28 Jul 2017 18:31
Regency Mines Plc
("Regency" or "the Company)
Update
28 July 2017
Regency Mines plc (AIM:RGM) the natural resource exploration, investment and development company announces an update on some of its current operations and investments.
Onshore UK Oil
As previously announced on 10 July 2017, the Company has disposed of 1.9% of its 5% holding in Horse Hill Development Ltd ("HHDL"), and is proceeding with the steps necessary for completion of this transaction. Following completion Regency will hold 17,361,862 shares in UK Oil and Gas plc (AIM: "UKOG"). Through its holding in HHDL as well as its new holding in UKOG Regency has a diversified exposure to the Weald Basin, a focus of current onshore exploration in the UK.
The thesis of an extensive, thick and continuous oil deposit of major economic significance in the Kimmeridgian limestones and clays underlying the Weald will be tested, and may be significantly advanced, over coming months by some or all of the current flow test, exploration and development programmes being conducted by UKOG at Horse Hill and Broadford Bridge, and by Angus Energy plc at Brockham.
US Coal
Progress on US coal production at the Rosa mine and the second project identified in the 9 March 17 news release as being invested through Vali Carbon Corporation, has been slower than originally anticipated, although contract coal washing at Rosa has continued during this period. Ongoing deficiencies in local management and organisation have become clear over the past months and these have manifested themselves through delays in production and reporting procedures at both projects.
Regency introduced a coal operations and financing specialist to the operator of the projects, UK Carbon Resolutions, earlier in the year with a view to introducing professional commodity specific management and this third party continues to work actively on formulating a go-forward plan, which may include additional coal assets.
The Board feels that the original investment thesis, investing to restart US metallurgical coal production during an extended period of high prices and on the back of the US President's stated ambition to support US coal producers, remains attractive.
Regency will continue to act jointly with other parties to rectify the operational deficiencies and restructure its interests appropriately. The Company will report further once this process has been finalized.
Curzon - Coal Bed Methane
Regency attended a site visit in Oregon earlier this year in which the future board of directors of Curzon gathered to be briefed on the status of the business and on its gas project in the north-western United States. Following those meetings Curzon confirmed its intention to obtain a public listing, to test its five existing gas wells and to drill several additional wells with the objective to enter production and determine commerciality of the project in the shortest possible timeframe.
Regency is to obtain a seat on the board of Curzon post-listing and expects to have a final shareholding of approximately 10% of the post-IPO share capital of the business.
Updated operational plans are expected to be announced at the time of listing and will be announced once available. Additional information on Curzon may be found on the Company's website and in the RNS of 26 May 2016.
Mambare / Direct Nickel
Regency retains a 50% stake in the Mambare nickel projects in Papua New Guinea, as well as a small stake in the restructured Direct Nickel Limited in Australia. After a period in which Regency carried the cost burden at Mambare, the new Direct Nickel Limited has been paying 100% of the costs of the project while they make up for historical imbalances as announced in the RNS of 15 July 2016.
The project itself remains on care and maintenance in New Guinea with the key licenses kept in good standing and all other costs reduced to absolute minimal levels. Both members of the JV believe the project has substantial future potential particularly following any increase in nickel prices and both are resolved to retain the project at the lowest possible cost until conditions improve.
Regency's partner, Direct Nickel Limited, now under new management and fully recapitalized, remains focused on facilitating the proliferation of its unique nickel processing technology through additional joint ventures in Indonesia and other locations. More information on Direct Nickel can be found at their website: www.directnickel.com.
Motzfeldt
Following the announcement of 22 February 2017 that Value Generation Limited had purchased an option to acquire 100% of the Company's Motzfeldt multi-element projects in Greenland, this option has now lapsed without exercise, although discussions with Value Generation concerning the project have continued.
The Company retains a 100% interest in license 2014/01 in Greenland and the project remains on care and maintenance, while Regency explores additional avenues of development.
Andrew Bell, Regency Chairman, comments: "Progress has been made on many fronts in 2017 to date, although not all projects have advanced as quickly as had been hoped. Our Horse Hill exposure has now been widened to a much larger Weald basin exposure, and the near quadrupling of the UKOG price from the price at which we contracted to acquire shares for part of our stake in HHDL has been one sign of the growing optimism that the Weald will become an important oil province. Our low cost pre-IPO investment in Curzon, with the opportunity to increase our holding at listing, is another developing story where we are very satisfied with progress and excited about near-term potential growth and newsflow.
Our initiatives in the US coal space have developed much more slowly than expected due primarily to our partner's operational weaknesses and overly optimistic projections; however we strongly believe that the underlying investment thesis remains attractive. Gaps in our partner's capabilities have allowed Regency to gain access to these opportunities in the first place and from early in the year we took active steps to address this key risk going forward by introducing a partner with strong management and the skills and resources to operate strategically. Reaching a conclusion to this process has taken time but a programme of mine planning, visits, and structuring is actively under way.
Structure and timetable and strategic plan are expected to evolve further over the coming weeks. Announcements will be made as soon as possible and the object is an outcome which enables us to be part of a much larger coal entity which will be appropriately funded and staffed with a multi-year development plan in place.
In the meantime, Regency offers investors an attractive and dynamic set of projects and investments in both oil and gas and mining assets in several international locations. The quality and strategic nature of several of the key assets is exemplified by the recent appreciation of our onshore UK investments.
We look forward to updating the markets as our portfolio continues to evolve."
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 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd.