Last checked at 22 Mar 2017 16:37
22 March 2017
Red Rock Resources plc Unaudited half-yearly results for the six months ended 31 December 2016 |
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Red Rock Resources plc ("Red Rock" or the "Company"), the natural resource exploration and development company with production interests in oil in Louisiana, manganese in South Africa, and gold in South America, announces its unaudited half-yearly results for the six months ended 31 December 2016. |
Chairman's statement |
We present the company's interim report for the six months to 31st December 2016.
Three months ago in our Annual Report we spoke of the end of the downward cycle in the mineral sectors, and the beginning of a recovery that had been seen since the lows of January and February 2016. The cost reduction measures we were implementing, another theme of the Annual Report, and the continuation of the sector's good performance into the end of the calendar year, have meant that the recovery began to feed through into our published results with these interim figures.
The published profit for the six month period was £147,662 compared with a loss of £22,025 for the six months to 31st December 2015. Of greater significance, the total comprehensive profit for the period rose to £7,114,520 against a loss of £109,477 in the comparable period of the previous year. This reflected principally a £6,927,699 partial reversal of prior year impairments in the value of our 1.2% holding in Jupiter Mines Ltd ("Jupiter") which also impacted positively on shareholders' total equity which rose to £16,026,755 from £8,627,235 at 30th June 2016.
The reduction in our cost base saw a 39.1% year-on-year reduction in administrative costs for the half year against the year-before period, after a 24.4% year-on-year reduction in the year to June 2016,
Better manganese prices allowed the Tshipi é Ntle mine in the Northern Cape province of South Africa to announce in November 2016 a planned distribution to its shareholders equivalent to over half their capital investment in developing the mine. The 49.9% joint venture shareholder, Jupiter, in turn made a distribution to its shareholders: our share of that, US$655,784.80 (approximately £530,700), we received after the period-end in March 2017. A further distribution is expected this year. The distribution was carried out by means of an "equal access buyback" at US$0.40 per share for 6% of the Jupiter shares held by each shareholder, and received 98.01% acceptance.
At the 40c price, the value of our holding would be US$10.93m (or approximately £8.85m), and we would hope for (but might not achieve) an equal or higher price-equivalent in a liquidity event for the remainder of our holding, which is anticipated for later this year.
Jupiter has since appointed Bank of America Merrill Lynch to progress options for realising shareholder value in 2017: this may include a relisting, or a listing or sale of Tshipi é Ntle.
Given the disparity between our market capitalisation on the stock market and the value of this single high quality asset, and the strong possibility of a liquidity event, our nearest and safest way to preserve and increase shareholder value will be to keep costs low and avoid where possible new share issuance as we expect developments at Jupiter to cause before long a natural narrowing of the discount at which we trade. It might be hard for a new investment to offer a return superior to that obtainable from an existing investment.
Turning to our other projects , the new owner of our former gold mining interests in Colombia now has a C$24m market value and has broadened its asset base. It announced in February 2017 that the second ball mill at the El Limón mine is now installed and operational, supplementing the first ball mill which gave us some problems and has given the new owner further ones, requiring more and lengthier refurbishment than expected. In our current financial year we have received three royalty payments amounting to US$26,607.16 from El Limón, covering the period to end-December, and hope to get one more, at a considerably higher level, as well as a US$50,000 interest payment, before our books close on 30th June 2017. After c1410 oz of gold production in calendar 2016, the operators forecast a level of production nearly ten times higher in 2017, with a 70%-plus further increase in 2018, so that we look to a substantial increase in our revenues from this source.
Our third revenue-producing asset, our 20% working interest in the LM20 and other oil and gas wells in the Shoats Creek field in Louisiana, has failed to produce the expected revenue stream to date as it has not been operated satisfactorily. This is a matter we shall now address, through a more vigorous and proactive approach. We see no reason why it should not perform better.
Apart from these three revenue and cash flow-producing interests, and some minor ones, the Company retains some exploration interests and assets in Kenya, Ivory Coast and elsewhere.
In Kenya, the company is pursuing an action for judicial review on behalf of itself and its local partner, and until that is resolved is restricted in its activities. This is a matter we shall give renewed attention. The Company is also seeking arbitration on its claim for conversion or early repayment of the US$1m Promissory Note due in May 2018 that was issued to it at the time of the sale of the Colombian assets.
