Update on Mambare JV; Further Agreements

RNS Number : 4896I

Regency Mines PLC

15 June 2011

 



Regency Mines PLC

('Regency' or the 'Company')

Update on Mambare Joint Venture; Further Agreements

15 June 2011

Regency Mines, the mining exploration and mineral investment company with interests in nickel and other minerals in Western Australia, Queensland, Papua New Guinea and Pakistan, reports on the Joint Venture between Direct Nickel Pty Ltd. ("DNi") and Regency (the "JV").

The Regency and DNi groups have formalised their Joint Venture by entering into certain new agreements, broadly as envisaged in the Company's announcement of 6 November 2009.

Purchase and Sale Agreement

Oro Nickel (Vanuatu) Ltd. ("ONV"), a wholly owned subsidiary of DNi, and the Company have signed a Purchase and Sale Agreement under which the Company sells its wholly owned Papua New Guinea subsidiary Canopus No 83 Ltd., currently undergoing a change of name to Oro Nickel Ltd. ("ON"), and assigns an intercompany loan from RGM to ON amounting to approximately £1.28 million, to ONV. The consideration is the allotment to Regency of such number of fully paid ordinary shares as will on completion represent 50 per cent. of ONV's outstanding share capital .

The assets of ONV are a non-exclusive 20 year licence from DNi for lateritic treatment technology capped at 40,000 tonnes per annum ("tpa") of nickel in concentrate with options to increase to 90,000 tpa of nickel in concentrate, together with the right to a further licence for any agreed additional project.  The maximum prescribed tonnage limit of 90,000 tpa is inclusive of any such additional project licence.  The options are exerciseable subject to an approved definitive feasibility study and on successful commissioning of plant by OMV.

The principal assets of ON are the licences comprising the Botue-Mambare Nickel Laterite Project ("BMNLP") in Oro Province, Papua New Guinea, including the EL 1390 licence.

Following the transaction, ONV will be a company owned 50 per cent. by DNi and 50 per cent. by Regency, the principal assets of which will be the technology licence for lateritic treatment technology and (through ON) the BMNLP.

Under the Purchase and Sale Agreement, Regency will be entitled to a Gross Smelter Return royalty of 1 per cent. on sales revenue from the BMNLP.

Shareholder and Funding Agreement

DNi and Regency have signed a Shareholder and Funding Agreement which will govern Joint Venture activities through ONV and otherwise and replace the provisions of previous letter agreements and other arrangements.

The objectives of the Joint Venture include to (a) undertake the exploration, delineation and definition of resources to JORC standard on the BMNLP, (b) undertake metallurgical test work on 100-200 tonnes of representative samples using the DNi process following the definition of resources on the BMNLP, (c) undertake exploration on potential geothermal resources, (d) commission a Definitive Feasibility Study and (e) other activities as agreed.

A Management Committee will be formed with delegated authority from ONV and ON to manage the Joint Venture activities. Each of DNi and Regency will appoint two members to the Management Committee and to the ONV board.

The Project Manager will be appointed by the Management Committee, and will be a person nominated by DNi and approved by Regency.

Regency welcomes this key development in advancing co-operation with its partner DNi. These agreements evidence the confidence and commitment of the partners in both the project and the technology.

Mambare exploration programme

Shortly after arriving on site, the operator of the ground penetrating radar work scheduled to begin last week had to be medically evacuated to Australia with appendicitis. The Joint Venture's emergency procedures worked well, and a short delay will result as a new operator is mobilised.

All work permits for overseas drilling staff have been issued, but visa processing in the Philippines is expected to result in a delay to full operation of the drill programme of between 2 and 4 weeks. In the meantime exploration continues, and the minor delay is being used to intensify mapping and training activities. 

Regency Mines PLC                 Andrew Bell, Chairman                                  0207 402 4580

                                                Sandra Spencer, Public and

                                                Investor Relations                                           0207 402 4580

Nominated Adviser

Religare Capital Markets          Peter Trevelyan-Clark/Ben Jeynes                   020 7444 0800

Broker

Simple Investments Ltd             Nick Emerson                                                 01483 413500

Updates on the Company's activities are regularly posted on its website www.regency-mines.com.

Note: DNi is a private company incorporated in Australia. Itis currently demonstrating a potentially revolutionary process with attractive economics for treating laterite nickel ores (the "Direct Nickel Process" or the "Process").

The Direct Nickel Process is a hydrometallurgical process for treating nickel laterites with unprecedented efficiency and environmental benefits. It is designed to operate with tank leaching at atmospheric pressure, and is the first to treat both limonite and saprolite ores with a single flowsheet. The Process recycles its novel reagents, offers high cobalt and nickel recoveries with short residence time, produces mixed hydroxide precipitates ("MHP") or sulphide concentrate, has substantially lower capital and operating costs than competing processes and is fully scalable.

 

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