Notes to the Financial Statements

 

1.   Principal Accounting Policies

 

1.1    Corporate Information

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.

 

1.2    Basis of Preparation

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.

 

1.3    Basis of Consolidation

The Consolidated Financial Statements of the Group incorporate the Financial Statements of the Company and subsidiaries controlled by the Company made up to 30 June each year.

 

Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, up until the date that control ceases.

 

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs, directly attributable to the acquisition, are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

 

Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances, existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.

 

Non-controlling interests in subsidiaries are measured at the proportionate share of the fair value of their identifiable net assets.

 

Intra-group transactions, balances and unrealised gains and losses on transactions between the Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.

 

At 30 June 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.

 

1.4    Summary of Significant Accounting Policies

1.4.1    Mineral Tenements and Exploration Property

Exploration licence and property acquisition costs are capitalised in intangible assets. Licence costs, paid in connection with a right to explore in an existing exploration area, are capitalised and amortised over the term of the permit. Licence and property acquisition costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. If no future activity is planned or the licence has been relinquished or has expired, the carrying value of the licence and property acquisition costs are written off through the statement of profit or loss and other comprehensive income.

 

1.4.2    Investment in Associates

An associate is an entity over which the Group has the power to exercise significant influence, but not controlled or jointly controlled by the Group, through participation in the financial and operating policy decisions of the investee.

 

Investments in associates are recognised in the Consolidated Financial Statements, using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income is recognised directly in other comprehensive income.

 

The carrying value of the investment, including goodwill, is tested for impairment, when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised, unless the Group has incurred obligations or made payments on behalf of the associate.

 

Where the Group transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.

 

In the Company Financial Statements, investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment, when there is objective evidence of impairment.

 

1.4.3    Interests in Joint Ventures

The Group recognises its interest in the jointly controlled entity's assets and liabilities, using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the Statement of Financial Position at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group Income Statement reflects the share of the jointly controlled entity's results after tax.

 

Any goodwill, arising on the acquisition of a jointly controlled entity, is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.

 

Where necessary, adjustments are made to bring the accounting policies in line with those of the Group's and to reflect impairment losses where appropriate. Adjustments are also made in the Group's Financial Statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.

 

1.4.4    Taxation

Corporation tax is provided on taxable profits or losses at the current rate. The tax expense/credit represents the sum of the current tax expense/credit and deferred tax.

 

The tax currently payable/receivable is based on taxable profit or loss for the year. Taxable profit or loss differs from accounting profit or loss as reported in the Statement of Comprehensive Income, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit or loss and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against, which deductible, temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction, which affects neither the taxable profit or loss nor the accounting profit or loss.

 

Deferred tax liabilities are recognised for taxable temporary differences, arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax is calculated at the tax rates that are expected to apply to the period, when the asset is realised or the liability is settled, based upon tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.

 

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.

 

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.

 

1.4.9    Impairment of Non-Financial Assets

The carrying values of assets, other than those to which IAS 36 "Impairment of Assets" does not apply, are reviewed at the end of each reporting period for impairment, when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

 

An impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income.

 

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

1.4.10     Finance Income/Expense

Finance income and expense is recognised as interest accrues, using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period, using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts or re-payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

 

1.4.11     Financial Instruments

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Fair Value through Profit or Loss (FVTPL)

This category comprises in-the-money derivatives and out-of-money derivatives, where the time value offsets the negative intrinsic value. They are carried in the Statement of Financial Position at fair value, with changes in fair value recognised in the Consolidated Statement of Comprehensive Income in the finance income or expense line. Other than derivative financial instruments, which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

 

Amortised Cost

These assets comprise the types of financial assets, where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost, using the effective interest rate method, less provision for impairment. Impairment provisions, for current and non-current trade receivables. are recognised, based on the simplified approach within IFRS 9, using a provision matrix in the determination of the lifetime expected credit losses.

 

During this process, the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss, arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account, with the loss being recognised in the Consolidated Statement of Comprehensive Income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Impairment provisions, for receivables from related parties and loans to related parties, are recognised, based on a forward-looking expected credit loss model. The methodology, used to determine the amount of the provision, is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset, based on analysis of internal or external information. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses, along with the gross interest income, are recognised. For those that are determined to be credit impaired, lifetime expected credit losses, along with interest income on a net basis, are recognised. 

