Registration Number: 05225394
Red Rock Resources Plc
Annual Report and Accounts 2022
Contents
STRATEGIC REPORT ................................................................................................................................................................ 2
Company Information ...................................................................................................................................................................2
Chairman’s Statement ...................................................................................................................................................................3
Strategic Review ............................................................................................................................................................................6
GOVERNANCE ......................................................................................................................................................................... 9
Board of Directors .......................................................................................................................................................................9
Directors’ Report ........................................................................................................................................................................10
Statement of Directors’ Responsibilities ...................................................................................................................................14
Corporate Governance Statement .............................................................................................................................................15
FINANCIAL STATEMENTS ...................................................................................................................................................... 18
Independent Auditor’s Report ....................................................................................................................................................18
Consolidated Statement of Financial Position .........................................................................................................................23
Consolidated Income Statement.................................................................................................................................................24
Consolidated Statement of Comprehensive Income .................................................................................................................24
Consolidated Statement of Changes in Equity ..........................................................................................................................25
Consolidated Statement of Cash Flows .....................................................................................................................................27
Company Statement of Financial Position .................................................................................................................................28
Company Statement of Changes in Equity .................................................................................................................................29
Company Statement of Cash Flows ............................................................................................................................................31
Notes to the Financial Statements .............................................................................................................................................32
Red Rock Resources Plc
Annual Report and Accounts 2022
1
Strategic Report
Company Information
Directors
Andrew Bell
Scott Kaintz
Alex Borrelli
Sam Quinn
Executive Chairman and CEO
Financial Director
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
3 The Millennium Centre
Farnham
Surrey GU9 7XX
Bankers
Coutts & Co
440 Strand
London WC2R 0QS
Red Rock Resources Plc
Annual Report and Accounts 2022
2
Chairman’s Statement
Dear Shareholders,
There were three key developments that we expected in 2022.
Key Expected Developments In 2022
Africa
The first of these, though one we cautiously underplayed in our public statements in order not to alert too many potential adversaries,
is the expected successful conclusion of our efforts in the Democratic Republic of Congo (“DRC”) to obtain recompense for the sale
of our interest in a copper-cobalt joint venture. We told you last year that once we discovered what had occurred, we had moved
promptly to obtain a freezing order. We later obtained judgment in our favour for 50.1% of the US$5 million consideration already paid.
This judgment is executory and cannot now be appealed. We obtained a further judgment from the Congolese courts for US$2 million
for costs and damages. This judgment is being appealed. Finally, in relation to the US$15 million consideration not yet paid, we went
to arbitration to claim 50.1% of this amount. Our case is of overwhelming strength, and there is a draft award, but up to the time of
writing our former partners have not attended a meeting where they would sign the Minutes of the Arbitration.
This playing for time cuts both ways. Parties, acting for our former partners, were trying to get us to agree to US$2.5 million in the
arbitration, rather than the US$7.5 million to which we are entitled, and the prospect of receiving US$12.5 million of the US$15 million,
subject to the arbitration is obviously enticing. But without our signature they too get nothing, and we think we should sign for what
the Arbitrators we believe are minded to award, not some much lesser amount. The contract was quite clear, and the principle that
foreign investors should not be unjustly deprived of their property is accepted by enough people that we feel confident that we will
prevail. This is not only in the interests of justice, but in the interests of the Congo.
Despite recent frustrations – we spent a total of some nine recent weeks in two spells in Kinshasa for the arbitration and in waiting for
the result – the year is one that has seen great progress on this front, if not a conclusion.
The relationships we have built may enable us to proceed with a new joint venture, also of substantial value, should we wish. Our
willingness to do this depends on our demonstrating to our shareholders and potential partners that investors in the DRC can be
treated justly, as they have not always been in the past.
The second key development was to be the listing of Elephant Oil, where we have a small but longstanding shareholding, on the
NASDAQ in the U.S. It has always been part of our strategy that we retain some of the listed shares we obtain in the process of
divestment or sale of assets as a liquidity reserve. In general, the listed assets have been ones we know well and have been involved
with for some time. We have generally remained positive on the outlook for the acquiring entity, because the underlying assets
themselves are good, and so have often preferred the shareholdings to cash. We have sold our remaining holdings in Jupiter Mines
Ltd and Juno Mines Ltd in Australia, as well as shares in Power Metal Resources Plc for total proceeds of approximately £2.54 million
during the period, and the delays in obtaining a listing for Elephant Oil this year have therefore left a gap in our equity holdings buffer.
We currently expect Elephant Oil to be listed in early 2023 at a listing price of between US$4.15 and US$5.15 a share, indicating our
holding of 397,874 shares may be valued (at the mid-point) at US$1.85 million, although subject to a six-month hold period post IPO
after which we would be in a position to realise all or part of this holding.
Australia
The third key development we anticipated to be the pre-IPO fundraising and then the listing of our Australian joint venture subsidiary
Red Rock Australasia Pty Ltd (“RRAL”), or its holding entity New Ballarat Gold Corporation Plc. Market conditions during the year
created a poor environment for a gold float, and therefore by extension for pre-IPO funding. Much time was spent by the partners
considering which market, in the changed circumstances, offered the best prospects. Towards the end of 2022, there was a consensus
on London, but then a further downward movement in prices made us decide to first complete the year-end drill programme, which
we expect to add material value, as a private company.
As long as we can continue to increase the value of RRAL, we should endeavour to wait as in volatile markets (and the mining and
exploration sector is always volatile) the difference between floating into a strong gold share market and floating into a poor one is
so great. In poor markets, it has always been Red Rock’s policy to try to build or maintain its positions, so that it is able to crystallise
value at times when markets are in an uptrend and prospects look good. The Company did this with Jupiter pre-privatisation; it did it
with Resource Star Ltd post-Fukushima, and it did it with the Kenyan assets when litigation arose involving our local partner. The first
two of these positions were successfully liquidated; Kenya still remains in the portfolio, but the Company hopes to find partners so
that progress can accelerate in what we believe will be better times ahead.
There are a number of different options for taking Australia forward. We could sell or buy to consolidate control in one partner, and we
could float, or we could retain our interest as a bedrock asset in a safe jurisdiction to balance the well-defined and exciting, but risky
potential in Congo. All these possibilities are under constant review and discussion, and the optimal choice may be different if we get
an early award in the DRC, when we will be cashed up as few other companies will be. Currently we continue with our partners to fund
the well-staffed, carefully managed, and active Australian company as a privately-held joint venture, which would not have been our
first choice, but which is appropriate for the circumstances. Some Red Rock shareholders may regret that we have not already listed,
Red Rock Resources Plc
Annual Report and Accounts 2022
3
Chairman’s Statement
continued
as we had indicated that this was likely to happen, but our aim is to secure the best eventual outcome for Red Rock stakeholders,
not the quickest, and we and our partners believe we have our finger on the pulse of the market and have made the right decisions.
Fortunately, the next phase of exploration – the drill programme about to start on one or both of the former mines in our portfolio,
both high grade 300,000 oz producers historically – is likely in our view to produce results that will evidence the potential that remains
down the dip or along the line of strike of these old mines. It should be noted that when we refer for example to the Berringa Mine,
this was in fact exploited as a number of different operations, but proximal and contemporaneous and along the same strike, so that
it is convenient to think of these efforts as one mine. This piecemeal exploitation is one of a number of factors that lead our analysts
to identify significant mineralised targets at shallow depth within the project area.
A further factor we consider important in evaluating the prospects for production from these key initial targets is that they are within
easy reach of currently underutilised processing facilities.
During or after the drill programme, we will re-evaluate our options and consider which alternative will be best for Red Rock.
Key Expected Developments in The Next Year
We expect to be able to conclude our arbitration and litigation in the DRC, and to identify a new quality project that will add value as
Musonoi has done.
That Musonoi and the other JV projects with Gécamines in the DRC were without our knowledge and consent sold for US$20m a
few months after we had started work there, and then according to our information sold on by a simultaneous or near-simultaneous
contract for some hundreds of millions of dollars, shows that we had identified and obtained a first-rate project, and our shareholders
were entitled to the benefit, which they have not to date received.
Our pursuit of the lost benefit and of compensation for the damage done does not end with victory in the cases fought in the DRC. We
therefore also expect to be initiating further actions to make whole and compensate the Company and its shareholders, and these we
shall announce in due course. We based the decision to start by getting a result in the Congo that would confirm we had rights there
and that these rights had not been respected on legal advice. Having laid these foundations, we are now looking at other remedies
that may be pursued outside the DRC.
We also expect to bring into test production one or more of the lithium assets held by our Zimbabwe subsidiary. An Environmental
Impact Assessment has already been initiated and in January 2023 we will be focused on advancing these assets into small-scale
production, initially into the local market and then, upon arrival of a flotation unit, starting sale of concentrated material into export
markets. The margin on this production at current sale prices, either into the local market for unconcentrated grades, or into the export
market after concentration by a flotation unit, has the capacity to generate significant positive cashflow. Our capable local staff, who
have developed small scale mining operations in the past, are already working on this, and during the final development stage and
as we start production, we will have one of our colleagues from London continually on site to oversee the process.
In Burkina Faso, and prospectively in Ivory Coast, our model is that our subsidiaries are funded in part by external investors. We
expect to continue exploration, the early stages of which will be geochemistry or geophysics, and which will lead to drilling of our
prime targets. The Company considers that it has high quality projects and staff in both jurisdictions, but does not want to run the risk
of early stage exploration in these countries, diverting investment from the core projects. Of course, a lucky result in either country
could convert a prospect into a core Red Rock project for the future, but that is not where we start.
