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Red Rock Resources swings to £5.2m profit

Red Rock Resources shares fell on Thursday after the group shared Final Audited Results for the year ended 30 June 2020.

The group reported a pre-tax profit of £5.2m, which was up from the reported loss of £1.7m in the previous year.

Red Rock said that they had mitigated the impacts of the pandemic and saw a growth in profits and received £419,000 of dividend income from its investments over the year.

“There is much that is uncertain in the world outlook. 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,” said the group in a statement.

“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.”

“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,” it added in a statement.

Red Rock Resources shares are trading -3.18% at 1.06 (1300GMT).

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