RGM.L Regulatory News (RGM)

REGENCY MINES PLC

Australian Exploration Update

4 May 2012

Regency Mines plc ("Regency" of the "Company"), the mining exploration and mineral investment company with interests in nickel and other minerals in Western Australia, Queensland, Papua New Guinea and Pakistan announces an update on its Australian exploration activities.

Regency focuses on base metals and raw material opportunities in Australia and Asia. The Company has been concentrating on nickel, with interests in an established deposit of lateritic nickel in Papua New Guinea. Other investments the Company holds indirectly are Australian iron ore interests, Asian coal interests and through a strategic partnership the Company is involved in nickel treatment technology.

The Company operates an exploration division currently focusing in Australia, searching for mineral commodities with future supply shortages. In recent weeks, supply shortages of high quality flake graphite have been identified by a number of Canadian media outlets as the next boom commodity. The supply shortage of flake graphite is increasing, primarily due to the use in Lithium Ion batteries.

The world graphite supply is currently due to the small number of high grade carbon flake graphite deposits which can be bought into production relatively quickly to fill the supply shortages expected to be acute in the coming years. As the price continues to rise due to commodity supply shortages, the Directors expect that global exploration will be increased to search for additional high grade resources.

The Company is pleased to provide the following technical information on its Munglinup flake graphite exploration activities.

In this release are also included initial drill assay results from Regency's March 2012 drilling program at the Pyramid Lake project, which intersected significant grades of Ilmenite containing up to 3.79% titanium.

Munglinup Graphite Exploration Project

Regency's management team acquired vacant ground in late 2010 adjoining Australia's primary flake graphite deposit at Munglinup. This deposit is referred to as "Halbert's Main Zone" flake graphite deposit and it is located approximately 112km away from the West Australian bulk handling port at Esperance (refer to figure 1).

http://www.rns-pdf.londonstockexchange.com/rns/7869C_-2012-5-4.pdf 

Figure 1: Location of Halbert's graphite deposit adjoining Regency Mines tenement

Exporters using the port facilities include Galaxy Resources Limited which mines spodumene (a main contributor of lithium) from the nearby Cattlin Creek pegmatite. This is then transported from Esperance to China where they produce lithium ion batteries.

The Halbert's graphite deposit adjoining Regency Mines tenements is owned by a private company, Graphite Australia Pty Ltd. The Halbert's graphite deposit contains an historic (non-compliant with currently used codes) resource of 1.30 mT @ 18.2 % Carbon, which was first released in 1988 by then owners Gwalia Minerals NL. The Gwalia Minerals NL resource report contains detailed geology and grade information not replicated here, and which can be downloaded from the WA mines department - WAMEX report number A25419.

There has been no systematic exploration or further resource evaluation work conducted on this deposit since 1988, due to global oversupply of flake graphite in the early 1990's when the export prices were subdued. A low commodity price therefore caused exploration for flake graphite to cease around the world. As far as the Board is aware, Regency is the first company to recommence exploration around Australia's primary flake graphite deposit, in the search for the same high grade carbon flake graphite.

In early 2011, Regency's exploration team identified the potential for geological strike continuation from the known graphite deposit into its exploration ground. Using available open file geophysical data from the WA state government, a regional aeromagnetic interpretation was completed, and historic data research conducted. A demagnetized zone was identified by the Company's geologists in a concentric shape, and this aeromagnetic interpretation is replicated in figure 2.

http://www.rns-pdf.londonstockexchange.com/rns/7869C_1-2012-5-4.pdf 

Figure 2: Regional open file aeromagnetic data with the initial magnetic interpretation

In July 2011 an AEM (airborne electromagnetic) survey utilising the Geotech Airborne VTEM system (a proprietary high performance helicopter-borne time-domain electromagnetic system) was conducted across the adjoining graphite deposit area, into Regency's tenements. This geophysical system was flown at high resolution of 100m - line spacing to gain optimal spatial resolution for resource definition. The magnetic data highlights a linear magnetic anomaly at Halbert's which trended northwards as shown in figure 3, but did not continue to the south.

http://www.rns-pdf.londonstockexchange.com/rns/7869C_2-2012-5-4.pdf 

Figure 3: Detailed magnetic data (RTP - 2VD filtered) with interpretation confirmed

The best flake graphite is conductive in the near surface, and drilled to an open pittable depth of 55m. Utilising the AEM data which measures conductivity strength, seven similar near surface AEM conductive zones have been delineated in Regency's tenement as shown in figure 4. The stratigraphic location of these conductors (red zones) and their conductivity strength in comparison to the Halbert's graphite deposit has been used for target identification. Three AEM conductors are coincident with or adjoining the interpreted magnetic graphitic ironstone unit.

http://www.rns-pdf.londonstockexchange.com/rns/7869C_3-2012-5-4.pdf 

Figure 4: AEM B-Field Channel 35 data with magnetic interpretation superimposed

The strongest and most coherent conductor lies directly across the syncline. The strike length of 1.4km means if this conductor does contain high grade flake graphite similar to Halbert's, then the size should be considerably larger in terms of tonnage. As with any geophysical rock measurement, other rock types can give identical responses which are not related to graphite. Drill testing of each conductive zone is the only way to ascertain if the geology is comparable with the known deposit.

The Company plans to conduct a reconnaissance drill program as soon as the permits can be obtained from the state government, and once access tracks are cleared through the scrub. The drill proposal shown in figure 5 is only for the large tonnage target. The map identifies proposed collar locations for a multi-phase drill program, which will commence with 2 to 3 drill lines initially. Should this conductive target zone contain graphite, the other 6 conductive target zones, viewed as potential satellite resources will be drilled as soon as permits have been obtained.

http://www.rns-pdf.londonstockexchange.com/rns/7869C_4-2012-5-4.pdf 

Figure 5: Proposed multi-phase air core drill program on aerial photo with tracks

Graphite Uses: Graphite is a common material but flake graphite is not. Flake graphite has been found to possess extremely low resistivity to electrical conductance. The electrical resistivity decreases with the increase of flaky particles. The bulk density decreases progressively as the particles become more and more flaky. Because of this property in flake graphite, it is used in the manufacture of carbon electrodes, plates and brushes required in the electrical and dry cell battery industries.

High thermal and electrical conductivity are the main properties of flake graphite, with other properties including excellent resistance to thermal shock and a low coefficient of thermal expansion. An increasing strength with temperature combined with resistance to chemical and acid attack as well as being non-wetting but lubricious are properties which makes flake graphite useful for metal foundry applications. A new usage for graphite is in a material called Graphene, which is a crystallographically perfect film of graphitic carbon, and may one day supersede silicon in computer chips.

Pyramid Lake Project JV

The Company undertook a combined Air Core (AC) and Reverse Circulation (RC) drilling programme at its Pyramid Lake project near Munglinup in March 2012. The drilling program consisted of 664m of RC drilling and 2,152m of AC drilling and was completed along a 1.2km strike.

This second phase drill programme was designed to infill anomalous drill assay results from the phase one drill programme completed in 2010. In the 2010 reconnaissance drilling programme a single drill hole (MNAC2007) recorded high titanium and sulphur assay results.

The 2012 drilling programme targeted a broad AEM conductive zone delineated by a VTEM survey flown in early 2011. The RC holes assays are still pending; however some of the aircore assays have been received and preliminary results have been tabulated below.

Notes: All Samples are Composite samplesAnalysed by Genalysis Laboratories in PerthAssay method using 4 Acid digest OES techniques

Initial assessment of these assays show thick and anomalous Ti (titanium) levels related to coarse grained columnar ilmenite in a sulphidic carbonaceous shale. The ilmenite mineralisation was first described in thin section using the 2010 air core drilling programme rock chips by Dr Roger Townsend, the Company's consultant petrologist in Perth.

It is therefore presumed, in this preliminary stage of investigation, that ilmenite could be the major contributor of the anomalous titanium. These titanium metal assays indicate the rock could contain up to 10% Ilmenite content, however further detailed assessment is required and a complete technical appraisal will follow once all assay results have been received from the laboratory.

Approximately 763 soil sample assays are pending from a large regional geochemical exploration programme recently completed across the district. The soil samples have been submitted for MMI (mobile metal ions) analysis, which detects very small changes in the subsurface geology.

Competent Person's statement

Mr Grant Donnes

The technical information in this report relates to exploration results based on information compiled by consultant Mr. Grant Donnes, BSc (Hons - Geophysics), who is a Member of the Australian Institute of Geoscientists (AIG) and Australian Society of Exploration Geophysicists (ASEG). Mr Donnes has sufficient experience in the style of mineralisation and type of deposit under consideration. Mr. Donnes has reviewed this announcement and consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. Mr. Donnes is a self-employed consultant to the Company.

For further information contact:

Updates on the Company's activities are regularly posted on its website:

www.regency-mines.com.