Red Rock Resources Regulatory News (RRR)

Red Rock Resources PLC

("Red Rock" or the "Company")

Acquisition of Interest in Steelmin Limited

Back to Back Financing Agreements Completed

23 June 2017

Red Rock Resources Plc, the natural resource development company with interests in gold, manganese and oil production, announces that it has entered into financing agreements under which it will fund Steelmin Limited ("Steelmin") to complete the refurbishment and recommissioning of a ferrosilicon smelter in Jajce, Bosnia, and acquire an interest in Steelmin.

Highlights:

o Red Rock has issued an 8 month secured loan note for €3,874,560 to Steelmin ("Loan"), bearing interest at 13% p.a. and extendable for a further 8 months for a fee

o The first tranche of €2,737,712.96 has been paid with a balance due in one week

o Red Rock has been issued 16% of the share capital of Steelmin ("SL Shares"), and this will increase to a maximum 30% depending on the date of full repayment of the Loan

o Red Rock will hold one board seat and one observer seat on the Steelmin board, with two seats if the loan is extended

o Security in the form of a fixed and floating charge of Steelmin and a mortgage over the Bosnian assets

o Loan enables Steelmin to complete refurbishment of ferrosilicon smelter complex in Jajce, Bosnia with production expected Q1 2018

o Steelmin's plant consists of two electric arc furnaces with a combined annual capacity of 48,720 tonnes ferrosilicon (FeSi 75) and 9,700 tonnes of microsilica and expected initial capacity from Furnace V of 29,000t of ferrosilicon p.a. and 5,800t of microsilica

o Steelmin's targets annual revenues on initial production levels of €36m and EBITDA of €7m

o To fund the Loan, Red Rock has borrowed from YA 11 PN Ltd, on behalf of a group of institutional investors, $4,230,750 on a secured basis for a term of one year bearing interest at 13% p.a. with a renewal option for a further 8 months for a fee (the "Note")

o First tranche of the Note, amounting to $3,069,250, has been received, with the balance due in one week

o 20m warrants with a 2 year life and exercisable at 2.2 pence per share have been issued to the Noteholders

o The Note is secured against the Company's Jupiter Mines ("Jupiter" or "JMS") holding, the Loan and the Shares

o Investment offers Red Rock a substantial stake in a quality near-term producing asset in the Company's familiar steel-feed space

Andrew Bell, Chairman of Red Rock comments: "This transaction gives us a stake in a brownfield ferrosilicon asset on which significant funds have been spent over several years. A land dispute which caused delay has been resolved, and so we are providing the final slice of money before production. We see this as a sound cash-generative business that will have quality management and customers, generally stable margins, and where we have attractive terms of entry. On-site expansion capacity will facilitate growth.

We have worked to find a creative financing solution to enable us to make this investment while not giving away equity upside in our business, knowing that a value crystallisation of our Jupiter Mines holding is likely this Summer.

Using back-to-back financing facilities we transfer substantially all the financing costs to Steelmin, securing ourselves over their significant plant and equipment and with an equity stake and board representation giving us exposure to the upside potential in the business.

The opportunity came together due to Steelmin's time-sensitivity around long-lead time items and desire to be in production by the beginning of next year, and Red Rock's desire to begin to lay the foundations for the next stages of growth and development beyond the coming liquidity events at Jupiter. Assets that offered cash flow generation, operated within the same steel feed space, had some similar quality characteristics, and with attractive cost of entry, were what we sought: we felt with Steelmin we had found one of these.

Steelmin has all necessary production plans, facility, labour and qualifications in place as well as an experienced management team fully incentivized both towards early production and to refinance our loan with cheaper trade based capital expected at first production if not before.

Expansion options include the recommissioning of the smaller second furnace located at the facility, the diversification into higher margin products and the acquisition of additional facilities in region and across Europe.

Overall, the Board of Red Rock believes that Steelmin constitutes an outstanding opportunity that will drive Red Rock forward along the road to becoming a multi-project natural resource producer."

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 has 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.

