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Red Rock Resources says actions earlier in 2020 mitigated the impact of pandemic for its exploration


Red Rock Resources PLC (LON:RRR), in its final results, highlighted that actions taken earlier in 2020 have mitigated impacts of the COVID-19 pandemic.

During the year, the company noted that it amended its field programmes so that they fell within what was permissible and practicable for local teams. No operations were taken to a full halt.

It highlighted that a ground geophysics field programme is underway in Congo.

In 2021, it is expected that ground exploration activities will begin once again in Kenya.

Community engagement activities are presently underway in Australia and Kenya in preparation for exploration activities.

For the twelve months ended June 30, Red Rock reported GBP5.156mln profit before tax mainly reflecting the writing back of a GBP5.28mln impairment from June 2015 against the assets in Kenya.

The company noted that it received GBP419,000 of dividend income from its investments during the year.

Administrative expenses amounted to GBP597,000 were held at a similar level as in the previous year.

Giving its outlook, meanwhile, the company emphasised the influence of commodity prices.

“There is much that is uncertain in the world outlook,” Red Rock said.

“China has become so big a demand factor for many commodities, iron ore and copper included, that sharp recent price increases have been seen in these commodities. Chinese steel production for the first nine months of the year has run at 6.8% above 2019 levels.

“Demand for copper from China also reflects the recovering economy, at a time when South American production has been interrupted by the effects of the pandemic.”

It added: “Longer term, the forecast for copper demand is for 2% growth p.a., and copper investment to replace consumed reserves has been insufficient in recent years.

“One may also wonder whether, if the world is to be converted to alternative energy and electric cars, the implications for demand for the world’s best conductor have been fully thought through and reflected in projected prices.

“Not only do electric cars contain more copper, but the transmission network necessary to take the electricity to the point of use, substituting for all the petrol tankers in the world, will be far greater than that currently existing. Moreover, alternative power generation technologies require large amounts of copper to mitigate their inherent inefficiencies.”

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