Red Rock expects to show continuing satisfactory results in the second half of its financial year and for the full year to 30th June 2017, and, provided that commodity prices remain reasonably stable, should see a pattern of strengthening revenues in the following year. There is also a strong possibility of one or more significant liquidity events over coming months. The Company therefore looks to the future with confidence.
Andrew Bell Chairman 22 March 2017
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Consolidated statement of financial position
as at 31 December 2016
Notes | 31 December 2016 | 31 December 2015 | 30 June 2016 | 30 June 2015 | ||||
Unaudited £ | Unaudited £ | Audited £ | Audited £ | |||||
ASSETS | ||||||||
Non-current assets | ||||||||
Property plant and equipment | 5 | 15,600 | - | 17,400 | 266 | |||
Investments in associates and joint ventures | 2,458,409 | 3,924,891 | 2,459,638 | 3,968,878 | ||||
Available for sale financial assets | 6 | 8,868,758 | 1,606,766 | 1,976,552 | 1,331,766 | |||
Exploration assets | 280,460 | - | 280,460 | - | ||||
Non-current receivables | 5,205,816 | 3,692,538 | 4,838,559 | 3,634,270 | ||||
Total non-current assets | 16,829,043 | 9,224,195 | 9,572,609 | 8,935,180 | ||||
Current assets | ||||||||
Cash and cash equivalents | 32,585 | 132,760 | 26,564 | 29,426 | ||||
Trade and other receivables | 996,151 | 765,863 | 939,554 | 661,152 | ||||
Total current assets | 1,028,736 | 898,623 | 966,118 | 690,578 | ||||
TOTAL ASSETS | 17,857,779 | 10,122,818 | 10,538,727 | 9,625,758 | ||||
EQUITY AND LIABILITIES | ||||||||
Equity attributable to owners of the parent | ||||||||
Called up share capital | 7 | 2,759,988 | 2,737,390 | 2,752,487 | 2,600,207 | |||
Share premium account | 25,553,288 | 24,678,302 | 25,275,788 | 24,285,503 | ||||
Other reserves | 7,490,289 | 307,448 | 523,431 | 394,899 | ||||
Retained earnings | (19,751,847) | (19,769,046) | (19,910,736) | (19,747,630) | ||||
16,051,718 | 7,954,094 | 8,640,971 | 7,532,979 | |||||
Non-controlling interest | (24,963) | (6,100) | (13,736) | (5,491) | ||||
Total equity | 16,026,755 | 7,947,994 | 8,627,235 | 7,527,488 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Trade and other payables | 1,831,024 | 2,094,202 | 1,854,002 | 2,098,270 | ||||
Short term borrowings | - | 80,622 | 57,490 | - | ||||
Total current liabilities | 1,831,024 | 2,174,824 | 1,911,492 | 2,098,270 | ||||
TOTAL EQUITY AND LIABILITIES | 17,857,779 | 10,122,818 | 10,538,727 | 9,625,758 | ||||
The accompanying notes form an integral part of these financial statements.
