RGM.L Regulatory News (RGM)

Regency Mines PLC

("Regency" or the "Company")

Update on Metallurgical Coal Interests

9 July 2019

Regency Mines Plc (LON: RGM) the natural resource exploration and development company with interests in energy storage, coal, natural gas and battery metals announces an update on its interest in Mining Equity Trust ("MET").

Highlights:

o Investment of $750,000 into MET by Carraigbarre Capital Limited ("CCL"), an investment company, on behalf of clients of White November completed

o CCL to become a 45.02% shareholder in MET with a board seat

o Legacy Hill Resources to remain operator of Omega

o Funds received and deployed to partially recapitalise MET

o Forbearance agreement signed - MET loan note obligations to Omega sellers of $8.17m rescheduled over period to October 2020

o Forbearance agreement currently in default following delays in CCL funding

o Additional funding required to ensure long-term stability of the business

o Regency retains a 25.84% stake in the expanded share capital of MET

o Longer term plans in place to install a wash plant and upgrade saleable product subject to additional capital being made available

Scott Kaintz, CEO, comments: "Following extended negotiations and administrative delays the existing shareholders of MET have agreed to invite Carraigbarre Capital into the US coal business in Virginia. Carraigbarre has conducted a due diligence process of its own and we are pleased that they have come to a positive conclusion regarding the potential of the business. 

Both existing partners including Regency have agreed to the reduction in their respective stakes to facilitate this third partner with a view to beginning to realise the promise that attracted them to this investment originally.

With fresh capital now flowing into MET, the business must now get down to the hard work of making these assets begin to pay off for its stakeholders. While these funds and a new partner constitute a critical forward step, much work and further capital are required to put the Omega business on a firm pathway to success."

MET Corporate Update

In June 2018 Regency invested $2m for a 47% interest in MET, a joint venture established with Legacy Hill Resources in February 2018. In August 2018 MET acquired Omega Holdings, a coal producer in S W Virginia. Failure to raise the expected debt funding at closing has adversely affected Omega's financing and operations to date and led to suboptimal scale and associated levels of production over the subsequent period.

An agreement has now been executed by which CCL has invested $750,000 of new capital for a 45.02% stake in MET to be utilised in recapitalising the business. CCL will receive a board seat as part of its investment and will become the largest stakeholder in the business. Regency will see its share of MET reduced to 25.84% and will retain all of its previous minority rights and protections as well as board representation at the MET level. The investment values the Regency stake at $430k compared to the current carrying cost of $298k in the most recent interim accounts.

Concurrent with the new investment in MET was the execution of a forbearance agreement between the sellers of the Omega coal asset and MET to repay the $8.17m of outstanding loan note obligations over the period to October 2020. This agreement delineates a revised payment schedule of all outstanding obligations to the Omega sellers, with the majority of the residual amounts now deferred until 2020. However, the forbearance agreement is now in default following delays in delivery of the CCL funding associated with this agreement, which was originally targeted for May 2019.

MET Operations Update

In Virginia, the MET unaudited management accounts report the following figures for total coal sales including third party sales as well as top level revenue figures during 2019 to date:

These totals reflect the operations of a single highwaller miner active during part of the period alongside third-party coal sales. Following delays to CCL funding being made available, both highwallers have been idled and third-party sales have also been paused, primarily due to working capital deficiencies at Omega.

MET now targets a restart of both highwall miners in the near term, and is exploring options to begin surface mining in the region having identified a favourable target lease. This restart effort and the associated surface mine will require additional funding, which may be supplemented with refinancing of existing machinery in the business.

The Company will update the markets on these next steps in due course to include the results of the ongoing strategic review of business operations.

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

For further information, please contact:

Scott Kaintz 020 7747 9960 Chief Executive Regency Mines Plc

Roland Cornish/ Rosalind Hill Abrahams 020 7628 3396 NOMAD Beaumont Cornish Limited

Jason Robertson 020 7374 2212 Broker First Equity Limited