20 Sep 2019 16:15
Regency Mines PLC
("Regency" or the "Company")
Allied Energy Services Exclusivity Agreement
20 September 2019
Regency Mines Plc (LON: RGM) the natural resource exploration and development company with interests in energy storage, battery metals and natural gas announces an update on progress concerning its investment, held through its subsidiary EsTEq, in Allied Energy Services.
Allied Energy Services ("AES") has executed an exclusivity agreement with the leaseholder of the Southport Energy Centre ("SEC"), as previously referenced on 24 July 2019. The agreement gives AES a period of exclusivity of three months over Phase 1 of the project, during which time the leaseowner will refrain from entering into any agreement that would prevent AES from executing a commercial lease as contemplated by the letter of intent signed by the parties in February 2019.
The agreement further includes a right of first refusal from the date of this agreement for a period of six months over Phase 2 of the project, conditional on AES making an investment in Phase 1 during this period. The leaseholder must offer AES the right to participate in Phase 2 of the project on the same terms as any third party, which AES may then consider at its own discretion.
Scott Kaintz, CEO, comments: "Continuing progress has been made at AES over the past months, as we move closer to financial close and construction start of Phase 1 of the project. Putting a period of exclusivity and a right of first refusal in place with the leaseholder of the first site protects our interests as we assist AES in lining up the debt and equity commitments required to proceed. All funding is currently planned to be raised through a special purpose vehicle ("SPV"), with further SPVs utilized on subsequent projects.
Currently, there is no expectation of Regency or EsTeq being required to fund a substantial part of either the debt or equity components of the SEC."
Background
The current focus of AES is on a single large development site near Liverpool, where two potential stages of development are envisioned under the name of the Southport Energy Centre ("SEC"). Phase 1 of the SEC is expected to consist of the leasing and installation of up to 9MW of gas-powered electricity generation accompanied by the installation of containerised batteries with 2MW of storage capacity.
Commonly known as "Peaker Plants", these types of plants are equipped to generate electricity and sell into the UK electricity market when electricity prices are high or renewable production low, and to buy and store electricity when prices are low or when electricity generation is higher than had been anticipated. Anticipated revenue streams include electricity trading, Short Term Operating Reserve ("STOR") and Fast Frequency Response.
Current plans call for the establishment of both gas and electricity grid connections, the latter being facilitated by the SEC location's adjacency to a major regional substation. Once these connections are in place and leased gas generators and batteries have been delivered, it is estimated that the site can start generating revenue in approximately six months.
A follow-on Phase II development of the existing site would involve the removal of the existing waste management site, which will not be disrupted during Phase 1, and its replacement with a new waste reception and anaerobic digestion plant. This potential second phase, which would be subject to technical and commercial due diligence and the availability of funding, constitutes a significantly larger and more complex overall development, but provides an additional pathway for growth within the existing site footprint. Beyond this initial SEC site, the current AES project pipeline consists of an additional 3-4 sites that include a mix of peaker plants, bio-gas, and combined heat and power opportunities at various stages of review.
Regency currently owns 100% of its subsidiary EsTeq Ltd, which in turn owns 80% of AES.
For further information, please contact:
Scott Kaintz 020 7747 9960 Director Regency Mines Plc
Roland Cornish/ Rosalind Hill Abrahams 020 7628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 020 7374 2212 Broker First Equity Limited
This announcement contains inside information under Article 7 of Regulation (EU) 596/2014.