Regency Mines
www.regency-mines.com
www.regency-mines.com
Regency Mines plc (AIM: RGM; Frankfurt: RM4) is listed on the Alternative Investment Market of the London Stock Exchange Ltd in London and on the Frankfurt Exchange. It is also traded on the PLUS Markets platform. The Company’s principal asset is the joint venture with Direct Nickel Ltd (DNi) in the Mambare nickel-cobalt project in Papua New Guinea. Regency is also a significant shareholder in DNi which owns a laterite nickel treatment technology at pilot plant stage.
Regency adds value to its assets by systematic exploration and development of these assets, and by joint venture, acquisition, and disposal of mineral resource interests.
The company’s principal interests are:
• The Mambare lateritic nickel/cobalt deposit in Papua New Guinea.
• The Munglinup / Ravensthorpe project in Western Australia with a sulphide discovery made by aircore drilling in 2010.
• Licenses at Kambalda, Western Australia of significant gold/nickel potential.
• The Bundarra mining camp in Queensland, a granodiorite pluton with a history of gold and copper production.
• Approximately 20.96% of AIM-listed Red Rock Resources plc, a gold exploration and production company founded by Regency with strategic stakes in steel feeds and in uranium/rare earths.
• 11% of Oracle Coalfields Plc, which operates in the Sindh Province, Pakistan.
Regency Mines commitment to Oro
The Mambare nickel laterite project area has been explored, intermittently, over the last forty years. About nine years ago, Minara Resources (then Anaconda Nickel) reviewed the available data on 158 square kilometres of the project, and concluded that the laterite layer nearest the surface (the limonite layer) contained over 200 million tonnes of ore with 1% nickel, 50% iron ore and 0.1% cobalt. The lower saprolite laterite layer has not been drilled comprehensively, but Regency Mines believes that it could contain another 200 million tonnes of ore grading between 1.25% and 1.5% nickel.
Last year, Andrew Bell, Chairman of Regency Mines, which had a 75% stake in the Mambare prospect, indicated that these two layers could be worth £25bn. Nickel prices have retreated considerably over the last year; however, even if we assume a savage decline of 80%, on Andrew Bell’s estimate, we are still talking about a potentially large project. This may explain why Regency Mines, which currently has a market capitalisation of under £4 million, has just acquired the remaining 25% of Mambare, taking its ownership of the 584 square kilometre project to 100%.
Nickel is a key ingredient of stainless steel, and demand is particularly strong from countries that are going through their industrial revolutions. As nickel laterite projects go, Mambare is at the right sort of address, in eastern Papua New Guinea. This is “local” in terms of shipping untreated ore to China, or India, for processing; for instance in 2007, Philippines-based Toledo Mining started shipping unprocessed laterite ore to China. However, during the second quarter of this year, the market for laterite ore declined and in August, it was reported that as much as 8 million tonnes of laterite ore was stockpiled at Chinese ports. This may be a temporary hiccup to do with “Olympic distortions” of the Chinese economy, or it could be a sign of a general slowing down. The industrial revolutions of India and China are far from over, although it is inevitable that there will be bumps along the way - and it is conceivable that this could be one.
The market for nickel laterite ore in China is divided into two parts: medium/high nickel and high iron feed (generally ore containing 1.5% nickel or higher and with more than 25% iron) which is used by blast furnaces to produce pig iron, and high nickel-low iron feed (ore containing more than1.5% nickel and less than 20% iron) which is used in electric arc furnaces. So it appears that Regency could have a ready market for its limonite ore at 1% nickel, 50% iron ore and 0.1% cobalt.
In April 2007, Regency and two major Chinese companies signed confidentiality agreements concerning the possible supply of untreated limonite from Mambare, as possible feedstock for blast furnaces. This relationship had the allure of early cash flow and low capital investment, and Regency’s shares, and the price of nickel, peaked over the next couple of months.
Apart from having a shallow covering of volcanic ash, the Mambare deposit is analogous to other laterite deposits in eastern Indonesia and Papua New Guinea. Typically, the deposit at Mambare includes a near-surface, earthy limonite layer of several metres thickness, which transitions into a thicker saprolite zone with rocky saprolite sitting on the bedrock below. Nickel laterite ore deposits are all near-surface deposits that have been weathered – the layers nearer the surface being the most weathered and easiest to extract. Nickel laterite ore deposits are important because, as nickel sulphide deposits are depleted, nickel laterites will become the predominant source of new nickel metal.