In Kenya, 2023 will be a critical year where our licences come up for renewal, and after a second half of 2022 when little activity was
undertaken in the run up to the Kenyan elections and then as new Ministers and ministry staff were installed, it will be essential now
to develop a new approach that enables sufficient resources to be deployed so that our exploration operations can begin to match the
performance of Shanta to the north and Barrick to the south. Market conditions in the second half of 2022, and our expectation that
funds would be available from realisations in the Congo, mean that Kenya operations recently have been lagging behind our schedule
and as our search for a suitable partner has not yet borne fruit, these are issues we ourselves need to address. We are doing so
as a matter of urgency. The remaining liability to the vendor of our Kenya operations, to which reference is made in the accounts, is
expected to be satisfied as DRC or Elephant Oil proceeds arrive.
Exploration
We are always exploring, but the best indicator of our progress for an outsider is the nature, scope and purposes of our drill activity.
In the year 2021-2, we drilled, first and successfully in the Congo for copper and cobalt; next for gold in Kenya, and then in Australia
in a couple of our second order sites with high potential.
In the recent period, we have drilled seven holes in Burkina Faso on two prospects, with extremely promising intersections at Bilbale,
where we encountered in one hole, 20m of 3.19 g/t gold from 22m depth, a further 8m at 2.28 g/t at 62m, and ended in renewed over
1 g/t mineralisation at 120m depth.
Red Rock Resources Plc
Annual Report and Accounts 2022
4
We now begin a jointly funded three-hole diamond drill programme in Australia at a former mine, Berringa, where we have a strong
target at shallow depth, and this programme should roll into further holes on a nearby target.
Given sufficient financial resources, we could justify a major programme, including some deep holes in Kenya to intersect higher
grade mineralisation. We also expect to be doing joint or partner-funded drilling in Burkina Faso and Ivory Coast later in 2023.
Other
We continue to anticipate the imminent listing of Elephant Oil, which we now hope will occur on the US markets early in the New
Year. We would then look to further corporate announcements from Elephant and will decide whether to keep or sell our shares at the
expiry of the hold period in July 2023.
The Company’s policy is to retain royalties on all assets passing through its hands. Royalties are held on iron ore in Australia, gold
in Colombia, multiple gold and metal licences in Australia, lithium licences in Zimbabwe, gold licences in Kenya, and gold licences
in Burkina Faso and Ivory Coast. The Company expects to add royalties over its DRC assets, and is in the process of putting the
royalties together in a dedicated royalty-holding subsidiary, after which a further announcement about the Company’s intentions will
be made.
Financial Results
The nature of Red Rock’s business currently, as a company not generating revenue from operations, means that profit and loss
is a metric of less utility than in many other businesses. Pre-tax loss for the year ended 30 June 2022 was £2,800,000 (2021 loss
of £1,699,000). This increased loss reflected principally higher administration costs, which in turn reflected higher costs of staff at
subsidiaries, increased accounting costs, and increased travel costs.
Outlook
In 2022, the Company saw a falling share price, as did its peer group; this was disappointing in a year in which, operationally, a
lot of progress was made, and this price weakness prevented us from taking advantage of all our opportunities to work on the
existing project portfolio. The delays in announcing the arbitration result in Congo were a particularly frustrating, and unnecessary,
impediment, and sometimes a distraction. We will vigorously pursue our claims in DRC and, on the basis of a successful realisation,
we will deploy the funds into our projects and working capital as well as reducing our creditor balances. What we have at times to
remind ourselves is that we are cracking the code of operating successfully in mineral rich but historically troubled countries. The
game is worth the candle, but it is sometimes a long game. When a gap appears in the clouds, the sun can suddenly shine, and then
the opportunities are realised.
In our budgeting for 2023, we have placed considerable reliance on the receipt of judgement and arbitration proceeds from the DRC.
Funds from the realisation of our shares in Elephant Oil, and funds generated from mining operations, are expected to make an
important contribution from mid-year or earlier, but significant delay in receipt of DRC monies will require a reassessment of priorities
by the Board and either additional funding or the sale of non-core assets in order to meet loan and deferred consideration obligations.
Red Rock is in the right places for a world, which should begin to value gold more highly and has an increasing need for battery
metals. We have teams that can take projects through to production in several of the countries in which we operate, and are starting
to do this. A year ago we would never have supposed that our first new production project of the 2020s might be in Zimbabwe, but we
are delighted that it is so, and that a country with a long and continuous mining history is coming back into favour and we are helping
that process.
Andrew Bell
Chairman and CEO
28 December 2022
Red Rock Resources Plc
Annual Report and Accounts 2022
5
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 funding markets across the junior mining industry. The Company’s 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, joint venture funding 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 realise value from them.
Political Risk
All countries carry political risk that can lead to interruption of activities. 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 frameworks, 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 risks.
COVID-19
The Company recognises the uncertainty, volatility, and risks caused by the 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 any residual risks associated with the COVID-19 pandemic.
Red Rock Resources Plc
Annual Report and Accounts 2022
6
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.
Red Rock Resources Plc
Annual Report and Accounts 2022
7
Strategic Review
continued
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.
Signed by order of the Board.
Andrew Bell
Chairman and CEO
28 December 2022
Red Rock Resources Plc
Annual Report and Accounts 2022
8
Governance
Board of Directors
The Board of Directors makes decisions on shareholders’ behalf. Red Rock has one Executive Chairman, one Financial 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 in public markets. Andrew Bell is
a French speaker.
Scott Kaintz, BS, MBA
Financial 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 a Director of Corcel Plc and Curzon Energy Plc.
Alexander Borrelli, FCA
Independent Non-Executive Director
Alex 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, LLB, BA
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’s strategy;
• Oversee financial activities and operational performance; and
•
Approval of annual budget and periodic fiscal reviews.
Focus Areas for 2022-23
• Continued exploration and development of Kenyan gold assets;
•
•
•
•
IPO or transaction involving the New Ballarat Gold Corporation Plc joint venture ;
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 2022
9
Directors’ Report
Red Rock Resources Plc - Company Number: 05225394
for the year ended 30 June 2022
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 2022.
Results and Dividends
The Group’s results are set out in the Consolidated Income Statement on page 24. The audited Financial Statements for the year
ended 30 June 2022 are set out on pages 23 to 63.
The Group made a post-tax loss of £2.8 million (2021: loss of £1.699 million).
The Directors do not recommend the payment of a dividend (2021: 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 3 to 8.
Fundraising and Share Capital
During the year, the Company raised nil in new equity (2021: £2,000,000); further details are given in note 19.
Directors
The Directors who served at any time during the period and to date are as follows:
Andrew R M Bell
Scott Kaintz
Sam Quinn
Alex Borrelli (appointed on 23 July 2021)
The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2022 were as follows:
Andrew R M Bell
Alexander Borrelli
Scott Kaintz
Sam Quinn
Ordinary shares
Direct
Beneficial
Total
34,316,883
—
3,072,093
2,656,766
17,514,132
847,058
17,514,132
15,529,425
51,831,015
847,058
20,586,225
18,186,191
As percentage
of issued
share capital
Options
Warrants
4.13% 23,000,000
0.07%
0
1.64% 15,500,000
3,000,000
1.45%
—
—
—
—
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
Alexander Borrelli
Scott Kaintz
Sam Quinn
Ordinary shares
Direct
Beneficial
Total
31,238,520
—
2,517,807
2,206,766
15,396,487
—
15,396,487
13,421,944
46,635,007
—
17,914,294
15,628,710
As percentage
of issued
share capital
Options
Warrants
—
3.83% 28,760,000
—
1.47% 20,180,000
3,900,000
1.28%
—
—
—
—
Events After the Reporting Period
The events after the reporting period are set out in note 26 to the Financial Statements.
Red Rock Resources Plc
Annual Report and Accounts 2022
10
Substantial Shareholdings
On 30 June 2022, the following were registered as being interested in 3% or more of the Company’s Ordinary share capital:
30 June 2022
1 December 2022
Ordinary
shares of
£0.0001 each
Percentage
of issued
share capital
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 SMKTISAS
Interactive Investor Services Nominees Limited – Designation SMKTNOMS
Barclays Direct Investing Nominees Limited – Designation CLIENT1
Hargreaves Lansdown (Nominees) Limited – Designation VRA
JIM Nominees Limited – Designation JARVIS
Red Rock Resources Plc Share Incentive Plan
Hargreaves Lansdown (Nominees) Limited – Designation 15942
Hargreaves Lansdown (Nominees) Limited – Designation HLNOM
Aurora Nominees Limited – Designation 2288700
Vidacos Nominees Limited – Designation IGUKCLT
Mr John Geoffrey Bolitho
Embark Investment Services Nominees Limited – Designation GRO
Total number of shares in issue
285,005,914
94,651,601
84,747,714
62,072,420
58,498,160
56,593,770
56,383,578
51,545,855
44,426,024
40,416,758
40,373,774
38,357,187
26,018,762
1,256,147,223
22.69% 285,042,115
7.54% 105,993,405
6.75% 114,951,732
59,077,311
4.94%
68,948,196
4.66%
40,413,680
4.51%
56,383,578
4.49%
48,374,340
4.10%
40,080,934
3.54%
1,576,283
3.22%
17,568,100
3.21%
38,357,187
3.05%
39,751,335
2.07%
1,296,147,223
21.99%
8.18%
8.87%
4.56%
5.32%
3.12%
4.35%
3.73%
3.09%
0.12%
1.36%
2.96%
3.07%
Management Incentives
In the year to 30 June 2022, the Company has granted nil options over its Ordinary shares (2021: 21,000,000). As at 30 June 2022,
50,000,000 options were outstanding (2021: 63,320,000).