Consolidated statement of income
for the period ended 31 December 2016
Notes | 6 months to 31 December 2016 | 6 months to 31 December 2015 | |||
Unaudited £ | Unaudited £ | ||||
Loss on sale of investments | (39,861) | - | |||
Administrative expenses | (293,861) | (482,520) | |||
Depreciation | (1,800) | (267) | |||
Exploration expenses | (106,975) | (26,591) | |||
Share of losses of associates and joint ventures | (1,229) | - | |||
Other income | 210,784 | 420,587 | |||
Foreign exchange gain | 235,900 | 72,214 | |||
Finance income/(costs), net | 144,704 | (5,448) | |||
Profit/(loss) for the period before taxation from continuing operations | 147,662 | (22,025) | |||
Tax credit | - | - | |||
Profit/(loss) for the period from continuing operations | 147,662 | (22,025) | |||
Profit/(loss) for the period attributable to: | |||||
Equity holders of the parent | 158,889 | (21,417) | |||
Non-controlling interest | (11,227) | (608) | |||
147,662 | (22,025) | ||||
Profit/(loss) per share | |||||
Profit/(loss) per share - basic | 3 | 0.04 pence | (0.00) pence | ||
Profit/(loss) per share - diluted | 3 | 0.04 pence | (0.00) pence | ||
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
for the period ended 31 December 2016
6 months to 31 December 2016 | 6 months to 31 December 2015 | |||
Unaudited £ | Unaudited £ | |||
Profit/(loss) for the period | 147,662 | (22,025) | ||
Revaluation of available for sale investments | 6,927,699 | - | ||
Unrealised foreign currency gain /(loss) arising upon retranslation of foreign operations |
39,159 |
(87,452) | ||
Total comprehensive profit/(loss) for the period | 7,114,520 | (109,477) | ||
Total comprehensive income/(loss) for the period attributable to: | ||||
Equity holders of the parent | 7,125,747 | (108,869) | ||
Non-controlling interest | (11,227) | (608) | ||
7,114,520 | (109,477) | |||
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
for the period ended 31 December 2016
The movements in equity during the period were as follows:
Share capital | Share premium account | Retained earnings | Non- controlling interest | Other reserves | Total equity | |
Unaudited | £ | £ | £ | £ | £ | £ |
As at 30 June 2015 | 2,600,207 | 24,385,501 | (19,747,629) | (5,491) | 394,900 | 7,627,488 |
Changes in equity for 2015 | ||||||
Total comprehensive (loss)/income for the period |
- |
- |
(21,417) |
(608) |
(87,452) |
(109,477) |
Transactions with owners | ||||||
Issue of shares | 137,184 | 392,799 | - | - | - | 529,983 |
Share issue and fundraising costs | - | - | - | - | - | - |
Share-based payment transfer | - | - | - | - | - | - |
Total Transactions with owners | 137,184 | 392,799 | (21,417) | - | - | 508,566 |
As at 31 December 2015 | 2,737,390 | 24,778,301 | (19,769,046) | (6,100) | 307,448 | 7,100,975 |
As at 30 June 2016 | 2,752,488 | 25,275,788 | (19,910,736) | (13,736) | 523,431 | 8,627,235 |
Changes in equity for 2016 | ||||||
Total comprehensive income/(loss) for the period |
- |
- |
158,889 |
(11,227) |
6,966,858 |
7,114,520 |
Transactions with owners | ||||||
Issue of shares | 7,500 | 292,500 | - | - | - | 300,000 |
Share issue and fundraising costs | - | (15,000) | - | - | - | (15,000) |
Share-based payment transfer | - | - | - | - | - | - |
Total Transactions with owners | 7,500 | 277,500 | - | - | - | 285,000 |
As at 31 December 2016 | 2,759,988 | 25,553,288 | (19,751,847) | (24,963) | 7,490,289 | 16,026,755 |
Available for sale trade investments reserve | Foreign currency translation reserve | Share based payment reserve | Total other reserves | |
Unaudited | £ | £ | £ | £ |
As at 30 June 2015 | 141,810 | 141,161 | 111,929 | 394,900 |
Changes in equity for 2015 | ||||
Total comprehensive income for the period | - | (87,452) | - | (87,452) |
Transactions with owners | ||||
Share-based payment transfer | - | - | - | - |
As at 31 December 2015 | 141,810 | 53,709 | 111,929 | 307,448 |
As at 30 June 2016 | 299,096 | 161,065 | 63,270 | 523,431 |
Changes in equity for 2016 | ||||
Total comprehensive income for the period | 6,927,699 | 39,159 | - | 6,966,858 |
Transactions with owners | ||||
Share-based payment transfer | - | - | - | - |
As at 31 December 2016 | 7,226,795 | 200,224 | 63,270 | 7,490,289 |
Consolidated statement of cash flows
for the period ended 31 December 2016
Notes | 6 months to 31 December 2016 | 6 months to 31 December 2015 | ||
Unaudited £ | Unaudited £ | |||
Cash flows from operating activities | ||||
Profit/(loss) before tax from continuing operations | 147,662 | (22,025) | ||
(Increase)/decrease in receivables | (114,609) | (302,760) | ||
(Decrease/increase in payables | (21,090) | 4,070 | ||
Share of losses in associates and joint ventures | 1,229 | - | ||
Interest receivable | (145,150) | (34) | ||
Interest payable | 445 | 5,481 | ||
Currency adjustments | (144,446) | 96,354 | ||
Depreciation | 1,800 | 231 | ||
Bad debt expense | 19,508 | - | ||
Net cash outflow from operations | (254,651) | (226,823) | ||
Cash flows from investing activities | ||||
Interest received | - | 34 | ||
