Regency Mines PLC (AIM:RGM) Half-year Report PLUS Podcast Interview

Regency Mines Plc (“Regency” or the “Company”), the natural resources exploration and mineral investing company with interests in hydrocarbon and base metal exploration and production, announces its unaudited half-yearly results for the six months ended 31 December 2017.

 

Chairman’s statement

Dear Shareholders,

 

It is with much pleasure that we present these interim results. The six month period to 31 December 2017 was one of significant activity, in which the Company completed the sale of its 5% participation in Horse Hill Developments Ltd, a private oil exploration company, and was able thereby to generate proceeds of £1,719,126, as well as receiving 6,467,500 shares in the AIM-listed Alba Mineral Resources plc.

 

A considerable profit was generated from this sale, only partially offset by an impairment of Regency’s interest in a metallurgical coal joint venture in the U.S. The proceeds of this sale allowed the Company to increase by £400,000 its investment in Curzon Energy plc, which it had helped fund in 2016 and which listed on the Standard List of the London Stock Exchange during the half year under review, as well as to increase its current assets and reduce its current liabilities. Net current liabilities were consequently reduced by £629,047 from the 30 June total, while the liquidity of its available for sale financial assets of £1,249,980 was improved by the fact that the bulk of them now comprised London-listed investments.

 

These developments significantly improved the financial position of the Company.

 

Since the end of the calendar year, further funding of £1,050,000 was raised and the balance sheet has been further strengthened. The trade and other receivables have been reduced to near zero, so that current assets now comprise almost entirely cash, while the trade and other payables have also been reduced to near zero, and short term borrowings have been entirely eliminated, so that current liabilities have been almost entirely discharged. The Company now enjoys a substantial net current asset position.

 

It is worth reminding shareholders, many of whom have come on the register since 2010, how the high level of debt we have carried ever since that time and up until recently came about. We had entered into a joint venture in relation to our Mambare lateritic nickel-cobalt project in Papua New Guinea with a party that was expecting to raise substantial funding and obtain a listing. Neither eventualised, partly due to market conditions, and we were left with the unappetising choice of aborting our nearly completed exploration programme with no measurable outcomes or of taking shares in a private entity and carrying our partner financially in order to complete the programme and obtain a maiden JORC Resource. We chose the latter, and in consequence lived with an uncomfortable if reducing level of debt throughout the 2010 to 2016 downturn.

 

Whether we were right in the long term to make that decision will now be seen. We know that in the short and medium term it was proved wrong, for nickel, having failed to recover like other metals between the global financial crisis of 2008 and the commodity market peak in 2010, continued to perform poorly as other metals came out of the down-cycle in 2016. Last year began to see a recovery in the cobalt price, which continues, and this year has seen the start of a recovery in the nickel price, and a pattern of increasing demand for these materials for electric vehicle and other storage batteries that we expect to continue.

 

An opportunity now exists to reinvigorate the Mambare project, and the extremely large Resource we have proved up from what is only a small part of the deposit gives us a strong platform to work from.

 

Meanwhile we have continued to work on building up our presence in hydrocarbon energy sources. Although we have sold out of Horse Hill Developments Ltd, our increased 8.91% shareholding in Curzon Energy plc gives us exposure to the coal bed methane market in the U.S.

 

Our first steps last year into the metallurgical coal market in the U.S. did not generate early production as hoped, and we identified management and organisational deficiencies in our partner that led us to make a provision of £821,566 against the value of these assets. We have however learnt by our experiences and have strong expectations for the development of that business, primarily through our new $2,000,000 commitment to a joint venture with Legacy Hill Resources Ltd, a privately held company with the technical and operating expertise that is needed to develop a successful metallurgical coal project in the competitive U.S. marketplace. 

 

The objective of the joint venture is to acquire and assemble a critical mass of production and reserves. We have known and worked with our partners at Legacy Hill for some time now, and have developed a high regard for their capabilities and strengths and an awareness of the degree to which they are complementary to our own. We are confident that we will be able to build a strong working relationship. Through this relationship, we will also try to address the potential of the Rosa mine and other coal assets.

 

At the end of 2017, we announced the formation of a Battery and Storage Technologies Division, which complements our hydrocarbon energy and battery metal activities and will address new developments in battery technology and developing uses for the metals in our portfolio. The first investment made was of £400,000 in White Car Ltd, a new Tesla-operating car hire company that aims to be a disruptor of the car hire market, and where my colleague Scott Kaintz now sits on the board.  

 

We thank our shareholders for their strong support during a period of transition, and look forward to an exciting period in which, from a solid financial base, we start to reap the rewards of investments undertaken and decisions made.

 

 

 

Andrew Bell

Chairman and CEO

 23 March 2018

 

Full RNS Link HERE

 





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