Regency Mines Plc

("Regency" or the "Company")

Final Results for the Year Ended 30 June 2014

Highlights

Consolidation and stabilisation leading to recovery:

·      Assisted in turnaround of Ram Resources Limited ("Ram") and re-launch of Alba Mineral Resources Plc

·      Net gain on partial sale of Fraser Range tenements to Ram and partial disposal of Ram shares

·      Exploration carried out in Sudan

·      Care and maintenance of nickel assets; expect to be more active in 2015

·      Entry into oil exploration/production with participation in Horse Hill-1 well and West Virginia drilling prospect

Executive Chairman's Review

Dear Shareholders,

Overview

During the year to 30 June 2014, the stabilisation and redevelopment process carried out in the previous year was consolidated and built upon. Despite difficult markets in the areas in which we operated, our efforts ensured we successfully avoided any further deterioration in the Company's financial position and began to sow the seeds of recovery, through streamlining costs and investing in new areas and commodities.

The sale of many of our Australian interests to Australian Stock Exchange ("ASX")-listed Ram Resources Limited ("Ram") enabled us to realise profits through the sale of Ram shares earlier in the year, with a substantial holding and a royalty still retained. We also participated in the process by which AIM-listed Alba Mineral Resources plc ("Alba") was re-launched with a new focus on oil and gas. The subsequent price improvement in Alba has also enabled us to realise the value of some of our shares in the company. To this extent, our strategy of realising value from the greater liquidity we aimed to create in some of our holding positions was successful, with further sales possible in the future.

In Sudan, we have been continuing to explore in a disciplined and cost effective manner both the phosphate potential at Jebel Abyad and the potash potential in the Red Sea licence. Field trips in late 2014 and early 2015 will help the Company determine the best way to further develop these assets.

Direct Nickel Ltd ("DNi") was relatively quiet during the year. Although DNi is listed on the ASX, the Company did not proceed with its plan to pursue a restoration to trading during the year, instead deciding to wait for improved market conditions. These decisions meant that there was no opportunity for Regency to lay off risk and realise returns from our investment in DNi by disposal during 2014.

However, our other interests in Australia appear to offer more immediate development prospects as the graphite project adjacent to our tenements at Munglinup has come out of administration and its new owners have expressed interest in partnering with Regency to develop the asset.

Post period end, a major development was the Company's entry into oil exploration. As part of the re-launch of Alba, the company invested in 5% of Horse Hill Developments Limited ("HHDL"); a company with a 65% interest in two blocks of exploration ground near Gatwick airport in Surrey that was planning to drill-test conventional oil and gas targets. Regency, in support of Alba's initiative, invested in a further 5% of HHDL, which began to drill at the Horse Hill site in September and has announced the discovery of oil at levels expected to be commercial.

Regency followed up this investment by taking a stake in a drilling consortium in the U.S. with the intention of drilling two shallow wells near old producing wells on acreage in West Virginia. Should these wells be successful, as we anticipate they will be, it is likely that a follow up programme - initially of 14 wells - will be instituted on these and nearby prospects. We believe the West Virginia exploration has a high probability of encountering oil and the key to its success will lie in keeping capital costs low, and operating at shallow depths utilising cost effective open hole completion techniques. The project offers low cost of entry to a historic oil and gas frontier in the US that has in recent years been somewhat neglected amid the excitement over much more expensive shale basins.

Both of these investments are intended to provide cash flow within a reasonable space of time, and therefore support the Company's operations and reduce its dependence on capital markets for further funding.

Prospects

Oil & Gas

In the coming period, we expect further news flow from Horse Hill as analysis of the electric logs continues following the completion of drilling. This may include further oil prospectivity or discovery in the Kimmeridge Clay formation. We will then start working with our partners on the process of bringing the project towards production.

In West Virginia, we were quick in agreeing terms with our partners, one of which is the operator, who like us has a 25% shareholding. One of the smaller participants was slower to execute the agreements, and rather than incur additional winter drilling costs, we now expect to begin the programme by drilling the first two wells in the spring. Since the key discipline in achieving the very high rate of return we expect in West Virginia is keeping costs low, it would not have made sense for us to pay higher costs merely in order to achieve the hoped-for 2014 start date.

Agrominerals

In October and November 2014, pitting and trenching at the Red Sea project is intended to improve mapping, and identify the halite-containing zones expected to contain potash. Following this three week programme, we will work toward drill target generation. Here too, our discipline is to squeeze out the maximum relevant information possible via desktop study and cost-effective mapping and exploration before incurring the cost of drilling. A similar process will be carried out as the next stage of exploration of the large Jebel Abyad phosphate prospect in the centre of Sudan takes place, probably in early 2015.