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 2022 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 21 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 2022. 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.
Red Rock Resources Plc
Annual Report and Accounts 2022
11
Directors’ Report
continued
Each Director is entitled to participate in the Share Incentive Plan.
The Company also has a Group Personal Pension Scheme for all eligible employees, including the Directors. The Scheme is an
insured, defined contribution arrangement with all members entitled to an employer pension contribution equivalent to 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 nil interest in Power Metal Resources Plc
as at 30 June 2022 (2021: 2.18%) and was jointly invested in the Red Rock Australasia (now New Ballarat Gold Corporation) joint
venture with Power Metal Resources Plc.
Corporate Governance Statement
A corporate governance statement follows on pages 15 to 17.
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.
CO2 Emissions
Given the early developmental stage of the projects in the Group portfolio, the Board does not consider it a practical possibility to
reliably assess the carbon emissions of the Group’s operations and so has not included disclosure of emissions estimates in this
annual report. The Board will continue to assess the possibility of measuring these levels as the Company’s continues to grow and
develop.
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 2022, the Group
had cash and cash equivalents of £0.066 million and £1.864 million of borrowings and, as at 22 December 2022, the cash balance
was c£400,000. 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 £1.4 million and
estimated settlement of DRC litigation of approximately £4.9 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.
Red Rock Resources Plc
Annual Report and Accounts 2022
12
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.
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 2022
Red Rock Resources Plc
Annual Report and Accounts 2022
13
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 UK-adopted international
accounting standards. 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 UK-adopted international accounting standards 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 2022
14
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, 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 Director, who is 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 Financial Director, an Independent Non-Executive Director, Alexander Borrelli and a Non-Executive
Director, 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 the Group level reflects 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 2022, the Board had 4 scheduled meetings together
with additional 9 ad hoc meetings as and when the business required.
Red Rock Resources Plc
Annual Report and Accounts 2022
15
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 2022 is
detailed in the table below:
Director
Andrew Bell, Chairman and CEO
Scott Kaintz, Director and CFO
Alexander Borrelli, Non-Executive Director
Sam Quinn, Non-Executive Director
Total Meetings
Board Scheduled
Meetings (6)
4
4
4
4
4
Board Ad Hoc
Meetings (16)*
9
9
9
9
9
Audit
Committee (1)
-
1
1
1
1
Remuneration
Committee (1)
-
1
1
1
1
* Ad hoc meetings: Meetings called for a specific matter generally of a more administrative or transactional nature often not requiring full Board attendance.
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 2022
16
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 2022
17
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 2022, 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 UK-adopted
international accounting standards 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 2022 and of the Group’s loss for the year then ended;
The Group Financial Statements have been properly prepared in accordance with UK-adopted international accounting standards;
The Parent Company Financial Statements have been properly prepared in accordance with UK-adopted international accounting
standards 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 2022
18
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 £187,000 and £168,300
(2021: £209,000 and £106,000) respectively. Performance materiality was set at 60% of overall materiality for the Group and Parent
Company at £112,200 and £100,980 (2021: £125,400 and £63,600) respectively, whilst the threshold for reporting unadjusted
differences to those charged with governance was set at £9,350 for the Group and £8,415 (2021: £10,450 and £5,300) 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.
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 £13,265,000 at 30 June 2022 (2021:
£13,515,000).
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 71% 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 2022
19
Independent Auditor’s Report
continued
Key Audit Matter
How Our Scope Addressed This Matter
Recoverability of non-current receivables for MFP sales
proceeds (see notes 1.5 and 17)
Non-current receivables for MFP sales proceeds have a
carrying value in the Financial Statements of £1,224,000 at
30 June 2022 (2021: £1,344,000).
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.
Key Observations
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
activities at the mine;
information on production
• 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.
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 2023 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 2022
20
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
UK-adopted 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.
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.
Red Rock Resources Plc
Annual Report and Accounts 2022
21
Independent Auditor’s Report
continued
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 2022
15 Westferry Circus
Canary Wharf
London E14 4HD
Red Rock Resources Plc
Annual Report and Accounts 2022
22
Consolidated Statement of Financial Position
as at 30 June 2022
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
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
30 June
2022
£’000
30 June
2021
£’000
12
13
14
16
15
17
19
18
18
18
18
1,030
13,265
511
736
2,320
17,862
66
164
660
890
18,752
1,585
13,515
124
1,755
1,344
18,323
457
161
399
1,017
19,340
2,839
31,077
1,434
(19,812)
15,538
(420)
15,118
2,835
30,924
1,627
(18,741)
16,645
(199)
16,446
415
822
1,237
1,355
1,042
2,397
18,752
119
731
850
1,075
969
2,044
19,340
These Financial Statements, on pages 23 to 63, were approved by the Board of Directors and authorised for issue on 28 December
2022 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 2022
23
Consolidated Income Statement
for the year ended 30 June 2022
Continuing operations
Administrative expenses
Exploration expenses
Project development
Other project costs
Share based payments
Currency gains
Other gains
Dividend income
Finance costs
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 loss per share, pence
Diluted loss per share, pence
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
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.
Year to
30 June
2022
£’000
Year to
30 June
2021
£’000
Notes
4
6
6
5
5
5
7
10
10
(1,225)
(256)
(676)
(211)
(16)
(183)
52
—
(285)
(2,800)
—
(2,800)
(2,615)
(185)
(2,800)
(0.23)
(0.23)
(699)
(105)
(559)
(305)
(350)
34
290
126
(131)
(1,699)
—
(1,699)
(1,625)
(74)
(1,699)
(0.18)
(0.18)
30 June
2022
£’000
(2,800)
30 June
2021
£’000
(1,699)
418
(442)
(177)
(201)
(3,001)
(2,816)
(185)
(3,001)
(330)
(330)
19
(641)
(2,340)
(2,266)
(74)
(2,340)
Red Rock Resources Plc
Annual Report and Accounts 2022
24
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
The movements in equity during the period were as follows:
As at 1 July 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
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 costs
Share based payments
Issue of warrants
Total transactions with owners
As at 30 June 2021
Changes in equity for 2022
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
Issue of warrants
Total transactions with owners
As at 30 June 2022
Share
capital
£’000
Share
premium
account
£’000
Retained
earnings
£’000
Other
reserves
£’000
Total
attributable
to owners of
the Parent
£’000
Non-
controlling
interest
£’000
Total
equity
£’000
2,783
26,909 (17,187)
1,460
13,965
(135)
13,830
— (1,625)
— (1,625)
(74)
(1,699)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
71
—
—
— (1,554)
52
—
—
—
52
2,835
4,163
(110)
—
(38)
4,015
—
—
—
—
—
30,924 (18,741)
(401)
(401)
(330)
—
19
(712)
—
—
66
813
879
1,627
(330)
71
19
(2,266)
4,215
(110)
66
775
4,946
16,645
—
—
—
(401)
(330)
71
—
(74)
19
(2,340)
—
—
—
—
—
(199)
4,215
(110)
66
775
4,946
16,446
— (2,615)
— (2,615)
(185)
(2,800)
—
—
—
—
(442)
(442)
418
418
—
—
—
1,544
— (1,071)
4
—
4
2,839
153
—
153
—
—
—
31,077 (19,812)
(177)
—
(201)
—
8
8
1,434
(177)
1,544
(1,272)
157
8
165
15,538
—
—
(36)
—
(221)
—
—
—
(420)
(442)
418
(213)
1,544
(1,493)
157
8
165
15,118
Red Rock Resources Plc
Annual Report and Accounts 2022
25
Consolidated Statement of Changes in Equity
continued
As at 1 July 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
Changes in equity for 2022
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to disposals
Transfer of FVTOCI reserve relating to revalued
FVTOCI financial assets
Unrealised foreign currency gains on translation of
foreign operations
Warrants issued in the year
Total comprehensive income / (expense) for
the year
As at 30 June 2022
FVTOCI financial
instruments
revaluation
reserve
£’000
Foreign
currency
translation
reserve
£’000
Share-based
payment
reserve
£’000
1,157
139
164
(401)
(330)
—
—
—
(731)
426
(442)
418
—
—
(24)
402
—
—
19
—
—
19
158
—
—
(177)
—
(177)
(19)
—
—
—
66
—
66
230
—
—
—
—
—
230
Warrant
reserve
£’000
—
—
—
—
—
813
813
813
—
—
—
8
8
821
Total
other
reserves
£’000
1,460
(401)
(330)
19
66
813
148
1,627
(442)
418
(177)
8
(193)
1,434
See note 20 for a description of each reserve included above.
Red Rock Resources Plc
Annual Report and Accounts 2022
26
Consolidated Statement of Cash Flows
for the year ended 30 June 2022
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
Finance costs
Share-based payments
Foreign exchange gain/loss
Change in value in FVTPL financial assets
Equity settled transactions
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
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 23.
Year to
30 June
2022
£’000
(2,800)
(140)
432
—
—
—
285
8
179
—
90
(1,946)
—
(1,946)
2,539
—
(150)
(141)
(387)
1,861
68
—
(250)
940
(1,035)
(277)
(362)
457
(29)
66
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
21
14
23
23
23
15
The accompanying notes and accounting policies form an integral part of these Financial Statements.
