Final Results

Red Rock Resources Plc

("Red Rock" or the "Company")

Final Audited Results for the Year Ended 30 June 2024

13 December 2024

The Company's Annual Report and Financial Statements for 2024, extracts from which are set out below, will be published and sent out to the Company's shareholders shortly and will be available on the Company's website www.rrrplc.com.

Chairman's Statement

Dear Shareholders,

We present the Report and Accounts of Red Rock Resources Plc for the year ending 30th June 2024. We also report on the progress of the Company since the balance sheet date and review prospects for 2025.

ACTIVITY DURING THE YEAR

The period has been an unusual one for the mineral exploration and production sectors. Most people would consider it to have been dominated by the rise in the gold price from a range bouncing around $2,000 per ounce up to March this year and then a sharp step up to around $2,400 and then a renewed and steady climb to the current level of around $2,700 an ounce. Yet the performance of stocks, whether exploration (at one extreme) or royalty (at the other) has failed to reflect this improvement and the sector has underperformed other sectors including technology. At the junior stock level this has been particularly evident, with poor liquidity in junior markets and a shortage of brokerage and fundraising support. Also, the AIM market, on which we are listed, has seen a decline in the number of listings and in liquidity, a matter on which we do not comment here.

Our situation has even within this environment been that of an outlier because our efforts and probably our share performance has been weighted towards the ebb and flow of news relating to our constant effort to achieve a resolution of our initial compensation claim in the Democratic Republic of Congo, in relation to our copper and cobalt joint venture near Kolwezi. 

It is worth recapitulating, though with caution and with the note that no settlement has yet been signed, why this is so important to Red Rock.

DRC

Red Rock's copper-cobalt joint venture underwent extensive analysis of the historical records up to and after the time of signing the JV in February 2019. Geologists working for Red Rock gathered historical data from the area and created a 3-D model of the mineralisation. Historic work had been based on much higher cut-off grades than would be used today, and aimed to test only the upper oxide layer of mineralisation. The old pit had reached a depth at maximum of c105m compared with workings down to 1000m in nearby licences, and had on abandonment, been backfilled with several tens of metres of rocks. Our work led to an estimation of up to 180,000 tonnes of contained copper at 2.7% grade and up to 17,000 tonnes of cobalt at 0.8% grade. This study was based on 83 drill holes, assays and over 750 pages of reports. Drilling reached to a little below the pit depth. Typical grades in the area ranged from 3-5% copper and 0.5-1% cobalt.

At a current copper price of over $9,000 per tonne and a cobalt price over $24,000 per tonne, and bearing in mind that the mineralisation would have been open pit mined from surface at a grade far above breakeven for each mineral taken individually, and that the deeper and sulphide mineralisation would have been drill tested by us to prove up further resource, it can readily be calculated that the asset was one with a value after mining costs, royalties and taxes that was very considerable and was transformative in terms of its potential effect on Company value.

It bears repeating that transforming what was originally a JV over quite mediocre assets, as our due diligence showed, into a portfolio of exceptional value and also high prospectivity in other areas was entirely the result of our perseverance, determination, and speed of analysis. Our partners were the beneficiaries, and in particular our free-carried local partner, VUP.

When our work was interrupted, we had already dozens of workers working on collection of historic drill core from the Gécamines sheds at Kolwezi to verify the written record of the old drilling, and we had a plan for the accelerated calculation of a compliant Resource based on the historic record even before, or with minimal, further drilling. 

Our asset was purportedly sold behind our backs by our 25% local partner in December 2019, and to be deprived of this interest that Red Rock had worked so hard to acquire was an unexpected blow that necessitated prompt follow up action. On discovery of what had occurred but been hidden from us we went to court and obtained a final and non-appealable judgment in January 2022 that we were entitled to 50.1% of the $5m consideration already paid. We then began an arbitration process in relation to the $15m consideration not yet paid. These current actions relate to the initial sale back to Gécamines, not the stage 2 immediate on-sale by Gécamines for a quantum an order of magnitude larger.

Some 30 months after the conclusion of the arbitration hearings, we are pushing for release of the award. A number of delaying tactics were earlier used to obstruct us, but we have worked to preserve the integrity of the process and keep it on track and it now appears that we are in a position to conclude and opposition and obstruction have visibly melted away. At the same time, we have engaged in indirect discussion with the former local partner and in the last days have reached an understanding on acceptance of the terms of settlement. 

We therefore expect a successful conclusion in the near future to our current arbitration, with early payment of any award. The implications however go far beyond these initial victories, and we look forward to a successful future in the DRC and with other ongoing matters.

Should we succeed, we will have put down a marker locally that we are prepared to work in good faith with the DRC authorities and to spend a long time over an extended period, acting always with patience and goodwill, in order to protect our legitimate interests.  

We will, in terms of our contacts and possibilities, have used this period to enhance our reputation and position to a point where many opportunities will open up.

Understandably, shareholders have found this a frustrating time, not least because some of the detail of any discussions and difficulties have not been possible to share without compromising the result.

