploration and development and that controls over expenditure are carefully managed. Management intend to meet obligations as they become due through ongoing revenue streams, the sale of assets, the issuance of new shares, the collection of debts owed to the Company and the drawing of additional credit facilities. 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. Foreign Currency Risk The Group’s transactions are carried out in a variety of currencies, including Sterling, Australian Dollar, US Dollar, Kenyan and Shilling. 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 financial assets with FVTOCI. These assets are denominated in the following currencies: Group 30 June 2021 GBP £ AUD £ USD £ CAD £ Other £ Total £ Cash and cash equivalents Amortised cost financial assets - Other receivables FVTOCI financial assets Amortised costs financial assets - Non-current receivables Trade and other payables, excluding accruals Short-term borrowings 387 254 604 — 57 969 29 1 977 3 26 — 7 144 174 1341 699 — — — — — — — 34 161 — — 53 — Red Rock Resources Plc Annual Report and Accounts 2021 457 560 1,755 1,344 835 969 60 Notes to the financial statements (continued) for the year ended 30 June 2021 23. Financial Instruments (continued) 23.2 Financial Risk Management Policies (continued) Group 30 June 2020 GBP £’000 AUD £’000 USD £’000 CAD £’000 Other £’000 Total £’000 Cash and cash equivalents Amortised cost financial assets - Other receivables FVTOCI financial assets FVTPL financial assets - warrants Amortised costs financial assets - Non-current receivables Trade and other payables, excluding accruals Short-term borrowings 29 243 147 — — 37 925 5 1 2,470 — 3 26 — 19 144 138 — 1,429 2,106 153 — — — 3 — 866 — — 156 — — — 39 — Company 30 June 2021 GBP £’000 AUD £’000 USD £’000 CAD £’000 Other £’000 Cash and cash equivalents Amortised cost financial assets - Other receivables FVTOCI financial assets Amortised costs financial assets - Non-current receivables Trade and other payables, excluding accruals Short-term borrowings, including intra-group 361 204 604 — 57 27 5 — — — — — — 161 174 1,341 693 — — — — — — — — — — — 53 — Company 30 June 2020 GBP £’000 AUD £’000 USD £’000 CAD £’000 Other £’000 Cash and cash equivalents Amortised cost financial assets - Other receivables FVTOCI financial assets FVTPL financial assets - warrants Amortised costs financial assets - Non-current receivables Trade and other payables, excluding accruals Short-term borrowings, including intra-group 27 572 147 — — 37 925 5 — 1,487 — — — — — 144 138 — 1,429 2,106 276 — — — 3 — 866 — — — — — — 36 — 53 544 2,755 3 1,432 3,074 1,078 Total £’000 366 365 778 1,341 803 27 Total £’000 32 716 1,772 3 1,429 3,045 1,201 Exposures to foreign exchange rates vary during the year, depending on the volume and nature of overseas transactions. 24. Reconciliation of Liabilities Arising from Financing Activities and Major Non-Cash Transactions 30 June 2020 Cash flow loans received Cash flow principal re- payment Cash flow Interest paid Non-cash flow Forex movement Non-cash flow - Conversion Non-cash flow Interest and arrangement fee accreted Non-cash flow Introducers fee accrued 30 June 2021 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 153 925 1,078 878 — 878 (27) (50) (77) (61) (24) (85) (35) — (35) — (884) (884) 34 33 67 — — — 942 — 942 Group Loan from institutional investors Convertible notes Total Red Rock Resources Plc Annual Report and Accounts 2021 61 Company Loan from subsidiary RRR Coal Convertible notes Notes to the financial statements (continued) for the year ended 30 June 2021 24. Reconciliation of Liabilities Arising from Financing Activities and Major Non-Cash Transactions (continued) 30 June 2020 Cash flow loans received Cash flow loans re- payment Cash flow Interest paid Non-cash flow Forex movement Non-cash flow – Conversion Non-cash flow Interest and arrangement fee accreted Non-cash flow Repayment with Jupiter shares 30 June 2021 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 276 925 1,327 (149) — (50) (19) (24) (43) 35 — 35 — (884) (884) 75 33 108 (466) 1,079 — — (466) 1,079 Total 1,201 1,327 (199) Significant non-cash transactions from financing activities, in relation to raising new capital, are disclosed in note 20. Significant non-cash transactions from operating activities were as follows: • • • Impairment of other receivables in the amount of £nil (2020: £0.249 million); Income recognised from the reversal of previous impairment in the amount of £nil (2020: £5.28 million); and Income recognised from forgiven creditors in the amount of £nil (2020: £0.551 million). 25. Significant Agreements and Transactions The following are the significant agreements and transactions recently undertaken having an impact in the year under review. For the sake of completeness and of clarity, some events after the reporting year may be included here and in note 27. Kenya Licensing On 17 August 2020, the anticipated renewals of Prospecting Licenses PL/2018/0202 and PL/2018/0203 (formerly SPLs 122 and 202) had been received for a period of three years from 2 August 2020. Performance Option Award On 24 August 2020, the Company announced the grant of 21,000,000 performance options to Directors and key staff, representing in aggregate 3.01% of the existing share capital of the Company, split between two pools of 10,500,00 performance options at a price of £0.002 per share and £0.0025 per share A pool of 6,000,000 options has been created for distribution at the Board’s discretion to key consultants and advisors. Option over Slovak Gold Assets On 7 September 2020, the Company announced that it had entered into an option over former gold and silver mining and exploration assets at Zlata Bana, Slovakia. A EUR 10,000 payment was made for a due diligence period to 21 September 2020. Red Rock then made a payment EUR 23,000 in order to acquire a 50% interest in the Zlata Bana License, covering an area of approximately 12 sq km. Upon exercise of the option, Red Rock would acquire a 50% interest in the other assets, including interests in land and buildings, vehicles and mining equipment, a permit over a mineral stockpile and mining information and data. The consideration, for exercise of the option, would be the issue upon the execution of documentation to transfer the interest in the assets ("Transfer") of EUR 250,000 of new Red Rock shares at an issue price equal to the prior 5 day average VWAP. A further issue of EUR 100,000 of new Red Rock shares would occur upon completion of the process of Transfer, at an issue price per share equal to the 5 day prior average VWAP. A Joint Venture will be established between Red Rock and Mr Lubomir Konkol. Red Rock would be responsible for certain expenditures ("Committed Expenditure") of the Joint Venture in the period after execution of the option, which was expected to amount to not less that EUR 100,000 in 2020. Following due diligence, the option was not exercised. Update on Jupiter Mines Limited Dividend and Iron Ore Spin Off On 7 September 2020, the Company announced that the Board of Jupiter Mines Limited had approved the execution of the IPO of its Central Yilgarn Iron Ore Assets. Jupiter Mines Limited also announced that the Board of Tshipi e Ntle had declared a dividend to its shareholders of ZAR 330 million for the first half of FY2021. Jupiter Mines Limited will received ZAR156 million and ZAR25 million in marketing profits. Financing to Raise £1,000,000 On 28 September 2020, the Company announced that it had raised £1,000,000 by way of a placing of 125,000,000 new ordinary shares of £0.0001 each at a price of £0.008 per share with 1 for 1 warrants exercisable at a price of £0.012 per share for thirty months. 12,500,000 warrants were issued to First Equity Ltd in part payment for its services as placing agent. Red Rock Resources Plc Annual Report and Accounts 2021 62 Notes to the financial statements (continued) for the year ended 30 June 2021 25. Significant Agreements and Transactions (continued) Jupiter Mines Limited – Dividend On 28 October, Jupiter Mines Limited announced an interim unfranked dividend for the half year period to 31 August 2020 of AUD 0.01 per ordinary share. Issue of Shares and Warrants – Kenya Update On 18 November 2020, the Company announced an update regarding a transaction, whereby Red Rock acquired the remaining beneficial interest in the project from a subsidiary of Kansai Mining Corporation Limited. The renewal of the license triggered a payment of £25,000 to Kansai by the issue of 3,571,429 Red Rock Shares at a price of £0.007 per share. Issuance of a USD 1,000,000 promissory note, payable