Red Rock Resources Plc
Annual Report and Accounts 2022
27
Company Statement of Financial Position
as at 30 June 2022
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
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
2022
£’000
30 June
2021
£’000
11
12
14
13
13
16
15
17
19
18
18
18
76
1,111
736
12,948
258
3,945
19,074
31
456
487
19,561
39
1,666
778
12,948
567
1,950
17,948
366
365
731
18,679
2,839
31,078
1,502
(20,827)
14,592
2,835
30,924
1,043
(19,003)
15,799
1,235
1,890
1,022
4,147
19,561
1,043
1,079
758
2,880
18,679
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own Income Statement or Statement of
Comprehensive Income. The Company’s loss for the financial year was £1.907 million (2021: loss of £1.578 million). The Company’s
total comprehensive loss for the financial year was £1.455 million (2021: loss of £2.122 million).
These Financial Statements, on pages 23 to 63, were approved by the Board of Directors and authorised for issue on 28 December
2022 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 2022
28
Company Statement of Changes in Equity
for the year ended 30 June 2022
The movements in equity during the period were as follows:
As at 1 July 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
Changes in equity for 2022
Loss for the year
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to revalued
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
Issue of warrants
Total transactions with owners
As at 30 June 2022
Share
capital
£’000
2,783
—
—
—
—
—
52
—
—
—
52
2,835
—
—
—
—
—
4
—
4
2,839
Share
premium
account
£’000
26,909
—
—
—
—
—
4,163
(110)
—
(38)
4,015
30,924
—
—
—
—
—
154
—
154
31,078
Retained
earnings
£’000
(17,362)
Other
reserves
£’000
645
Total
equity
£’000
12,975
(1,578)
—
(1,578)
—
—
(63)
(1,641)
—
—
—
—
—
(19,003)
(631)
150
—
(481)
—
—
66
813
879
1,043
(631)
150
(63)
(2,122)
4,215
(110)
66
775
4,946
15,799
(1,907)
—
(1,907)
—
—
83
(1,824)
—
—
—
(20,827)
518
(66)
—
452
—
7
7
1,502
518
(66)
83
(1,372)
158
7
165
14,592
Red Rock Resources Plc
Annual Report and Accounts 2022
29
Company Statement of Changes in Equity
continued
As at 1 July 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
Share based payments
Issue of warrants
Total Other comprehensive income
As at 30 June 2021
Changes in equity for 2021
Other comprehensive income for the year
Transfer of FVTOCI reserve relating to revalued FVTOCI financial assets
Transfer of FVTOCI reserve relating to disposals
Issue of warrants
Total Other comprehensive income
As at 30 June 2022
See note 20 for a description of each reserve included above.
FVTOCI
financial assets
revaluation
reserve
£’000
481
Share-based
payment
reserve
£’000
164
Warrant
reserve
£’000
—
Total
other
reserves
£’000
645
150
(631)
—
—
(481)
—
518
(66)
—
452
452
—
—
66
—
66
230
—
—
—
—
230
—
—
—
813
813
813
—
—
7
7
820
150
(631)
66
813
398
1,043
518
(66)
7
459
1,502
Red Rock Resources Plc
Annual Report and Accounts 2022
30
Company Statement of Cash Flows
for the year ended 30 June 2022
Cash flows from operating activities
Profit/(loss) before taxation
Increase in receivables
(Decrease) / Increase in payables
Dividend income
Interest income and other finance income
Finance costs
Share-based payments
Equity settled transactions
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
Investment in Joint venture projects
Investment in subsidiaries
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
2022
£’000
(1,907)
(990)
859
—
—
90
7
90
—
235
(1,616)
—
(1,616)
—
577
(141)
(37)
(91)
308
68
—
—
940
(35)
973
(335)
366
31
30 June
2021
£’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
Red Rock Resources Plc
Annual Report and Accounts 2022
31
Notes to the Financial Statements
for the year ended 30 June 2022
Principal Accounting Policies
Corporate Information
1.
1.1
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. The principal activities of the Group are the exploration for and development of mineral resources in
multiple locations globally, principally in Africa and Australia.
Basis of Preparation
1.2
The Financial Statements have been prepared in accordance with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006. The Financial Statements have been prepared on the historical 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 2022, the Group
had cash and cash equivalents of £0.066 million and £1.864 million of borrowings and, as at 22 December 2022, the cash balance
was c£400,000. 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 £1.4 million and
estimated settlement of DRC litigation of approximately £4.9 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.
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:
•
•
•
•
•
Annual Improvements: 2018 – 2020 Cycle (effective 1 January 2022);
Amendments to IAS 1: Classifications of liabilities and Disclosure of Accounting Policies (effective 1 January 2023);
Amendments to IAS 8: Accounting Policies, Changes to Accounting Estimates and Errors (effective 1 January 2023);
Amendments to IAS 12: Income Taxes – Deferred Tax arising from a Single Transaction (effective 1 January 2023);
Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1 January 2022).
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.
Basis of Consolidation
1.3
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.
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32
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 2022, the Consolidated Financial Statements combine those of the Company with those of its subsidiaries, Red Rock
Australasia Pty Ltd, New Ballarat Gold Corporation Plc, RRR Coal Ltd, African Lithium Resources Limited, Lac Minerals Ltd, Lacgold
Resources SARLU, Faso Minerals Ltd, Faso Greenstone Resources SARLU, Jimano Ltd, Red Rock Resources Congo S.A.U., Red
Rock Galaxy SA, RedRock Kenya Ltd, RRR Kenya Ltd and Red Rock Resources (HK) Ltd.
The Group’s dormant subsidiaries Intrepid Resources Ltd, Red Rock Resources Inc., 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.
Summary of Significant Accounting Policies
1.4
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.
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.
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1.
1.4
1.4.4
Principal Accounting Policies continued
Summary of Significant Accounting Policies continued
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.
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 Pounds 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 (“CFD”), and Kenyan Shillings
(“KES”).
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.
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Annual Report and Accounts 2022
34
Notes to the Financial Statementscontinued 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.
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.
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Annual Report and Accounts 2022
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1.
1.4
1.4.9
Principal Accounting Policies continued
Summary of Significant Accounting Policies continued
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:
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.
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Annual Report and Accounts 2022
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Notes to the Financial Statementscontinued 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.
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:
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Annual Report and Accounts 2022
37
Principal Accounting Policies continued
Summary of Significant Accounting Policies continued
1.
1.4
1.4.11 Financial Instruments continued
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.
-
-
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.
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Annual Report and Accounts 2022
38
Notes to the Financial Statementscontinued 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.
Significant Accounting Judgements, Estimates and Assumptions
1.5
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 2022, 30 June 2021, 30 June 2020 and 30 June 2019.
The effect of recognising MMM as an FVTOCI financial asset would be to increase the profit by £29 (2021: decrease the profit
by £25).
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 (2021: US$1,750);
• Discount rate – 10% (2021: 10%); and
•
Annual production rate – 6,500 (2021: 10,000oz)
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.
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Annual Report and Accounts 2022
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1.
1.5
Principal Accounting Policies continued
Significant Accounting Judgements, Estimates and Assumptions continued
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.
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.
Red Rock Resources Plc
Annual Report and Accounts 2022
40
Notes to the Financial Statementscontinued 2. Segmental Analysis
The Group considers 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.
Year to 30 June 2022
Exploration expenses
Administration expenses
Project development
Other project costs
Share based payments
Currency gain
Other income
Dividend income
Finance costs
Net profit/(loss) before tax
from continuing operations
Gold
Exploration
Australia
£’000
—
(280)
—
(45)
—
20
—
Gold
Exploration
Kenya
£’000
(255)
(1)
—
(10)
—
—
—
Copper
Exploration
DRC
£’000
—
(1)
(623)
(15)
—
—
—
—
—
—
(305)
(266)
(639)
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
Net profit/(loss) before tax from
continuing operations
Gold
Exploration
Australia
£’000
—
—
—
(138)
—
(9)
—
—
—
Gold
Exploration
Kenya
£’000
(98)
(5)
—
(40)
—
—
—
—
—
Other Projects
£’000
(1)
(8)
(54)
(140)
116
1
(86)
Copper
Exploration
DRC
£’000
—
(4)
(559)
—
—
—
—
—
—
Investments
£’000
—
(9)
—
—
—
32
(77)
Corporate
and
unallocated
£’000
—
(926)
—
—
(16)
(235)
13
Total
£’000
(256)
(1,225)
(677)
(210)
(16)
(183)
52
(205)
(81)
(285)
(259)
(1,245)
(2,800)
Investments
£’000
—
—
—
—
—
—
—
126
(2)
Corporate
and
unallocated
£’000
(7)
(690)
—
(127)
(350)
43
290
—
(129)
Total
£’000
(105)
(699)
(559)
(305)
(350)
34
290
126
(131)
(147)
(143)
(563)
124
(970)
(1,699)
Red Rock Resources Plc
Annual Report and Accounts 2022
41
Notes to the Financial Statements
continued
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 2022
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 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
UK
£’000
Africa
£’000
Australia
£’000
Total
£’000
—
—
—
—
736
1,224
1,960
1,030
165
12,949
316
—
1,096
15,556
—
346
—
—
—
—
346
1,030
511
12,949
316
736
2,320
17,862
UK
£’000
Africa
£’000
Australia
£’000
Total
£’000
—
—
—
—
736
1,341
2,077
1,585
—
12,948
567
1,019
—
16,119
—
124
—
—
—
3
127
1,585
124
12,948
567
1,755
1,344
18,323
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
2022
£’000
2021
£’000
28
310
12
4
25
312
11
7
Red Rock Resources Plc
Annual Report and Accounts 2022
42
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 & other finance costs
Total finance (costs) / income (other than MFP finance income)
MFP finance expense / (income)
Total finance (costs) / income
Other gains
Group
2022
£’000
Group
2021
£’000
Company
2022
£’000
Company
2021
£’000
562
47
15
39
115
36
45
13
96
77
37
10
92
41
1,225
307
20
15
28
42
15
64
—
105
24
22
8
35
13
699
356
27
15
39
98
23
33
5
96
75
29
10
72
39
917
2022
£’000
—
—
(209)
(209)
(76)
(285)
52
307
20
15
28
40
14
64
—
105
24
17
8
35
13
690
2021
£’000
290
126
(131)
285
—
285
—
Interest income (other than Mineras Four Points (“MFP”) finance income) comes from non-current receivables from an associate.