 

The Group considers a financial asset in default, when contractual payments are 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default, when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full, before taking into account any credit enhancements held by the Group. A financial asset is written off, when there is no reasonable expectation of recovering the contractual cash flows.

 

The Group's financial assets, measured at amortised cost, comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and, for the purpose of the Statement of Cash Flows, bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the Consolidated Statement of Financial Position.

 

Fair Value through Other Comprehensive Income (FVTOCI)

The Group has a number of strategic investments in listed and unlisted entities, which are not accounted for as subsidiaries, associates or jointly controlled entities. For those investments, the Group has made an irrevocable election to classify the investments at fair value through other comprehensive income rather than through profit or loss as the Group considers this measurement to be the most representative of the business model for these assets. They are carried at fair value, with changes in fair value recognised in other comprehensive income, and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any balance, within fair value through other comprehensive income reserve, is reclassified directly to retained earnings and is not reclassified to profit or loss.

 

Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which case, the full or partial amount of the dividend is recorded against the associated investments carrying amount.

 

Purchases and sales of financial assets, measured at fair value through other comprehensive income, are recognised on settlement date with any change in fair value between trade date and settlement date, being recognised in the fair value through other comprehensive income reserve.

 

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

 

·       In the principal market for the asset or liability; or

·       In the absence of a principal market, in the most advantageous market for the asset or liability.

 

The principal or the most advantageous market must be accessible by the Group.

 

The fair value of an asset or a liability is measured, using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

A fair value measurement, of a non-financial asset, takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

 

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

All assets and liabilities, for which fair value is measured or disclosed in the Financial Statements, are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

·       Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

·       Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

·       Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

 

For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Group determines, whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

 

Financial Liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired:

 

Fair Value through Profit or Loss (FVTPL)

This category comprises out-of-the-money derivatives, where the time value does not offset the negative intrinsic value or any liabilities held for trading. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income. The Group did not hold any such liabilities at the date of IFRS 9 adoption or at the end of the reporting year.

 

Other Financial Liabilities

Other financial liabilities include:

 

·       Borrowings, which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost, using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption as well as any interest or coupon payable while the liability is outstanding;

·       Liability components of convertible loan notes are measured as described further below; and

·       Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method.

 

1.4.12     Investments

Investments in subsidiaries are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairments.

For acquisitions of subsidiaries or associates achieved in stages, the Company re-measures its previously held equity interests in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses, previously recognised in other comprehensive income, are transferred to profit and loss.

 

Investments in associates and joint ventures are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairment.

 

1.4.13     Dividend Income

Dividends, received from strategic investments, are recognised, when they become legally receivable. In case of interim dividends, this is when declared. In case of final dividends, this is when approved by the shareholders at the Annual General Meeting.

 

1.4.14     Share Capital

Financial instruments, issued by the Group, are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments.

 

1.4.15     Convertible Debt

The proceeds, received on issue of the Group's convertible debt, are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows, using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability, measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Convertible debt option reserve" within shareholders' equity, net of income tax effects.

 

1.4.16     Warrants

Derivative contracts, that only result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity's own equity instruments, are classified as equity instruments. When warrants are issued, attached to specific loan notes, the Company estimates the fair value of the issued warrants, using the Black-Scholes pricing model, taking into account the terms and conditions upon which the warrants were issued, value of such warrants is deducted from the balance of loan notes, a directly attributable transaction cost. Warrants, relating to equity finance and issued together with ordinary shares placement, are valued by residual method and treated as directly attributable transaction costs and recorded as a reduction of share premium account based on the fair value of the warrants. Warrants, classified as equity instruments, are not subsequently re-measured.

 

1.5    Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Group's Consolidated Financial Statements, requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty, about these assumptions and estimates, could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

 

Significant Judgements in Applying the Accounting Policies

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts, recognised in the Consolidated Financial Statements:

 

Recognition of Holdings Less Than 20% as an Associate

The Company owns 15% of the issued share capital of Mid Migori Mining Company Ltd ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider that, the agreements whereby the Company owns the beneficial interest in the Kenyan assets, and the input of resource by the Company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the standard. As such, MMM has been recognised as an associate for the years ended 30 June 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.

 

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.

 

2.     Segmental Analysis

 

The Group consider its mining and exploration activities as separate segments. These are in addition to the investment activities, which continue to form a significant segment of the business.

 

The Group has made a strategic decision to concentrate on several commodities, ranging from gold to manganese and copper/cobalt, and as such further segmental analysis by commodity has not been considered useful or been presented. Transfer prices, between operating segments, are on an arm's length basis in a manner similar to transactions with third parties.

 

Year to 30 June 2022	Gold Exploration Australia £'000		Gold Exploration Kenya £'000	Copper Exploration DRC £'000		Other Projects   £'000		Investments £'000		Corporate and unallocated £'000		Total £'000
Exploration expenses	-		(255)	-		(1)		-		-		(256)
Administration expenses	(280)		(1)	(1)		(8)		(9)		(926)		(1,225)
Project development	-		-	(623)		(54)		-		-		(677)
Other project costs	(45)		(10)	(15)		(140)		-		-		(210)
Share based payments	-		-	-				-		(16)		(16)
Currency gain	20		-	-				32		(235)		(183)
Other income	-		-	-		116		(77)		13		52
Dividend income
Finance costs	-		-	-		1		(205)		(81)		(285)
Net profit/(loss) before tax from continuing operations	(305)		(266)	(639)		(86)		(259)		(1,245)		(2,800)
Year to 30 June 2021		Gold Exploration Australia £'000			Gold Exploration Kenya £'000		Copper Exploration DRC £'000		Investments £'000		Corporate and unallocated £'000	Total £'000
Exploration expenses		-			(98)		-		-		(7)	(105)
Administration expenses		-			(5)		(4)		-		(690)	(699)
Project development		-			-		(559)		-		-	(559)
Other project costs		(138)			(40)		-		-		(127)	(305)
Share based payments		-			-		-		-		(350)	(350)
Currency gain		(9)			-		-		-		43	34
Other income		-			-		-		-		290	290
Dividend income		-			-		-		126		-	126
Finance income, net		-			-		-		(2)		(129)	(131)
Net profit/(loss) before tax from continuing operations		(147)			(143)		(563)		124		(970)	(1,699)

 

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	UK £'000	Africa £'000	Australia £'000	Total £'000
Non-current assets
Investments in associates and joint ventures	-	1,030	-	1,030
Mineral tenements	-	165	346	511
Exploration properties	-	12,949	-	12,949
Exploration assets	-	316	-	316
FVTOCI financial assets	736	-	-	736
Non-current receivables	1,224	1,096	-	2,320
Total segment non-current assets	1,960	15,556	346	17,862

 

Year ended 30 June 2021	UK £'000	Africa £'000	Australia £'000	Total £'000
Non-current assets
Investments in associates and joint ventures	-	1,585	-	1,585
Mineral tenements	-	-	124	124
Exploration properties	-	12,948	-	12,948
Exploration assets	-	567	-	567
FVTOCI financial assets	736	1,019	-	1,755
Non-current receivables	1,341	-	3	1,344
Total segment non-current assets	2,077	16,119	127	18,323

 

 

3.   (Loss)/Profit for the Year Before Taxation

 

(Loss)/profit for the year before taxation is stated after charging:

	2022 £'000	2021 £'000
Auditor's remuneration:
-  fees payable to the Company's auditor for the audit of consolidated and Company Financial Statements	28	25
Directors' emoluments (note 9)	310	312
-   Share Incentive plan - Directors	12	11
-  Share Incentive plan - staff	4	7

 

4.   Administrative Expenses

	Group 2022 £'000		Group 2021 £'000			Company 2022 £'000		Company 2021 £'000
Staff costs
Payroll		562	307				356	307
Pension		47	20				27	20
Consultants		15	15				15	15
HMRC / PAYE		39	28				39	28
Professional services
Accounting and Audit		115	42				98	40
Legal		36	15				23	14
Marketing		45	64				33	64
Other		13	-				5	-
Regulatory compliance		96	105				96	105
Travel		77	24				75	24
Office and Admin
General		37	22				29	17
IT costs		10	8				10	8
Rent		92	35				72	35
Insurance		41	13				39	13
Total administrative expenses		1,225	699				917	690

 

 

5.   Finance Income/(Costs), Net

Group	2022 £'000	2021 £'000
Interest income (other than MFP finance income)	-	290
Dividend income	-	126
Interest expense & other finance costs	(209)	(131)
Total finance (costs) / income (other than MFP finance income)	(209)	285
MFP finance expense / (income)	(76)	-
Total finance (costs) / income	(285)	285
Other gains	52	-

 

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.

 

 

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. 

		Group and Company
		2022 £'000	2021 £'000
Project development expenses
VUP (Congo)		(328)	(392)
Zlata Bana		-	(42)
Galaxy (Congo)		(47)	(14)
Other (Congo)		(79)	-
Luanshimba (Congo)		(166)	(19)
Kinsevere		(2)	(92)
Other		(54)	-
Total project development expenses		(676)	(559)
Other project costs
Mid Migori Mines (Kenya)		(10)	(40)
Greenland		(68)	(126)
Other		(133)	(139)
Total other project expenses		(211)	(305)

 

 

7.   Taxation

		2022 £'000	2021 £'000
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		(2,800)	(1,699)
Profit/(loss) on ordinary activities at the average UK standard rate of 19.00% (2020: 19.00%)		(532)	(323)
Income not taxable		-	-
Effect of expenditure not deductible		20	67
Losses brought forward utilised in the current period		-	-
Tax losses carried forward		512	256
Tax charge		-	-

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.

 

 

8.   Staff Costs

The aggregate employment costs of staff (including Directors) for the year in respect of the Group was:

	2022 £'000	2021 £'000
Wages and salaries	562	322
Pension	47	20
Social security costs	39	28
Employee share-based payment charge	9	66
Total staff costs	657	436

 

The average number of Group employees (including Directors) during the year was:

	2022 Number	2021 Number
Executives	4	4
Administration	1	1
Exploration	9	1
	14	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	Directors' fees £'000	Directors' fees - discretionary bonus £'000	Consultancy fees £'000		Share Incentive Plan £'000	Pension contributions £'000	Social security costs £'000	Total £'000
Executive Directors
A R M Bell	120	-	15		4	10	15	164
Other Directors
S Kaintz	65	-	-		3	6	7	81
S Quinn	24	-	-		3	2	2	31
A Borrelli	22	-	-		2	-	2	26
	231	-	15		12	18	26	302

 

2021	Directors' fees £'000	Directors' fees - discretionary bonus, £'000	Consultancy fees £'000		Share Incentive Plan £'000	Pension contributions £'000	Social security costs £'000	Total £'000
Executive Directors
A R M Bell	88	17	15		7	7	10	144
Other Directors
S Kaintz	65	15	-		7	6	7	100
M C Nott	15	7	-		7	1	1	31
S Quinn	19	7	-		7	2	2	37
	187	46	15		28	16	20	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. 

 

 

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.

 

		2022					2021
	(Loss)/profit attributable to equity holders of the parent company, £	(2,799,730)					(1,698,983)
	Adjusted for interest accrued on the convertible notes	-					-
	Adjusted (loss) / profit attributable to equity holders of the parent company used for diluted EPS calculation	(2,799,730)					(1,698,983)
	Weighted average number of ordinary shares of £0.0001 in issue, used for basic EPS	1,221,091,538					939,293,986
	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	1,221,091,538					939,293,986
		2022					2021
	(Loss)/earnings per share - basic	(0.23 pence)					(0.18 pence)
	(Loss)/earnings per share - fully diluted	(0.23 pence)					(0.18 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:
			2022			2021
	Share options granted to employees - either not vested and/or out of the money		50,000,000			63,320,000
	Number of warrants given to shareholders as a part of placing equity instruments - out of the money		389,430,010			380,197,618
	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		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.

 

 

11.          Investments in Subsidiaries

Company	2022 £'000	2021 £'000
Cost
At 1 July	40	20
Investment in subsidiaries	37	20
At 30 June	77	40
Impairment
At 1 July	(1)	(1)
Charge in the year	-	-
At 30 June	(1)	(1)
Net book value	76	39

 

As at 30 June 2022 and 30 June 2021, the Company held interests in the following subsidiary companies:

 

Company	Country of registration	Class	Proportion Held At 30 June 2022	Proportion Held At 30 June 2021	Nature of business
Red Rock Australasia Pty Ltd	Australia	Ordinary	50.1%	50.1%	Mineral exploration
New Ballarat Gold Corporation Plc	UK	Ordinary	50.1%	50.1%	Mineral exploration
RedRock Kenya Ltd	Kenya	Ordinary	87%	87%	Mineral exploration
RRR Kenya Ltd	Kenya	Ordinary	100%	100%	Mineral exploration
Red Rock Resources (HK) Ltd	Hong Kong	Ordinary	100%	100%	Holding company
Red Rock Resources Congo S.A.U.	DRC	Ordinary	100%	100%	Holding company
African Lithium Resources PVT Ltd	Zimbabwe	Ordinary	65%	nil	Mineral exploration
Lac Minerals Ltd	UK	Ordinary	100%	100%	Mineral exploration
Lacgold Resources SARLU	Ivory Coast	Ordinary	100%	100%	Mineral exploration
Faso Minerals Ltd	UK	Ordinary	100%	100%	Mineral exploration
Faso Greenstone Resources SARL	Burkino Faso	Ordinary	100%	100%	Mineral exploration
RRR Coal Ltd	UK	Ordinary	100%	100%	Holding company
Jimano Ltd	Cyprus	Ordinary	100%	100%	Royalty Holdings
Red Rock Galaxy SA	DRC	Ordinary	80%	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, 4^th Floor Office 401, Nicosia, Cyprus

 

Red Rock Galaxy SA office is 1320 Av Meteo 2 Q/Meteo C/Lumbumbashi, DRC

 

 

12.    Investments in Associates and Joint Ventures

	Group			Company
	2022 £'000	2021 £'000		2022 £'000	2021 £'000
Cost
At 1 July	1,806	1,805		1,669	1,668
Reclassifications to Other Receivables	(696)	-		(696)	-
Additions during the year	141	1		141	1
At 30 June	1,251	1,806		1,114	1,669
Impairment
At 1 July	(221)	(221)		(3)	(3)
Profit/(loss) during the year	-	-		-	-
At 30 June	(221)	(221)		(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	Country of incorporation	Class of shares held	Percentage of issued capital	Accounting year ended
Mid Migori Mining Company Limited	Kenya	Ordinary	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	Revenue £'000	Loss £'000	Assets £'000	Liabilities £'000
Mid Migori Mining Company Limited	-	-	2,110	(2,238)

 

For the year as at 30 June 2021:

Company	Revenue £'000	Profit £'000	Assets £'000	Liabilities £'000
Mid Migori Mining Company Limited	-	-	2,559	(2,623)

 

Mid Migori Mining Company Ltd

The Company owns 15% of the issued share capital of Mid Migori Mining Company Ltd ("MMM"), incorporated in Kenya. The Company has entered into agreements under which it manages MMM's development projects and has representation on the MMM board. In accordance with IAS 28, the involvement with MMM meets the definition of significant influence and, therefore, has been accounted for as an associate (note 1.5).

 

VUP Musonoi Mining SA

On 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. 

 

		Mid Migori Mining Company Limited £'000	VUP Musonoi Mining SA £'000	Total £'000
Cost
At 1 July 2021		1,083	583	1,666
Additions during the year		28	113	141
Reclassified during the year		-	(696)	(696)
At 30 June 2022		1,111	-	1,111
Impairment and losses during the year
At 1 July 2021		(81)	-	(81)
The Group's share of profit/(loss) during the year		-	-	-
At 30 June 2022		(81)	-	(81)
Carrying amount
At 30 June 2021		1,002	583	1,585
At 30 June 2022		1,030	-	1,030

 

 

13.          Exploration Assets           

 

Group	2022 £'000	2021 £'000
At 1 July	13,515	11,858
Additions	150	1,657
Reclassification as non-current receivables (note 16)	(400)	-
At 30 June	13,265	13,515

 

Exploration assets were capitalised:

 

·      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. 

 

 

14.    Financial Instruments with Fair Value Through Other Comprehensive Income (FVTOCI)

 

	Group			Company
	2022 £'000	2021 £'000		2022 £'000	2021 £'000
Opening balance	1,755	2,755		778	1,711
Additions	223	143		223	143
Disposals	(1,693)	(401)		(775)	(697)
Change in fair value	451	(742)		510	(379)
At 30 June	736	1,755		736	778

 

 

Market Value of Investments

The market value as at 30 June of the listed and unlisted investments was as follows:

	Group			Company
	2022 £'000	2021 £'000		2022 £'000	2021 £'000
Quoted on London AIM	-	562		-	562
Quoted on other foreign stock exchanges	-	1,019		-	42
Unquoted investments at fair value	736	174		736	174
	736	1,755		736	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.

 

 

15.    Cash and Cash Equivalents

Group	30 June 2022 £'000	30 June 2021 £'000
Cash in hand and at bank	66	457
	66	457

 

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash at bank and in hand.

 

Company	30 June 2022 £'000	30 June 2021 £'000
Cash in hand and at bank	31	366
	31	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

	Group 2022 £'000	Group 2021 £'000	Company 2022 £'000	Company 2021 £'000
Amounts receivable relating to VUP Joint Venture	1,096	-	1,096	-
Due from subsidiaries	-	-	1,625	601
MFP sale proceeds	1,224	1,344	1,224	1,341
	2,320	1,344	3,945	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

	Group			Company
	2022 £'000	2021 £'000		2022 £'000	2021 £'000
Current trade and other receivables
Prepayments	310	42		46	42
Short-term loan receivable	-	-		161	162
MFP sales proceeds - current element	129	85		129	85
Other receivables	221	272		120	76
Total	660	399		456	365

 

Prepayments in the year include £264,085 of prepaid/deferred costs relating to mineral exploration activity in Kenya (2021: £nil).

 

 

18.          Trade and Other Payables

	Group			Company
	2022 £'000	2021 £'000		2022 £'000	2021 £'000
Non-current liabilities
Trade and other payables	415	119		-	-
Borrowings	822	731		822	731
Total non-current liabilities	1,237	850		822	731
Current liabilities
Trade payables	1,149	835		1,029	803
Accruals	206	240		206	240
Due to Partners in associate (note 26)	-	-		-	-
Due to key management	-	-		-	-
Total trade and other payables	1,355	1,075		1,235	1,043
Intra-group borrowings	-	-		1,890	1,079
Short-term borrowings	1,042	969		1,022	27
Total current liabilities	2,397	2,044		4,147	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 $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.  

 

 

19.          Share Capital of the Company

 

The share capital of the Group and the Company is as follows:

Authorized, Issued and fully paid	2022 £'000	2021 £'000
1,216,708,801 (2020: 696,767,452) ordinary shares of £0.0001 each	126	122
2,371,116,172 deferred shares of £0.0009 each	2,134	2,134
6,033,861,125 A deferred shares of £0.000096 each	579	579
As at 30 June	2,839	2,835

 

Movement in ordinary shares	Number	Nominal £'000
As at 30 June 2020 - ordinary shares of £0.0001 each	696,767,452	70
Issued 28 Sep 2020 at 0.8 pence per share (cash)	125,000,000	13
Issued 18 Nov 2020 at 0.7 pence per share (non-cash, Kansai settlement for MMM)	3,571,429	-
Issued 14 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion)	42,493,333	4
Issued 18 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion)	34,313,378	3
Issued 22 Dec 2020 at 0.6 pence per share (non-cash, convertible loan note conversion)	70,466,665	7
Issued on 12 Feb 2021 at 1.05 pence per share (cash)	95,238,095	10
Issued on 22 Mar 2021 at 1.05 pence per share (non-cash, Kansai settlement)	101,550,000	10
Issued on 9 Apr 2021 at 0.75 pence per share (cash, exercise of warrants)	980,392	-
Issued on 12 Apr 2021 at 1 pence per share (non-cash, SIP)	1,800,000	-
Issued on 12 Apr 2021 at 0.155 pence per share (non-cash, SIP)	13,768,254	1
Issued on 15 Apr 2021 at 0.75 pence per share (cash, exercise of warrants)	1,838,235	-
Issued on 19 Apr 2021 at 0.75 pence per share (cash, exercise of warrants)	980,392	-
Issued on 20 Apr 2021 at 0.75 pence per share (cash, exercise of warrants)	980,392	-
Issued on 4 Jun 2021 at 0.75 pence per share (cash, exercise of warrants)	26,960,784	3
As at 30 June 2021 - ordinary shares of £0.0001 each	1,216,708,801	122
Issued on 28 Jan 2022 at 0.45 pence per share (cash - options exercise)	5,670,000	1
Issued on 3 Feb 2022 at 0.45 pence per share (cash - options exercise)	450,000	-
Issued on 13 May 2022 at 0.425 pence per share (non-cash, SIP)	5,038,253	-
Issued on 15 Jun 2022 at 0.3791 pence per share (non-cash, secured shares for convertible facility)	18,464,800	2
Issued on 15 Jun 2022 at 0.39 pence per share (cash, placing)	9,815,384	1
As at 30 June 2022 - ordinary shares of £0.0001 each	1,256,147,238	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	2022 number of warrants			2021 number of warrants
Outstanding at the beginning of the year	380,197,618			101,740,195
Granted during the period	9,232,392			323,322,618
Exercised during the period	-			(44,865,195)
Cancelled during the period	-			-
Lapsed during the period	-			-
Outstanding at the end of the year	389,430,010			380,197,618