An UltraGPR (ground-penetrating radar) survey was completed at Mambare in the first half of this year. Eleven profiles, ranging from 2.2 km to over 10 km, were acquired to create 51.2 km of data. The survey showed that there is a lot of variation in the depth of the laterite layers. The thinnest layers were on the steepest slopes, where erosion has taken place. However, in general, the volcanic ash has acted as a protective cap, minimising erosion on all but the steepest gradients. The laterite sequence was found to vary by more than 10 metres in thickness, over a few metres, making conventional profiling of the laterite layers, using widely spaced drill holes, impossible. However, Regency estimates that there is over 211 million cubic metres of limonite and ash, plus 151 million cubic metres of saprolite to be found over an area of about 22 square kilometres, which is about 20% of the Mambare plateau.
In August, a rotary drilling programme began at Mambare with the intention of penetrating all the laterite layers through into the bedrock, to develop a resource for part of the license. The competed programme will comprise of between 10,000 metres and 20,000 metres of drilling, and it is expected that there will be seven drills at work by October.
Although, Papua New Guinea is richly endowed with natural resources, exploiting them has been hindered by the country’s rugged terrain, and the consequent high cost of developing infrastructure. Papua New Guinea has a reputation for serious law and order problems, and it has a complicated system of land title. Minerals are important to the country, with 72% of export earnings coming from oil, copper, and gold. In March 2006, the United Nations Committee for Development Policy called for Papua New Guinea's designation of “developing country” to be downgraded to “least-developed country” because of protracted economic and social stagnation.
The Mambare plateau is 2,600 feet above sea level and is 70 miles from the port at Oro. However, Papua New Guinea is liable to batterings from “cyclones”, as hurricanes are known in this neck of the woods. In November 2007, Cyclone Guba visited the Oro Province; once the storm had passed, twenty-eight bridges around the province were left either destroyed or unsafe, and many roads were rendered unusable by landslides or burst culverts.
Clearly, developing and running a project in Papua New Guinea will be no ‘walk in the park’; the economics will have to be very robust, so the tendency for the climate to destroy roads and bridges - disrupting both distribution of product and cash flow - may rule out the possibility of building a processing plant on site. However, the two major Chinese metals companies that have signed confidentiality agreements have declared that the limonite ore from Mambare would be suitable for their purposes. The only capital requirements to service these customers will be earth moving equipment, trucks for haulage to Oro Bay, and storage and belt loading facilities at the port. Exporting the limonite ore from Mambare would expose the saprolite laterite, but it is not yet known where and how this saprolite could be marketed. So it makes sense that the company is now engaged in a drilling programme which includes the saprolite and will develop a resource figure for it. Clearly it would be advantageous to be able to ‘talk saprolite ore’ with potential customers.
Regency’s other assets include: the Bundarra prospect, which is 200 square kilometres of Queensland that is considered prospective for a large IOCG (Iron Ore Copper Gold) system; 103.25 million shares or 60% of Red Rock Resources; and 1.5 million shares in Greatland Gold.
Earlier this year, the company issued 17.5 million new shares at 2.25p per share. Andrew Bell, Chairman of Regency Mines, subscribed for 100,000 shares, taking his stake in the company to nearly 44 million shares - about 20% of the company. That’s confidence for you!
Last year, Andrew Bell, Chairman of Regency Mines, which had a 75% stake in the Mambare prospect, indicated that these two layers could be worth £25bn. Nickel prices have retreated considerably over the last year; however, even if we assume a savage decline of 80%, on Andrew Bell’s estimate, we are still talking about a potentially large project. This may explain why Regency Mines, which currently has a market capitalisation of under £4 million, has just acquired the remaining 25% of Mambare, taking its ownership of the 584 square kilometre project to 100%.
Nickel is a key ingredient of stainless steel, and demand is particularly strong from countries that are going through their industrial revolutions. As nickel laterite projects go, Mambare is at the right sort of address, in eastern Papua New Guinea. This is “local” in terms of shipping untreated ore to China, or India, for processing; for instance in 2007, Philippines-based Toledo Mining started shipping unprocessed laterite ore to China. However, during the second quarter of this year, the market for laterite ore declined and in August, it was reported that as much as 8 million tonnes of laterite ore was stockpiled at Chinese ports. This may be a temporary hiccup to do with “Olympic distortions” of the Chinese economy, or it could be a sign of a general slowing down. The industrial revolutions of India and China are far from over, although it is inevitable that there will be bumps along the way - and it is conceivable that this could be one.