OTHER ACTIVITY

After starting a lithium export product pipeline from Zimbabwe in late 2023, the sudden and rapid decline in the lithium price at the end of that year, which continued at various points in 2024, caused us to halt further sales. Although we could source material cheaper than it could be produced, costs including the royalty level which had been set at a fixed price when prices of the commodity were higher, and price softness in the destination market, meant that operations could not be profitable. Fortunately, by starting with a trading operation we had avoided stranding capital and had the flexibility to respond swiftly to these changing economic conditions.

In Burkina Faso, we made the final purchase payments for the Boulon licence, and developed plans for operations at Bilbale. We identified a London and South Africa-based partner with equipment that they were ready to contribute to an initial alluvial operation. Illnesses on their side and their strategy of bringing in a substantial complement of Indian staff led to some delay, especially when new requirements for overseas labour were introduced at the Indian end. We therefore, in order to have activity on the ground as required, brought in an experienced camp and mine operator from South Africa who with a local partner runs mining operations in the Congo, in order to achieve a quick start and are happy with recent progress. Mike Billings has been on site with the first of the equipment and has proved an efficient and schedule-conscious manager.

Also in West Africa, the Company has two granted gold licences in Côte d'Ivoire.

In Kenya, our licences came up for renewal in 2024 and with that an obligation to drop 50% of the ground. We have been much occupied with the renewal process where we are well advised by local consultants and lawyers. We are not implementing our current plans for ground activity until the uncertainties involved in the surrender process, renewal, and designation of artisanal reserves are resolved. However, given the relatively modest grade of the currently identified Resource compared with other commercially viable projects, the rise in the gold price over the course of 2024 significantly enhances the prospects for our ground.

During the year we contracted to acquire the 49.9% of our Australian gold asset portfolio held through Red Rock Australasia Pty Ltd not already owned, making this a wholly owned subsidiary. We have continued exploration on our gold licences in Victoria, identifying antimony anomalism at O'Loughlins and rare earth potential in the eastern licences. The two key assets remain the old Berringa Mine near Ballarat and the Ajax workings a little to the north. We have begun to engage with a number of local companies in the second half of 2024 in order potentially to obtain a listing for the Australian gold portfolio.

We had looked forward during the period under review to the proposed listing of Elephant Oil, where we have a small but longstanding shareholding, on the NASDAQ market in the U.S. These plans were abandoned and Elephant acquired two onshore licences in the Ivory Coast, and preliminary commitments of the funding to develop further these comparatively advanced plays. The implications of this are that Elephant is likely to remain private for longer while it uses these funds to add value through further exploratory work, but the countervailing benefit should be that it becomes a considerably more valuable company before seeking a future liquidity event, and the possibility of the sale of a non-core asset may exist in a way it did not while Elephant was seeking a listing and so any offer by us competed with their own fundraising.

FINANCIAL RESULTS

We report pre-tax losses for the year ended 30 June 2024 of £3,012m (2023: loss of £2,953m). Reductions in administration expenses and share based payments have been offset by various project and asset related expenses, resulting in a fairly comparable bottom line result to the prior year.  Reduced administrative costs in particular, reflect reductions in payroll, as well as marketing and compliance costs during the year.   

CONCLUSION

We expect to generate cash from sales of assets and from court and arbitration awards over the next few months.

The Company remains fairly highly indebted, as it has sought to maintain a portfolio of what is considers to be high quality exploration assets while waiting for a major, and excessively delayed, liquidity event in the DRC. It will be important to address this either by sourcing substantial funds by compensation awards and sales, or by negotiating farm ins, or by sales of significant but non-core assets.

A continuing strong gold price may help us in this regard, and the combination of strong gold and a weak Australian dollar is likely in particular to create additional local investment and market interest in the Australian gold sector, providing potential opportunities to finance drilling with local capital.

We are now making sales of gold a current priority, and a key operational task at present is to develop our operations in Burkina Faso and elsewhere to generate a steady stream of income.

Andrew Bell

Chairman and CEO

12 December 2024

Results and Dividends

The Group made a post-tax loss of £3.012 million (2023: loss of £2.953 million). The Directors do not recommend the payment of a dividend. The following financial statements are extracted from the audited financial statements, which were approved by the Board of Directors and authorised for issuance on 12 December 2024.

For further information, please contact:

Andrew Bell 0207 747 9990                                                       Chairman Red Rock Resources Plc

Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396           NOMAD Beaumont Cornish Limited

Bob Roberts 0203 8696081                                                        Broker Clear Capital Corporate Broking

This announcement contains inside information for the purposes of Article 7 of Regulation 2014/596/EU, which is part of domestic UK law pursuant to the Market Abuse (Amendment) (EU Exit) regulations (SI 2019/310) and is disclosed in accordance with the Company's obligations under Article 17.

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated Adviser and is authorised and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's Nominated Adviser, including a responsibility to advise and guide the Company on its responsibilities under the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont Cornish is not acting for and will not be responsible to any other persons for providing protections afforded to customers of Beaumont Cornish nor for advising them in relation to the proposed arrangements described in this announcement or any matter referred to in it.

Financial Statements

Independent Auditor's Report

to the Members of Red Rock Resources Plc

Opinion

We have audited the financial statements of Red Rock Resources Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2024 which comprise the Consolidated Statement of Financial Position, the Consolidated Income Statement and Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Financial Position, the Company Statement of Changes in Equity, the Company Statement of Cash Flows and notes to the Financial Statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

·      the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2024 and of the group's loss for the year then ended;

·      the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

·      the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

·      the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis For Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related To Going Concern

We draw attention to note 1.2 in the Financial Statements, which indicates that the Directors anticipate having to raise funds within the going concern period, being 12 months from the date of approval of these financial statements, in order to meet its liabilities as they fall due, including repayment of loans due within 12 months from the year end. As stated in note 1.2, these events or conditions, along with the other matters as set forth in that note, indicate that a material uncertainty exists that may cast significant doubt on the Group's and Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the Financial Statements, we have concluded that the Director's use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors' assessment of the Group's and Company's ability to continue to adopt the going concern basis of accounting included:

·      reviewing the cash flow forecasts for the ensuing twelve months from the date of approval of these financial statements and critically challenging the key inputs and assumptions used. The forecasts demonstrated that, after the removal of expected cash inflows (including asset sales, estimated settlement amounts in respect of DRC litigation, and anticipated placings), the timing and amounts of which are uncertain, the Group and Company will require additional funding in order to meet their liabilities as and when they fall due, and to fund planned exploration activities;

·      obtaining evidence where possible in support of the Group's and Company's ability to defer certain payments, including evidence of the ongoing financial support of key stakeholders currently providing loans to the Company;

·      reviewing management's going concern memorandum and holding discussions with management regarding future plans and availability of funding;

·      reviewing the adequacy and completeness of disclosures in the group financial statements; and

·      reviewing post balance sheet events as they relate to the group's ability to raise funds and restructure debt.

Our responsibilities and the responsibilities of the Directors, with respect to going concern, are described in the relevant sections of this report.

Our Application Of Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we consider gross assets to be most significant determinant of the Group's financial performance and most relevant to investors and shareholders for an exploration Group with a number of investments and early-stage projects. We have therefore set Group materiality at 1.5% of gross assets (2023: 1.5% of gross assets). Materiality of the Company was based upon 3% of net assets, capped below group materiality (2023: 3% of net assets). We considered this an appropriate benchmark as the Company has significant assets and liabilities on its statement of financial position.

We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level of uncorrected misstatements that would be material for the financial statements as a whole.

We determined the Group and Company materiality for the financial statements as a whole to be £322,000 and £320,000 (2023: £287,000 and £285,000), respectively. Performance materiality was set at 60% (2023: 60%) of overall materiality for the Group and Company at £193,200 and £192,000 (2023: £172,200 and £171,000), respectively, whilst the threshold for reporting unadjusted differences to those charged with governance was set at £16,100 for the Group and £16,000 for the Company (2023: £14,350 and £14,250). We also agreed to report differences below that threshold that, in our view, warranted reporting on qualitative grounds.

Materiality for other significant components of the group ranged from £62,600 to £120,400 calculated as a percentage of gross assets.

Our Approach To The Audit

In designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial Statements. In particular, we looked at areas involving significant accounting estimates and judgement, including the recoverability of exploration assets and non-current receivables, by the Directors, and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

The accounting records of the Company and all subsidiary undertakings are centrally located and audited by us based upon materiality or risk. The key audit matters, and how these were addressed, are outlined below.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Other Information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions On Other Matters Prescribed By The Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·      the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters On Which We Are Required To Report By Exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

·      adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

·      the parent company financial statements are not in agreement with the accounting records and returns; or

·      certain disclosures of directors' remuneration specified by law are not made; or

·      we have not received all the information and explanations we require for our audit.

Responsibilities Of Directors

As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities For The Audit Of The Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

·       We obtained an understanding of the Group and Company and the sector, in which they operate, to identify laws and regulations that could reasonably be expected to have a direct effect on the Financial Statements. We obtained our understanding in this regard through discussions with management and our cumulative audit knowledge and experience of the sector.

·       We determined the principal laws and regulations relevant to the Group and Company in this regard to be those arising from UK-adopted international accounting standards, the Companies Act 2006 and the local laws and regulations in the jurisdictions in which the Group operates.

·       We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the Group and Company with those laws and regulations. These procedures included, but were not limited to, making enquiries of management, performing a review of Board minutes and a review of legal and regulatory correspondence.

·       We also identified the risks of material misstatement of the Financial Statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the risk of fraud related to the estimates, judgements and assumptions applied by management in their assessment of impairment of intangible assets and the recoverability of non-current receivables. Refer to the Key Audit Matters section above on how our audit scope addressed

·       these matters.

·       We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals, reviewing accounting estimates for evidence of bias, and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.  This description forms part of our auditor's report.

