RGM.L Regulatory News (RGM)

23 March 2018

Regency Mines Plc ("Regency" or the "Company"), the natural resources exploration and mineral investing company with interests in hydrocarbon and base metal exploration and production, announces its unaudited half-yearly results for the six months ended 31 December 2017.

Chairman's statement

Dear Shareholders,

It is with much pleasure that we present these interim results. The six month period to 31 December 2017 was one of significant activity, in which the Company completed the sale of its 5% participation in Horse Hill Developments Ltd, a private oil exploration company, and was able thereby to generate proceeds of £1,719,126, as well as receiving 6,467,500 shares in the AIM-listed Alba Mineral Resources plc.

A considerable profit was generated from this sale, only partially offset by an impairment of Regency's interest in a metallurgical coal joint venture in the U.S. The proceeds of this sale allowed the Company to increase by £400,000 its investment in Curzon Energy plc, which it had helped fund in 2016 and which listed on the Standard List of the London Stock Exchange during the half year under review, as well as to increase its current assets and reduce its current liabilities. Net current liabilities were consequently reduced by £629,047 from the 30 June total, while the liquidity of its available for sale financial assets of £1,249,980 was improved by the fact that the bulk of them now comprised London-listed investments.

These developments significantly improved the financial position of the Company.

Since the end of the calendar year, further funding of £1,050,000 was raised and the balance sheet has been further strengthened. The trade and other receivables have been reduced to near zero, so that current assets now comprise almost entirely cash, while the trade and other payables have also been reduced to near zero, and short term borrowings have been entirely eliminated, so that current liabilities have been almost entirely discharged. The Company now enjoys a substantial net current asset position.

It is worth reminding shareholders, many of whom have come on the register since 2010, how the high level of debt we have carried ever since that time and up until recently came about. We had entered into a joint venture in relation to our Mambare lateritic nickel-cobalt project in Papua New Guinea with a party that was expecting to raise substantial funding and obtain a listing. Neither eventualised, partly due to market conditions, and we were left with the unappetising choice of aborting our nearly completed exploration programme with no measurable outcomes or of taking shares in a private entity and carrying our partner financially in order to complete the programme and obtain a maiden JORC Resource. We chose the latter, and in consequence lived with an uncomfortable if reducing level of debt throughout the 2010 to 2016 downturn.

Whether we were right in the long term to make that decision will now be seen. We know that in the short and medium term it was proved wrong, for nickel, having failed to recover like other metals between the global financial crisis of 2008 and the commodity market peak in 2010, continued to perform poorly as other metals came out of the down-cycle in 2016. Last year began to see a recovery in the cobalt price, which continues, and this year has seen the start of a recovery in the nickel price, and a pattern of increasing demand for these materials for electric vehicle and other storage batteries that we expect to continue.

An opportunity now exists to reinvigorate the Mambare project, and the extremely large Resource we have proved up from what is only a small part of the deposit gives us a strong platform to work from.

Meanwhile we have continued to work on building up our presence in hydrocarbon energy sources. Although we have sold out of Horse Hill Developments Ltd, our increased 8.91% shareholding in Curzon Energy plc gives us exposure to the coal bed methane market in the U.S.

Our first steps last year into the metallurgical coal market in the U.S. did not generate early production as hoped, and we identified management and organisational deficiencies in our partner that led us to make a provision of £821,566 against the value of these assets. We have however learnt by our experiences and have strong expectations for the development of that business, primarily through our new $2,000,000 commitment to a joint venture with Legacy Hill Resources Ltd, a privately held company with the technical and operating expertise that is needed to develop a successful metallurgical coal project in the competitive U.S. marketplace.

The objective of the joint venture is to acquire and assemble a critical mass of production and reserves. We have known and worked with our partners at Legacy Hill for some time now, and have developed a high regard for their capabilities and strengths and an awareness of the degree to which they are complementary to our own. We are confident that we will be able to build a strong working relationship. Through this relationship, we will also try to address the potential of the Rosa mine and other coal assets.

At the end of 2017, we announced the formation of a Battery and Storage Technologies Division, which complements our hydrocarbon energy and battery metal activities and will address new developments in battery technology and developing uses for the metals in our portfolio. The first investment made was of £400,000 in White Car Ltd, a new Tesla-operating car hire company that aims to be a disruptor of the car hire market, and where my colleague Scott Kaintz now sits on the board.

We thank our shareholders for their strong support during a period of transition, and look forward to an exciting period in which, from a solid financial base, we start to reap the rewards of investments undertaken and decisions made.

Andrew Bell

Chairman and CEO

 23 March 2018

Consolidated statement of financial position

as at 31 December 2017

The accompanying notes form an integral part of these financial statements.

Consolidated statement of income

for the period ended 31 December 2017

The accompanying notes form an integral part of these financial statements.

Consolidated statement of comprehensive income

for the period ended 31 December 2017

The accompanying notes form an integral part of these financial statements.

