TIDMRGM
RNS Number : 3845S
Regency Mines PLC
11 March 2019
Regency Mines PLC
("Regency" or the "Company")
Corporate Update
11 March 2019
Regency Mines Plc (LON: RGM) the natural resource exploration
and development company with interests in hydrocarbons, energy
storage and battery metals announces a corporate update.
Overview
Following the Company's annual general meeting ("AGM") concluded
on 25 February 2019, the Directors were given the authority to
issue 500,000,000 new ordinary shares, but were not provided with
the authority from shareholders to disapply pre-emption rights over
any issuance that might occur.
The current business model of Regency along with that of most
other junior exploration companies in the small-cap space relies on
the ability to access capital by the issuance of new shares to
investors to fund ongoing working capital and project development
requirements.
The defeat of resolution 5 in the recent AGM and lack of
associated pre-emption rights has largely removed this access to
capital and as such the Board has been in discussions with various
stakeholders concerning the ongoing requirements of the business,
which include both operational and financial obligations. These
discussions currently remain ongoing.
Mining Equity Trust LLC ("MET") - US Coal Operations
In Virginia, MET, the Company's 47% owned associate continues to
operate the Omega coal asset. Figures for total coal sales (tons)
including third party sales as well as top level revenue figures
since the MET joint venture commenced operations in August 2018 are
presented here:
2018 2019
MET
Actuals Aug Sept Oct Nov Dec Jan Feb Totals
---------- -------------- -------------- -------------- ----------- ----------- ----------- ----------- ----------------
Coal
Sales 74,673 44,020 43,530 20,006 16,973 15,179 24,883 239,264
Revenues $3,075,530 $1,959,036 $2,015,816 $891,624 $640,683 $539,636 $919,116 $ 10,041,441
The total coal sold during this period represents approximately
49% of the totals originally planned and the revenues during this
period represent roughly 43% of original projections made by the
joint venture operators for this period. These variances have come
to exist due to a variety of financial and operational factors that
developed during and after the joint venture partners took control
of the Omega assets.
In particular, a failure to agree and borrow the level of
originally expected debt funding for the MET joint venture purchase
of Omega caused a slow cascade of operational pressure and
financial distress to appear in the business. This ultimately
resulted in one of the two highwall miners being temporarily idled,
with the expected associated reduction in the levels of coal
production.
These operational deficiencies have now largely been rectified
as can be seen in the increasing levels of coal production and
associated revenue in 2019 to date. However, Regency has been made
aware by its JV partners that an immediate requirement for
additional working capital of approximately $400,000-500,000
currently exists, and that additional sums may be required over the
next six months in order to complete the full purchase of Omega as
well as to replenish depleted working capital. Immediate funding is
required to restart the second highwall miner and to reduce key
creditor obligations that have built up during the periods of
reduced production towards the end of 2018.
Regency's general inability to access the capital markets since
the 25(th) of January 2019 has further exacerbated this situation,
with Regency's capital contributions to the project having fallen
behind that of its JV partners. The Company currently estimates
that a deficit funding situation with its JV partners of
approximately $565,000 thus currently exists. Regency's ability to
support its obligated share of required investments into MET
remains uncertain over the short term.
The joint venture operators of the asset now believe that as a
result of operational and managerial changes on the ground in
Virginia a corner has been turned and that production levels are
trending back to the levels originally anticipated post acquisition
at Omega. A successful resumption of full-scale operations would
allow MET to focus on upgrading the Omega asset to potentially
include the addition of a wash plant as well as the consideration
of supplementary assets designed to increase both total production
and profit margins through increasing sales of metallurgical grade
coal as well as to achieve greater efficiencies of scale across the
business.
The Company has further been seeking external advice from a
reputable coal industry expert with an established track record of
US coal operations and this individual has expressed interest that
he may be available to join the Company in some capacity pending a
satisfactory go-forward plan is put in place at both the Regency
and MET operational levels.
Financial Situation
Following the announcement of 14 January 2019, the Company has
been in ongoing discussions with the group of institutional
investors regarding several payments that may be due under the
terms of the Company's existing loan note. The Company's potential
inability to meet these payments may require additional
restructuring of its debt load and could result in the Company
forfeiting control of its interests in MET and the US coal
operations, as these assets have been pledged as collateral to the
Company's lenders.
Furthermore, the Company has considered the possibility of
running an open offer or related style of placing using its current
authorization and the feedback from the Company's legal and
financial advisors is that this is likely to be possible only at
significant expense in both time and cost and so is unlikely to be
able to meet the Company's short-term requirements. An open offer
may however be viable as part of a larger restructuring of the
Company's balance sheet and capital structure over the coming
weeks.
These discussions remain ongoing and additional announcements
will be made as required.
It should be noted that whilst the Board remains in constructive
discussions with all of its stakeholders, no positive outcome is
assured at this time. The priority of the Directors is to ensure
the future success of the Company and its ability to support the
development of those of its diverse assets and interests it
ultimately determines to be core and sustainable. The Company
further intends to announce both managerial changes and a strategic
review of its entire portfolio following a successful resolution of
its current funding requirements.
For further information, please contact:
Scott Kaintz 0207 747 9960 Director Regency Mines Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0207 374 2212 Broker First Equity Limited
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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