Use Of Our Report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Imogen Massey (Senior Statutory Auditor)                                                                                                       15 Westferry Circus

For and on behalf of PKF Littlejohn LLP                                                                                                                       Canary Wharf

Statutory Auditor                                                                                                                                                          London E14 4HD

12 December 2024                                   

Consolidated Statement of Financial Position

as at 30 June 2024

These Financial Statements were approved by the Board of Directors and authorised for issue on 12 December 2024 and are signed on its behalf by:

Andrew Bell

Chairman and CEO

The accompanying notes form an integral part of these Financial Statements.

Consolidated Income Statement

for the year ended 30 June 2024

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2024

The accompanying notes form an integral part of these Financial Statements.

Consolidated Statement of Changes in Equity

for the year ended 30 June 2024

The movements in equity during the period were as follows:

See note 20 for a description of each reserve included above.

Consolidated Statement of Cash Flows

for the year ended 30 June 2024

Major non-cash transactions are disclosed in note 23.

The accompanying notes and accounting policies form an integral part of these Financial Statements.

Company Statement of Financial Position

Red Rock Resources Plc (Registration Number: 05225394) as at 30 June 2024

Company Statement of Comprehensive Income

As permitted by Section 408 Companies Act 2006, the Company has not presented its own Income Statement or Statement of Comprehensive Income. The Company's loss for the financial year was £2.273 million (2023: loss of £1.971 million). The Company's total comprehensive loss for the financial year was £2.273 million (2023: loss of £1.971 million).

These Financial Statements on were approved by the Board of Directors and authorised for issue on 12 December 2024 and are signed on its behalf by:

Andrew Bell                          

Chairman and CEO             

The accompanying notes and accounting policies form an integral part of these Financial Statements.

Company Statement of Changes in Equity

for the year ended 30 June 2024

The movements in equity during the period were as follows:

See note 20 for a description of each reserve included above.

Company Statement of Cash Flows

for the year ended 30 June 2024

The accompanying notes and accounting policies form an integral part of these Financial Statements.

Significant non-cash transactions undertaken in the year are disclosed in note 23 to these Financial Statements.

Notes to the Financial Statements

for the year ended 30 June 2024

1.  Principal Accounting Policies

1.1    Corporate Information

Red Rock Resources Plc is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM.  The principal activities of the Group are the exploration for and development of mineral resources in multiple locations globally, principally in Africa and Australia.

1.2    Basis of Preparation

The Financial Statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006. The Financial Statements have been prepared on the historical cost basis, except for certain financial instruments, which are carried as described in the respective sections in the policies below. The principal accounting policies adopted are set out below.

Going Concern

It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 30 June 2024, the Group had cash and cash equivalents of £38k and £3.03 million of borrowings.  The Directors anticipate having to raise additional funding over the course of the current financial year in order to continue to meet working capital requirements and fund work programmes as planned. 

Having considered the prepared cashflow forecasts and the Group budgets, which includes anticipated fundraising activity, the possibility of Directors reducing or foregoing their salaries if required, the progress in activities post year-end, the capacity to defer expenditure and seek the support of suppliers and other creditors defer settlement of fees if necessary and the estimated settlement of DRC litigation of up to £6.77 million (gross and before deductions and expenses and subject to repatriation to the UK), the Directors consider that they will have access to adequate resources in the 12 months from the date of the signing of these Financial Statements to meet their financial obligations as they fall due. As a result, they consider it appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements.  However, as the amounts and timings of these sources of funding are currently uncertain, a material uncertainty exists which may result in the need to raise additional equity or debt funding based on conditions in existence at the appropriate time.  As the ability to meet minimum work obligations on the Group's various licences is dependent on the availability of further funding, should the funding not be available as and when required then any impact on licence terms compliance may result in an impairment of the licences in question.

Should the Group be unable to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities, which might arise, and to classify non-current assets as current. The Financial Statements have been prepared on the going concern basis and do not include the adjustments that would result if the Group was unable to continue as a going concern.

New Standards, Amendments and Interpretations Not Yet Adopted

At the date of approval of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements were in issue but not yet effective:

·       Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (effective 1 January 2024);

·       Amendments to IAS 1: Classification of Liabilities as Current or Non-current - Deferral of Effective Date (effective 1 January 2024);

·       Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants (effective 1 January 2024);

·       Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (effective 1 January 2024);

·       Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rate: Lack of Exchangeability (effective 1 January 2025).

The effect of these new and amended standards and interpretations, which are in issue but not yet mandatorily effective, is not expected to be material.

Standards Adopted Early by the Group

The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.

1.3    Basis of Consolidation

The Consolidated Financial Statements of the Group incorporate the Financial Statements of the Company and subsidiaries controlled by the Company made up to 30 June each year.

Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, up until the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs, directly attributable to the acquisition, are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances, existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.

Non-controlling interests in subsidiaries are measured at the proportionate share of the fair value of their identifiable net assets.

Intra-group transactions, balances and unrealised gains and losses on transactions between the Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.

