Regency Mines - A Red Rock Investment

Regency Mines (LON:RGM) offers decent upside in the coming months from its stakes in Oracle Coalfields which is due to list on AIM shortly (April?), from its 20% stake in Red Rock which is expecting gold pour news from Colombia and its interim results due next week. Drilling in Mambare will start in April. To sum the investment case up in a nutshell, most of the market cap seems covered by RGM's stake in RRR, with only a small portion of the market cap covering the stakes in Oracle, Direct Nickel, Mambare and other projects. However the assets excluding Red Rock (LON:RRR) look to offer huge upside.

As the website states, Regency Mines plc 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 is focussed on mining investment and on exploration of areas of nickel and copper potential in Western Australia, Queensland, and Papua New Guinea. The company’s mission is to add value 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 central and southern parts of the sulphide nickel/gold prospective Lake Johnston greenstone belt in Western Australia. 
- Licenses at Kambalda, Western Australia of significant gold/nickel potential.
- The entire Bundarra mining camp in Queensland, a substantial 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 with strategic stakes in steel feeds and in uranium/rare earths.

The management believe there is a huge resource of Nickel Laterite in Mambare & a very large proven resource of Coal in Pakistan. These are the two elephants in the room. Both projects are worth millions to RGM. Management have the option of increasing its stake from 10% in Oracle to 20% when it lists on AIM. Nickel is mainly used for with steel and chrome to make stainless steel. Demand will increase for stainless steel with a more affluent eastern consumer. The Nickel industry is worth $35 billion per year.

RGM's market cap is only about £28 million and seems covered by existing assets, most notably its stake in RRR. Andrew Bell is a shrewd operator, consider what he did with Red Rock (LON:RRR) moving from 2p to 12p in the past year. In my opinion, Regency Mines (LON:RGM) is a safer bet with little downside and massive upside which will surpass RRR at some point.  I attended the Mining Maven presentation last night. Andrew Bell presented very well and came across as someone who understood the industry well & someone who is good at doing deals.  AB's strategy is to work on big projects that offer huge upside as he said that there is no point in doing small projects which require the same amount of resources for less gain.

Do Your Own Research - This is worth a read and so is this and this presentation. 

Disclosure of Interest: The author holds shares in Regency Mines (LON:RGM)