TIDMRRR
RNS Number : 4557F
Red Rock Resources plc
21 February 2018
Red Rock Resources PLC
("Red Rock" or the "Company")
Steelmin Repays Red Rock Loan
21 February 2018
Red Rock Resources Plc, the natural resource development company
with interests in gold and steel feed materials, announces further
to the announcement of 18(th) January 2018, that Steelmin Limited
("Steelmin"), a company Red Rock financed so that it could complete
the refurbishment and recommissioning of a ferrosilicon smelter in
Jajce, Bosnia, has repaid in full the amounts outstanding to Red
Rock ("Loan").
Key points:
o Total amount due under the Loan of EUR4,314,688.68 has been
repaid to Red Rock.
o Red Rock retains a 22% fully diluted shareholding in
Steelmin.
o Red Rock has one board seat and one observer seat on the
Steelmin board.
o Red Rock understands that Steelmin now forecasts first
production following completion of the refurbishment of the
ferrosilicon smelter complex in Jajce, Bosnia for April 2018
(previously reported as March).
o Steelmin's plant will initially consist of the refurbished
Furnace V of 29,000t of ferrosilicon p.a. and 5,800t of
microsilica, and after a planned (but not yet funded) refurbishment
of a second furnace will have a combined annual capacity of 48,720
tonnes ferrosilicon (FeSi 75) and 9,700 tonnes of microsilica.
o Red Rock will now repay US$3,000,899 in full settlement of its
obligations to the institutional investors that provided the back
to back financing for its Loan to Steelmin, and will retain the
balance as GBP976,525.46 and US$912,457.90.
Andrew Bell, Chairman of Red Rock comments: "The successful
unwinding of these back to back arrangements leaves Red Rock in a
solid financial position. We now hold at no net cost a key stake in
an emerging European ferrosilicon producer. We look forward to
updating the market on further developments as they occur."
Steelmin - Background
The Steelmin plant and facility is located in central Bosnia,
104 kilometres north west of Sarajevo. The complex, formerly part
of Electrobosna, was originally built in the 1970s by Elkem, a
major silicon and alloy producer based in Norway, and was one of
the largest and best known producers of ferrosilicon and silicon
metal in Europe. It was closed down in 1992 due to the Bosnian War,
was then privatised and the six furnaces were sold off in two
separate parts in 2000. The plant was brought back online until
finally being shuttered again in 2004 due to increasing exports
pressure from Chinese producers.
Anti-dumping regulations have since been implemented by the
European Commission; which significantly reduced both Chinese and
Russian exports into Europe, allowing prices to stabilize and rise
over time. The second, smaller, facility split off from the
original is now being operated by the Italian ferro-alloy producer
Metalleghe, and has been successfully producing next to Steelmin's
plant for the past 12 years.
Steelmin - Assets
Steelmin controls furnaces IV and V from the original
Electrobosna complex. Furnace V has a 48MVA installed power Elkem
furnace, and is connected to two chimneys on the roof of the
production hall. Furnace IV, the smaller of the two, has a 30 MVA
Tagliaferri furnace with three chimneys, preventing the emission of
gases in ambient air to comply with EU regulatory requirements.
Given its larger total capacity Steelmin decided to bring furnace V
on initially and then move to recommission furnace IV later in
2018.
In addition to the two furnaces, the facility in Jajce houses a
filtration plant, warehouse storage for raw materials, pouring and
dispatch hall as well as a plant for process water
recirculation.
Refurbishment for the second furnace is expected to begin later
in 2018.
Power remains the most significant input cost to ferrosilicon
production and this is provided by abundant and economical
hydro-power available across the region. Furnace feedstock such as
quartz is also sourced from the region. The filtration plant
refurbishment has been completed and ensures that all outputs of
gases will comply with EU regulations.
Steelmin Products and Markets
Steelmin intends initially to produce ferrosilicon containing
75% silicon and 25% iron, a product primarily used as a deoxidising
agent and to add electrical conductivity and corrosion resistance
to steel. A by-product of ferrosilicon production will be
microsilica, which is a dust used in the manufacture of speciality
concretes in the construction industry as well as in advanced
refractories and ceramics. Furnace V is expected to produce 29,000t
of ferrosilicon per annum as well as 5,800t of microsilica.
Over time Steelmin is expected to produce both ferrosilicon as
well as additional silicon alloys that offer higher margins and
additional upside. Currently ferrosilicon trades at over EUR1500 a
ton compared with between EUR1280-1350 a ton at the time of Red
Rock's investment in June 2017.
European ferrosilicon production depends critically on access to
cheap power (locally generated hydroelectric power in the case of
Jajce) since this is up to half the cost of production. Prices are
historically driven by steel production levels, the level of
Chinese pricing and production allowed into Europe, as well as the
associated export and anti-dumping tariffs. Since late 2016 overall
Chinese export prices have begun to rise, positively impacting
European produce prices. Key input costs such as metallurgical coal
are also closely correlated to realized ferrosilicon prices.
For further information, please contact:
Andrew Bell 0207 747 9990 Chairman Red Rock Resources Plc
Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0207 374 2212 Broker First Equity Limited
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Glossary
Ferrosilicon: ferrosilicon produced at Steelmin contains 75%
silicon, and is primarily used as a deoxidising agent in steel
production, adding electrical conductivity and corrosion-resistance
properties to steel
Microsilica: a by-product of silicon and ferrosilicon
production, used in the construction industry for its added
strength and abrasion resistance
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCMMGZZLGVGRZM
(END) Dow Jones Newswires
February 21, 2018 02:00 ET (07:00 GMT)
Red Rock Resources (LSE:RRR)
Historical Stock Chart
From Apr 2024 to May 2024
Red Rock Resources (LSE:RRR)
Historical Stock Chart
From May 2023 to May 2024