TIDMRGM
RNS Number : 4878G
Regency Mines PLC
24 July 2019
Regency Mines PLC
("Regency" or the "Company")
Results of Strategic Review
24 July 2019
Regency Mines Plc (LON: RGM) the natural resource exploration
and development company with interests in energy storage, battery
metals and natural gas announces the conclusions of its strategic
review of operations.
On 15 April 2019 the Company announced it would conduct a
strategic review of its operations with the goal of reviewing the
existing portfolio and business systems to streamline the investor
proposition and ultimately drive investor returns. This work has
been accelerated following the announcement of the revised board
and management team on 24 June 2019 and has now been brought to a
conclusion, the results of which are laid out here.
Highlights:
o Revised Company to be refocused around mineral interests in
nickel and vanadium alongside existing business in UK energy
storage development
o Interests in metallurgical coal and natural gas to be held as
non-core for future realisation
o Directors believe the Company now positioned for onward
development
Mineral Interests:
The Company holds two major interests in the mining and battery
metals space, that of its historic nickel-cobalt project in Papua
New Guinea, and the 50% interest in the Dempster Vanadium project
in the Yukon, Canada, acquired in January 2019.
Mambare Nickel-Cobalt Project - Papua New Guinea
The Mambare nickel project is the Company's largest historic
project, and one which saw the majority of the Company's focus and
expenditure prior to 2017. Regency currently holds a 50% interest
in the project through a stake in Oro Nickel Vanuatu ("ONV"), which
owns 100% of the operating entity, Oro Nickel Ltd ("ONL"). The
Company's partner in the project, originally called Direct Nickel
Pty Ltd ("DNI"), has recently been supplanted by Battery Metals Pty
Ltd ("BMA"). BMA has signed an agreement with the Company by which
it has been substituted for DNI as a member of all agreements
previously in place. BMA has further assumed all obligations of DNI
including those that had arisen prior to the effective date and is
owned and operated by former members of DNI.
The Mambare project sits on licence EL1390 and, as previously
announced, contains a JORC Indicated and Inferred Mineral Resource
Estimate of 162.5m tonnes at 0.94% Ni and 0.09% Co. With only 3% of
the 80 square kilometre (km(2) ) main plateau target tested by
drill to date, the joint venture partners have long indicated the
project's potential to be a large nickel laterite deposit with
by-product credits in the form of cobalt.
Currently, the ONL JV awaits renewal of its exploration licences
for Mambare, having recently renewed for the prior two-year period
June 2017 to June 2019, only in Q2 2019. A work programme was put
forward for the 2019-20 programme to the Mineral Resources
Authority ("MRA") in Papua New Guinea.
Current plans sent to the MRA include a revised ground
penetrating radar ("GPR") work programme, estimated to complete in
the second half of 2019. To date, track and road clearing to
support this effort has been largely completed with some bank
cutting remaining. Spot gravelling and stump removal is scheduled
for later this summer utilising heavier earth moving and bulldozer
equipment. The two existing exploration camps have been put in good
order and additional telecoms equipment is being installed.
GPR walking is now, subject to JV funding, scheduled to start by
September, with proposals from Canadian service providers under
consideration. The ONV JV's environmental permit has been released
by the PNG Cultural Department, so the Commonwealth Environment
Protection Agency ("CEPA") environmental assessment team has
recently begun work on site at the project.
Given the recent recovery in nickel prices, the JV partners will
seek to convert the current exploration licence to a mining licence
based on a direct shipping ore ("DSO") operation plan presently in
development. Proposals call for a DSO operation exporting a minimum
of 1.2m wet tonnes of laterite a year as an alternative to a much
more complex local processing operation that might require over
$1bn in capital expenditure.
This DSO operation would consist of a relatively simply flow
sheet with no processing plant, pipeline or tailings. As a result,
this plan would be both environmentally friendly and
uncontroversial in comparison with similar efforts in the region. A
definitive feasibility study is planned covering this DSO operation
following the conclusion of this year's work programme.
Dempster Vanadium Project
An option to acquire a 50% interest in the Dempster vanadium
project was first announced on 6 December 2018, and following a
diligence process the Company exercised this option on 24 January
2019.
The project includes 196 claims covering 40.96 km(2) with up to
a 20km potential strike. The entirety of the property lies
alongside the Dempster Highway, some 65km north of the Eagle River
Lodge, in the Northern Yukon, Canada.
The goal of the project is to further identify and exploit
vanadium in black shales, a potentially ideal source of material
for the battery metal markets. Previous work on the property was
focused primarily on nickel, and it was from existing drill-holes
that vanadium results were initially identified.
The Board believes that demand for vanadium is only likely to
increase given its traditional use as an additive to steel and in
the chemical industries, now being expanded due to its use in super
alloys in the aeronautics and ceramics industries, and in
particular the expected growth of its use in vanadium redox flow
batteries. These batteries provide efficient storage and controlled
release of energy in renewable power generation systems and are
expected to be an increasing component of energy storage
infrastructure solutions across the world.
The Company is currently engaged with the 50% partners in the
project to develop both short and longer term plans for geological
activities in the Yukon, with the focus being on relatively
inexpensive rock-chip sampling designed to provide more information
on the geology of the project and ultimately to develop drill-ready
targets.