We have posted online, and announced, the ASTER analysis work that we have carried out on Jebel Abyad, which shows the sophistication and originality of our approach and our willingness to use every geological tool available to pursue effective exploration. Our team remains optimistic for our Sudan project, and we have established a good name in the country as competent explorers. This may lead, in time, to other opportunities, including ones outside the agrominerals space focussed on to date.

Nickel

Our nickel interests in Papua New Guinea and through DNi in Indonesia did not have the active year in 2014 that some were expecting. However, the rise in the nickel price in the early part of the year, caused by the Indonesian export ban, was never expected by us to lead to instant results. Our view was that 2014 would be characterised by short term expedients to upgrade Indonesian production, and find substitutes in the Philippines for high grade Indonesian ore.

The Company believes that only in 2015 will we see the beginnings of long term investments in nickel production assets.

2015 should also see the continuation and completion of DNi's feasibility study on its PT Antam joint venture nickel plant in Indonesia. At the same time, we expect there to be opportunities to attract investment for joint exploration of the Company's Mambare lateritic nickel project in Papua New Guinea.

Our role this year has been to maintain the standing of our Papua New Guinea licences, and to try to assist DNi by identifying possible investors and strategic partners. With this in mind, we entered into a number of discussions with different parties. Some discussions are just now beginning and we will continue to work on these; others are ongoing. There is no doubt that the DNi technology, where the completion of the pilot plant programme has now proved the concept, represents a major opportunity for changing the economics of lateritic nickel production, and therefore that those able to bring this technology to bear on laterite projects will have a competitive advantage.

There is also no doubt that the Mambare deposit contains one of the largest known lateritic nickel bodies in the world, and that this ore body will contain zones of high mineralisation. This is one of the last opportunities that players will have to position themselves before the expected nickel shortage develops later in the decade and we must explore every avenue over the next months to exploit these changes in the market and generate returns for our shareholders.

Other

When Ram dropped its Greenland licences this summer, we took the opportunity to pick up this area, which we knew well, against strong competition. The Motzfeldt Project contains a known JORC Inferred Mineral Resource Estimate of 340Mt @ 120ppm Ta2O5, 1,850ppm Nb2O5, 4,600ppm ZrO2 and 2,600ppm TREO, with very large unexplored potential. Initial work will be largely desk-top studies and literature review, as we talk to potential partners.

In conclusion, we believe Regency to be a robust and more diversified entity as we move towards 2015, with more marketable assets, with greater prospect of near term cash flow, and with a reduced level of costs and liabilities.

We thank shareholders for their support during the last year.

Yours sincerely,

Andrew Bell
Chairman and CEO

21 November 2014

Results and dividends

Regency Mines plc (the "Parent") and its subsidiaries made a loss before taxation from continuing operations of £1,515,447 (2013: £5,166,017) and a loss after taxation of £1,508,812 (2013: £5,352,311).

The Directors do not recommend the payment of a dividend.

The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issue on 21 November 2014. 

For further information, please contact:

Andrew Bell0207 747 9960 or 0776 647 4849                              Chairman               Regency Mines Plc

Roland Cornish/Rosalind Hill Abrahams0207 628 3396             NOMAD                 Beaumont Cornish Limited

Jason Robertson0129 351 7744                                                         Broker                   Dowgate Capital Stockbrokers Ltd

Christian Pickel0203 128 8208                                                           Media Relations     MHP Communications

Consolidated statement of financial position

as at 30 June 2014

Consolidated income statement

for the year ended 30 June 2014

Consolidated statement of comprehensive income

for the year ended 30 June 2014

Consolidated statement of changes in equity

for the year ended 30 June 2014

The movements in equity during the year were as follows:

Consolidated statement of cash flows

for the year ended 30 June 2014

1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below.

Company Statement of Comprehensive Income

As permitted by Section 408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company's loss for the financial year was £1,253,686 (2013: £2,054,435). The Company's other comprehensive expense for the financial year was £197,560 (2013: £94,159).

Amendments to published standards effective for the year ended 30 June 2014

The following standards have been adopted during the year:

·      IFRS 13 "Fair Value Measurement"; and

·      IAS 19 "Employee Benefits (revised)".

Additional disclosures have been provided to comply with the revised standardsalthough the adoption of these amendments has had no significant impact on the financial position and performance of the Company and its subsidiaries (the "Group").

Standards adopted early by the Group

The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.

Adoption of standards and interpretations

As at the date of authorisation of these financial statements, there were standards and interpretations in issue but that are not yet effective and have not been applied in these financial statements, as listed below.

Standards, amendments and interpretations in issue but not effective

Effective for annual periods beginning on or after 1 January 2014:

·      IFRS 10 "Consolidated Financial Statements";

·      IFRS 11 "Joint Arrangements";

·      IFRS 12 "Disclosure of Interests in Other Entities";

·      IAS 27 (Revised) "Separate Financial Statements"; and

·      IAS 28 (Revised) "Investments in Associates and Joint Ventures".