Proceeds of sale of investments | 132,778 | - | ||
Payments to acquire associate company and joint venture investments | - | (275,000) | ||
Payments to acquire AFS investments | (97,284) | - | ||
Net cash (outflow)/inflow from investing activities | 35,494 | (274,967) | ||
Cash flows from financing activities | ||||
Proceeds from issue of shares | 300,000 | 529,983 | ||
Transaction costs of issue of shares | (15,000) | - | ||
Interest paid | (445) | (5,481) | ||
Proceeds of new borrowings | - | 250,000 | ||
Repayments of borrowings | (59,377) | (169,378) | ||
Net cash inflow from financing activities | 225,178 | 605,124 | ||
Net (decrease)/increase in cash and cash equivalents | 6,021 | 103,334 | ||
Cash and cash equivalents at the beginning of period | 26,564 | 29,426 | ||
Cash and cash equivalents at end of period | 32,585 | 132,760 | ||
Cash and cash equivalents | 32,585 | 132,760 | ||
32,585 | 132,760 |
Half-yearly report notes
for the period ended 31 December 2016
1 | Company and group |
As at 30 June 2016 and 31 December 2016 the Company had one or more operating subsidiaries and has therefore prepared full and interim consolidated financial statements respectively. |
The Company will report again for the year ending 30 June 2017.
The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the year ended 30 June 2016 has been extracted from the statutory accounts for the Group for that year. Statutory accounts for the year ended 30 June 2016, upon which the auditors gave an unqualified audit report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. |
2 | Accounting Polices |
Basis of preparation | |
The consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting.' The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2016, which have been prepared in accordance with IFRS. |
3 | Profit per share |
The following reflects the profit/(loss) and share data used in the basic and diluted profit/(loss) per share computations: |
6 months to 31 December 2016 | 6 months to 31 December 2015 | |||
Unaudited £ | Unaudited £ | |||
Profit/(loss) attributable to equity holders of the parent company | 158,889 | (21,417) | ||
Weighted average number of Ordinary shares of £0.0001 in issue | 394,440,494 | 5,756,628,685 | ||
Profit/(loss) per share - basic | 0.04 pence | (0.00) pence | ||
Weighted average number of Ordinary shares of £0.0001 in issue inclusive of outstanding dilutive options | 394,440,494 | 5,756,628,685 | ||
Profit/(loss) per share - fully diluted | 0.04 pence | (0.00) pence | ||
The weighted average number of shares issued for the purposes of calculating diluted loss per share reconciles to the number used to calculate basic loss per share as follows: | ||||
2016 | 2015 | |||
Number | Number | |||
Profit/(loss) per share denominator | 394,440,494 | 5,756,628,685 | ||
Weighted average number of exercisable share options | 13,320,000 | - | ||
Diluted profit/(loss) per share denominator | 407,760,494 | 5,756,628,685 | ||
In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 13,320,000 for the current period. These were not included in the calculation of diluted earnings per share because all the options are not likely to be exercised given that even the lowest exercise price is substantially higher than the market price and are therefore non-dilutive for the period presented. | ||||
Half-yearly report notes
for the period ended 31 December 2016, continued
4 | Segmental analysis |
Jupiter Mines Limited |
Other investments |
Australian exploration |
African exploration | Corporate and unallocated |
Total | ||
For the 6 month period to 31 December 2016 | £ | £ | £ | £ | £ | £ | |
Revenue | |||||||
Total segment external revenue | - | - | - | - | - | - | |
Result | |||||||
Segment results | - | (105,464) | 29,309 | (86,114) | 165,227 | 2,958 | |
Profit from continuing operations before tax and finance costs | 2,958 | ||||||
Interest receivable | 144,955 | ||||||
Interest payable | (251) | ||||||
Profit from continuing operations before tax | 147,662 | ||||||
Tax | - | ||||||
Profit from continuing operations for the period | 147,662 |
Jupiter Mines Limited |
Other investments |
Australian exploration |
African exploration | Corporate and unallocated |
Total | ||
For the 6 month period to 31 December 2015 | £ | £ | £ | £ | £ | £ | |
Revenue | |||||||
Total segment external revenue | - | - | - | - | - | - | |
Result | |||||||
Segment results | - | (47,607) | (1,261) | (4,677) | 36,968 | (16,577) | |
Loss from continuing operations before tax and finance costs | (16,577) | ||||||
Interest receivable | 33 | ||||||
Interest payable | (5,481) | ||||||
Loss from continuing operations before tax | (22,025) | ||||||
Tax | - | ||||||
Loss from continuing operations for the period | (22,025) |
A measure of total assets and liabilities for each segment is not readily available and so this information has not been presented. |
Half-yearly report notes
for the period ended 31 December 2016, continued
5 | Property plant and equipment | ||||||
