RGM.L Regulatory News (RGM)

Regency Mines PLC

("Regency" or the "Company")

Nickel Deposit Debt Acquisition, Introduction of Cornerstone Investor, Director Dealings, and Fundraising

7 April 2020

Regency Mines Plc (LON: RGM), the natural resource exploration and development company with interests in battery metals and flexible grid solutions, announces the partial purchase of the corporate debt of Resource Mining Corporation Pty Ltd (ASX: RMI) ("RMI"), the 100% owner of the WoWo Gap nickel-cobalt project in Papua New Guinea ("PNG").

Highlights:

o AUD 1.7 million of debt in RMI purchased by Regency for a consideration of £178,096 cash and 13,288,982 new ordinary shares of the Company (representing a 62% discount to the face value of the debt or at full face value an effective issue price of RGM shares of 5p

o Six-month option to buy the balance of RMI debt at the same proportional terms (AUD 3.05m debt would be purchased for AUD 640,000 in cash and 23,711,018 new ordinary shares in Regency)

o Introduction of the Chinese owned Sinom Group as a new locked in cornerstone investor in Regency (held through its subsidiary Base Asia Pacific Limited ("Base Asia")) with an initial 7.97% equity position

o Regency, in its new role as lender to RMI, plan to initiate constructive discussions with RMI management regarding synergies between its Mambare project and the WoWo Gap nickel-cobalt project in PNG

o To implement the transaction and despite volatile markets, Regency completes a gross fundraising of £470,000

Scott Kaintz, CEO, commented: "Despite recent market turmoil, Regency is committed to delivering Company shaping initiatives and emerging as a larger and stronger player in the battery metal space. We are delighted to reveal the first of these, which positions Regency as one of the leading PNG Nickel exploration companies with critical mass in country.

This debt acquisition provides Regency shareholders with linkage to a highly complementary project in Papua New Guinea and is a first step in creating a business with the scale and diversity to appeal to a wider range of institutional and retail investors.

We look forward to fruitful discussions with RMI regarding how we might coordinate and explore synergy between our respective projects and teams with a view to pursuing organic growth and development in the region."

Regency will continue to build the business through a blend of organic development and acquisition and provide investors with updates as they become available."

Debt Purchase Summary:

Regency has agreed to purchase AUD 1.71m of outstanding corporate debt in RMI from Sinom Hong Kong Limited ("Sinom"). The consideration is £178,096 cash plus 13,288,982 new ordinary shares ("Consideration Shares"), representing (at a price of £0.011 per ordinary share at the time the transaction was finalised) an aggregate consideration of £324,275 (the "Transaction") being a 62% discount to the face value of the debt, effectively at full face value an equivalent issue price of £0.05 per share. The new shares are subject to a lock-up for one year.

Regency has been granted a 6-month option, extendable at the election of Sinom, to purchase the remaining RMI debt of AUD 3.05m for consideration of 23,711,018 new ordinary shares and AUD 640,000 in cash, which represents a similar discount to the initial acquisition.

The existing RMI debt consists of four instruments as follows:

Purchased by Regency:

· Loan Note A: AUD 1,210,000

· Loan Note B: AUD 500,000

Under Option:

· Convertible Loan Notes of AUD 2,000,000

· Loan Note C: AUD 1,051,087

All the loan notes are interest free and unsecured. The convertible notes are convertible into ordinary shares of RMI at a price of AUD 0.20, however the convertible feature of the notes under option would be removed prior to purchase by Regency.

During the period of the option, Sinom have the right to drag Regency along if they proceed with a sale of the residual portion of their debt, and Regency has agreed with Sinom to limit some of their rights as lender.

Post the expiry of the option and assuming the option is not exercised Regency is either entitled to have Sinom repurchase the debt on the same initial terms as the original purchase or to benefit from all normal lender rights.

WoWo Gap Nickel-Cobalt Project:

ASX listed RMI has a 100% interest in the WoWo Gap nickel-cobalt project, located 200km from the Papua New Guinea Capital of Port Moresby and some 150km southeast of the Company's Mambare asset. The Company holds the project through one tenement in PNG, EL 1165, currently under reapplication for a further 2-year period.