At 30 June 2024, the Consolidated Financial Statements combine those of the Company with those of its subsidiaries, Red Rock Australasia Pty Ltd, New Ballarat Gold Corporation Plc, RRR Coal Ltd, African Lithium Resources Limited, Lac Minerals Ltd, Lacgold Resources SARLU, Faso Minerals Ltd, Faso Greenstone Resources SARLU, Jimano Ltd, Red Rock Resources Congo S.A.U., Red Rock Galaxy SA, RedRock Kenya Ltd, RRR Kenya Ltd and Red Rock Resources (HK) Ltd.

The Group's dormant subsidiaries Intrepid Resources Ltd, Red Rock Resources Inc., Red Rock Cote D'Ivoire SARL and Basse Terre SARL, have been excluded from consolidation on the basis of the exemption provided by Section 405(2) of the Companies Act 2006 that their inclusion is not material for the purpose of giving a true and fair view.

Non-Controlling Interests

Profit or loss and each component of other comprehensive income are allocated between the Parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance.

Transactions with non-controlling interests, that do not result in loss of control, are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in "other reserves" in equity.

1.4    Summary of Significant Accounting Policies

1.4.1    Mineral Tenements and Exploration Property

Exploration licence and property acquisition costs are capitalised in intangible assets. Licence costs, paid in connection with a right to explore in an existing exploration area, are also capitalised. Licence and property acquisition costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. If no future activity is planned or the licence has been relinquished or has expired, the carrying value of the licence and property acquisition costs are written off through the statement of profit or loss and other comprehensive income. For assets that move into production any intangible E&E assets values are amortised on a unit production basis over the period of production.

1.4.2    Investment in Associates

An associate is an entity over which the Group has the power to exercise significant influence, but not controlled or jointly controlled by the Group, through participation in the financial and operating policy decisions of the investee.

Investments in associates are recognised in the Consolidated Financial Statements, using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income is recognised directly in other comprehensive income.

The carrying value of the investment, including goodwill, is tested for impairment, when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised, unless the Group has incurred obligations or made payments on behalf of the associate.

Where the Group transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.

In the Company Financial Statements, investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment, when there is objective evidence of impairment.

1.4.3    Interests in Joint Ventures

The Group recognises its interest in the jointly controlled entity's assets and liabilities, using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the Statement of Financial Position at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group Income Statement reflects the share of the jointly controlled entity's results after tax.

Any goodwill, arising on the acquisition of a jointly controlled entity, is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.

Where necessary, adjustments are made to bring the accounting policies in line with those of the Group's and to reflect impairment losses where appropriate. Adjustments are also made in the Group's Financial Statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.

1.4.4    Taxation

Corporation tax is provided on taxable profits or losses at the current rate. The tax expense/credit represents the sum of the current tax expense/credit and deferred tax.

The tax currently payable/receivable is based on taxable profit or loss for the year. Taxable profit or loss differs from accounting profit or loss as reported in the Statement of Comprehensive Income, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit or loss and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against, which deductible, temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction, which affects neither the taxable profit or loss nor the accounting profit or loss.

Deferred tax liabilities are recognised for taxable temporary differences, arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply to the period, when the asset is realised or the liability is settled, based upon tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income. 

Deferred tax assets and liabilities are offset, where there is a legally enforceable right to offset current tax assets and liabilities, and the deferred tax relates to income tax levied by the same tax authorities on either:

·       The same taxable entity; or

·       Different taxable entities, which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period, when the significant deferred tax assets and liabilities are expected to be realised or settled.

1.4.5    Foreign Currencies

Both the functional and presentational currency of Red Rock Resources Plc is Pounds Sterling ("£"). Each Group entity determines its own functional currency, and items included in the Financial Statements of each entity are measured using that functional currency.

The functional currencies of the major foreign subsidiaries are Australian Dollars ("AUD"), the Congolese Franc ("CFD"), and Kenyan Shillings ("KES").

Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange rate, prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities, that are denominated in foreign currencies, are translated at the exchange rate, prevailing at the reporting date. Non-monetary assets and liabilities, carried at fair value that are denominated in foreign currencies, are translated at the rates, prevailing at the date when the fair value was determined. Gains and losses, arising on translation, are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income, when the changes in fair value are recognised directly in other comprehensive income.

On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates, prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.

1.4.6    Share-Based Payments

Share Options

The Group operates an equity-settled share-based payment arrangement, whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted.

The fair value of options, granted to Directors and others in respect of services provided, is recognised as an expense in the Income Statement, with a corresponding increase in equity reserves - the share-based payment reserve, until the award has been settled and then make a transfer to share capital. On exercise or lapse of share options, the proportion of the share-based payment reserve, relevant to those options, is transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.

The fair value is measured at grant date and charged over the vesting period, during which the option becomes unconditional.

The fair value of options is calculated using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The exercise price is fixed at the date of grant.

Non-market conditions are performance conditions that are not related to the market price of the entity's equity instruments. They are not considered, when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period, based on the best available estimate of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date, based on factors such as a shortened vesting period, and the cumulative expense is "trued up" for both the change in the number expected to vest and any change in the expected vesting period.

Market conditions are performance conditions that relate to the market price of the entity's equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is accelerated in the period that the entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period.

For other equity instruments, granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price.

