Red Rock enters option over Zlata Bana mining assets in Slovakia

Gold, manganese and base metals-focussed development company Red Rock Resources has entered into an option over the gold and silver mining and exploration assets at Zlata Bana in Slovakia, it announced on Monday.

The AIM-traded firm said the vendors were Lubomir Konkol and his associated parties, including the non-profit company Zdarboh.

It said the assets included a licence covering the area which contains old gold mines, and a number of mineral-bearing veins mapped at surface, as well as land and buildings.

A total of €10,000 (£8,970) was paid for a due diligence period to 21 September, and Red Rock had also made a payment of €23,000 to acquire a 50% interest in the Zlata Bana licence, which covers an area of about 12 square kilometres.

Upon exercise of the option, Red Rock said it would acquire a 50% interest in the other assets, including interests in land and buildings, vehicles, and mining equipment, a permit over a mineral stockpile, and mining information and data.

The consideration for exercise would be the issue of documentation to transfer €0.25m of new Red Rock shares at an issue price equal to the prior five-day volume-weighted average price.

A further €0.1m of new Red Rock shares would be issued on completion of the transfer of the assets, at an issue price also equal to the five-day prior volume-weighted average price.

Red Rock said a joint venture would also be established between itself and Lubomir Konkol.

The company would be responsible for certain expenditures of the joint venture in the period after execution of the option, which the board said it expected to be at least €0.1m in 2020.

“This is an exciting potential addition to Red Rock's silver and gold pipeline and balances the portfolio in terms of risk and geographic spread,” said chairman Andrew Bell.

“The porphyry and other gold deposits of Eastern Europe have not generally undergone systematic modern exploration, and the historic mining centre of Zlata Bana in eastern Slovakia, last mined in the 1970s, is a case in point.

“The company's management has known this license since owning it as part of a Slovak license portfolio from 2004 to 2006.”

Bell said Zlata Bana had, before its sale, been considered the lead asset of the portfolio.

“We consider that applying modern geochemical and geophysical techniques to this historic asset will open up new exploration possibilities.

“In a country where landowner rights have in the past sometimes inhibited exploration, uniting land ownership where this is not public with licence rights has the potential to create considerable value and shorten the path to production.

“In Lubomir Konkol, the company has for its prospective partner a local property owner with longstanding mining interests.”

Bell said due diligence began with his visit to Zlata Bana in early August, and was continuing.

At 1110 BST, shares in Red Rock Resources were down 2.12% at 0.92p.