TIDMRRR
RNS Number : 2984Z
Red Rock Resources plc
30 August 2018
Red Rock Resources PLC
("Red Rock" or the "Company")
Update on JV Agreement to Develop Cobalt/Copper Tailings
Indicative Ore Offtake Agreement
Expiry of Warrants
30 August 2018
Red Rock Resources Plc, the natural resource development company
with interests in gold, manganese and oil production, announces
progress in relation to the conditional agreement first announced
on 26 September 2017, and supplemented most recently by further
announcements dated 29 March 2018 and 15 June 2018, to acquire an
interest in a Joint Venture company ("JVCo") to be formed for the
exploitation of copper/cobalt tailings and dumps (the "Resource")
near Kolwezi in the Democratic Republic of Congo ("Agreement" and
"DRC").
Pursuant to the Agreement Red Rock made the initial payment of
$50,000, and conducted due diligence, including drilling and
testwork.
In accordance with the terms of the Agreement, an adjustment is
being made by our local partner, Vumilia Pendenza S.A.("VUP") to
ensure that the areas comprising the Project have acceptable
quantities and grades of mineralisation. This may involve, as noted
in the announcement of 26 September 2017, adding areas; it may also
involve dropping certain of the areas and substituting others.
Minor adjustments have been made to the Agreement to reflect the
passage of time and the opportunity cost borne by Red Rock which
have the effect of slightly reducing the overall cost and
simplifying the transaction. The immediate counterparty has been
changed from an Isle of Man company to a Congolese company, Bring
Minerals SAU ("BRO").
Highlighted changes:
o Red Rock now acquires 50.1% on completion instead of 26.25% of
JVCo for:
o Cash payment of $700,000 (unchanged) upon BRO providing proof
of it Rights over the VUP Project ("Rights").
o GBP490,000 payable in Red Rock shares ("Shares") at 0.7 pence
a share (revised from 0.65 pence), with attached 1-for-1 (revised
from 5-for-3) three year warrants to subscribe for new Shares at 1p
("Warrants").
o The obligation by Red Rock to fund $1.2m of exploration
expenditure over 18 months to produce a bankable feasibility study
("BFS") disappears.
o Instead of Red Rock having six months within which to elect to
pay $1m to farm in to a further 26.25% of JVCo, bringing its
interest to 52.5%, after a BFS is completed, Red Rock holds 50.1%
immediately on completion and $1m will be paid as a post-completion
obligation if and when commercial production begins.
o Whereas before a 0.4% royalty was due to a partner but could
be bought out, the buy out provision has been deleted but Red Rock
will also enjoy a 0.4% royalty.
Summary of other terms:
The Warrants as before only become exerciseable upon a decision
to proceed with commercial production.
The transaction continues to be subject to a 1% NSR Royalty in
favour of VUP, and VUP retains as before a 20% interest in JVCo
which is subject to a carry of exploration costs and a finance
carry (repayable out of distributions from JVCo) of project finance
costs.
The transaction continues to be subject to conditions precedent
including:
(a) Execution of such formal agreements as may be necessary;
(b) Receipt of all necessary consents;
(c) Proof of all Rights;
(d) Red Rock having a satisfactory legal opinion in relation to
the Rights.
Time for completion is further extended by a provision that
these conditions are to be satisfied or waived within 60 days of 24
August 2018; failing which either party may by notice terminate the
transaction.
Other information:
Whilst the precise details of the assets Red Rock will be buying
into will only be clarified in the definitive agreements, the heads
of terms currently contemplate Red Rock acquiring rights to assets
including a portion of the Luilu tailings dumps near Kolwezi. There
is no geological data reported on to an AIM Standard but Red Rock
is aware of the following non-compliant historic data on Luilu
which should naturally be treated with caution until confirmed in
accordance with the AIM requirements: on 13 July 1998 First Quantum
Minerals Ltd, listed at that time on the Vancouver Stock Exchange,
reported a resource estimate that could be classified as measured
for the entirety of the Luilu tailings dump deposited up to that
time (based on an estimated specific gravity of 1.3) of 13.78m tons
at 1.98% copper and 0.35% cobalt.
All Rights to be passed under the Agreement and subsequent
amendments derive from commercial rights negotiated by VUP with La
Générale des Carrières et des Mines (Gécamines), a state-controlled
corporation.
Offtake: Winmar Resources Limited ("Winmar")(ASX:WFE) has on 23
August 2018 signed with Red Rock a Non-Binding Indicative Ore
Purchase Agreement, under which Red Rock would supply copper and
cobalt ores from its projects in the DRC to the Luapula Cobalt
Processing Facility located near the town of Likasi in Haut-Katanga
Province, the DRC. On 23 July 2018 Winmar announced a Binding Heads
of Agreement for Cobalt Production Joint Venture to acquire an
interest in and refurbish this facility.
Expiry of warrants: On 22 August 2018, 75,000,000 warrants
exercisable into 75,000,000 Red Rock shares at a price of 0.8 pence
a share expired unexercised.
Andrew Bell, Chairman of Red Rock, comments: "We are satisfied
with the results of our due diligence inquiries to date and
provided proof of rights to the Resource can be provided at
completion, we expect the transaction to proceed. We welcome the
adjustment in terms we have been able to negotiate with our
partners.
Full details of the Rights acquired, including their
composition, extent and duration, will be notified at the time of
completion.
Our due diligence showed the strong demand for feed from local
plants and our indicative ore purchase agreement reflects this.
Although we expect over time to add more value, initially through
ore beneficiation, the ability now to sell our material on
profitably underpins the value of this opportunity and will ensure
we can control the level of our commitments."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
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
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END
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