 

During the year ended 30 June 2022, the Company had the following warrants to subscribe for shares in issue:

 

Grant date	Expiry date	Warrant exercise price, £	Number of warrants
10 Dec 2019	19 Dec 2022	0.009	56,875,000
28 Sep 2020	27 Mar 2023	0.012	137,500,000
6 Nov 2020	6 Nov 2023	0.016	8,000,000
6 Nov 2020	6 Nov 2023	0.024	8,000,000
18 Nov 2020	18 May 2023	0.007	71,428,571
19 Mar 2021	18 Mar 2023	0.020	47,619,047
1 Mar 2021	18 Mar 2023	0.020	50,775,000
8 Jun 2022	16 Aug 25	0.005	9,232,392
Total warrants in issue at 30 June 2022			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.

 

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:

 

		Options issued 13 January 2017 exercisable at 0.8p per share, expiring on 13 January 2023     Number	Options issued on 24 August 2020 at 0.2p per share, expiring on 19 August 2025       Number	Options issued on  24 August 2020 at 0.25p per share, expiring on 19 August 2025       Number	Total             Number
A R M Bell		12,000,000	5,500,000	5,500,000	23,000,000
S Kaintz		11,000,000	2,250,000	2,250,000	15,500,000
S Quinn		3,000,000	-	-	3,000,000
Employees		3,000,000	2,750,000	2,750,000	8,500,000
Total		29,000,000	10,500,000	10,500,000	50,000,000

 

			Company and Group
	2022					2021
	Number of options	Weighted average exercise price pence				Number of options	Weighted average exercise price pence
Outstanding at the beginning of the year	63,320,000	0.46				48,320,000	0.70
Options issued in the year	-	-				21,000,000	0.225
Options exercised in the year	(6,120,000)	0.45				-	-
Options lapsed in the year	(7,200,000)	0.45				(6,000,000)	0.80
Outstanding at the beginning of the year	50,000,000	1.41				63,320,000	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.

 

 

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	Group 2022 £'000	Group   2021 £'000	Company 2022 £'000	Company   2021 £'000
Financial assets
Available for sale financial assets at fair value through OCI
Unquoted equity shares	736	174	736	174
Quoted equity shares	-	1,581	-	604
Total available for sale financial assets at fair value through OCI		1,755		778
Financial assets FVTPL (Para warrants)	-	-	-	-
Total financial assets carried at fair value through profit and loss	736	-	736	-
Cash and cash equivalents	66	457	31	366
Loans and receivables
Non-current receivables	2,320	1,344	3,945	1,950
Other receivables - current	660	560	456	365
Total loans and receivables carried at amortised cost	2,980	1,904	4,401	2,315
Total financial assets	3,782	4,116	5,168	3,459
Total current financial assets	726	1,067	487	731
Total non-current financial assets	3,056	3,099	4,681	2,728

 

Financial liabilities
Short-term borrowings, including intra-group	1,042	969		2,912		1,106
Long-term borrowings	1,237	731		822		731
Trade and other payables, excluding accruals	1,149	954		1,029		803
Total current financial liabilities	3.428	2,654		4,763		2,640

 

Other Receivables and Trade Payables

Management assessed that fair values of other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

 

Non-Current Receivables

Long-term fixed-rate receivables are evaluated by the Group, based on parameters such as interest rates, recoverability and risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for any expected losses on these receivables.

 

Loans and Borrowings

The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer's borrowing rate.

 

The carrying value of current financial liabilities in the Company is not materially different from that of the Group.

 

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	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
FVTOCI financial assets
- Unquoted equity shares	-	736	-	736
- Quoted equity shares	-	-	-	-
FVTPL (Para warrants)	-	-	-	-

 

Company 30 June 2022	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
FVTOCI financial assets
- Unquoted equity shares	-	736	-	736
- Quoted equity shares	-	-	-	-
FVTPL (Para warrants)	-	-	-	-

 

Group 30 June 2021	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
FVTOCI financial assets
- Unquoted equity shares	-	-	174	174
- Quoted equity shares	1,581	-	-	1,581
FVTPL (Para warrants)	-	-	-	-

 

Company 30 June 2021	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
FVTOCI financial assets
- Unquoted equity shares	-	-	174	174
- Quoted equity shares	604	-	-	604
FVTPL (Para warrants)	-	-	-	-

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.