Warrants or options, issued to parties other than employees, are valued based on the value of the service provided.

Share Incentive Plan

Where shares are granted to employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares, granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date, and is recognised as an expense in the Income Statement on the date of the grant. For the partnership shares, the charge is calculated as the excess of the mid-market price on the date of grant over the employee's contribution.

1.4.7    Pension

The Group operates a defined contribution pension plan, which requires contributions to be made to a separately administered fund. Contributions to the defined contribution scheme are charged to profit or loss as they become payable.

1.4.8    Exploration Assets

Exploration assets comprise exploration and development costs incurred on prospects at an exploratory stage. These costs include the cost of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects. These costs are carried forward in the Statement of Financial Position as non-current intangible assets less provision for identified impairments.

Recoverability of exploration costs is dependent upon successful development and commercial exploitation of each area of interest and will not be amortised until the existence (or otherwise) of commercial reserves in the area of interest has been determined. The Group and the Company currently have no exploration assets, where production has commenced.

The Group adopts the "area of interest" method of accounting, whereby all exploration and development costs relating to an area of interest, are capitalised and carried forward until abandoned. In the event that an area of interest is abandoned, or if the Directors consider the expenditure to be of no value, accumulated exploration costs are written off in the financial year in which the decision is made. All expenditure incurred prior to approval of an application is expensed with the exception of refundable rent, which is raised as a receivable.

Upon disposal, the difference between the fair value of consideration receivable for exploration assets and the relevant cost within non-current assets is recognised in the Income Statement.

1.4.9    Impairment of Non-Financial Assets

The carrying values of assets, other than those to which IAS 36 "Impairment of Assets" does not apply, are reviewed at the end of each reporting period for impairment, when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.4.10     Finance Income/Expense

Finance income and expense is recognised as interest accrues, using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period, using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts or re-payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

1.4.11     Financial Instruments

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair Value through Profit or Loss (FVTPL)

This category comprises in-the-money derivatives and out-of-money derivatives, where the time value offsets the negative intrinsic value. They are carried in the Statement of Financial Position at fair value, with changes in fair value recognised in the Consolidated Statement of Comprehensive Income in the finance income or expense line. Other than derivative financial instruments, which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

Amortised Cost

These assets comprise the types of financial assets, where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost, using the effective interest rate method, less provision for impairment. Impairment provisions, for current and non-current trade receivables. Are recognised, based on the simplified approach within IFRS 9, using a provision matrix in the determination of the lifetime expected credit losses.

During this process, the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss, arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account, with the loss being recognised in the Consolidated Statement of Comprehensive Income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions, for receivables from related parties and loans to related parties, are recognised, based on a forward-looking expected credit loss model. The methodology, used to determine the amount of the provision, is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset, based on analysis of internal or external information. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses, along with the gross interest income, are recognised. For those that are determined to be credit impaired, lifetime expected credit losses, along with interest income on a net basis, are recognised. 

The Group considers a financial asset in default, when contractual payments are 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default, when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full, before taking into account any credit enhancements held by the Group. A financial asset is written off, when there is no reasonable expectation of recovering the contractual cash flows.

The Group's financial assets, measured at amortised cost, comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and, for the purpose of the Statement of Cash Flows, bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the Consolidated Statement of Financial Position.

Fair Value through Other Comprehensive Income (FVTOCI)

The Group has strategic investments in listed and unlisted entities, which are not accounted for as subsidiaries, associates or jointly controlled entities. For those investments, the Group has made an irrevocable election to classify the investments at fair value through other comprehensive income rather than through profit or loss as the Group considers this measurement to be the most representative of the business model for these assets. They are carried at fair value, with changes in fair value recognised in other comprehensive income, and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any balance, within fair value through other comprehensive income reserve, is reclassified directly to retained earnings and is not reclassified to profit or loss.

Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which case, the full or partial amount of the dividend is recorded against the associated investments carrying amount.

Purchases and sales of financial assets, measured at fair value through other comprehensive income, are recognised on settlement date with any change in fair value between trade date and settlement date, being recognised in the fair value through other comprehensive income reserve.

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

·       In the principal market for the asset or liability; or

·       In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured, using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement, of a non-financial asset, takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities, for which fair value is measured or disclosed in the Financial Statements, are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

·       Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

·       Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

·       Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Group determines, whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Financial Liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired:

Fair Value through Profit or Loss (FVTPL)

This category comprises out-of-the-money derivatives, where the time value does not offset the negative intrinsic value or any liabilities held for trading. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income. The Group did not hold any such liabilities at the date of IFRS 9 adoption or at the end of the reporting year.

Other Financial Liabilities at Amortised Cost

Other financial liabilities include:

·       Borrowings, which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost, using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption as well as any interest or coupon payable while the liability is outstanding;

·       Liability components of convertible loan notes are measured as described further below; and

·       Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method.

1.4.12     Investments

Investments in subsidiaries are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairments.

For acquisitions of subsidiaries or associates achieved in stages, the Company re-measures its previously held equity interests in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses, previously recognised in other comprehensive income, are transferred to profit and loss.

