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Red Rock poised for income boost from El Limon output

Red Rock Resources is poised for a royalty boost from El Limon after Para's purchase...

Pictured is a gold pour....
Red Rock Resources has a royalty deal with Para

Red Rock Resources Plc (LON:RRR) is poised for a royalty boost after Para Resources, to which it sold the El Limon mine in Colombia, has bought  further concessions in the South American country.

It has bought three small operating mines - part of 17,000 hectares - for US$1mln in the Segovia gold belt in north-east Colombia, which are set to provide additional feed material to the El Limon plant, allowing it to exceed the 200 tonnes per day plant capacity.

Because of its royalty deal with Para, Red Rock already projected, that once the targeted steady state production of the 20,000 ounce a year is reached, at current gold prices, Red Rock will get around US$300,000 of annualised royalty income from El Limon.

"With greater visibility now as to the source of the other half of the material Para plans to process to reach its projected steady state production of 20,000 oz p.a., we expect to revise those projections upwards over time," said chairman Andrew Bell.

"The improving news flow from Colombia shows that we selected the right buyer for our Colombian assets last year."

Red Rock is still due an instalment of US$225,000 for the El Limon sale in August and holds a promissory note from Para for US$1mln.

Royalty income to Red Rock of 3% of plant output began at the beginning of this month and will be calculated quarterly.

Red Rock shares added  8% in early deals to stand at 0.675p.

Quick facts: Red Rock Resources PLC

Price: 0.49 GBX

AIM:RRR
Market: AIM
Market Cap: £3.31 m
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