Steelmin currently has a team of 45 people on-site led by engineers who were involved with the original plant from commissioning. Steelmin stands to benefit from experienced local labour with 20+ years of experience, at a fraction of typical cost of these skills in Europe. With proximity and abundant access to raw materials including quartz deposits, Steelmin has secured contracts for most of the materials required for production, as well as letters of intent and statements of interest from some of the largest steel producers in Europe.

Refurbishment for the second furnace is expected to begin later in 2018. A multinational financial institution has expressed interest to partner with Steelmin once in production, through the provision of debt for the refurbishment of the second furnace.

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 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 between €1280-1350 a ton and the estimated price of microsilica is €200 a ton.

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.

EU supplies of ferrosilicon are generally heavily constrained, with 70% coming from Norway and Iceland and few if any new producers coming online. Given Bosnia's ideal location closer to key steel customers in Germany, Austria and Northern Italy, Steelmin is well poised to service these major markets.

Steelmin Financial Projections

Steelmin currently projects operating revenues of €35m in its first full year of operations with gross margins expected to come in around 33%. These figures assume production of 85 tonnes per day over 339 days a year and a Ferrosilicon selling price of €1,200/t.

For the eighteen months ended 30 December 2016, Steelmin reported no turnover, losses before taxation of €1,205,241 and had as at that date shareholders' equity of €3,024,053. The shareholders consisted of a number of investment funds and businesses and high net worth and other investors, including management.

Details of Red Rock's loan to Steelmin and Red Rock's borrowings to enable this loan are set out below:

Red Rock Loan to Steelmin

o 8 Month secured loan note of €3,874,560 carrying interest rate of 13% pa and repayable in one bullet payment at term

o No early repayment penalty

o Red Rock to have fixed and floating security and debenture over Steelmin

o 7.5% arrangement fee; 4% to be paid at close and 3.5% after 8 months

o Red Rock to receive 16% of the fully diluted equity of Steelmin at closing, 1 board seat and one observer

o Steelmin to be able to refinance the Loan for an additional 8 month term by paying a 5 % fee, outstanding amounts to then be amortized monthly

o Red Rock to receive a further 1% of the fully diluted equity of Steelmin if the Loan is not fully repaid by 1 September 2017 and a further 1% each month until April 2018, 0.9% in May, 1.1% in June, and then 1% per month up to a maximum holding of 30%.

o Steelmin to borrow net €3m from Christof Industries and OeKb, Osterreicheische Kontrollbank AG, to complete funding required to bring furnace V back into production and a representative of Christof Industries is expected to join the board

o Steelmin expected to refinance all borrowings with cheaper trade finance once in production

Red Rock Borrowings

o Red Rock to borrow $4,230,750 from a group of Investors ("Investors") in the form of a 12 month secured promissory note

o Note payable in two tranches, the first of $3,069,250 already received and the second due in one week

o Note carries a 13% interest rate with a three month repayment holiday and 75% of the loan to be amortized over 8 months leaving a 25% bullet at 12 months

o 7.5% arrangement fee; 4% to be withheld at close and 3.5% at the earlier of an exit from the JMS investment or 31 December 2017

o Loan offers an additional term of 8 months available for a 5% refinancing fee and amortized monthly

o In the event of a JMS liquidity event, then depending on quantum Red Rock will repay between 30% and 50% of the outstanding principal or interest of the Loan; any other prepayments are subject to a 5% penalty

o In the event of a default in repayment of any principal or interest by the Company lasting more than four days, the Investors may convert the amount in default into new ordinary shares in the Company ("Shares") at 93% of the volume-weighted average price at which the Shares have traded in the three days prior to their allotment, subject to a maximum value of five times the average daily traded value over that period

o Investors to receive charge over the Company's shares in JMS, excluding any shares that might be required to participate in JMS buybacks

o Investor to receive a potential earn out payment based on the value of the Company's JMS investment at the time of a trade sale or IPO of the Tshipi Manganese mine, the amount payable varying between $0 and $410k, with $100k payable if no such liquidity event occurs by 31 December 2017

o Investors to receive 20,000,000 24 month warrants with a strike price of £0.022

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 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd

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