Investments in associates and joint ventures are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairment.

1.4.13     Dividend Income

Dividends, received from strategic investments, are recognised, when they become legally receivable. In case of interim dividends, this is when declared. In case of final dividends, this is when approved by the shareholders at the Annual General Meeting.

1.4.14     Share Capital

Financial instruments, issued by the Group, are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments.

1.4.15     Convertible Debt

The proceeds, received on issue of the Group's convertible debt, are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows, using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability, measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Convertible debt option reserve" within shareholders' equity, net of income tax effects.

1.4.16     Warrants

Derivative contracts, that only result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity's own equity instruments, are classified as equity instruments. When warrants are issued, attached to specific loan notes, the Company estimates the fair value of the issued warrants, using the Black-Scholes pricing model, taking into account the terms and conditions upon which the warrants were issued, value of such warrants is deducted from the balance of loan notes, a directly attributable transaction cost. Warrants, relating to equity finance and issued together with ordinary shares placement, are valued by residual method and treated as directly attributable transaction costs and recorded as a reduction of share premium account based on the fair value of the warrants. Warrants, classified as equity instruments, are not subsequently re-measured.

1.5    Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Group's Consolidated Financial Statements, requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty, about these assumptions and estimates, could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Significant Judgements in Applying the Accounting Policies

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts, recognised in the Consolidated Financial Statements:

Contingent Consideration for the Acquisition of 49.9% Interest in Red Rock Australasia

During the year, the Company entered into an agreement to acquire the 49.9% interest in Red Rock Australasia Pty Ltd from Power Metals plc, via its ownership in the holding company New Ballarat Gold Corporation plc - see note 24 for details.  The consideration payable for the acquisition includes two tranches payable in cash or shares in the event of a threshold level of JORC compliant reserves being attained following a reassessment of the mineral resource within the company licence areas - see note 24 for further details.  The directors have determined that there can be no certainty that levels of resource will be attained sufficient to trigger the crystallisation of these contingent consideration tranches, such that they have not been recognised as liabilities in these financial statements.

Recognition of Holdings Less Than 20% as an Associate

The Company owns 15% of the issued share capital of Mid Migori Mining Company Ltd ("MMM"). Andrew Bell is a member of the board of MMM. In accordance with IAS 28, the Directors of the Company consider that, the agreements whereby the Company owns the beneficial interest in the Kenyan assets, and the input of resource by the Company in respect of drilling and analytical activities, to provide the Group with significant influence as defined by the standard. As such, MMM has been recognised as an associate for the years ended 30 June 2024, 30 June 2023, 30 June 2022, 30 June 2021, 30 June 2020 and 30 June 2019.

The effect of recognising MMM as an FVTOCI financial asset would be to increase the profit by £nil (2023: increase the profit by £nil).

Significant Accounting Estimates and Assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period, include the impairment determinations, the useful lives of property, plant and equipment, the bad debt provision and the fair values of our financial assets and liabilities. 

Recoverability of VUP Litigation Related Receivable

The directors have reviewed progress as regards the outstanding litigation relating to the VUP project with a view to assessing the recoverability of the amounts held within the balance sheet totalling £1,096,256. The directors consider that the carrying value of this receivables at the current balance sheet date is more than justified given the potential quantum and likelihood of a favourable outcome

The VUP JV asset was misappropriated some years ago by the 25% local partner by way of a sale of the project to a third party without our consent, for a total consideration of $20m. On discovery of this development the Company pursued a cure through the DRC courts and obtained a final and non-appealable judgment that it is entitled to 50.1% of the $5m consideration already paid to the JV partner for the unapproved sale of the project. The Company then began an arbitration process in relation to the $15m consideration not yet paid by the purchaser to the JV partner.

Some 30 months following the conclusion of the arbitration hearings, we are pushing for release of the award. A number of delays have been encountered to this process, however it now appears that the matter should be concluded in the near term. At the same time, we have engaged in indirect discussion with the former local partner and in the last days have reached an understanding on acceptance of the terms of settlement. 

The Company therefore expects a successful conclusion in the near future to our current arbitration, with early payment of any award.

In assessing the above matters and impact on the recoverability of the asset carrying value, the Directors have had to apply judgements, based on the legal advice received from local counsel, as to the likelihood of a successful outcome to the remaining legal process and the likelihood of successfully receiving funds due once the legal process has fully completed.  The Directors have estimated that the recoverable amounts greatly exceed the carrying value of the asset, albeit it subject to the above described uncertainties, such that no impairment of the asset carrying value is required.

Whilst the directors believe that this balance will become realised in the near term, given the time taken to date there remains a level of uncertainty over the timing of such an event, such that the directors have determined it appropriate to carry this balance as non-current so as to present the liquidity position of the Group on the most prudent basis.  See note 16 for details.

