Regency Mines (LSE:RGM) sat at 0.33p this morning after announcing its decision to enter the vanadium sector yesterday afternoon.
In an update that helped shares to jump 14.3pc on Thursday, the company said it has secured a 45-day option to buy a 50pc stake in a North American vanadium exploration project. It has paid for the option through the issue of 5m Regency shares at a price of 0.5p each, which comes to a total of £25,000. This price represents a 42.9pc premium to the mid-market share price when the deal was agreed.
Vanadium is a vital additive in the steel alloy and chemical industries and is enjoying a growing demand thanks to rapid infrastructure development in emerging economies and new technologies using so-called ‘super alloys’. Indeed, according to Regency, prices of vanadium pentoxide, one of the most important compound of vanadium from an industrial perspective, have risen by around 700pc over the last three years.
As it stands, around 70pc of primary vanadium supply is a secondary product derived from reprocessing slag generated in steel mills. The remaining 30pc is extracted from several different types of mineral deposits and is primarily produced as a co-product or by-product of other commodities.
Alongside its vanadium option, Regency- which was trading down 18.8pc as at the time of writing – said it has decided to exit its niobium-tantalum project in Greenland. It advised the country’s authorities of its decision to surrender licence 2014/01 at the end of 2018 after concluding that its Motzfeldt project there was non-core. The firm put the shift in its approach to the project – which it acquired in 2014 – down to changing market conditions and company priorities.
Andrew Bell, chairman of Regency Mines, said: ‘As we exit Greenland having concluded that the niobium-tantalum project there was non-core, we are pleased to have secured this option for Regency Mines, which, if exercised, gives the company exposure to a vanadium exploration opportunity in North America that lies squarely within our battery metals focus and complements our nickel-cobalt asset at Mambare.
A successful project in vanadium could provide Regency with three main pillars of value within the Company. The vanadium project would provide a high potential impact exploration opportunity. At our 50% owned Mambare project we have a significant JORC compliant nickel/cobalt deposit. And we have a revenue-generating coal production asset through our 47% interest in Mining Equity Trust LLC. Regency Mines is entering into an exciting phase. We look forward to providing further updates in respect of the vanadium project and across all our business operations.’
Author: Daniel Flynn
Disclosure: The author does not own shares in the companies mentioned above