Please refer to note 16 and note 17 respectively. Dividend income in the prior year represents the money received from the Group’s
0.53% holding in Jupiter Mines Limited as at 30 June 2021, which was fully disposed of in the current year.
Red Rock Resources Plc
Annual Report and Accounts 2022
43
Notes to the Financial Statements
continued
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)
Other (Congo)
Luanshimba (Congo)
Kinsevere
Other
Total project development expenses
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
Group and Company
2022
£’000
(328)
—
(47)
(79)
(166)
(2)
(54)
(676)
(10)
(68)
(133)
(211)
2021
£’000
(392)
(42)
(14)
—
(19)
(92)
—
(559)
(40)
(126)
(139)
(305)
2022
£’000
2021
£’000
—
—
—
—
—
(2,800)
(532)
—
20
—
512
—
—
—
—
—
—
(1,699)
(323)
—
67
—
256
—
No deferred tax asset, relating to the Group’s investments, was recognised in the Statement of Comprehensive Income (2021: £nil).
No deferred tax charge has been made due to the availability of trading losses. Unutilised tax losses, arising in the UK, amount to
£4.4 million (2021: £4.1 million).
On 3 March 2021, the UK government announced that it intended to increase the main rate of corporation tax to 25% for the financial
years beginning 1 April 2023. This new rate was substantively enacted by Finance Act 2021 on 10 June 2021.
Red Rock Resources Plc
Annual Report and Accounts 2022
44
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
2022
£’000
562
47
39
9
657
2022
Number
4
1
9
14
2021
£’000
322
20
28
66
436
2021
Number
4
1
1
6
The key management personnel are the Directors and their remuneration is disclosed within note 9.
1,236,656 free shares were issued to five employees (2021: 360,000), including Directors. 1,267,199 partnership and 2,534,398
matching shares, making the total of 3,801,597, were issued in the year ended 30 June 2022 (2021: 4,589,418 partnership, 9,178,836
matching, 15,568,254 total).
9. Directors’ Emoluments
2022
Executive Directors
A R M Bell
Other Directors
S Kaintz
S Quinn
A Borrelli
2021
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
120
65
24
22
231
—
—
—
—
—
15
—
—
—
15
4
3
3
2
12
10
6
2
—
18
15
7
2
2
26
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
Total
£’000
164
81
31
26
302
Total
£’000
144
100
31
37
312
Three Directors exercised share options in the year, for a total of 5,670,000 new shares (2021: nil). During the year, the Company
contributed to a Share Incentive Plan, more fully described in the Directors’ Report on pages 10 to 13.
Red Rock Resources Plc
Annual Report and Accounts 2022
45
Notes to the Financial Statements
continued
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.
(Loss)/profit attributable to equity holders of the parent company, £
Adjusted for interest accrued on the convertible notes
Adjusted (loss) / profit attributable to equity holders of the parent company used for
diluted EPS calculation
Weighted average number of ordinary shares of £0.0001 in 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
(Loss)/earnings per share – basic
(Loss)/earnings per share – fully diluted
2022
(2,799,730)
—
2021
(1,698,983)
—
(2,799,730)
(1,698,983)
1,221,091,538 939,293,986
—
—
1,221,091,538 939,293,986
(0.18 pence)
(0.18 pence)
(0.23 pence)
(0.23 pence)
At 30 June 2022, 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:
Share options granted to employees – either not vested and/or out of the money
Number of warrants given to shareholders as a part of placing equity 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
2022
50,000,000
2021
63,320,000
389,430,010 380,197,618
439,430,010 443,517,618
There were no ordinary share transactions such as share capitalisation, share split or bonus issue after 30 June 2022, 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 2022
46
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
2022
£’000
2021
£’000
40
37
77
(1)
—
(1)
76
20
20
40
(1)
—
(1)
39
As at 30 June 2022 and 30 June 2021, the Company held interests in the following subsidiary companies:
Company
Red Rock Australasia Pty Ltd
New Ballarat Gold Corporation Plc
RedRock Kenya Ltd
RRR Kenya Ltd
Red Rock Resources (HK) Ltd
Red Rock Resources Congo S.A.U.
African Lithium Resources PVT Ltd
Lac Minerals Ltd
Lacgold Resources SARLU
Faso Minerals Ltd
Faso Greenstone Resources SARL
RRR Coal Ltd
Jimano Ltd
Red Rock Galaxy SA
Country of
registration
Australia
UK
Kenya
Kenya
Hong Kong
DRC
Zimbabwe
UK
Ivory Coast
UK
Burkino Faso
UK
Cyprus
DRC
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Proportion
Held
At 30 June 2022
50.1%
50.1%
87%
100%
100%
100%
65%
100%
100%
100%
100%
100%
100%
80%
Proportion
Held
At 30 June 2021
Nature of business
50.1% Mineral exploration
50.1% Mineral exploration
87% Mineral exploration
100% Mineral exploration
100% Holding company
100% Holding company
nil Mineral exploration
100% Mineral exploration
100% Mineral exploration
100% Mineral exploration
100% Mineral exploration
100% Holding company
Royalty Holdings
100%
80% Holding company
Red Rock Australasia Pty Ltd registered office is c/o Paragon Consultants PTY Ltd, PO Box 903, Claremont WA, 6910, Australia.
New Ballarat Gold Corporation Plc registered office is 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT.
RedRock Kenya Ltd and RRR Kenya Ltd registered office is PO Box 9306 – 003000, Nairobi, Kenya.
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.
African Lithium Resources PVT Ltd registered office is 3 Hex Road, Queensdale, Harrare, Zimbabwe.
Lac Minerals Ltd registered office is Salisbury House, London Wall, London EC2M 5PS.
Lacgold Resources SARLU registered office is Yamoussoukro Morofe Lot 420B Ilot 32, BP 1364 Yamoussoukro, Ivory Coast.
Faso Minerals Ltd registered office is Salisbury House, London Wall, London EC2M 5PS.
Faso Greenstone Resources SARL registered office is Secteur 54, Quartier Ouaga 2000, Lot 28, Parcelle 18, Section 280, 01 BP 5602
Ouagadougou 01, Burkina Faso.
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 2022
47
Notes to the Financial Statements
continued
12. Investments in Associates and Joint Ventures
Cost
At 1 July
Reclassifications to Other Receivables
Additions during the year
At 30 June
Impairment
At 1 July
Profit/(loss) during the year
At 30 June
Group
2022
£’000
1,806
(696)
141
1,251
(221)
—
(221)
2021
£’000
1,805
—
1
1,806
(221)
—
(221)
Company
2022
£’000
1,669
(696)
141
1,114
(3)
—
(3)
2021
£’000
1,668
—
1
1,669
(3)
—
(3)
Net book amount at 30 June
1,030
1,585
1,111
1,666
The Company, at 30 June 2022 and at 30 June 2022, 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 Accounting year ended
15.00% 30 September 2021
Summarised financial information for the Company’s associates and joint ventures, where available, is given below:
For the year as at 30 June 2022:
Company
Mid Migori Mining Company Limited
For the year as at 30 June 2021:
Company
Mid Migori Mining Company Limited
Revenue
£’000
—
Loss
£’000
—
Assets
£’000
2,110
Liabilities
£’000
(2,238)
Revenue
£’000
—
Profit
£’000
—
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).
Red Rock Resources Plc
Annual Report and Accounts 2022
48
VUP Musonoi Mining SA
On 28 February 2019, Vumilia Pendeza S.A. (“VUP”) and Bring Minerals S.A.U. (“B.Min”), and Red Rock Resources Congo S.A.U.
(“RRRC”), a wholly owned local subsidiary of the Company, signed a “Joint Venture Agreement” and B,Min and RRRC 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 was to be pursued. The Statutes were then taken by the lawyer to procure the signature of the correct
officer of VUP. RRRC owns 50.1% of the Joint Venture and was to own 50.1% of VMM SA. The Company sent the registration costs
of VMM SA twice, but the lawyer failed to register the company. The governing document of the joint venture therefore remains an
unincorporated joint venture under the Joint Venture Agreement. 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
interest in relation to this joint venture. On 28 December 2021 it obtained an order from the Tribunal de Commerce de Lubumbashi
against VUP in the sum of US$2.5m in respect of US$5m that had been paid to VUP in relation to a sale of the JV Project to which
the Company had not been a party (the Unauthorised Sale). Subsequently, on 28 June 2022, an Arbitration was ordered in respect
of a further US$15m due to be paid by the buyer to VUP pursuant to the Unauthorised Sale.
Due to the above developments in the year, the Company has reclassified amounts recognised as investments in the VUP joint
venture (£696,364), along with amounts previously classified as Exploration Assets (£399,892), as a Non-current receivable.
