22 Feb 2017 13:20
REGENCY MINES PLC
("Regency" or the "Company")
Grant of Option over Motzfeldt
Issue of Equity and TVR
22 February 2017
Regency Mines plc announces that it has granted a four month option to Value Generation Limited,a private company (the "Option" and the "Optionor"/"VGL") to acquire the Company's 100% interest in license 2014/01 covering the Motzfeldt intrusive complex in southern Greenland ("Motzfeldt").As a condition of the Option, VGL has also subscribed £75,000 for new shares in Regency ("Subscription").
Subscription
As consideration for the Option, VGL has agreed to purchase 11,538,461 new ordinary shares of 0.01 pence each ("Shares") in the Company at a price of 0.65p per share for a gross consideration of £75,000, with 1 for 1 warrants exercisable at a price of 1.3p for eighteen months ("August 2018 Warrants" and "Subscription").
The purpose of the Subscription is to provide working capital for the development of the Company's coal interests and other working capital purposes.
The Subscription is conditional on admission of the Shares to trading on AIM ("Admission"). Application has been made to the London Stock Exchange for Admission of the Shares, which will rank pari passu with the Company's existing issued Ordinary Shares. Dealings are expected to commence at 8.00 a.m. on or around 28 February 2017.
Option
The Optionor will utilise the Option period to carry out due diligence on Motzfeldt. The Optionor has the right at any time within the four month Option period to exercise the Option and acquire 100% of Motzfeldt for an exercise consideration of £350,000 payable in cash. In the event the Option is exercised Regency will also be granted a 1.25% Gross Revenue Royalty over any future production from the Motzfeldt license. In the event the Option is exercised and Motzfeldt is sold on within the next eighteen months, then if the sale consideration exceeds £5m Regency will be paid an additional consideration of £500,000 and if the sale consideration exceeds £10,000,000 Regency will be paid an additional consideration of £1,000,000.
Information on VGL
VGL reported unaudited shareholders' funds its unaudited abbreviated balance sheet as at 31 March 2016 of £29,925. Its director and controlling shareholder is Paul Johnson. It was announced on 25 November 2016 that Paul Johnson and Michelle Johnson held 10.06 per cent. of the Company's issued share capital and on 11 January 2017 that their holding had reduced to 8.9 per cent. Accordingly, Paul Johnson and VGL are Related Parties under the Aim Rules and the therefore the Subscription and the Option ("Transaction") fall within the requirements of Aim Rule 13.
The Directors of the Company, none of whom are involved in the Transaction, consider, having consulted the Company's Nominated Adviser, that the terms of the Transaction are fair and reasonable insofar as the Company's shareholders are concerned.
Information on Motzfeldt
The Motzfeldt license contains a JORC-compliant Inferred Mineral Resource estimate of 340mt at 120ppm Tantalum Pentoxide, 1850ppm Niobium Pentoxide and 4600ppm Zirconium Dioxide. As at the last audit date of 30th June 2016, it was carried in the Company's accounts at a book value of £35,574.
Andrew Bell, Regency Chairman, states: "We welcome this approach by a party interested in progressing exploration at our Motzfeldt license. This license, promising as it is, was not considered core to the Company's activities, which are principally focussed on the drive to build up our metallurgical coal interests in the U.S. We have therefore been open to suitable opportunities for partnership. This transaction, if completed, will relieve us of funding obligations while leaving us through the retained royalty the ability to benefit from any future production. The Optionor in taking a placing of shares at a premium to the market price has shown its serious intent, and we look forward to working with them.
Progress at the Rosa coal mine continues on track and further announcements will be made in due course."
Total Voting Rights
Following the Placing, the Company's total issued ordinary share capital will consist of 439,923,032 Shares with voting rights. No Shares are held in treasury.
The above figure of 439,923,032 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure and Transparency Rules.
Background Information
Regency Mines is a natural resource development and investment company with interests in oil and mineral exploration, and in the production of metallurgical coal. Regency holds energy interests in Horse Hill Development Limited, that has discovered substantial oil deposits near Gatwick, Curzon Energy plc, with development interests in coal bed methane in Oregon, Carbon Minerals Corporation, which is currently re-opening the Rosa metallurgical coal mine in Alabama, and other coal interests. Regency also controls the Mambare project in Papua New Guinea, where it established through exploration a large nickel-cobalt Resource, and the Motzfeldt tantalum-niobium Resource in southern Greenland.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Andrew Bell 0207 747 9960 Chairman Regency Mines Plc
Scott Kaintz 0207 747 9960 Executive Director Regency Mines Plc
Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd.