Regency Mines Plc announces, progress at the Rosa metallurgical coal mine (“Rosa”, held through Carbon Minerals Corporation or “CMC”) located in Alabama, United States of America, in the Warrior Coal Basin, and at Vali Carbon Corporation (“VCC”). Regency owns 20% of CMC and 20% of VCC.
Today we publish the new RGM brochure along with a Q&A, interview with Andrew Bell that we published last month.
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On the 7 April 2017 Andrew Bell highlight the reasons behind the deals around the issue of equity to Stephen Moscicki. Talked about the convertible loan and what it means for shareholders and the specifics in the agreement that Andrew has placed to protect shareholders. Cover’s the general dynamics as they plan to come into near term production.
Regency Mines (AIM:RGM) Q&A
Do Carbon minerals corporation have all the necessary permit permissions to be able to instantly drill to depths of up to 1000 feet at the Rosa coal mine? If not what is the plan?
Yes, the ASMC permit is in place, as are ancillary permits. It covers auger, highwall, and stripping. However a revision to the mining plan has been filed to show the change in plan and the greater area expected to be accessed by the highwaller.
Who are the directors and main shareholders of VCC, CMC and other us companies related to all these coal deals? Are these available to be researched via the internet?
The shareholders for VCC are/will be the same as for CMC. RGM currently has 20%, Stephen Moscicki directly or indirectly controls 65%, and the balance is spread among parties brought in by Mr Moscicki before our involvement. It will be some time before any of these companies files annual reports so I doubt much could be gained by checking the Delaware records at this stage. We will report key numbers, expect to equity account, and will provide a segment breakdown in our own reporting.
What involvement does David Winduss have if any?
He is an experienced accountant and is working most of the week in Mr Moscicki’s Yorkshire office as CFO of his company and is acting as CFO for Rosa.
Are people selling warrants below their market value because of they don’t perceive any profit from your projects?
No. As a gesture of confidence.
Who is running the Rosa coal mine. What is their background and experience? What are the perceived Staff levels required for your forward looking plans?
There are two experienced coal personnel running Rosa. From 1st April an experienced bookkeeper will return there, and the accounts will go to a local CPA. Stephen and his US partner (with respectively 15 and several decades of US coal experience) are providing oversight with frequent visits. The contractor will operate the highwaller with his own staff. Staff levels will depend on how many shifts we run but the scale and management requirements of running Rosa on initial production levels with coal sold on a pick-up basis might fairly be compared with the running of a quarry in the UK. Staffing appears quite low, but Stephen and his partner’s experience is undoubted. We expect that this minimal staffing will not diminish the capacity for regular and accurate reporting or the ability to prevent and detect fraud, and in-vehicle as well as fixed cameras are being installed with a direct feed to company offices.
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What Infrastructure will be needed at the 3 sites to get them up to production levels (wash plant, high wallers augers etc)
Let me answer on Rosa as sufficient public disclosure has not been made – yet – on the others to allow that level of detail to be provided. The roads, ponds, pre-strip, wash plant, weighbridge, offices, and drills are in place at Rosa. The attached sketch map may be helpful. Site 2 has a large wash plant that needs refurbishment, and needs ponds and some road grading. As it is planned to begin with strip mining an area that is permitted at Site 2, the work being carried out is the pre-strip; as soon as a sufficient area is cleared what will be needed further is two loaders with weigh scales, initially hired, and production and sales can at once begin. Meanwhile permitting of the highwall area at 2 will be under way.
What are the current operating output with the coal washing facility? What is the future output plans? What profit are you making and hoping to make in the future?
We shall publicly announce as operating figures become available. Future plans are for expansion to 24 hour working and a second drill, but it will be better to wait until we can be specific before announcing these.
Can the current wash plant at the Rosa Mine be upgraded to wash more tons per hour/day, if so what are the potential costs of upgrading and amount of tonnage as a result of the upgrade?
The quickest and easiest expansion may be to put in a pre-wash unit before the wash plant. Also ROM material that we sell will not be washed, and with some production this may make sense. It is premature to cost the expansion, as no engineering studies have been prepared, but it will be possible.
The second production mine which is intending to be in production in around 3 months time, does that time frame mean actually producing and selling coal, or is the 3 months for when operations will start. If there is any overburden to clear beforehand any time frame for removing the overburden and what is the depth and area size of the overburden?
1. The former. 2. Yes. 3. This will be done in football field sized stages with excavation and loading following on behind. We will announce the area initially being cleared.
You have previously mentioned different Phases at Rosa can you explain more about these?
There are three phases in the old plan. At the moment we are in the first phase. This phase is divided up into a number of Increments. Each Increment is itself divided into increments. Phase 2 is mining over a different area. Phase 3 would be underground mining. Any Reserve figures in the existing 43-101 and any we are likely to quote in the near future (assuming we update the 43-101) will relate to phase 1. It may be useful to hear us say that we believe we will have access to coal sufficient to continue operations for a number of years; ample to carry us through the current cycle: and we do.
Shots of the Rosa met coal mine and wash plant
What is the expected life of Rosa with current Phases and what is the future mine life with these different phases.
I refer to the previous answer: until we have a 43-101 or equivalent carried out we are not permitted to say more.
as a private investor I have tried to see and work out what the potential is with the mines to try and ascertain my strategy of should I hold long term as an investor or see RGM as a trade, what output do you perceive and over what timescale from all of your three assets?
Sales at Rosa scale are easily predictable and demand is there; we would hope to produce at the rate of several hundred thousand tons of coal a year fairly soon. Project 2 could be at a monthly rate in 6 figures once longwall mining begins, but would be at levels similar to Rosa while stripping operations continue. There, the only obvious constraint to expansion may be demand and logistics; similarly at the potentially still larger Project 3, since the scale of these could reach levels where they would be supplying more distant customers.
What are the seam thicknesses, number of seams, and coal density (assuming 900kg/m3) at the projects.
Your coal density assumption is considerably too low: try over 1200. The main Rosa seam is 1.5 feet or so generally, but thicker in places. Project 2 has two of the three most important seams (of a number) at about 4 feet each. Project 3 has two potentially still thicker seams.
We would like to thank Andrew Bell, Chairman and CEO of Regency Mines for agreeing to answer the shareholder’s questions. A special shout out to everyone for taking the time to send in their questions!