According to RMI's announcements made on the ASX and reflected on their website, the most recent 2010-11 drilling programme identified a JORC 2004 resource later including an Indicated and Inferred Resource Estimate of 125m tonnes at 1.06% nickel and 0.07% cobalt. Exploration at the project dates back to the 1950s and has consisted of multiple drilling programmes, including diamond drilling, wacker holes and ground penetrating radar activities.

An independent valuation ("Valuation") of the WoWo Gap project was conducted in 2009 and valued the project at AUD 168m.

Further information on this Resources Estimation and the Valuation are available respectively at:

http://resmin.com.au/wowo-gap-nickel-project/resource-estimation/ 

http://resmin.com.au/wowo-gap-nickel-project/valuation/

Important Note: The above Resource Estimate and Valuation have not been independently verified on behalf of Regency. The Resource Statement, being an ASX disclosure, is not in accordance with JORC 2012. Therefore, it is not to be regarded as resources stated in accordance with an AIM Standard and should be regarded as for information only and not relied upon for any investment decision regarding Regency's Ordinary Shares.

Project activity of late at WoWo has focused on maintaining commitments for the EL 1165 licence, including site-based activities such as maintenance of the existing infrastructure and equipment, so as to facilitate a ready state for future exploration, with development likely to be focused on a potential direct shipping ore operation.

Neither Sinom nor Base Asia has made any agreement, commitment or undertaking in any form with Regency regarding Regency's proposed future cooperation with RMI.

Financial information on RMI:

The latest half-yearly report for the six months ended 31 December 2019 is available at the following address:

http://resmin.com.au/wp-content/uploads/sites/14/docs/financial_reports/half-yearly/2019-December.pdf

Fundraising:

Regency has, based on its existing share authorities, raised £470,000 by way of a placing organised by the Company of 58,750,000 new ordinary shares at a price of £0.008 per share (the "Placing"). The Company has granted 29,375,000 3-year warrants to new investors at an exercise price of £0.016 per share.

Director Dealings:

The Company Directors have also participated in the placing as follows: 1,562,500 new ordinary shares and 781,250 warrants have been issued to James Parsons and 937,500 new ordinary shares and 468,750 warrants have been issued to Scott Kaintz. 1,562,500 new ordinary shares and 781,250 warrants have been issued to Discovery Energy Pension Scheme of Discovery Energy Limited, a company controlled by Ewen Ainsworth, a Director of the Company.

The placing shares and warrants issued to Directors have been included in the table below, which sets out the total shareholding and interests of three of the Company's Directors in the enlarged share capital of the Company.

* Discovery Energy Limited, a company controlled by Mr. Ainsworth, is a beneficial holder of 141,901 shares.

Discovery Energy Pension Scheme of Discovery Energy Limited is a beneficial holder of 1,562,500 and 781,250 warrants.

**Mr. Kaintz is the beneficiary of 132,144 shares held on his behalf by the Regency Mines Share Incentive Plan Trustees.

Related Party Transaction:

As the aggregate number of shares and warrants to be issued to the Directors of Regency in the Placing, 6,093,750, is greater than 5% (6.43%) of the issued share capital (94,726,190 allowing for the issue in relation to Mambare also announced on 7 April), under AIM Rule 13 this participation is a Related Party Transaction under the AIM Rules.

Nigel Burton, being the Director of the Company independent of the Transaction and the Placing, having consulted with the Company's Nominated Advisor, Beaumont Cornish Limited, and having taken into account the necessity of the Placing to complete the Transaction and the desire by investors to see director participation in the Placing, considers the terms of the Directors' participation in the Placing to be fair and reasonable insofar as the Company's Shareholders are concerned.

Admission to Trading on AIM and Total Voting Rights:

Application is being made for 72,038,982 new ordinary shares, which when issued will rank pari passu with the existing ordinary shares in issue, to be admitted to trading on AIM, which is expected to be on or around 16 April 2020 ("Admission").

Following the issue of the new ordinary shares and the issue of shares also announced on 7 April in relation to the Mambare JV, the issued share capital of the Company will consist of 166,765,144 ordinary shares of £0.0001 each with voting rights. No ordinary shares are held in Treasury.

As from Admission, he above figure of 166,765,144 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure and Transparency Rules.

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.