Regency Mines turns profit after nickel prices recover and associate Red Rock boosts income

For the six-months ended 31 December 2009, Regency Mines (AIM: RGM) reported a pretax profit of £388,164 compared to a £1.4m loss in the comparative period in 2008, and said it is loolking ahead with confidence.

The company owns almost 30% of Red Rock Resources (AIM: RRR), and this investment contributed £634,001 to Regency in the half-year period. The strong financial performance was also buoyed by a surplus on the revaluation of available for-sale financial assets and exploration properties.

The year-on-year rise in the value of exploration properties was boosted by a write-back of provisionally written-off exploration expenditure.

Regency said that last year nickel prices were hitting their lows and pessimism about the world economy was at an extreme, consequently it seemed appropriate to assume no value in exploration carried out. However following the recovery in nickel prices and in stainless steel demand, at the time of audit, the company believed no provision was deemed necessary.

The assessment of Regency’s Mambare project in Papua New Guinea is continuing, and the company said that it is working closely with its partners at Direct Nickel Pty on structuring the project’s next steps. ‘We await the imminent release of new geophysical data by the Papua New Guinea government, following which we will embark on the next stage of exploration’, Regency said.

Elsewhere, an initial drill programme has begun at the Western Australian tenements, in the Lake Johnstone greenstone belt, and the first phase of 2,600m drilling has been completed. Regency said that the programme targets potential gold and nickel mineralisation, and initial encouraging indications are that the geological boundary has been found, and the right type of rocks are present.

Also the company has acquired more promising tenements in Western Australia and it is reviewing the extensive portfolio, with a view to optimising the potential value through joint-ventures, disposals or exploration.

Regency said it continuously reviews opportunities, but as it believes in the long term investment fundamentals for nickel are now improving, it expects to retain a focus on the company’s core commodity.

For the remainder of the financial year, Regency said that it looks to the remaining months with considerable confidence and it believes that the prospects for Red Rock are exceptional. Furthermore, it expects to have developments of its own to announce, Regency stated.