Red Rock Resources to receive £658,350 from manganese investment

AIM-listed miner RedRock will receive a £0.5m payout from a South African investment due to strong manganese prices, which if they continue are expected to lead to more of the same.

Jupiter Mines, an Australian company in which Red Rock owns over 27.3m shares, has announced that its 49.9% owned business Tshipi é Ntle Manganese Mining Proprietary is to distribute 1bn South African rand to its shareholders for the year ending 28 February 2017, subject to no material change in production and market conditions for the rest of the financial year.

As a result, Jupiter will distribute $55m of the funds received from Tshipi to its own shareholders, with $0.66 (£0.53m) to Red Rock, payable in March 2017.

The distribution from Tshipi, which is one of the five largest manganese operations in the world, repays shareholders 50% of the capital cost of mine, while there is over 60 years of the mine’s life left.

Jupiter expects further distribution next year if the price of manganese price continues to be strong, while production in year to February 2017 is anticipated to exceed the near 2m tonne target.

Red Rock chairman Andrew Bell said the last 12 months have seen all-time lows in the manganese market and more recently record prices in the South African Rand, and that Tshipi had already shown itself to be profitable at prices below $3 per dry metric tonne unit, and when prices were low Tshipi tightened its cost structure further, making it one of the most efficient and low-cost operators.

“We anticipate a continuation of stable-to-favourable market conditions, from which Tshipi is well placed to benefit, as it enters what the Jupiter Chairman calls the ‘value optimization phase’. Red Rock has patiently held this investment, confident in its underlying quality, and continues to see significant upside."

Shares in Red Rock Resources were up 10% to 0.44p at 1054 GMT.