Business Update, Strategic Financing and Director Participation
Regency Mines Plc (LON: RGM) is pleased to announce a business update, strategic financing and confirmation of director participation.
· Regency to rebrand its nickel/cobalt and related assets as a battery metals function in recognition of the Company’s position in these mineral resources to be used in EV batteries and related energy technologies;
· Operations at Mambare, the Company’s major nickel/cobalt project, to be accelerated;
· Advanced due diligence and discussions underway to expand the Company’s coal footprint within its hydrocarbon energy function;
· Strategic financing undertaken at 0.55p, the current market bid price, to raise £1,050,000 through the issue of 190,909,090 new ordinary shares of 0.01 pence each (“Shares”)
· Uses of funds to include repayment in full of convertible loan at cost of c£630,000 leaving Regency balance sheet free of debt;
· Directors Andrew Bell and Scott Kaintz to invest an aggregate £100,000 cash in the strategic financing to acquire 18,181,818 Shares;
· Each Share issued in the financing comes with a warrant to subscribe for a further share at 1.0p, with the Company able to accelerate warrant conversion in the event that the volume weighted average price of Shares equals or exceeds 3.5p for ten consecutive business days;
Andrew Bell, Chairman, comments: “Regency Mines faces a significant opportunity in the fast-evolving battery metals sector. We intend to focus on the nickel/cobalt sector, while still proactively developing our hydrocarbon and coal interests with a view to achieving early cash flow. We believe we can find value creation opportunities for shareholders as EV battery and power storage demand see advances in battery technology and this leads to changes in the pattern of demand for key metals.
The new capital raised in this funding will enable the Company to repay in its entirety the convertible loan from YA II PN Ltd announced on 5 April 2017. This will make Regency debt-free for the first time since 2011. We thank YA for making the facility available as part of a rollover of obligations in 2017, and for their support and co-operation throughout.
Regency’s stronger capital base will we believe enable it to exploit more effectively the expected improvement in nickel and cobalt demand, both from the battery and the stainless steel sector, after a near nine year bear market in nickel. A weak but consistent uptrend in nickel prices has been underway since late 2015, that we expect to continue.
Regency is looking to strengthen its strategic capabilities in early 2018 with a non-executive appointment to the board, and further announcements will be made as soon as possible.”
Regency was founded in 2004 and listed in London in 2005 as a natural resource operating company. The Company has been proactive throughout the period since listing, notwithstanding the highly cyclical nature of the natural resource market, and the extremely challenging conditions of recent years.
Painful though the process has sometimes been, Regency has maintained its hold on the Mambare lateritic nickel/cobalt asset in Papua New Guinea throughout a period when nickel has been among the least favoured metals, recognising the strategic importance of this asset and the expectation that demand would one day recover. Market adversity yields opportunity and we have found that with existing interests and the new opportunity pathways we have followed the Company is now well-positioned with businesses in coal bed methane and metallurgical coal which have some potential for generating early cash flow, and a strategic position in the new energy area through its large Resources of the key metals used in EV batteries.
The Company’s board is of the view that there is an opportunity for re-setting the market’s valuation of the Company, particularly through achieving recognition of Regency’s position in battery metals. Our business interests encompass mineral exploration, Resource definition, mineral development and production, and prospectively the production and sale of intermediate and final mineral products. This last element is increasingly technology-dependent, and we need to prepare for the changes in product demand that will come with the development of the electric battery market as well as the growing requirement for traceability and ethical sourcing of raw materials. This requires a wider vision and new skills. Our small investment (currently 3.3%) through our new subsidiary EsTeq Ltd in the Tesla car-hire business White Car adds a new dimension to our business where we will see the final destination of our raw materials.
In other words, Regency is becoming one of the small but growing number of listed companies in London with significant interests in battery metals and materials.
In this positioning the Company benefits from its longstanding interest in the 50% owned Mambare Nickel-Cobalt project, where with part of the plateau flank and just 3% of the mineralised plateau tested we have already achieved through our exploration efforts a maiden JORC-compliant Resource, announced on 13 June 2012, of 1.53million tonnes of in-situ Nickel and 146,000 tonnes of in-situ Cobalt. Given the current metal prices of nickel (US$12,600/t) and cobalt (US$75,300), the magnitude and potential of Mambare is readily apparent.
We intend to step up operational activities at Mambare in the near term and further news in respect of our planned work programmes will follow.
We are currently engaged in due diligence on a potential increase to 100% in our interest in the Rosa coal mine. Furthermore we are conducting due diligence in relation to our coal agreement with Legacy Hill, announced on 6 December 2017, under which we are jointly seeking to manage and expand our coal footprint in the United States. We expect to devote significant time and effort to high value metallurgical coal opportunities in the U.S. during 2018 and we will advise the market accordingly as transactions are concluded.
On 14 December 2017 we announced the formation of ESTEQ Limited, a 100% owned subsidiary to act as the vehicle from which we could view battery technologies. This division is currently implementing the agreement already announced for the 3.3% investment in White Car Limited, where further news will follow.
Regency is in a robust financial position with cash at bank and near cash investments in Curzon Energy plc (LON:CZN) and Alba Minerals plc (LON:ALBA). We have a convertible loan in place for circa £630,000 which the Company’s board has resolved to accelerate its exit from this facility.
Following completion of the Placing, a significant part of the proceeds will be utilised to repay in full the convertible loan and the Company will, for the first time since 2011, have no debt on its balance sheet.
In addition, the Company believes the time is right to appoint an additional Non-Executive Director to the Board, and we look forward to announcing progress on this in due course.
Regency Mines has raised £1,050,000 by way of a placing of 190,909,090 new ordinary shares of 0.01 pence each (“Shares”) in the Company at a price of 0.55 per Share with 1 for 1 warrants exercisable at a price of 1 penny per Share for twenty-four months (“January 2020 Warrants”)(together the “Placing”).
17,272,727 Shares were subscribed by Andrew Bell, a director of the Company. 909,091 Share were subscribed by Scott Kaintz, a director of the Company.
The table below sets out the total shareholding and interests of Mr Bell and Mr Kaintz in the share capital of the Company:
Mr A Bell and Mr S Kaintz are each the beneficiaries of 4,877,654 shares held on their behalf by the SIP Trustees.
Further Information and Additional Terms
The January 2020 Warrants are subject to call at seven days’ notice should the volume weighted average price of the Shares equal or exceed 3.5 pence for ten consecutive days.
The Placing is conditional on admission of the Shares to trading on AIM (“Admission”).
Application will be made to the London Stock Exchange for Admission of the Shares, which will rank pari passu with the Company’s existing issued Ordinary Shares. Dealings are expected to commence at 8.00 a.m. on or around 23 January 2018.
Total Voting Rights (TVR)
Following the issue of the Placing Shares, the issued share capital of the Company will consist of 769,704,154 ordinary shares of 0.01p each with voting rights. No Ordinary Shares are held in Treasury.
The above figure of 769,704,154 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.
Note: Market soundings, as defined in the Market Abuse Regulation (“MAR”), were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.
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