Consolidated statement of changes in equity

for the period ended 31 December 2017

The movements in equity during the period were as follows:

Consolidated statement of cash flows

for the period ended 31 December 2017

Half-yearly report notes

for the period ended 31 December 2017

Half-yearly report notes

for the period ended 31 December 2017, continued

Half-yearly report notes

for the period ended 31 December 2017, continued

As a result of the Group's evaluation of its non-financial assets, an impairment loss of £821,566 on investments in associates and joint ventures was recognised in the income statement (2016: £nil). This relates to the Company's investments in Vali Carbon Corporation, a company targeting the acquisition and development of metallurgical coal assets in Virginia, as announced on 6 February 2017, 9 March 2017 and on 16 March 2017.

The Directors recognise that Vali Carbon Corporation has suffered from significant managerial and organizational deficiencies to date, particularly a lack of financial capital and focus from the majority owner of the business. As such the Company considers advancement of these assets to be on hold pending further negotiation and discussion with the majority partner.

Simultaneously, the Company is exploring options to potentially inject some of its metallurgical coal investments into the joint venture with Legacy Hill Resources first announced on 27 February 2018, as part of a larger US metallurgical coal investment and development strategy.

Given the broad uncertainty around the future of these assets, the fact that the metallurgical coal market remains buoyant and the original investment thesis sound with multiple potential pathways for future development, an impairment value of £821,566 for the year was determined to most appropriately reflect the present situation and pervading uncertainties.

In August 2017 the Company disposed of 1.9% of its stake in Horse Hill Developments Ltd ("HHDL") to UK Oil and Gas ("UKOG"). For this interest the Company received £54,498 in obligations assumed by the buyer as well as £268,502 of value in UKOG shares. These shares were subsequently sold for proceeds of £1,298,555.

On 29 November 2017, Regency announced that it has completed the sale to dispose of its remaining 3.1% interest in HHDL for £630,000, of which 50% would was delivered in cash and 50% in shares of the buyer, Alba Mineral Resources plc ("Alba").

Half-yearly report notes

for the period ended 31 December 2017, continued

Half-yearly report notes

for the period ended 31 December 2017, continued

10 Subsequent events

ESTEQ Investment into Whitecar Ltd.

On 22 December 2017 the Company announced that its wholly owned subsidiary, EsTeq Ltd, had agreed to invest £400,000 into Whitecar Ltd, in two tranches, one at closing and a further in February 2018. In February 2018 EsTeq completed the terms of this investment by investing the second £200,000 tranche into Whitecar Ltd, bringing the total invested to £400,000 and its shareholding to 5.8% of Whitecar.

Strategic Fundraising and Loan Repayment

On 11 January 2018 the Company raised £1,050,000 through the issuance of 190,909,090 new ordinary shares of 0.01 pence each. Each participant in the placing received a warrant along with each share purchased to subscribe for a further share at 1.0 pence for 24 months. The Company retains the ability to call these warrants in the event that the volume weighted average price of the Company's shares equals or exceeds 3.5 pence for ten consecutive business days.

On 30 January 2018 the Company further announced that it had repaid in full all of its outstanding convertible loan notes with YA II PN, Ltd. This payment totalled $835,115 and was broken down into $725,647 of principal and $33,548 of interest.

Joint Venture with Legacy Hill Resources

On 27 February 2018 the Company announced that it had executed a joint venture agreement with Legacy Hill Resources ("LHR"), a privately-owned mining company, setting out a framework for cooperation. The purpose of the joint venture was to structure and finance acquisitions in the U.S. metallurgical coal sector including their subsequent management and operation.

Under the terms of the joint venture, LHR will own 30% of the joint venture, to reflect their efforts in financing, conducting due diligence and managing the acquisition process to date. LHR will contribute $1m in cash and Regency will contribute up to $2m in cash, with the total equity contributions under this agreement capped at $3m. Regency will thereby hold a proportion of the joint venture equal to 70% of its relative cash contributions. If more than $3m of cash investment was required, a new agreement would be entered into for that additional amount. LHR was to be responsible for day to day operations of the investments and all these terms and relationships were to be formalized in a full agreement when appropriate.

Update on Rosa Mine Due Diligence

On 27 February 2018 the Company announced that alongside Legacy Hill Resources due diligence had been carried out on the Company's option to acquire 80% of the Rosa metallurgical coal mine and wash plant not already owned by Regency. While the original sixty-day timeline had expired, Regency was continuing to review information gathered on the Rosa mine, to reach out and speak with stakeholders, and to discuss additional partnership options regarding this asset with Legacy Hill Resources. The Company further explained that the eventual terms of any potential transaction regarding Rosa might require additional negotiation and would likely be different than those originally announced.

For further information contact:

Andrew Bell 0207 747 9960 Chairman Regency Mines Plc

Scott Kaintz 0207 747 9960 Executive Director Regency Mines Plc

Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited

Jason Robertson 020 7374 2212 Broker First Equity Limited