Regency Mines Plc

("Regency" or "the Company")

Acquisition of Interest in North American Vanadium Project

Issue and Allotment of Shares

24 January 2019

Regency Mines Plc, the natural resource exploration and development company with interests in hydrocarbons and battery metals is pleased to announce, further to the announcement of 6 December 2018, that it has on expiry of the 45 day option period exercised its option (the "Option") to acquire a 50% interest in a North American vanadium project (the "Project") from vendors represented by and including Breakaway Exploration Management Inc, a Yukon company ("Vendor").

Highlights:

·    The Project includes 196 claims covering 40.96 square kilometres covering a mineralised trend with up to 20 kilometres of potential strike;

·    All points on the property lie within 1.8km of the Dempster Highway, some 65 km north of the Eagle River Lodge, northern Yukon;

·    The target is primary vanadium in black shale and historic exploration includes soil, silt & rock sampling which outlined numerous broad zones of strongly anomalous vanadium.  Drill testing of the targets, although limited to date, identified multiple vanadium bearing intervals;

·    The Project has been transferred by the Vendor into a newly incorporated special purpose vehicle, DVY196 Holdings Corp ("DVY"), in which Regency now acquires 50% at a price of CAD 450,000 from the Vendor ("Consideration");

·    The Vendor has agreed to subscribe for 53,109,600 new ordinary shares ("Shares") in Regency at a fixed price of 0.50 pence per Share, which at an agreed exchange rate of GBP 1/CAD 1,695) enables Regency to satisfy the Consideration;

·    Regency Mines plc will be the operator of the Project;

·    Further information on the transaction terms is provided below and the Company will provide further updates to the market in respect of this opportunity in the near term.

Andrew Bell, Chairman of Regency Mines commented: "This is a potentially major project and builds on one of our two core strengths: our early involvement in battery metals and related technologies. It has additional synergies with the static power storage element of our subsidiary ESTEQ's AES grid backup and private grid/CHP business.

The Project comes with an expert team and lies along an existing road, giving access to infrastructure.

While iron ore-hosted VTM deposits supply 70% of the current vanadium market and will continue to supply most of the steel additive demand with their 80% grade material, the growing battery metal segment requires 98-99% grades which shale-hosted BSV deposits can provide. For this reason the three Nevada BSV deposits of Canadian-listed companies Cellcube, Prophecy and First Vanadium (www.cellcubeenergystorage.com, www.prophecydev.com, and www.firstvanadium.com) - which would combined all fit quite comfortably  within our ground - are now being fast-tracked.    

Previous work on the Property targeting other minerals found vanadium in and around the interval they targeted. Two holes previously drilled have provided us with adequate core material in good condition to prepare 250 samples for testing over wider intervals and we expect results within several weeks, with subsequent presentation of a paper for publication by our team and their academic partners.

Soil sampling, where matching funds from the territory may be available, will be possible from June 2019, when the ground is free of snow, and any drilling will then follow over the long winter season."

Principal Transaction Terms:

a.    The CAD450,000 (agreed as equivalent to £265,548) consideration is as a result of the subscription payable in new Regency Mines plc ordinary shares at a price of £0.005  equating to 53,109,600 shares (the "Subscription Shares") and representing approximately 6.05% of the total number of issued shares post transaction.

b.    RGM will be prohibited from selling their 50% interest in the Project for a period of 12-months post-acquisition and thereafter the Vendors will retain a first right of refusal to acquire Regency's interest on the same terms as any disposal agreement achieved by Regency.

c.     The Subscription Shares distributed to the Vendor will be subject to:

-      A 4 month holding period where the shares may not be traded except subject to the exceptions below:

o  Should RGM close at above £0.008 for 7 consecutive trading days, the Vendor has the right to sell 25% of its position.

o  Should RGM close at above £0.01 for 7 consecutive trading days, the Vendor has the right to sell a further 25% of its position.

In-Country Management

a.    The Project will be held by DVY.

b.    The Vendor will have the right to nominate two directors to the board of DVY and will appoint the company secretary & legal counsel.

c.     All contracts of work are to be awarded to agreed technical consultants on an arm's length commercial basis.

d.    Regency has the right to nominate two members to the Board of DVY.

e.    Regency are to be appointed the operator of the Project.

Expenditure and Dilution

a.    Regency will commit to and fund a minimum spend of CAD$150,000 exploration in the 12 months post acquisition and upon completion of the required spend of CAD$150,000 the joint venture will revert to a shared funding or dilution agreement in line with standard industry practice.

b.    Should Regency fail to expend on a pro-rata basis CAD$950,000 or more within 24 months of acquisition (net of CAD$150,000), the original syndicate have the right to reacquire 40% of Regency's interest in the Project for Regency's then book cost.

Vendor's Residual Interests

a.    The residual 50% DVY interest will vest in a UK private company representing the Vendor interests.

b.    The Vendor will receive a 3% NSR royalty (held within the above UK private company).

c.     RGM have the right of first refusal to purchase within three months of first commercial production 1% of the NSR for cash consideration of £1,000,000.

d.    Vendor to receive cash/equity (50:50) of CAD$250,000 upon the release of a compliant maiden resource.

e.    Vendor to receive cash/equity (50:50) of CAD$1,500,000 upon commercial production.

f.     Vendor to receive cash/equity (50:50) of CAD$500,000 upon a Decision to Proceed following a feasibility study.

g.    Prices of equity in d to f above to be determined by the volume-weighted average price ("VWAP") for the 7 trading days immediately preceding the date of the relevant market announcement

Vanadium Overview:

Vanadium is a vital additive in the steel alloy and chemical industries.  Traditional demand for vanadium is growing due to rapid infrastructure development in emerging economies.  Demand is also expanding in new technologies including super alloys used in the aeronautics and ceramics industries, and in energy storage applications.  In particular, vanadium redox flow batteries ("VFRB") provide efficient storage and controlled released of energy in renewable power generation systems.

