TIDMRGM
RNS Number : 8587E
Regency Mines PLC
09 July 2019
Regency Mines PLC
("Regency" or the "Company")
Update on Metallurgical Coal Interests
9 July 2019
Regency Mines Plc (LON: RGM) the natural resource exploration
and development company with interests in energy storage, coal,
natural gas and battery metals announces an update on its interest
in Mining Equity Trust ("MET").
Highlights:
o Investment of $750,000 into MET by Carraigbarre Capital
Limited ("CCL"), an investment company, on behalf of clients of
White November completed
o CCL to become a 45.02% shareholder in MET with a board
seat
o Legacy Hill Resources to remain operator of Omega
o Funds received and deployed to partially recapitalise MET
o Forbearance agreement signed - MET loan note obligations to
Omega sellers of $8.17m rescheduled over period to October 2020
o Forbearance agreement currently in default following delays in
CCL funding
o Additional funding required to ensure long-term stability of
the business
o Regency retains a 25.84% stake in the expanded share capital
of MET
o Longer term plans in place to install a wash plant and upgrade
saleable product subject to additional capital being made
available
Scott Kaintz, CEO, comments: "Following extended negotiations
and administrative delays the existing shareholders of MET have
agreed to invite Carraigbarre Capital into the US coal business in
Virginia. Carraigbarre has conducted a due diligence process of its
own and we are pleased that they have come to a positive conclusion
regarding the potential of the business.
Both existing partners including Regency have agreed to the
reduction in their respective stakes to facilitate this third
partner with a view to beginning to realise the promise that
attracted them to this investment originally.
With fresh capital now flowing into MET, the business must now
get down to the hard work of making these assets begin to pay off
for its stakeholders. While these funds and a new partner
constitute a critical forward step, much work and further capital
are required to put the Omega business on a firm pathway to
success."
MET Corporate Update
In June 2018 Regency invested $2m for a 47% interest in MET, a
joint venture established with Legacy Hill Resources in February
2018. In August 2018 MET acquired Omega Holdings, a coal producer
in S W Virginia. Failure to raise the expected debt funding at
closing has adversely affected Omega's financing and operations to
date and led to suboptimal scale and associated levels of
production over the subsequent period.
An agreement has now been executed by which CCL has invested
$750,000 of new capital for a 45.02% stake in MET to be utilised in
recapitalising the business. CCL will receive a board seat as part
of its investment and will become the largest stakeholder in the
business. Regency will see its share of MET reduced to 25.84% and
will retain all of its previous minority rights and protections as
well as board representation at the MET level. The investment
values the Regency stake at $430k compared to the current carrying
cost of $298k in the most recent interim accounts.
Concurrent with the new investment in MET was the execution of a
forbearance agreement between the sellers of the Omega coal asset
and MET to repay the $8.17m of outstanding loan note obligations
over the period to October 2020. This agreement delineates a
revised payment schedule of all outstanding obligations to the
Omega sellers, with the majority of the residual amounts now
deferred until 2020. However, the forbearance agreement is now in
default following delays in delivery of the CCL funding associated
with this agreement, which was originally targeted for May
2019.
MET Operations Update
In Virginia, the MET unaudited management accounts report the
following figures for total coal sales including third party sales
as well as top level revenue figures during 2019 to date:
2019
MET Actuals (Unaudited) Jan Feb Mar Apr May June Totals
------------------------- --------- ---------- --------- ---------- --------- --------- -----------
Coal Sales (tonnes) 15,179 24,883 20,327 24,858 10,320 5,413 100,980
Revenue (USD) $539,636 $919,116 $665,603 $878,744 $327,129 $177,374 $3,507,602
These totals reflect the operations of a single highwaller miner
active during part of the period alongside third-party coal sales.
Following delays to CCL funding being made available, both
highwallers have been idled and third-party sales have also been
paused, primarily due to working capital deficiencies at Omega.
MET now targets a restart of both highwall miners in the near
term, and is exploring options to begin surface mining in the
region having identified a favourable target lease. This restart
effort and the associated surface mine will require additional
funding, which may be supplemented with refinancing of existing
machinery in the business.
The Company will update the markets on these next steps in due
course to include the results of the ongoing strategic review of
business operations.
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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