in 15 months to Kansai. Grant to Kansai of £500,000 of warrants, exercisable for 30 months into shares at £0.007 a share. In addition, Red Rock announced that it had issued to Riverfort Global Opportunities PCC Limited and YA II PN Ltd a total of 16,000,000 thirty-six month warrants, half exercisable at £0.016 and half at £0.024 per share in consideration of the extension of existing facilities and grant of a six month repayment holiday on drawn amounts. Issue of Shares upon Exercise of Convertible Loan Notes On 14 December 2020, the Company announced that it had received notice of conversion of £254,960 of convertible loan notes into 42,493,333 shares at a price of £0.006 per share. Issue of Shares upon Exercise of Convertible Loan Notes On 18 December 2020, the Company announced that it had received notice of conversion of £205,880 of convertible loan notes into 34,313,378 shares at a price of £0.006 per share. Right to Acquire Loans – Funding of Arbitration On 21 December 2020, the Company announced that it had entered into a funding deed and a deed of agreement to create conditions in which the Company was able to fund arbitration proceedings and to give Red Rock the right for two years to acquire the loans of the secured creditors of Vector Resources Limited, for a consideration equal to their net book cost as the time acquisition, with half of the consideration to be paid in Red Rock shares at the then current price. These loans are secured on Vector’s primary asset, a majority holding in the Adidi-Kanga gold project in the Democratic Republic of Congo. The obligation to date, on Red Rock, was USD 90,000. Issue of Shares upon Exercise of Convertible Loan Notes On 22 December 2020, the Company announced that it had received notice of conversion of £422,800 of convertible loan notes into 70,466,665 shares at a price of £0.006 per share. IPO of Juno Minerals Limited On 21 January 2021, the Company announced that in relation to its investment in Jupiter Mines Limited, Jupiter Mines Limited had made an announcement on the ASX, detailing the demerger and initial public offering of its Central Yilgam Iron Ore Assets, through a newly created company, Juno Minerals Limited. Jupiter Mines Limited and Juno Minerals Limited had lodged a notice of meeting and a prospectus respectively. Financing to Raise £1,000,000 On 12 February 2021, the Company announced that it had raised £1,000,000 by way of a placing of 95,238,095 new ordinary shares of £0.0001 each in the Company at a price of £0.0105 per share. The placing was carried out through Monecor (London) Limited, trading as ETX Capital. The placing was conditional on admission of shares to trading on AIM. The Company indicated that it would seek approval at a General Meeting for the issue of non-transferable warrants with a life of two years and an exercise price of £0.02 to be issued to subscribers to the placing on the basis of one warrant for each two placing shares. Announcement by Jupiter Mines Limited On 18 February 2021, the Company announced that in relation to its investment in Jupiter Mines Limited, Jupiter Mines Limited had announced that the Board of Tshipi é Ntle Manganese Mining Proprietary Limited has declared a final dividend to its shareholders of ZAR 1.1 billion for FY2021. Jupiter will receive ZAR 521.5 million (approximately AUD 46.1 million; net of withholding tax). Jupiter Mines Limited will also receive ZAR 30.6 million (approximately AUD 2.7 million) in marketing profits. Australian JV – Start of IPO Process and Update On 1 March 2021, the Company announced that it had begun the Canadian IPO process for its 50.1% owned subsidiary Red Rock Australasia Pty Ltd with the appointment of legal counsel in Canada. Following the grant of the first three licenses, announced on 2 February 2021, a further seven applications are at an advanced stage of processing. The Company further noted that a new application was made for a 227 sq km EL 45/5859 in Western Australia, which will be subject to a ballot between Red Rock Australasia Pty Ltd and Rumble Resources Limited. Red Rock Resources Plc Annual Report and Accounts 2021 63 Notes to the financial statements (continued) for the year ended 30 June 2021 25. Significant Agreements and Transactions (continued) Completion of Purchase – Conditional Issue of Shares