Cost
At 1 July 2021
Additions during the year
Reclassified during the year
At 30 June 2022
Impairment and losses during the year
At 1 July 2021
The Group’s share of profit/(loss) during the year
At 30 June 2022
Carrying amount
At 30 June 2021
At 30 June 2022
13. Exploration Assets
Group
At 1 July
Additions
Reclassification as non-current receivables (note 16)
At 30 June
Exploration assets were capitalised:
Mid Migori
Mining Company
Limited
£’000
VUP Musonoi
Mining SA
£’000
1,083
28
—
1,111
(81)
—
(81)
1,002
1,030
583
113
(696)
—
—
—
—
583
—
Total
£’000
1,666
141
(696)
1,111
(81)
—
(81)
1,585
1,030
2022
£’000
13,515
150
(400)
13,265
2021
£’000
11,858
1,657
—
13,515
•
•
•
•
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, with all capitalised
amounts having been reclassified as non current receivables in the current year.
For the African Lithium Resources Limited project, all amounts relate to the acquisition of mineral rights in Zimbabwe. This includes
the purchase of the Tin Hill project on 2 February 2022.
For the Faso Greenstone project since the acquisition of the Bilbale licence interest on 24 December 2021.
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 27.
Red Rock Resources Plc
Annual Report and Accounts 2022
49
Notes to the Financial Statements
continued
14. Financial Instruments with Fair Value Through Other Comprehensive Income (FVTOCI)
Opening balance
Additions
Disposals
Change in fair value
At 30 June
Group
Company
2022
£’000
1,755
223
(1,693)
451
736
2021
£’000
2,755
143
(401)
(742)
1,755
2022
£’000
778
223
(775)
510
736
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
Company
2022
£’000
—
—
736
736
2021
£’000
562
1,019
174
1,755
2022
£’000
—
—
736
736
2021
£’000
1,711
143
(697)
(379)
778
2021
£’000
562
42
174
778
Jupiter Mines Limited
During the prior year, Jupiter Mines Limited made distributions recognised as dividends and included into the Dividend line in the
Consolidated Income Statement in the amount of £0.126 million. No dividends were received in the current year as this investment
was fully disposed of during the year.
At 30 June 2022, Red Rock retains a nil% stake in the share capital of Jupiter Mines Limited (2020: 0.53%).
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, and consideration of the implied value of the company by recent new
subscriptions by investors and the intention to list the Company on the USA capital markets, the fair value of the investment has been
revalued to £736,281 (2021: £173,866).
Corcel Plc
During the prior 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 2022, Red Rock retains a nil% stake in the share capital of Juno Minerals Limited (2021: 0.29%).
Details of the fair value measurement hierarchy are included in note 22.
Red Rock Resources Plc
Annual Report and Accounts 2022
50
15. Cash and Cash Equivalents
Group
Cash in hand and at bank
30 June
2022
£’000
66
66
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
30 June
2022
£’000
31
31
30 June
2021
£’000
457
457
30 June
2021
£’000
366
366
Credit Risk
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.
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.
16. Non-Current Receivables
Amounts receivable relating to VUP Joint Venture
Due from subsidiaries
MFP sale proceeds
Group
2022
£’000
1,096
—
1,224
2,320
Group
2021
£’000
Company
2022
£’000
Company
2021
£’000
—
—
1,344
1,344
1,096
1,625
1,224
3,945
—
601
1,341
1,942
Amounts receivable, relating to the VUP joint venture, have arisen due to the reclassification of Joint Venture investment costs and
capitalised exploration asset costs in the year. See note 12 for further detail.
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.
17. Other Receivables
Current trade and other receivables
Prepayments
Short-term loan receivable
MFP sales proceeds – current element
Other receivables
Total
Group
2022
£’000
310
—
129
221
660
2021
£’000
42
—
85
272
399
Company
2022
£’000
46
161
129
120
456
2021
£’000
42
162
85
76
365
Prepayments in the year include £264,085 of prepaid/deferred costs relating to mineral exploration activity in Kenya (2021: £nil).
Red Rock Resources Plc
Annual Report and Accounts 2022
51
18. Trade and Other Payables
Non-current liabilities
Trade and other payables
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
2022
£’000
415
822
1,237
1,149
206
—
—
1,355
—
1,042
2,397
2021
£’000
119
731
850
835
240
—
—
1,075
—
969
2,044
Company
2022
£’000
—
822
822
1,029
206
—
—
1,235
1,890
1,022
4,147
2021
£’000
—
731
731
803
240
—
—
1,043
1,079
27
2,149
During the prior 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
US$ 2.0 million, and drawing down an initial gross amount of US$ 1.0 million with additional tranches available at the lenders’
absolute discretion. The notes were 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 carried an interest rate of 10% and came with a 7.5%
implementation fee. The notes were repaid in the year out of the disposal proceeds of Jupiter Mines Limited shares.
During the year, the Company took out the following additional borrowings:
•
•
•
•
•
A £100,000 working capital loan from Power Metals Corporation Plc, the joint venture partner in Red Rock Australasia Pty Ltd
was advanced to the Company for use in covering pre-IPO related costs of the New Ballarat Gold Corporation;
A convertible loan note facility with Riverfort Global Opportunities Fund (“RGO”). The facility is for up to £1,000,000 in funding
for working capital purposes, with an initial drawdown of £385,000 in principal (before costs). On drawdown, 18,464,800 shares
in the Company were issued to RGO as security against future conversions of principal. The unremunerated value of these
shares, being £68,153 at the reporting date, forms an offsetting receivable against the principal owing on the facility in these
financial statements. Drawdown on the facility was subject to a coupon deduction of £35,000, implementation fee of £26,950 and
various legal costs of £14,346. Amounts owing are convertible at the lower of 0.455 pence per share and the volume weighted
average share price in the 5 trading days prior to conversion. The facility is further secured by a fixed and floating charge over
the assets of the Company, which was registered on 27 May 2022 and will be satisfied on full settlement of amounts owing, by
either repayment or conversion.
A short-term loan facility provided by Yew Tree Capital for a principal amount of £250,000 (before £6,250 in drawdown deductions)
for working capital purposes. The facility accrues interest at 8% per annum and was settled via novation into convertible loan
notes following the reporting date.
In June 2022, various subscribers to new convertible loan notes, which were issued following the reporting date, had provided
their subscription funding for this transaction. As a consequence, as at the reporting date, the Company had received £320,000
in funds to be applied against these convertible loan notes, which were formally issued on 25 July 2022. As at the reporting date,
these funds represent “prepaid subscriptions” and have been recognised as a short term borrowing in these financial statements.
A US$1,000,000 loan note remains payable to Kansai Ltd, which would complete the acquisition of the Mid Migori Gold project.
Payment of this loan has been mutually agreed with Kansai to be delayed until a transaction or exit of the project is completed.
Red Rock Resources Plc
Annual Report and Accounts 2022
52
Notes to the Financial Statementscontinued 19. 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
2022
£’000
126
2,134
579
2,839
Movement in ordinary shares
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)
As at 30 June 2021 – ordinary shares of £0.0001 each
Issued on 28 Jan 2022 at 0.45 pence per share (cash – options exercise)
Issued on 3 Feb 2022 at 0.45 pence per share (cash – options exercise)
Issued on 13 May 2022 at 0.425 pence per share (non-cash, SIP)
Issued on 15 Jun 2022 at 0.3791 pence per share (non-cash, secured shares for convertible facility)
Issued on 15 Jun 2022 at 0.39 pence per share (cash, placing)
As at 30 June 2022 – ordinary shares of £0.0001 each
Number
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
1,216,708,801
5,670,000
450,000
5,038,253
18,464,800
9,815,384
1,256,147,238
2021
£’000
122
2,134
579
2,835
Nominal
£’000
70
13
—
4
3
7
10
10
—
—
1
—
—
—
3
122
1
—
—
2
1
126
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 2022, the Company had 389,430,010 warrants in issue (2021: 380,197,618) with a weighted average exercise price of
£0.0128 (2021: £0.0015). Weighted average remaining life of the warrants, at 30 June 2022, was 293 days (2021: 582 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
2022
number of
warrants
380,197,618
9,232,392
—
—
—
2021
number of
warrants
101,740,195
323,322,618
(44,865,195)
—
—
Outstanding at the end of the year
389,430,010
380,197,618
Red Rock Resources Plc
Annual Report and Accounts 2022
53
19. Share Capital of the Company continued
During the year ended 30 June 2022, 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
19 Mar 2021
1 Mar 2021
8 Jun 2022
Total warrants in issue at 30 June 2022
Expiry date Warrant exercise price, £
0.009
0.012
0.016
0.024
0.007
0.020
0.020
0.005
19 Dec 2022
27 Mar 2023
6 Nov 2023
6 Nov 2023
18 May 2023
18 Mar 2023
18 Mar 2023
16 Aug 25
Number of warrants
56,875,000
137,500,000
8,000,000
8,000,000
71,428,571
47,619,047
50,775,000
9,232,392
389,430,010
The aggregate fair value, related to the share warrants granted during the reporting period, was £7,578 (2021: £1,195,797).
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 22). 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.
20. 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.
