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Regency Mines making "great progress" with all its operations

With the move of a high wall miner to a new site and the fitting of a new cutter head, Regency is targeting coal sales of between 2,200-2,300 tonnes per day from Omega

All is going to plan for Regency it seems

Coal production at Regency Mines PLC’s (LON:RGM) 47%-owned Omega operations in Virginia, US continues to improve following the move of a high wall miner at the end of November.

The new location, Kilgore, is approximately 25 miles closer to the main customer, enabling significant savings in trucking costs and gross margins.

A move from one daily shift at Kilgore to working two shifts of nine hours has cut wage costs down to around US$240,000 per month from US$400,000.

READ: Regency exercises option to acquire 50% of North American vanadium project

As a result, Mining Equity Trust (MET), the name of the joint venture, has been able to reduce Omega’s breakeven production level to about 1,000 tonnes per working day.

Production is expected to be well above that – especially after the fitting of a new cutter head – and Regency is targeting sales of between 2,200-2,300 tonnes per day going forward.

A second high wall mining machine is preparing to move to a new site after it suspended operations as the Mudlick seam became thin.

The coincidence of this event with the scheduled move of the other machine impacted operations during November and December, with sales in November of 20,006 tons of coal and revenues of US$891,624 for the month, after 43,530 tons of sales and revenues of US$2.02mln in October.

“The key move of a high wall miner at the end of 2018 to a new location should provide three years of coal production and now enables increased output and operating efficiencies,” said Regency chairman Andrew Bell.

“Once the second mining machine is moved to its new location we expect to see overall operations reaching a new level of turnover and profitability. Many other initiatives are under way to tune up performance and increase production, and we look to the future with confidence.”

Progress at other operations, too

Elsewhere, activity is increasing at Regency’s Mambare nickel-cobalt joint venture in Papua New Guinea where a “significant” ground penetrating radar (GPR) program is planned for later this year, pursuing the goal of a direct shipping ore (DSO) operation and mining licence.

“At Mambare, the hiatus that followed the failure of our former joint venture partner is now over and a new and committed partner has come forward out of the old structure, just in time for us to meet the challenges of recovering nickel and cobalt demand,” said Bell.

“The outlook for the Mambare joint venture is transformed by this and we and our partners are stepping up activity with some significant initiatives that we hope will lead to the grant of a mining lease and may lead to DSO production.”

As for Regency’s other projects, Bell added: “At ESTEQ, AES and vanadium explorer DVY we are increasing our battery metal footprint and developing what may this year become a significant and cash flow-generative business at AES. At Curzon, we await developments.”

The chairman concluded: “Overall, great progress is being made and we thank shareholders for their support.”

Quick facts: Regency Mines PLC

Price: 0.035 GBX

Market: LSE
Market Cap: £530.91 k

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