Red Rock Resources

Red Rock Resources will receive shares worth more than its total AIM value in a newly agreed Australian manganese deal.

Primarily focused on Australian prospects, though with interests in Africa and in mobile gold treatment plants as well, London-based Red Rock is exercising its option to sell the Oakover manganese tenements in Western Australia to Down Under-listed Jupiter Mines in exchange for Jupiter shares representing 28.97% of Jupiter’s equity. That is currently worth some £5.62m (though some shares are temporarily locked in), against Red Rock’s present AIM tag of £5.4m and Oakover’s book value of just £120,000 in Red Rock’s accounts.

The option exercise will bring a 28.91% Jupiter Holding to Red Rock’s consortium partner, mining investment group Pallinghurst Resources, headed by Brian Gilbertson, former boss of mining giant BHP Billiton. Each stake will fall to a little more than 25% when Jupiter completes a share placing with major Korean steel producer POSCO.

Red Rock’s chairman, Andrew Bell, who also heads its largest shareholder, Regency Mines, boasts ‘this is the kind of deal we’d like to do every day’. Floated at 2p four years ago, Red Rock shares have been as low as 0.38p during the past year.

Now 1.18p, they clearly carry risk, in terms of Jupiter’s stock market performance, commodities, currencies and Red Rock’s other ploys. But for the risk-friendly, they could repay a medium-term punt if all goes well.