For the Company's management and shareholders, Monday the 1st of March 2010 will be remembered as the day a new chapter opened in its development cycle. To borrow from one of Winston Churchill's most famous war time speeches, this marks "the end of the beginning" for Red Rock Resources.
The big news (click here to see) came from Jupiter Mines, (ASX:JMS) the Australian miner in which Red Rock are currently 25% shareholder, announcing their intention to acquire a 49.9% stake in the Tshipi Kalahari Manganese project in South Africa, from Pallinghurst Resources (JSE: PGL) and their high profile co-investors.
This deal represents an effective corporate restructuring for Pallinghurst, who, together with their investment partners will end up with around 85% of Jupiters equity. The share-based transaction will be worth approximately A$245m, which will transform Jupiters with exciting opportunities in iron ore and manganese in both Australia and South Africa.
To view the deal presentation click here
After the transaction, Red Rocks stake in Jupiter will be reduced to around 6% of the enlarged entity. However this will also leave Red Rock holding the largest independent stake outside of Pallinghurst and their co-investors.
So why does this deal mark such a seminal event for Red Rock?
Up till now, the successes of the Company's agressive growth strategy have been largely overshadowed by the ongoing need for funding by way of equity placements. But all that changed on Monday.
This deal now opens up an early exit route for Red Rock as its joint venture in Jupiter with Pallinghurst is now completed; thus allowing the company to sell down some of its £15m stake (which, by the way is greater than its entire market cap - currently worth over 2.5p per Red Rock share), without impacting on Jupiters market value.
So with a new route to significant non-dilutive funding available, we expect that long awaited re-rating may shortly be on its way.
Here is an interview Pallinghurst Chairman Brian Gilbertson gave to Bloomberg TV Asia yesterday. One has to admire his patience, given the Anchor's obvious lack of knowledge of both the company's activities and the sector in general. Why she would feel the need to question him on the Rio Tinto Chinese spy allogations is beyond credulity! Mr Gilbertson is obviously a gentleman!
Monday also saw the company's Uranium development vehicle Resource Star finally resume trading after 18 months off the market. Resumption of trading has seen the share price fall by around 25% from the 20c level. Taken in isolation this would be disappointing, but we view the relisting as more of a technical event and expect corporate developments and deals, (as referred to in Andrew Bells previous interview with miningmaven tv here) to be the drivers for value, in short order.
It is little over 6 weeks since we updated our value proposition on Red Rock (click here to see) yet Mondays developments have left it in need of a thorough makeover.
Over the next day or so, we will be putting together an updated value proposition which will take into consideration all the events that have happened in the interim, and we will be looking at where things could go from here. Exciting times ahead!
This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.
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The author owns shares in Red Rock plc.
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