Regency Mines in January completed its acquisition of a 20% shareholding in Carbon Minerals Corporation (“CMC”).
This acquisition is significant as CMC own the Rosa coal mine in the United States and is going to provide near term revenue.
This has the potential to be a major revenue stream for RGM with significant coal outputs.
The last brokers note from Dowgate (see here) doesn’t mention the Rosa mine, as deal hadn’t happened at that time and gave a share price target without this asset of 31.8p.
The last but one presentation from Regency (see here) makes a small reference to the Rosa mine with this graphic.
This asset is under the radar for many potential investors when in fact it is a major revenue stream.
The following figures are from Share Talk (Steve’s Shares – see here).
The figures for production of coal at 2000 tonnes per day and at $100 margin per tonne (30% lower that current coal values) are $200,000 per day and RGM has a 20% deal in place. So changing into GBP that equates to around £32500 profit to RGM per day.
Assuming production around 200 days per year that is £7.5M plus per year income for RGM.
This table is from the latest presentation on the Regency website giving their thoughts of the potential revenue.
When the current market cap of RGM is c£2m it makes you wonder when the market will realise this stock is undervalued.
These figures are based on the Rosa mine alone. RGM have significant other assets as indicated in their presentation, such as an oil asset in Horsehill.
What will an updated brokers note from Dowgate state when it’s issued and includes the Rosa revenue?
RGM have also stated that they have received additional enquiries for their coal output since Trump elected president of the United States.
RGM share price is looking likely to re-rate in the very near future.
I have over the last few weeks built a position paying circa 0.4p a share and like many, will now hold tight awaiting any share price uplift.