Realizing that the right business move is to stop what you’re doing and take a different direction is something that is done far too little times. Some companies will continue to bang away at a project or a business endeavor regardless if it seems to be a moot point or not.
The idea of "throwing good money after bad" never seems to enter the minds of management and, thus, the company never can get off the ground or find any sort of financial success.
Vancouver-based Regency Gold Corp (TSX-Venture:RAU.H), formerly Silvio Ventures, is engaged in the acquisition, exploration and development of mineral properties. It worked on three projects in Nevada throughout a five-month stretch in 2008 which consisted of mapping, rock chip and soil sampling and geophysical surveys on the projects.
While receiving some positive results, Regency management decided that it was in the best interest of the Company and its shareholders to maintain its strong capital structure and balance sheet rather than pursue these early stage exploration projects.
As a result, exploration was stopped and the agreement with Sirius Exploration LLC and its principals was terminated with Regency transferring title and rights to the mineral claims to Sirius and Sirius returning all 425,000 shares issued by Regency which were promptly sent back to the treasury and cancelled.
Regency has been quiet now for the better part of two years, but re-surfaced today with a press release to announce that it has acquired a 100% interest in the Agate Pass property located in Eureka County, Nevada. As with any agreement of this nature, regulatory approval is still mandatory, but the first annual payment was for $10,000 and has already been paid in full upon signing of the lease agreement.
By year five, the annual payment will increase to $50,000. To maintain compliance with the lease, Regency will pay annual escalating advance royalty payments against a 3% net smelter return royalty, but will retain the right to buy back up to two of the points via payments of $1 million per point.
Even though Regency has been quiet, the stock chart for V.RAU.H has been in a nice upward channel for the last three months since hitting a 52-week low of 14 cents. With its steady rise through the teens and now over 20 cents per share, technical traders will be turning their sights on the channels continuation as fundamental traders are taking a closer look at the potential behind this new acquisition.
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