Field equipment and machinery £ | Fixtures and fittings £ | Assets under construction £ | Total £ |
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31 December 2015 |
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Cost |
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At 1 July 2015 | 34,607 | 28,649 | - | 63,256 |
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Additions | - | - | - | - |
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Disposals | - | - | - | - |
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Currency exchange | - | - | - | - |
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At 31 December 2015 | 34,607 | 28,649 | - | 63,256 |
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Depreciation and impairment |
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At 1 July 2015 | (34,607) | (28,382) | - | (62,989) |
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Depreciation charge | - | (267) | - | (267) |
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Disposals | - | - | - | - |
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Currency exchange | - | - | - | - |
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At 31 December 2015 | (34,607) | (28,649) | - | (63,256) |
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Net book value |
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At 31 December 2015 | - | - | - | - |
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31 December 2016 |
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Cost |
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At 1 July 2016 | 34,607 | 45,807 | - | 80,414 |
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Additions | - | - | - | - |
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Disposals | - | - | - | - |
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Currency exchange | - | - | - | - |
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At 31 December 2016 | 34,607 | 45,807 | - | 80,414 |
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Depreciation and impairment |
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At 1 July 2016 | (34,607) | (28,407) | - | (63,014) |
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Depreciation charge | - | (1,800) | - | (1,800) |
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Disposals | - | - | - | - |
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Currency exchange | - | - | - | - |
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At 31 December 2016 | (34.607) | (30,207) | - | (64,814) |
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Net book value |
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At 31 December 2016 | - | 15,600 | - | 15,600 |
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6 | Available for sale financial assets | |||
31 December 2016 £ | 31 December 2015 £ |
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At 1 July 2016 | 1,976,552 | 1,331,766 |
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Additions | 97,284 | 275,000 |
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Disposals | (132,778) | - |
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Revaluation adjustment | 6,927,699 | - |
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Impairment | - | - |
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At 31 December 2016 | 8,868,758 | 1,606,766 |
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Half-yearly report notes
for the period ended 31 December 2016, continued
7 | Share Capital of the company |
| |||
Number | Nominal £ | ||||
Allotted and fully paid during the period | |||||
As at 30 June 2016 | 392,325,740 | 2,752,487 | |||
Issued 24 August 2016 at 0.40 pence per share | 75,000,000 | 7,500 | |||
As at 31 December 2016 | 467,325,740 | 2,759,987 | |||
8 | 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. 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 period. |
9 | Subsequent events |
· On 16 January 2017, the company granted 35,000,000 employee options exercisable at 0.80p per share for a period of six years, and vesting in four equal tranches, two immediately, and the other two after 6 months and subject to performance conditions. The grants other than those to non-executive directors were made under the company's Enterprise management Incentive scheme.
· On 14 March 2017, the company announced that Jupiter Mines Ltd had completed the equal access share buy-back which commenced on 30 January 2017. Red Rock held 27,324,374 shares in Jupiter, equivalent to approximately 1.2% of the issued share capital prior to the share buyback. The carrying cost of this investment in the books of Red Rock at the date of the last audited accounts, 30 June 2016, was £1,483,119. Following the equal access buyback, in which Red Rock tendered 6% of the Jupiter stock it held, Red Rock has received USD 655,784.80 (approximately £537,131) and holds 25,684,913 shares in Jupiter, equivalent to approximately 1.2% of the issued share capital.