Red Rock Resources (RRR) has updated on its investment in Jupiter Mines (ASX - JMS) and in Kenya. The latter includes repair and refurbishment of the exploration camp is now being completed and local community engagement and low impact geological work is expected to start next week, with a full programme of work to be developed “over coming weeks”. This follows recent restoration of the gold licences which we consider could be highly material to the valuation here – this looks reinforced by it stated it to “now rapidly set about the business of expanding our 1.2m oz initial gold Resource, as North Mara has expanded its resource to our south and as Shanta is doing so to our north. This is a highly prospective belt”.
Meanwhile, Jupiter has announced a half year dividend of $0.01 per share – Red Rock noting a cautious view has been taken though currently “demand for manganese continues strong” and with a demerger of Jupiter’s Central Yilgarn Iron Ore assets (consisting of the Mt Ida magnetite deposit and the Mt Mason DSO haematite deposit) and subsequent initial public offering approved by its board – this to mean a distribution of shares in-specie and it stated “post the demerger, Jupiter will become a pure-play manganese company, with the aim to continue to maintain its strong balance sheet and high payout ratio”.
Red Rock adds it “has a holding in Jupiter Mines valued currently at approximately AUD 3.8m. The company also has a 1.3% gross revenue royalty over the Mt Ida iron ore project. Anglo-Pacific Group plc has an obligation to purchase 0.45% of this royalty interest from Red Rock for $8m upon the achievement by Jupiter of certain milestones in relation to Mt Ida, namely (a) a definitive feasibility study and decision to proceed, and (b) commercial production”.
At a current 0.80p to buy, Red Rock’s market cap is £6.6 million – currently equating to $8.5 million and AUD12.1 million. As well as the above, we particularly note the valuation is following a recent placing raising £1 million (meaning net cash) and with the Australian gold spin off potential for a value to the company greater than the market cap and potentially significantly so. We continue to look for 1.3p+ on further news flow on progress with the above and, having been recommended at a 0.60p offer price, still, at the very least, hold tight – as writer for this website Tom Winnifrith does.
This article first appeared on HotStockRockets – for a special report from the HotStockRockets team; 'Three stocks to buy ahead of the US election on Tuesday', OUT JUST LAST FRIDAY AFTERNOON for just £5.50 click HERE
Filed under: Red Rock Resources, GVC, Ocado, Bearcast, Tern, ShareProphets, HotStockRockets
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