First of all, congratulations on your new role announced at Regency Mines. Why Regency?
I see my skill set primarily as a micro-cap turnaround and growth specialist. I have been messaging for some time my plan to go back to those micro-cap roots and launch a new vehicle, building on those skills, the learnings of the past and our connectivity to cornerstone investors. Regency Mines PLC (LON:RGM) is my chosen company….. it fits on multiple levels including thematically as the world transitions to electric vehicles and a lower carbon economy and therefore requires investment in batteries and specifically battery metals to enable that.
Regency provides now, post the recent financial restructuring, I believe, the right entry point for myself and my investors. It has a diverse legacy new energy portfolio, including the Mambare battery metals project in PNG where I see previously hidden value, and is operating in a sector with strong core growth and huge opportunity. I’m not here to pretend Regency’s history isn’t a little “messy” but I see opportunity from this starting point, and I intend to spend the coming years building this company as an executive through a blend of organic development and acquisition.
Why the slight shift in focus away from upstream E&P?
I remain involved in the space of course and it still has much to offer. But it is certainly true that the E&P sector has never been more challenging, and the simple fact is that equity markets right now are increasingly not recognising Net Asset Values or rewarding success at the drill bit. There are still opportunities in upstream E&P, of course, particularly in strong regional gas markets such as Southern Cone / South East Asia / North Africa and in “special situations” such as sanctioned countries. But outside of these niche opportunities, I see long term decline and an increasingly difficult journey to attract new investment.
I believe battery metals however are a critical part of our future. Despite some short-term price uncertainty largely driven by the ongoing US/China trade war, the battery metals market still represents one of the fastest growing sectors within the broader energy markets. Raw material demand for cobalt and nickel remain strong and we are already seeing the adoption of Electric Vehicles forecast to increase hugely – I believe they are forecasting over 30% by 2040. Even within the renewables sector, we are seeing increasing demand for larger batteries to store energy and ease pressure on power grids by levelling out supply / demand imbalances.
Any reflections on your eight-year tenure at Sound energy?
Opening up the Eastern Moroccan province has been a rollercoaster ride and very exciting. I think those of us involved will look back in a few years once the development project is up and running, hopefully the Palaeozoic is drilled, and more discoveries are brought on stream and feel very proud, particularly from an industrial perspective, of the work the company did to open up this new province. Not many people get the chance to do that in a small cap in this industry!
I think fundamentally we took the right long-term strategic bet on European gas prices and indeed navigated the transition away from Italy towards Morocco at exactly the right time. We introduced the right partners, demonstrated we could unlock the TAGI with our early wells, funded and delivered the seismic and then funded and delivered the drilling. For sure, we didn’t get everything right and take with us some learnings. The latest exploration well results definitely disappointed but fundamentally I am a believer in the Eastern Morocco basin and firmly expect Sound to unlock it with further wells. Basin opening work in my opinion is about maintaining your “eyes on the prize”, keeping drilling even after failed wells and not getting distracted by the short-term noise / sentiment.
My view is AIM is certainly a tough place right now, and various macro issues (Brexit, the election, US-China trade war, climate change, etc) are tightening equity markets, particularly in oil and gas. But Sound has a strong team, a great asset and an enviable position in a high growth /low-risk country. At many levels, I am sorry to leave them at this particular moment, but I believe, on balance, the time is right and I plan to remain an investor.
What particular elements of your experience at Sound will you bring to Regency?
Look… I understand more than most what it takes to turn around a micro-cap story.
This is all about designing the strategy, accessing the capital, attracting the team and then executing the operations. Having a thick skin is important too as turning around a micro-cap is never straightforward and never without bumps in the road!