 

These assets are denominated in the following currencies:

 

Group 30 June 2022	GBP £	AUD £	USD £	CAD £	Other £	Total £
Cash and cash equivalents	31	13	16	-	6	66
Amortised cost financial assets - Other receivables	125	8	332	-	360	825
FVTOCI financial assets	-	-	736	-	-	736
Amortised costs financial assets - Non-current receivables	-	-	2,320	-	-	2,320
Trade and other payables, excluding accruals	77	26	166	876	4	1,149
Short-term borrowings	1,042	-	-	-	-	1,042
Long term borrowings	-	415	822	-	-	1,237

 

 

Group 30 June 2021	GBP £'000	AUD £'000	USD £'000	CAD £'000	Other £'000	Total £'000
Cash and cash equivalents	387	29	7	-	34	457
Amortised cost financial assets - Other receivables	254	1	144	-	161	560
FVTOCI financial assets	604	977	174	-	-	1,755
Amortised costs financial assets - Non-current receivables	-	3	1341	-	-	1,344
Trade and other payables, excluding accruals	57	26	699	-	53	835
Short-term borrowings	969	-	-	-	-	969

 

Company 30 June 2022	GBP £'000	AUD £'000	USD £'000	CAD £'000	Other £'000	Total £'000
Cash and cash equivalents	31	-	-	-	-	31
Amortised cost financial assets - Other receivables	1,750	-	331	-	-	2,081
FVTOCI financial assets	-	-	736	-	-	736
Amortised costs financial assets - Non-current receivables	-	-	2,320	-	-	2,320
Trade and other payables, excluding accruals	74	-	79	876	-	1,029
Short-term borrowings, including intra-group	2,912	-	-	-	-	2,912
Long term borrowings	-	-	822	-	-	822

 

Company 30 June 2021	GBP £'000	AUD £'000	USD £'000	CAD £'000	Other £'000	Total £'000
Cash and cash equivalents	361	5	-	-	-	366
Amortised cost financial assets - Other receivables	204	-	161	-	-	365
FVTOCI financial assets	604	-	174	-	-	778
Amortised costs financial assets - Non-current receivables	-	-	1,341	-	-	1,341
Trade and other payables, excluding accruals	57	-	693	-	53	803
Short-term borrowings, including intra-group	27	-	-	-	-	27

 

Exposures to foreign exchange rates vary during the year, depending on the volume and nature of overseas transactions.

 

 

23.  Reconciliation of Liabilities Arising from Financing Activities and Major Non-Cash Transactions

 

Group	30 June 2021	Cash flow loans received	Cash flow principal re-payment	Cash flow Interest paid	Non-cash flow Forex movement	Non-cash flow -Conversion	Non-cash flow Interest and arrangement fee accreted	Non-cash flow Introducers fee accrued	30 June 2022
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Loan from institutional investors	963	564	(963)	(37)	-	-	37	13	577
Convertible notes	-	241	-	-	-	-	35	41	317
Other loans	-	100	-	-	-	-	-	-	100
Total	963	905	(963)	(37)	-	-	72	54	994

 

Company	30 June 2021	Cash flow loans received	Cash flow loans re-payment	Cash flow Interest paid	Non-cash flow Forex movement	Non-cash flow - Conversion	Non-cash flow Interest accreted	Non-cash flow arrangement fee accreted	30 June 2022
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Loan from subsidiary RRR Coal	1,079	810	-	-	-	-	-	-	1,889
Loan from institutional investors	-	564	-	-	-	-	13	-	577
Convertible notes	-	241	-	-	-	-	35	41	317
Other loans	-	100	-	-	-	-	-	-	100
Total	1,079	1,715	-	-	-	-	48	41	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.

 

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 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. Red Rock Australasia was to become a 100% owned Australian subsidiary of New Ballarat Gold Corporation. 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 32km E 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

 

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. 

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.

 

29.    These results are audited, however the information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006.  The consolidated statement of financial position at 30 June 2022 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2022 statutory financial statements.  Their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2022 will be delivered to the Registrar of Companies by 31 December 2022.