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Regency Mines in need of urgent funding as coal operations stall

Regency owns 47% of MET and needs to make a US$565,000 payment to its partner
Regency Mines is behind on payments to MET joint venture

Regency Mines PLC (LON:RGM) has warned it might have to cede ownership of its coal assets in Pennsylvania, having fallen behind on its obligations.

Regency owns 47% of MET, the joint venture running the coal operation, and now needs to make a US$565,000 payment to its partner.

Production at the Omega operation has been running below expectations due in part of lack of funds, which has meant one of the two high wall excavators being idled.

READ: Regency Mines making "great progress" with all its operations

MET requires additional working capital of approximately $400,000-500,000 to make up the cash shortfall, pay off creditors and allow for further investments such as a wash plant to boost sales of metallurgical coal.

Regency added it has fallen behind on its scheduled payments to MET, which has exacerbated the situation.

At the annual meeting in January, Regency's shareholders refused to give permission for the company to waive pre-emption rights if it issued more shares.

That had severely hampered its ability to raise equity finance said the statement.

Loans to the joint venture are secured on its MET and the US coal assets and if it continues to miss payments these might be forfeited said Regency.

A restructuring of the balance and capital structure are planned with an open offer and placing with existing shareholders also likely  

In the meantime, talks are ongoing with its banks with managerial changes and a strategic review of its entire portfolio proposed if it can sort out its financial situation.

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