Effective for annual periods beginning on or after 1 January 2015:

·      IFRS 9 "Financial Instruments: Classification and Measurement".

The Directors do not anticipate that the adoption of these standards and interpretations in future periods could have a material effect on the financial position or performance of the Group and Company, other than the introduction of IFRS 10 which could affect the financial position and performance and IFRS 11 and IFRS 12 which are likely to change or increase the level of disclosure required in respect of the Group's investments. The Group intends to adopt these standards when they become effective.

IFRS 10 is a new standard which establishes principles for the presentation and preparation of consolidated financial statements. As a result of its publication, the Directors will be required to consider the application of the revised definition of control to determine whether additional entities will need to be consolidated and whether consolidation is still appropriate for those that currently are.

The new definition of control will require the Directors to consider whether the Company has:

a) power over the investee;

b) exposure, or rights, to variable returns from involvement with the investee; and

c)  the ability to use power over the investee to affect the amount of the investor's returns.

The financial effect of such changes on the Group has not yet been reliably estimated. However, it is widely expected, irrespective of industry sector and without specific reference to the Group that the adoption of IFRS 10 is likely to result in more entities being consolidated.

IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly-controlled Entities - Non-monetary Contributions by Venturers". It removes the option to account for jointly controlled entities ("JCEs") using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. JCEs under current IAS 31 that will be classified as joint ventures under IFRS 11 will transition from proportionate consolidation to the equity method by aggregating the carrying values previously recorded, testing that amount for impairment and then using that amount as deemed cost for applying the equity method going forward. The Group recognises its interest in jointly controlled entity using the equity method of accounting. The application of this new standard will not impact the financial position of the Group.

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures related to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The adoption of IFRS 12 is likely to change or increase the level of disclosure required in respect of the Group's investments.

Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Significant judgements in applying the accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Going concern

The Directors are of the opinion that on-going evaluations of the Group's interests indicate that preparation of the Group's financial statements on a going concern basis is appropriate. The key factor for a business such as that of the Group is its ability to continue to fund its exploration and development activities. The Group's income has arisen from the provision of management services. It is not possible to predict the amount and timing of future income until the Group acquires or develops income-producing assets. However, the Group has shareholdings in listed companies, including Red Rock Resources plc, and expects to be able to realise the value of part or all of these holdings should it need to do so. The Directors are confident in the Company's ability to raise new finance from stock markets if this is required during 2014/2015 and the Group has demonstrated a consistent ability to do so as required.

Based on the above, the Directors have concluded that there is no material uncertainty that would cast significant doubt upon the Group's and the Company's ability to continue as a going concern. The Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the next twelve months from the date of the annual report. Accordingly, they continue to adopt the going concern basis in preparing the annual financial statements.

Recognition of holdings less than 20% as an associate

The Directors have classified, as an associate, an equity investment where the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.

Significant influence is presumed when the Company holds greater than 20% of the voting power of the investee, unless it can be clearly demonstrated that this is not the case. Conversely, if the Company holds less than 20% of the voting power of an investee, it is presumed that the Company does not have significant influence, unless such influence can be clearly demonstrated.

The Company owns 9.80% (2013: 11.39%) of the issued share capital of Red Rock Resources plc. Andrew Bell, Chairman and Chief Executive Officer of the Company, is also a member of the Board and the Executive Chairman of Red Rock Resources plc. In accordance with IAS 28, the Directors of the Company consider this to provide the Group with significant influence as defined by the standard. As such, it continues to recognise Red Rock Resources plc as an associate for the year ended 30 June 2014 despite its shareholding falling below 20%.

The effect of recognising Red Rock Resources as an available for sale financial asset would be to decrease the loss by £394,804 and decrease other comprehensive income by £53,651.

Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

·      In the principal market for the asset or liability; or

·      In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

·      Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

·      Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

·      Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Impairment of available for sale financial assets

The Group follows the guidance of IAS 39 to determine when an available for sale financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.

In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.

As a result of the Group's evaluation, no impairment (2013: impairment loss of £373,480) on available for sale investments was recognised in the income statement.

2 Loss per share

The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue.

Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

The following reflects the loss and share data used in the basic and diluted loss per share computations:

The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:

In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 14,072,329 (2013: 18,000,000) which were not included in the calculation of diluted loss per share because they are non-dilutive for the year presented.

3The consolidated statement of financial position at 30 June 2014 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2014 statutory financial statements.  The auditors have reported on the 2014 financial statements; their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2014 will be delivered to the Registrar of Companies before 31 December 2014.

4A copy of the Company's annual report and financial statements for 2014 will be made available on the Company's websitewww.regency-mines.comshortly and at the Annual General Meeting on23 December 2014; in addition the Annual Report will be posted to the Shareholders.