Energy Storage:
The Company created its EsTeq (Energy Storage Technologies)
subsidiary in 2017 in order to pursue opportunities in the battery
storage, battery metals, and energy storage technology arenas,
complementing the historic focus on mineral exploration activities.
EsTeq invested in Allied Energy Services Ltd ("AES") in 2018 with a
view towards developing a holding with a deep pipeline of energy
related projects in the United Kingdom, and has invested a total of
GBP150,000 to date in support of that initiative.
AES spent most of 2018 refining its pipeline of energy storage
projects, putting each through a series of gates to determine their
suitability for further development. The nature of such a process
is that many projects will appear promising for initial
development, and in many cases planning permissions might be
applied for as a first step, but ultimately will not meet all the
criteria required for final investment. Projects once formally
approved are to be developed via individual special purpose
vehicles set up for each site or phase, with a reliance on the
significant availability of debt funding in this sector.
The current focus of the business is on a single large
development site near Liverpool, where two potential stages of
development are envisioned under the name of the Southport Energy
Centre ("SEC"). Phase 1 of the SEC is expected to consist of the
leasing and installation of 9MW of gas-powered electricity
generation accompanied by the installation of containerised
batteries with 2MW of storage capacity.
Commonly known as "Peaker Plants", these types of plants are
equipped to generate electricity and sell into the UK electricity
market when electricity prices are high or renewable production
low, and to buy and store electricity when prices are low or when
electricity generation is higher than had been anticipated.
Anticipated revenue streams include electricity trading, Short Term
Operating Reserve ("STOR") and Fast Frequency Response.
Current plans call for the establishment of both gas and
electricity grid connections, the latter being facilitated by the
SEC location's adjacency to a major regional substation. Once these
connections are in place and leased gas generators and batteries
have been delivered, it is estimated that the site can start
generating revenue in approximately six months.
A follow-on Phase II development of the existing site would
involve the removal of the existing waste management site, which
will not be disrupted during Phase 1, and its replacement with a
new waste reception and anaerobic digestion plant. This potential
second phase, which would be subject to technical and commercial
due diligence and the availability of funding, constitutes a
significantly larger and more complex overall development, but
provides an additional pathway for growth within the existing site
footprint. Beyond this initial SEC site, the current AES project
pipeline consists of an additional 3-4 sites that include a mix of
peaker plants, bio-gas, and combined heat and power opportunities
at various stages of review.
The Board believes that the growth of renewables in the UK
energy mix will only increase the demand for flexible storage and
generation solutions of the kind being developed by AES and that
additional development of this existing investment complements
mineral exploration activities in PNG and the Yukon. As such,
building out the AES framework and operations team will remain an
area of focus for the Company.
Investments:
The Company retains two major investment holdings, an 8.55%
stake in Curzon Energy Plc ("Curzon"), listed on the Standard List
of the London Stock Exchange and a 25.89% stake in Mining Equity
Trust ("MET"), owner of a metallurgical coal asset in Virginia in
the United States.
Curzon Energy has announced that it is currently focused on the
investment and development of a second natural gas project in
Texas, designed to supplement its historic interests in the Coos
Bay coal bed methane project in Oregon, USA. Curzon, and its
Houston based partners, Pared Energy LLC, are planning to drill two
wells in the Claiborne formation in southeast Texas, on the thesis
of applying current horizontal drilling and modern completion
methods to known gas bearing horizons where outdated technologies
have long remained in use primarily by small local operators.
As announced on 9 July 2019, Regency retains a minority
non-operating interest in MET, which owns 100% of the Omega
Holdings coal assets in southwestern Virginia. Given the obstacles
in putting together adequate financing to fund the purchase of the
business in 2018, and the subsequent impact on operations,
significant doubt remains over the availability of the additional
capital required to develop these assets into a successful US based
coal producer. The Company retains a 25.84% stake in MET, however
beyond residual board representation, has little influence on
day-to-day operations of the business.
Following the results of the strategic review the Board has
decided that the Curzon and MET holdings will continue to be held
as non-core assets, with the ultimate goal of achieving an exit and
maximising value to investors as appropriate, but will no longer be
an area of significant focus or resource expenditure going forward.
As an equity holder in both investments, the Company has nominal
residual obligations going forward.
The Board believes that metallurgical coal and natural gas,
while potentially attractive in their own rights, do not constitute
the best deployment of the Company's available resources.
Scott Kaintz, CEO, comments: "Having spent several months
putting together a strengthened board and management team and
analysing the existing portfolio alongside considering external
options, the Board has come to the conclusion that a core business
exists within Regency that can be developed.
This core will consist of a combination of our existing mining
interests coupled with the investment in energy storage space,
offering investors potential exposure to the battery story and
energy revolution from the raw materials in the ground to their
ultimate deployment in the modern UK electricity grid.
We believe the revised business is a compelling combination and
proposition for UK investors. Funding will be required to develop
our projects and we look forward to announcing further details of
these plans in due course. With our corporate debt now refinanced
out over five years, and our projects and focus now clearly
delineated and streamlined, all of the pieces have been put in
place to take the business onward."
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
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END
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