and Warrants On 1 March 2021, the Company announced, that further to its announcement of 18 November 2020, 17 August 2020 and 31 December 2020, the terms of the fulfilment of its remaining obligations to Kansai Mining Corporation Ltd under the transaction, announced on 15 June 2018, whereby Red Rock was to acquire the remaining beneficial interest in the Mikei gold project in Kenya from a subsidiary of Kansai, following the renewal of the project licenses. The Company has paid USD 1,000,000 of the USD 2,500,000 payment obligation by paying USD 1,000,000 in cash and Kansai has elected to receive the balance of the USD 1,500,000 in the form of an issue of 101,550,000 new ordinary shares of £0.0001 in the Company at a price of £0.0105 per share to Kansai. The issue of shares was conditional on the approval of Red Rock shareholders. At the same time, Kansai has agreed to sell 52,437,048 shares to be issued to it to a number of substantial private investors in a transaction arranged by Bespoke Capital Solutions Limited. The Company will seek approval at a General Meeting for the issue of the shares, required under the transaction and for the issue of non-tradeable warrants with a life of two years and an exercise price of £0.02 to be issued to Kansai or its nominees on the basis of one warrant for each two shares issued in the transaction. Completion of Purchase On 22 March 2021, the Company announced that following fulfilment of the shareholder approval condition the Company has now issued the 101,550,000 new ordinary shares of £0.0001 in the Company at a price of £0.0105 per share due to Kansai Mining Corporation Ltd or its nominees in settlement of the acquisition of Kansai’s remaining beneficial interest in the Mikei gold project in Kenya. Non-tradeable warrants, with a life of two years and an exercise price of £0.02, will also now be issued to the places, in the share placing, announced on 11 February 2021, and to Kansai or its nominees, on the basis of one warrant for every two shares issued under the placing, and one warrant for every two shares issued under the purchase of the project. Exercise of Warrants On 9 April 2021, the Company announced that it had received notice to exercise warrants over 980,392 warrants into shares at an exercise price of £0.0075 per share. On 15 April 2021, the Company announced that it had received notice to exercise warrants over 1,838,235 warrants into shares at an exercise price of £0.0075 per share. On 19 April 2021, the Company announced that it had received notice to exercise warrants over 980,392 warrants into shares at an exercise price of £0.0075 per share. On 20 April 2021, the Company announced that it had received notice to exercise warrants over 980,392 warrants into shares at an exercise price of £0.0075 per share. On 3 June 2021, the Company announced that it had received notice to exercise warrants over 26,960,784 warrants into shares at an exercise price of £0.0075 per share. 26. Related Party Transactions • The costs incurred on behalf of the Company by Corcel Plc were deemed as a related party for the 30 June 2020 year end. In the current year Corcel Plc is no longer deemed a related party. Amounts are invoiced at each month end and settled on a quarterly basis. 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 £nil (2020: £21,589). Of this, £nil was outstanding at 30 June 2021 (2020: £16,549). • • • • • The costs incurred by the Company, on behalf of Corcel Plc, were £nil (2020: £25,562) in relation to shared services during the year. Of this, £nil was outstanding at 30 June 2021 (2020: £7,962). Power Metal Resources Plc are the Company's partner and holder of 49.9% in the Company's 50.1% owned subsidiary Red Rock Australasia Pty Ltd (“RRAL”). The costs incurred by the Company on behalf of Power Metal Resources Plc were £76,422 (2020: £9,918) in relation to shared costs paid on behalf of RRAL during the year. Of this, £6,000 was outstanding at 30 June 2021 (2020: £nil). Related party receivables and payables are disclosed in notes 18 and 19. The Company held 25,000,000 shares (2.18%) in Power Metal Resources Plc as at 30 June 2021 (2020: 25,000,000 (6.89%)). The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2021 and at 30 June 2020 are shown in the Director’s Report. Red Rock Resources Plc Annual Report and Accounts 2021 64 Notes to the financial statements (continued) for the year ended 30 June 2021 • The key management personnel are the Directors and their remuneration is disclosed within note 9. 27. Significant Events After the Reporting Period On 26 July 2021, the Company announced the appointment to the Board of Alex Borrelli as an independent Non-Executive Director with immediate effect. On 29 September 2021, the Company announced that it had disposed of a substantial part of its remaining holding in Jupiter Mines Limited through market sales at an average price of AUD 0.304 per share for proceeds of AUD 2,327,052.70 (approximately £1,239,489.34). The Company retains 5,870,693 Jupiter Mines Limited shares, with the current share price of Jupiter Mines Limited at AUD 0.225, which is 26% below the average price of Red Rock’s recent sales. On 18 October 2021, the Company announced that it had made applications for five exploration permits through a wholly owned Cote d’Ivoire subsidiary LacGold Resources SARL. The five licenses area totalling 1,907.07 square km were selected, based on a detailed and comprehensive screening and ranking of possible target areas. On 7 December 2021 the Company announced that it had exchanged its shares in Red Rock Australasia for 50.1% of the newly formed New Ballarat Gold Corporation Plc, a UK public company which now owned 100% of RRAL and which would be the vehicle for a possible public listing in London. 28. Commitments As at 30 June 2021, the Company had entered into the following commitments: • Exploration commitments: On-going 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. • On 26 June 2015, the Company announced an agreement with Kansai Mining Corporation Ltd, pursuant to which Red Rock’s farm in agreement was replaced by agreements, under which any interest in the Migori Gold Project or the other assets of Mid Migori Mines, that may be retained or granted to Mid Migori Mines or Red Rock, would be shared 75% to Red Rock and 25% to Kansai. Kansai’s interest was to be carried up the point of an Indicated Mineral Resource of 2m oz of gold. Red Rock was to have full management rights of the operations and of the conduct of legal proceedings on behalf of both Mid Migori Mines and itself. On 15 June 2018, Red Rock announced a revision to this agreement. The effect of the revision is that Kansai exchanged its 25% carried interest under the 2015 agreement for a USD 50,000 payment, leaving Red Rock with a 100% interest. In the event of a renewal or reissue of licenses, covering the relevant assets, the Company will within three months make further payments, subject to such renewal or reissue not being on unduly onerous terms, as follows: (1) USD 2.5 million payable in cash; (2) a USD 1 million promissory note, payable 15 months after issue; and (3) £0.500 million of warrants into Red Rock shares at a price 20% above their average closing price on the three trading days prior to issue. This agreement was further amended on 21 December 2020 through agreement with Kansai to pay USD 1 million, of which USD 0.5 million has been paid on 24 December 2020, and to defer payment of USD 1.5 million until 29 January 2021, at which time the balance could be paid in cash or shares at Kansai’s discretion, with any shares to be issued at the closing price of the Company’s shares on the 21 of December 20201. • On 1 March 2021, the Company has paid USD 1,000,000 of the USD 2,500,000 payment obligation by paying USD 1,000,000 in cash and Kansai has elected to receive the balance of USD 1,500,000 in the form of an issue of 101,550,000 new ordinary shares of £0.0001 in the Company ("Shares" and "Share Payment") at a price of £0.0105 per Share to Kansai. The Issue of Shares for the Share Payment is conditional on the approval of Red Rock shareholders and was subsequently approved. • On 23 November 2021, the Company entered into a new lease agreement for office space with WeWork Aldwych House. The initial lease runs from 1 January 2022 through 30 June 2022 and is non-cancellable during this period. Thereafter, the lease can be terminated by giving one full calendar month notice. 29. Control There is considered to be no controlling party. Red Rock Resources Plc Annual Report and Accounts 2021 65 

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