Recoverability of Capitalised Exploration and Evaluation Costs

Kenya

During the year the Kenyan exploration licences came due for renewal, inclusive of a 50% relinquishment obligation. Applications for renewal have now been made and the directors believe they have dealt with any issues raised in relation to the processing of these renewal applications. The Directors believe that the Migori gold project remains amongst the highest quality of comparable Kenyan projects, with conservative estimations of 844,000 oz gold Resource (formerly calculated at 1.2m oz), further supported by the strength of the gold price in local currency. The Directors therefore believe that it is prudent to retain the current carrying value of the project in these financial statements. As at the date of these financial statements, the formal renewal of the Group's licences in Kenya remained subject to administrative and legal processes currently under way. However the Directors remain strongly of the view that renewal of the licences will be formalised in due course and note that the process of renewal has not in the past been completed until some time after the expiry date. The administrative processes  associated with the renewal have been affected also by the replacement of the Responsible Cabinet Secretary and Principal Secretary.

Australia

The Company has assembled a portfolio of Australian properties comprising a broad range from exploration targets to near term appraisal (and hence resource potential targets), all of which remain largely undeveloped by modern standards of exploration. Two key former mines, Ajax and the recently acquired Berringa, have been the focus of recent exploration efforts, including a drilling campaign at Berringa. A high-grade target with a range reaching 1.2m oz and a most likely 500k oz plus has been identified by this work at Berringa. The Company believes both mining areas can be brought into production, with additional value catalysts being presented by proximity to third party processing plants, currently operating sub capacity.

During the year, the Company acquired the remaining interest in the Australia projects from its JV partner, see note 24 for further details.

The Company expects, subject to market conditions, to continue preparations for the listing of the Australian subsidiary NBGC, including the intended completion of a Pre-IPO financing round for NBGC in 2025. The Company has therefore deemed the carrying value of these assets to remain recoverable, given high asset quality, low "pegging" costs and the proximity to underutilised infrastructure.

Fair value of Mineras Four Points Sales Proceeds Receivable

In estimating the fair value of the Company's future gold royalties from Colombia, the Directors have made assumptions about the future cash flows, which include the following key assumptions:

·       Gold price (US$/oz) - US$2,735 (2023 US$1,957);

·       Discount rate - 10% (2023: 10%); and

·       Annual production rate - 8,000oz (2023: 8,000oz)

The Directors have reviewed the future gold model provided by MFP to consider the reasonableness of the assumptions, following this review the directors deem the assumptions appropriate.

The fair value is directly sensitive to any changes in the key assumptions.  For the overall carrying value (current and non-current) to fall by a material amount, the above assumptions would have to change as follows:

·       Gold price (US$/oz) - US$1,300;

·       Discount rate - 18%; or

·       Annual production rate - 5,000oz 

Share-Based Payment Transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model. The model has its strengths and weaknesses and requires six inputs as a minimum: 1) the share price; 2) the exercise price; 3) the risk-free rate of return; 4) the expected dividends or dividend yield; 5) the life of the option; and 6) the volatility of the expected return. The first three inputs are normally, but not always, straightforward. The last three involve greater judgement and have the greatest impact on the fair value.

Fair Value of Financial Assets

A financial asset, or a group of financial assets, is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.

In the case of equity investments, classified as financial instruments with fair value movements through other comprehensive income (FVTOCI), objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. With respect to Elephant Oil the fair value is based on the fair value implied by the last fundraising round undertaken by the company during preparations for its proposed listing.  The company has determined not to pursue a listing at this time and instead is evaluating funding strategies to continue development of its portfolio without a listing, which may include a significant private financing.  The Directors of the Company believe that there is no current indication that the current carrying value of this investment is not recoverable and continues to monitor the investment for additional fair value datapoints.  The Directors are aware of intended fundraising activity commensurate with the levels taken as the last fair value data point in arriving at the current carrying value of the asset, further supporting the above position.

Mining share prices typically have more volatility than most other shares and this is taken into account by management, when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment, when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the Company development cycle of the investment.

Impairment of Non-financial Assets

The Group follows the guidance of IAS 36 to determine, when a non-financial asset is impaired. The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The group has the following Non-Financial Assets; Investments in associates, investments in subsidiaries and loans extended to subsidiaries (Company only).

In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on detailed projections, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These projections generally cover a period of five years with a terminal value or salvage value applied.

Impairment losses of continuing operations are recognised in the Income Statement in expense categories, consistent with the function of the impaired asset.

For investments in associates and joint ventures, the Group assesses impairment after the application of the equity method.

2.   Segmental Analysis

The Group consider its mining and exploration activities as separate segments. These are in addition to the investment activities, which continue to form a significant segment of the business.

The Group has made a strategic decision to concentrate on several commodities, ranging from gold to manganese and copper/cobalt, and as such further segmental analysis by commodity has not been considered useful or been presented. Transfer prices, between operating segments, are on an arm's length basis in a manner similar to transactions with third parties.

Information by Geographical Area

Presented below is certain information by the geographical area of the Group's activities. Revenue, from investment sales and the sale of exploration assets, is allocated to the location of the asset sold.

3.    (Loss)/Profit for the Year Before Taxation

(Loss)/profit for the year before taxation is stated after charging:

4.    Administrative Expenses

5.    Finance Income/(Costs), Net