The two end-use commodities of vanadium production are ferrovanadium (FeV), an iron-vanadium alloy used in the steel industry, and vanadium pentoxide (V₂O₅), used for most other applications including VFRB. 

Approximately 70% of "primary" vanadium supply is actually a secondary product derived from reprocessing slag generated in steel mills.  The remaining 30% is extracted from several different types of mineral deposits and is largely produced as a co-product or by-product of other commodities.  These deposits include vanadium-titanium-magnetite ("VTM") deposits, sandstone hosted vanadium (with or without uranium) deposits ("SSV") and vanadium-rich metalliferous black shales ("BSV").

VTM deposits are currently the largest and most important vanadium producers.  Such deposits consist of vanadium-rich sequences of iron or iron-titanium oxides found in large layered magmatic intrusions.  Typical grades range from 0.2 to 1.2% V₂O₅.  However these are complex deposits with the vanadium tightly enclosed within ilmenite or magnetite.  Not only is metal tenor important, but oxide mineralogy, grain size and intergrowth texture are all critical factors for efficient production of V₂O₅ concentrate.  Deposits of this type are presently mined in Brazil, China, Russia, Scandinavia and South Africa, and large deposits are currently being developed in Eastern Canada and Western Australia. 

SSV or Uravan deposits, where uranium, vanadium and other metals were dissolved, transported and deposited near-surface by the circulation of meteoric waters, are a small but important source of vanadium as a by-product of uranium mining on the Colorado Plateau in the American Southwest.  Typical grades range from 0.2 to 1.7% V₂O₅. 

Vanadium-rich black shales are found mainly in late Proterozoic and Phanerozoic marine basins that were deposited in epeiric (inland) seas and on continental margins.  Grades in BSV deposits typically exceed 0.2% V₂O₅ but can be as high as 1.8% V₂O₅.  These deposits are marked by large areal extent, steady grade, consistent geometry and simple mineralogy, all of which favour low-cost mining and processing methods. 

Two large BSV deposits are currently being developed in Nevada, and dormant deposits are known in China and Madagascar.  Related to BSV deposits, significant amounts of vanadium are recovered as by-product of coal, oil sand, and oil shale processing, and petroleum refining.

Further Project Information:

The proposed property covers a segment of a regional scale contact between two distinct sedimentary formations.  The base of the upper formation is marked by a black shale horizon (the "BSV horizon"), and at the base of this horizon there is a discrete layer of metal-bearing, organic-rich black shale. 

The initial discovery of vanadium in the area by Héon in 2006 was followed up by drilling for Nickel-Molybdenum (NiMo) mineralisation by Southampton Ventures in 2007. The partial logging of these holes (DV-01 to DV-07) has shown this layer to be strongly enriched in a number of metals including vanadium.  The BSV horizon daylights and would appear to be exploitable by open-pit mining methods.  The BSV horizon is more or less continuous within the property with minor offsets due to normal vertical faults. 

The layer continues outside the boundaries of the property but becomes progressively more distant from the highway. 

The BSV mineralization present on the proposed property is believed to be a large-scale syngenetic event caused by the reduction effects of organic material in a restricted epeiric, anoxic basin.  Hydrothermal venting may be a possible source for the metals.

The drill intersections reported by Southampton Ventures were:

1.      All intersections open up and down hole, i.e. V2O5 intervals potentially wider than reported

2.      Vanadium parts per million (V ppm) converted to vanadium pentoxide per cent V₂O₅ by factor of 1.7852  

Issue of Shares to a Service Provider

The Company also announces the issue of 5,333,333 new Shares to a provider of communication and social media services at a price of 0.45 pence per Share.

Admission to Trading on AIM and Total Voting Rights:

Application is being made to AIM for 58,442,933 new ordinary shares allotted to the Vendor to be admitted to trading on AIM. Admission of the new Ordinary Shares is expected on or around 30 January January 2019.

Following the issue of the 58,442,933 new ordinary shares, the issued share capital of the Company consists of 877,254,015 ordinary shares of 0.01p each with voting rights. No Ordinary Shares are held in Treasury.

The above figure of 877,254,015 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the Disclosure and Transparency Rules.

Competent Person Statement

The technical and related information in this report has been reviewed by Mark Fekete, PGeo. Mr Fekete has designation as a professional geologist in Quebec and British Columbia and is a qualified person for the preparation of reports under the Canadian disclosure standard NI 43-101. He has sufficient experience in the style of mineralisation and type of deposit under consideration. He approves the inclusion in this announcement of the technical information in the form and context in which it occurs. Mr Fekete is a principal of Breakaway Exploration Management Inc.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information contact:

Andrew Bell 0207 747 9960                                                             Chairman Regency Mines Plc

Scott Kaintz 0207 747 9960                                                              Executive Director Regency Mines Plc

Roland Cornish/Rosalind Hill Abrahams 0207 628 3396             NOMAD Beaumont Cornish Limited

Jason Robertson 020 7374 2212                                                      Broker First Equity Limited