RGM.L Regulatory News (RGM)

REGENCY MINES PLC

GRANT OF AGROMINERAL OPTION

4 July 2012

Regency Mines plc ("Regency" or "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 that it has entered into an Option agreement with International Mineral Resources (Agrominerals Sudan) Ltd ("IMRAS") covering agromineral and mineral licenses in Sudan ("Option").

Highlights:

• IMRAS has claims over phosphate and other licenses in Sudan ("Licenses")

• previous work has shown indications of large tonnages at good grades, with potential for world class resources, at some of these locations

• the Option gives Regency the opportunity to conduct due diligence inquiries and is to be exercised by 17th July 2012

• should Regency exercise the Option, it will acquire 26% of IMRAS at a price in cash or shares of $500,000. The shares are to be issued at the market price prevailing on the day of exercise.

• a further right will then exist whereby Regency could raise its ownership of IMRAS to 51% at a price of $2,500,000 after establishing two JORC or comparable Resources on the Licenses

• a due diligence team is expected to leave for Khartoum this week

Terms of the Option:

Under an Option Letter Agreement ("OLA") signed on 2 July 2012, Regency was granted an exclusive 45 day option by IMRAS giving Regency the right to execute the Transaction (as defined below) on the Agreed Terms (as defined below).

On 3 July, Regency paid $15,000 to IMRAS to cover the expenses of the due diligence visit and accordingly under the terms of the OLA has triggered the Option.

Within ten days of the completion of a due diligence visit to Sudan by a Regency team led by Group geologist Baker Khudeira, BSc, MAusIMM, MAIG, accompanied by IMRAS directors and local geologists, which is scheduled to begin this week, Regency may if it chooses make a further Option payment of $35,000 and will then have the right to execute the Transaction.

Agreed Terms of the Transaction:

Upon the completion of successful due diligence and a decision by the Regency board to proceed, the payment of the further Option payment would trigger execution of the Transaction.

Regency would then pay $500,000 in cash or stock at the market price prevailing on the day of exercise to IMRAS, and receive 26% of the enlarged share capital of IMRAS (the "Transaction").

As a post-completion obligation, Regency would be required to begin exploration on the Licenses within sixty days of completion of the Transaction.

Upon the proving up by Regency of a JORC or similar Resource on two of the Licenses, Regency would pay a further $2,500,000 and its interest in IMRAS would increase to 51%. 

The Licenses:

IMRAS claims rights over the following exploration licenses in Sudan:

1) Abo Hashem (phosphate and associated minerals)

A cretaceous basin/sub-basin north-west of Khartoum with reported potential P2O5 grades up to 20% and an exploration target of 3.5 bn tons or more of P2O5, for which the comparator is the Saudi Al Jalamid Phosphate deposit.

2) Kurun (phosphate)

A cretaceous basin/sub-basin south of Khartoum with reported potential P2O5 grades up to 25% and an exploration target of up to 120m tons of P2O5, for which the comparator is the Jordanian Russeifa Phosphate mine.

3) Sabaloka (potassium oxide)

North of Khartoum, with unknown grade, but 300 reported occurrences, and a conceptual target of 160m tons.

4) Um Kaddada (potassium nitrite)

Southwest of Khartoum, with unknown grade or geological detail.

5) Red Sea Gypsum (gypsum)

An evaporite system northeast of Khartoum and 70 km from Port Sudan with good potential access and unknown grade or scale.

The purpose of the due diligence will be not only to assess geological potential but also infrastructural constraints, likely to be significant in some of the inland projects, and social, economic, and political factors. Sudan is a country facing social and economic challenges, and its Government has a poor international reputation, which it is attempting to improve. These factors need to be offset against high geological potential, a likely favourable tax regime, and good English language skills. There can be no certainty that Regency will elect to proceed with the Transaction.

Enquiries: