London-listed Red Rock Resources in the six months ended December 31, 2019, reported a profit before tax from continuing operations of £337 000, compared with a loss of £283 000 in the six months ended December 31, 2018.
Chairperson Andrew Bell says the company’s net finance income was at similar levels in the six months under review as the prior six month period, at £524 000, amounting to interim diluted earnings a share of 0.047p apiece.
The company’s total comprehensive loss for the period under review was £227 000, compared with a total comprehensive loss of more than £2-million in the prior comparable period, with the loss arising as a result of revaluation of available-for-sale investments.
The company has interests in various mining companies across commodities, including a 1% shareholding in ASX-listed Jupiter Mines, which, in turn, has an interest in the company that owns the Tshipi Borwa manganese mine, in South Africa.
Red Rock also has a majority stake in the Migori gold project, on the Kenyan greenstone belt, while it is busy disposing its interest in the El Limon project, in Colombia.
Further, Red Rock has exposure to copper and cobalt exploration through interests in the Katanga segment of the Central African Copperbelt, in the Democratic Republic of Congo (DRC), and a 4.64% interest in petroleum exploration company Elephant Oil.
The company also has exposure to battery metals including copper, cobalt, lithium and nickel through African Battery Metals.
Bell states that the directors have taken a conservative decision to delay writing back any part of the £5.2-million impairment which had been taken in relation to the company’s Kenyan assets in the June 2015 accounts, while awaiting resolution of the then pending court case.
Although further progress towards a conclusion has been made in the first quarter of this year, the directors have once again deferred any write back of previous impairments, feeling that do to this at a time when Covid-19 created such global uncertainty might be inappropriate.
Bell says in the months since the company reported its final results for the year ended June 30, 2019, no major initiatives have been undertaken by, or developments occurred within, Red Rock in this short period.
However, the company did continue its work towards restoration of the Kenyan licences, and has been preparing a programme for renewed exploration at its Luanshimba copper/cobalt licence in the DRC, as well as at its other licences in the country, but these tasks for the early part of 2020 were prefigured in the statement in the annual report.
“Yet everything has changed. The coronavirus pandemic declared globally has shaken up the kaleidoscope so effectively as to change every market and every part of the world economy: today they all look different.
"The impact of these changes has been almost universally negative in the short term, with the strength in the gold market a rare exception," Bell explains.
Red Rock has experienced limited impacts as a result of the virus, but will continue to review developments.
Bell says Red Rock's current assumption is that although there are short-term effects on the world economy, human ingenuity will find solutions and the successes of Taiwan, South Korea, Japan, Singapore, and even China in controlling the outbreaks, while limiting the damage to economic activity and people's livelihoods will provide some lessons that can be adapted to apply in the Western economies.
“Nearer home, the templates of Iceland, Norway and Germany may already offer directly applicable lessons in testing, tracing and reducing mortality.
“Should this be correct, the bounce-back will be rapid, and the extra liquidity being pumped into economies may assist this. Red Rock believes its positioning in gold and battery metals will be well adapted for this environment,” Bell points out.
Red Rock also believes its holding in Jupiter Mines, a very low-cost major manganese producer, will continue to provide support for its asset value as well as providing ongoing cash flow.
The company will nonetheless prepare itself for a less benign environment by ensuring that it can turn off a significant proportion of its costs at short notice.