The market for nickel laterite ore in China is divided into two parts: medium/high nickel and high iron feed (generally ore containing 1.5% nickel or higher and with more than 25% iron) which is used by blast furnaces to produce pig iron, and high nickel-low iron feed (ore containing more than1.5% nickel and less than 20% iron) which is used in electric arc furnaces. So it appears that Regency could have a ready market for its limonite ore at 1% nickel, 50% iron ore and 0.1% cobalt.
In April 2007, Regency and two major Chinese companies signed confidentiality agreements concerning the possible supply of untreated limonite from Mambare, as possible feedstock for blast furnaces. This relationship had the allure of early cash flow and low capital investment, and Regency’s shares, and the price of nickel, peaked over the next couple of months.
Apart from having a shallow covering of volcanic ash, the Mambare deposit is analogous to other laterite deposits in eastern Indonesia and Papua New Guinea. Typically, the deposit at Mambare includes a near-surface, earthy limonite layer of several metres thickness, which transitions into a thicker saprolite zone with rocky saprolite sitting on the bedrock below. Nickel laterite ore deposits are all near-surface deposits that have been weathered – the layers nearer the surface being the most weathered and easiest to extract. Nickel laterite ore deposits are important because, as nickel sulphide deposits are depleted, nickel laterites will become the predominant source of new nickel metal.
An UltraGPR (ground-penetrating radar) survey was completed at Mambare in the first half of this year. Eleven profiles, ranging from 2.2 km to over 10 km, were acquired to create 51.2 km of data. The survey showed that there is a lot of variation in the depth of the laterite layers. The thinnest layers were on the steepest slopes, where erosion has taken place. However, in general, the volcanic ash has acted as a protective cap, minimising erosion on all but the steepest gradients. The laterite sequence was found to vary by more than 10 metres in thickness, over a few metres, making conventional profiling of the laterite layers, using widely spaced drill holes, impossible. However, Regency estimates that there is over 211 million cubic metres of limonite and ash, plus 151 million cubic metres of saprolite to be found over an area of about 22 square kilometres, which is about 20% of the Mambare plateau.
In August, a rotary drilling programme began at Mambare with the intention of penetrating all the laterite layers through into the bedrock, to develop a resource for part of the license. The competed programme will comprise of between 10,000 metres and 20,000 metres of drilling, and it is expected that there will be seven drills at work by October.
Although, Papua New Guinea is richly endowed with natural resources, exploiting them has been hindered by the country’s rugged terrain, and the consequent high cost of developing infrastructure. Papua New Guinea has a reputation for serious law and order problems, and it has a complicated system of land title. Minerals are important to the country, with 72% of export earnings coming from oil, copper, and gold. In March 2006, the United Nations Committee for Development Policy called for Papua New Guinea's designation of “developing country” to be downgraded to “least-developed country” because of protracted economic and social stagnation.
The Mambare plateau is 2,600 feet above sea level and is 70 miles from the port at Oro. However, Papua New Guinea is liable to batterings from “cyclones”, as hurricanes are known in this neck of the woods. In November 2007, Cyclone Guba visited the Oro Province; once the storm had passed, twenty-eight bridges around the province were left either destroyed or unsafe, and many roads were rendered unusable by landslides or burst culverts.
Clearly, developing and running a project in Papua New Guinea will be no ‘walk in the park’; the economics will have to be very robust, so the tendency for the climate to destroy roads and bridges - disrupting both distribution of product and cash flow - may rule out the possibility of building a processing plant on site. However, the two major Chinese metals companies that have signed confidentiality agreements have declared that the limonite ore from Mambare would be suitable for their purposes. The only capital requirements to service these customers will be earth moving equipment, trucks for haulage to Oro Bay, and storage and belt loading facilities at the port. Exporting the limonite ore from Mambare would expose the saprolite laterite, but it is not yet known where and how this saprolite could be marketed. So it makes sense that the company is now engaged in a drilling programme which includes the saprolite and will develop a resource figure for it. Clearly it would be advantageous to be able to ‘talk saprolite ore’ with potential customers.
Regency’s other assets include: the Bundarra prospect, which is 200 square kilometres of Queensland that is considered prospective for a large IOCG (Iron Ore Copper Gold) system; 103.25 million shares or 60% of Red Rock Resources; and 1.5 million shares in Greatland Gold.
Earlier this year, the company issued 17.5 million new shares at 2.25p per share. Andrew Bell, Chairman of Regency Mines, subscribed for 100,000 shares, taking his stake in the company to nearly 44 million shares - about 20% of the company. That’s confidence for you!
