Regency Mines PLC (AIM:RGM) JV with Legacy Hill Resources and Loan Agreement

 

Incorporation of Mining Equity Trust, LLC

 Company Signs US$1,600,000 Loan Agreement

Andrew Bell, Regency Chairman, comments: “In announcing that we have fulfilled our funding obligations under the Joint Venture Agreement, we take another small step in the gradual building out of our metallurgical coal mining interests in the U.S. We expect to make further announcements in relation to our coal investments, including in the Rosa Mine, shortly. The Loan Note has enabled us to carry out this funding without liquidating our marketable holdings, including our strategic holding in coal bed methane producer Curzon Energy plc.”

Further to the announcements of 6 December 2017 and 27 February 2018, Regency Mines Plc, the natural resource exploration and development company with interests in hydrocarbons and base metals, announces that that it has now, in accordance with the co-operation agreement announced on 6 December 2017 and the joint venture agreement (“JVA”) announced on 27 February 2018, has deposited US$2,000,000 in escrow pending completion of the joint venture funding. This is its agreed share of joint venture funding under the JVA, and Regency will hold 47% of Mining Equity Trust (MET), LLC (“MET”) the new Delaware-incorporated limited liability company in and through which Legacy Hill Resources Ltd (“LHR”), a privately owned mining company, (as majority shareholder) and Regency (as minority shareholder) will hold their interests in the previously announced metallurgical coal joint venture. This 47% stake represents Regency’s proportionate share of cash contributions after the 30% management share held by LHR.

The purpose of the Joint Venture (“JV”), as previously announced, is the structuring and financing of acquisitions in the U.S. metallurgical coal sector, and their subsequent management and operation.

The assets of MET at inception are the cash contributions of the JV partners.

The contribution of Regency to the JV has been funded in part by a US$1,600,000 loan provided by Cuart Investments PCC Ltd and YA II PN, Ltd and arranged by Riverfort Global Capital Limited (the “Note”).

Background of Legacy Hill Resources

Legacy Hill Resources is a mining company founded by D. Saradhi Rajan. It has a multi-disciplinary team focussed on technical and operating expertise and uses a low risk, cashflow focussed approach to build assets with strong growth prospects.

Details of the Note

Regency has agreed to borrow gross proceeds of $1,600,000 (net $1,520,000) from institutional investors in order to fund a portion of its obligations under the JV.  The loan will carry a 10% interest rate and be for an initial term of six months, and is subject to an implementation fee of $96,000. A further six-month extension available for a 5% fee. If extended, the loan may be converted by the noteholder at a fixed price equal to 130% of the 10 day VWAP prior to the initial repayment date/date of the available six month extension period (the “Fixed Price”). 

If the loan is extended past six months a payment schedule will be applicable and the payments may be paid in either cash or shares at the discretion of the Company.  If paid in shares, the payment amount will be convertible at the lower of (i) the Fixed Price, or (ii) a price equal to 90 per cent of the lowest daily VWAP over the five trading days immediately preceding the date of the relevant payment date.  The Company has the right to prepay the loan at any time in full for a 3% redemption fee, provided that after the First Repayment Date the Company may only prepay the loan if the stock price is trading below the Fixed Price at the time of prepayment. 

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