Red Rock Resources Plc
Annual Report and Accounts 2022
54
Notes to the Financial Statementscontinued 21. 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 2022, the Company had outstanding options to subscribe for ordinary shares as follows:
A R M Bell
S Kaintz
S Quinn
Employees
Total
Outstanding at the beginning of the year
Options issued in the year
Options exercised in the year
Options lapsed in the year
Outstanding at the beginning of the year
Options issued
13 January 2017
exercisable at
0.8p per share,
expiring on
13 January 2023
Number
12,000,000
11,000,000
3,000,000
3,000,000
29,000,000
Options issued on
24 August 2020 at
0.2p per share,
expiring on
19 August 2025
Number
5,500,000
2,250,000
—
2,750,000
10,500,000
Options issued on
24 August 2020 at
0.25p per share,
expiring on
19 August 2025
Number
5,500,000
2,250,000
—
2,750,000
10,500,000
Company and Group
2022
2021
Number of
options
63,320,000
—
(6,120,000)
(7,200,000)
50,000,000
Weighted
average
exercise
price
pence
0.46
—
0.45
0.45
1.41
Number of
options
48,320,000
21,000,000
—
(6,000,000)
63,320,000
Total
Number
23,000,000
15,500,000
3,000,000
8,500,000
50,000,000
Weighted
average
exercise
price
pence
0.70
0.225
—
0.80
0.46
Nil share options were granted by the Company in the reporting year (2021: 21,000,000). The weighted average fair value of each
option granted during the year was £nil (2021: £0.002). The exercise price of options, outstanding at 30 June 2022, ranged between
£0.0008 and £0.025 (2021: £0.0020 and £0.0045). Their weighted average contractual life was 1.63 years (2020: 2.41 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 £nil (2021: £42,000).
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 3,801,597 Partnership and Matching Shares were awarded and 1,236,656 Free Shares (2021:
13,768,254 Partnership and Matching Shares and 1,800,000 Free Shares) with a fair value of £0.00425 for the Partnership and the
Matching Shares and £0.00425 for the Free Shares (2021: £0.00155 for the Partnership and the Matching Shares and £0.01 for the
Free Shares), resulting in a share-based payment charge of £16,027 (2020: £39,341), included in the administration expenses line
in the Income Statement.
Red Rock Resources Plc
Annual Report and Accounts 2022
55
22. Financial Instruments
22.1 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
Other Receivables and Trade Payables
Group
2022
£’000
Group
2021
£’000
Company
2022
£’000
Company
2021
£’000
736
—
—
736
66
2,320
660
2,980
3,782
726
3,056
1,042
1,237
1,149
3.428
174
1,581
1,755
—
—
457
1,344
560
1,904
4,116
1,067
3,099
969
731
954
2,654
736
—
—
736
31
3,945
456
4,401
5,168
487
4,681
2,912
822
1,029
4,763
174
604
778
—
—
366
1,950
365
2,315
3,459
731
2,728
1,106
731
803
2,640
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.
Red Rock Resources Plc
Annual Report and Accounts 2022
56
Notes to the Financial Statementscontinued
22.2 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.
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 2022
FVTOCI financial assets
– Unquoted equity shares
– Quoted equity shares
FVTPL (Para warrants)
Company
30 June 2022
FVTOCI financial assets
– Unquoted equity shares
– Quoted equity shares
FVTPL (Para warrants)
Group
30 June 2021
FVTOCI financial assets
– Unquoted equity shares
– Quoted equity shares
FVTPL (Para warrants)
Company
30 June 2021
FVTOCI financial assets
– Unquoted equity shares
– Quoted equity shares
FVTPL (Para warrants)
Red Rock Resources Plc
Annual Report and Accounts 2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
—
—
736
—
—
—
—
—
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
—
—
Level 1
£’000
—
1,581
—
736
—
—
—
—
—
Level 2
£’000
Level 3
£’000
—
—
—
174
—
—
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
604
—
—
—
—
174
—
—
Total
£’000
736
—
—
Total
£’000
736
—
—
Total
£’000
174
1,581
—
Total
£’000
174
604
—
57
22. Financial Instruments continued
22.3 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.
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;
• Obtaining funding from a variety of sources; and
• Maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to finance operations for commercial exploration and 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.
Red Rock Resources Plc
Annual Report and Accounts 2022
58
Notes to the Financial Statementscontinued These assets are denominated in the following currencies:
Group
30 June 2022
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
Long term borrowings
Group
30 June 2021
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
Company
30 June 2022
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
Long term borrowings
Company
30 June 2021
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
GBP
£
31
125
—
—
77
1,042
—
GBP
£’000
387
254
604
—
57
969
GBP
£’000
31
1,750
—
—
74
2,912
—
AUD
£
13
8
—
—
26
—
415
AUD
£’000
29
1
977
3
26
—
AUD
£’000
—
—
—
—
—
—
—
USD
£
16
332
736
2,320
166
—
822
USD
£’000
7
144
174
1341
699
—
USD
£’000
—
331
736
2,320
79
—
822
CAD
£
—
—
—
—
876
—
—
CAD
£’000
—
—
—
—
—
—
CAD
£’000
—
—
—
—
876
—
—
Other
£
6
360
—
—
4
—
—
Other
£’000
34
161
—
—
53
—
Other
£’000
—
—
—
—
—
—
—
Total
£
66
825
736
2,320
1,149
1,042
1,237
Total
£’000
457
560
1,755
1,344
835
969
Total
£’000
31
2,081
736
2,320
1,029
2,912
822
GBP
£’000
AUD
£’000
USD
£’000
CAD
£’000
Other
£’000
Total
£’000
361
204
604
—
57
27
5
—
—
—
—
—
—
161
174
1,341
693
—
—
—
—
—
—
—
—
—
—
—
53
—
366
365
778
1,341
803
27
Exposures to foreign exchange rates vary during the year, depending on the volume and nature of overseas transactions.
Red Rock Resources Plc
Annual Report and Accounts 2022
59
23. Reconciliation of Liabilities Arising from Financing Activities and Major Non-Cash Transactions
Group
Loan from institutional
investors
Convertible notes
Other loans
Total
Company
Loan from subsidiary
RRR Coal
Loan from institutional
investors
Convertible notes
Other loans
Total
30 June 2021
£’000
Cash flow
loans
received
£’000
Cash flow
principal
re-payment
£’000
Cash flow
Interest
paid
£’000
Non-cash
flow Forex
movement
£’000
Non-cash flow-
Conversion
£’000
Non-cash flow
Interest and
arrangement
fee accreted
£’000
Non-
cash flow
Introducers
fee accrued
£’000
963
—
—
963
564
241
100
905
(963)
—
—
(963)
(37)
—
—
(37)
—
—
—
—
—
—
—
—
37
35
—
72
13
41
—
54
Cash flow
loans
received
£’000
Cash flow
loans
re-payment
£’000
Cash flow
Interest
paid
£’000
Non-cash
flow Forex
movement
£’000
Non-cash flow-
Conversion
£’000
Non-cash
flow Interest
accreted
£’000
Non-
cash flow
arrangement
fee accreted
£’000
810
564
241
100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13
35
—
48
—
—
41
—
41
1,079
1,715
30 June 2021
£’000
1,079
—
—
—
30 June
2022
£’000
577
317
100
994
30 June
2022
£’000
1,889
577
317
100
2,883
Significant non-cash transactions from financing activities, in relation to raising new capital, are disclosed in note 18.
24. 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 26.
Investment Disposals
During the year, the Group disposed of its entire holding in Power Metals Resources Plc, raising proceeds of £0.7m after transaction
fees.
During the year, the Group disposed of its entire holding in Jupiter Mines Ltd, raising proceeds of £1.9m after transaction fees.
Proceeds from these disposals were used in full settlement of loans payable to Riverfort/YA drawn down in the prior year, totalling
£962,758 as at 30 June 2021.
Financing
During the year, the Group entered into a convertible loan note facility with Riverfort Global Opportunities Fund (RGO) for up to
£1m, with an initial principal drawdown of £385,000 before costs (£310,550 after costs). Principal owing on the initial drawdown is
convertible by the note holders at the lower of 4.549 pence per share and the Volume Weighted Average Share Price (VWASP) of
the Company shares in the 5 trading days prior to notice of conversion. As part of the transaction, the Company issued RGO with
18,464,800 ordinary shares as security against amounts owing, at a total value of £70,000. The par value of these shares was
remitted to the Company on issue, with the remainder being recognised in these financial statements as an offsetting receivable
against the principal amounts owing at the reporting date.
During the year, the Company entered into an agreement with Yew Tree Capital for a loan of £250,000 before costs (£243,750 net of
costs) at a coupon interest rate of 8% pa. The entire principal owing on this loan was novated into subscriptions to convertible loan
notes following the reporting date. See note 26 for further details.
During the year, the Company received £320,000 form institutional investors as subscription prepayments against convertible loan
notes issued after the reporting date. As at the reporting date, these amounts have been recognised as a current loan payable.
Red Rock Resources Plc
Annual Report and Accounts 2022
60
Notes to the Financial Statementscontinued During the year, the Company entered into an agreement with Power Metal Resources plc for the provision of a £100,000 working
capital loan towards expenses incurred on behalf of that company and the Company as shareholders in New Ballarat Gold Corporation
Plc, The intention of the parties is that where such joint expenses do not arise or have not arisen within a reasonable time frame, any
outstanding balance will be settled by the issue of Company shares on commercial terms to Power Metal Resources Plc. As of this
date, no such terms have been agreed.
The Company has agreed to defer payment of its outstanding US$1,000,000 promissory note to Kansai Limited.
During the year, 6,120,000 options previously issued to staff were exercised at a price of 0.45 pence per share, yielding total
subscription proceeds of £27,540.
Elephant Oil & Gas
Elephant Oil is currently finalizing an IPO on the Nasdaq market. This is expected to complete with an up to US$12m funding. The
most recent Elephant Oil pre-IPO funding has revalued the price per share to US$2.25 per share. The current Form S1, filed with the
SEC, gives a listing price range of US$4.15 to US$5.15. Given the pricing and the pending IPO, the Company believes that it would
be prudent to hold this investment at the pre-IPO funding pricing of US$2.25 per share, pending the final listing, when the holding
can be marked to market.
Power Metal Resources Plc and Australian Joint Venture
On 21 September 2021, the Company announced that it had incorporated New Ballarat Gold Corporation Plc (“NBGC”) in order for
Red Rock and Power Metal Resources Plc to hold their interest in the Victoria Goldfields joint venture in Australia. The Companies
agreed to retain the same shareholdings as in the previous JV structure, 50.1% Red Rock and 49.9% Power Metal Resources
Plc. Red Rock Australasia was to become a 100% owned Australian subsidiary of New Ballarat Gold Corporation Plc. A further
announcement, on 7 December 2021, confirmed that shares in the old JV, RRAL, had now been exchanged for shares in NBGC.
On 24 May 2022, the Company announced that three further exploration licenses had been granted bring the project’s footprint in the
Victoria Goldfields to over 1,800 sq km.
VUP Project – Democratic Republic of Congo
On 6 January 2022, the Company announced that it had obtained an order Ordonnance No 437/BIL/12/2021 Portant Injonction
de Payer (the “Payment Order”) from the Commercial Court in Lubumbashi instructing VUP SA, the Company’s partner in the joint
venture, to pay US$2,505,000 as a principal amount to Red Rock. It further indicated that an audience took place in Lubumbashi at
which the Company’s claim for interest and damages of US$11,000,000 was heard, with judgment was to be given within eight days.
Red Rock indicated that it continues to investigate additional remedies that may be available to it in the Congo and elsewhere.
On 19 January 2022, the Company announced that on 14 January 2022 the Commercial Court of Lubumbashi issued an executory
judgment ordering VUP SA, the Company’s partner in the Joint Venture, to pay US$2,000,000 as damages, with costs. This follows
the earlier judgment for payment of a principal amount of US$2,505,000, representing 50.1% of the payment already made by a third
party to VUP SA.
Faso Greenstone Resources SARLU
On 6 January 2022, the Company announced that it had acquired two new prospective exploration projects in the prolific Boromo
and Banfora Greenstone Belts of Burkina Faso. The assets were to be held by Faso Greenstone Resources SARLU, a wholly owned
subsidiary of Faso Minerals Ltd, which itself is wholly owned by Red Rock.
Establishment of Lithium Subsidiary in Zimbabwe
On 31 March 2022, the Company announced that it had completed the creation of African Lithium Resources Pvt Limited (“ALR”),
which was established as a 75% owned subsidiary in Zimbabwe with a local partner. ALR has acquired 51 ha of lithium claims 29 km
NW of Bikita in SE Zimbabwe at Tin Hill and was in the process of transferring title. Consideration of US$25,000 had been paid with
a further US$10,000 retained by ALR until completion of the transfer. A new 125 ha application near Arcturus, a mining site 32 km
East of Harare in Zimbabwe had also been approved for grant with a further application nearby in process. A 107 ha application near
Bikita had been made and another property with high grades from our sampling has been identified for purchase. On 6 May 2022, the
Company announced that a group of high net worth investors had acquired a 10% early stage interest in African Lithium Resources
Pvt Ltd for consideration of US$100,000. The consideration of this sale would be applied to the development of the ALR business,
which included recent additions including an application for 46 ha near Arcturus and an agreed acquisition of net 25 ha of claims
East of Bikita. The Company reported that work continued on additional applications within and outside the registered area of interest
Red Rock Resources Plc
Annual Report and Accounts 2022
61
24. Significant Agreements and Transactions continued
Kimono Cobalt Project - DRC
On 27 June 2022, the Company announced it has entered into a joint venture agreement with the Société d’Investissement Minier
Akon et Sodimico S.A. (“Simaks”), whereby the Company will acquire a 58% holding in the Kimono Cobalt-Copper Project (“KCCP”),
a cobalt project in Haut Katanga Province of the DRC. Simaks is a joint venture company between Whitewater LLC of Sharidan,
Wyoming (“WhiteWater”) and La Société de Développement Industriel et Minier du Congo (“SODIMICO”), which currently owns the
20 carrés (17 sq km) of mining licence PE 102 containing the KCCP. SODIMICO is a parastatal mining company of the DRC. White
Waterfall LLC is a private equity fund controlled by the American-Senegalese businessman and musician Mr Aliaune Thiam. Red
Rock indicated that it had currently paid US$50,000 for 58% of the project, with a further US$25,000 due per quarter until a total
of US$400,000 had been paid. The Company further indicated that an acceleration of payments to US$100,000 per quarter or a
temporary suspension of payments was provided for in the executed agreement depending on certain eventualities involving liquidity
events at Red Rock as well as an ongoing license extension and restructuring of the license block holding structure.
25. Related Party Transactions
•
Power Metal Resources Plc (POW) are the Company’s partner and holder of 49.9% in the Company’s 50.1% owned subsidiary
Red Rock Australasia Pty Ltd (“RRAL”). During the year, the Company entered into an agreement with POW for the provision of
a £100,000 working capital loan to the Company. See note 24 for further details.
•
In the prior year, costs incurred by the Company on behalf of Power Metal Resources Plc were £76,422 (2022: £nil) in relation to
shared costs paid on behalf of RRAL during the year. Of this, £6,000 was outstanding at 30 June 2021 (2022: £nil).
• Related party receivables and payables are disclosed in notes 17 and 18.
•
•
The Company held nil shares (nil%) in Power Metal Resources Plc as at 30 June 2022 (2021: 25,000,000 (2.18%)).
The direct and beneficial interests of the Board in the shares of the Company as at 30 June 2022 and at 30 June 2021 are shown
in the Director’s Report.
•
The key management personnel are the Directors and their remuneration is disclosed within note 9.
26. Significant Events After the Reporting Period
On 6 July 2022, the Group announced that it had entered into an agreement for the acquisition of EL 5535, a 9 block (288 net hectare)
exploration licence south-west of Ballarat, containing the historic Berringa Mine from Balmaine Gold Pty Ltd. Under the terms of the
agreement Balmaine was to transfer license EL 5535 to RRAL for an initial payment of A$20,000. Pending successful renewal of the
license for five additional years, RRAL has agreed to pay a further A$130,000 to the vendor. A further payment of A$350,000 was to
be made upon the public release of a mineral resource estimate of no less than 100,000 of gold in the inferred category as defined
by the JORC code. Finally a net smelter royalty of 1.5% is payable to the vendor up to a maximum total of A$1,500,000. Completion
of the acquisition was announced on 22 September 2022.
On 25 July 2022, the Group announced the issuance of £623,000 in new convertible loan notes to a variety of institutional investors.
Of the principal amount, £256,000 was the novation of amounts payable to Yew Tree Capital at the reporting date and £367,000
represented new subscriptions to notes, of which £320,000 of subscription proceeds had been received as prepaid funds at the
reporting date. The notes have a denomination of £1,000 each, are convertible at 0.6 pence per share and each note holder was
granted 83,333 warrants per note to subscribe to new ordinary shares at 0.8 pence per share. The notes attract a coupon of 12% pa,
mature 12 months from issuance and may be convertible at any point prior to maturity. On 19 August 2022, the Group announced the
further issuance of £50,000 in convertible loan notes, on the same terms as above.
On 21 September 2022, the Group announced the placing of 40,000,000 new ordinary shares to institutional investors at 0.4 pence
per share, raising gross proceeds of £160,000 before costs. Additionally, 20,000,000 warrants to subscribe to ordinary shares at
0.8 pence each for a period of 24 months were issued to placees. The Company further announced that it had appointed OvalX as
joint broker to the Company.
On 15 December 2022, the Company announced a fundraising of US$500,000 by way of a subscription of new ordinary shares with
an ascribed value of US$548,000. Following this subscription, the investor may make an additional advance of US$1,000,000 by way
of a further subscription for shares to an ascribed value of US$1,098,000. Each subscription under the agreement will be made by
way of the subscriber prepaying for shares to be issued at the subscriber’s request, in one or several tranches. These subscriptions
must occur within twenty-four months of the date of the placing at the subscription price, initially set at £0.007 per share, then after
the first month, adjusting to the average of five VWAPs selected by the investor during a twenty-day period prior to the date of the
subscriber’s formal notice, but subject to a floor price of £0.002 per share.
Red Rock Resources Plc
Annual Report and Accounts 2022
62
Notes to the Financial Statementscontinued The Company will also have the right (but no obligation) to forego issuing shares in relation to the subscriber’s request for issuance
and instead opt to repay the applicable subscription amount by making a payment to the subscriber equal to the market value of
the shares that would have otherwise been issued. Concurrent with the subscription, the Company will issue 28,000,000 of the
subscription shares to the subscriber at par value, reducing the amount to be ultimately issued under the agreement. In lieu of
applying these shares towards the aggregate number of subscription shares to be issued, the subscriber may make an additional cash
payment to the Company. The Company will further issue to the subscriber 17,000,000 shares in satisfaction of an arrangement fee.
27. Commitments
As at 30 June 2022, 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 US$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) US$2.5 million payable in cash;
(2) a US$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 US$1 million, of which US$0.5 million has been paid on 24 December
2020, and to defer payment of US$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 2021. As
at the reporting date, the amount of US$1,000,000 remains payable, with agreement having been arrived at between the parties
that payment shall be deferred until receipt by the Company of any funds awarded by the court of the DRC.
28. Control
There is considered to be no controlling party.
Red Rock Resources Plc
Annual Report and Accounts 2022
63
Perivan 265009