In its FY 2018 results release of June 28, 2019, Providence Resources announced that the Board had carried out a strategic review of the Company’s operations to ensure that its business model continues to be ‘fit for purpose’. As a result, the Board concluded that there was an immediate requirement to re-engineer Providence’s business model to reflect the changes evident in its operating environment.

Since that announcement, the Company has continued to progress this business re-engineering by implementing a project-based, outsourced business model which is more aligned with the current reduced and sporadic nature of its operated activities. The Company has engaged in a consultation process with its staff and its Board and conditional on the Company having sufficient working capital to implement the necessary changes, the following actions have been identified as necessary:

• the Company will vacate its current Dublin office in early Q4 2019 (at the expiry of the current lease) and re-locate to smaller serviced facility in Dublin;
• all technical and support staff will be made redundant;
• the size and composition of the Board of Directors will change (see below); and
• the use of various services providers and advisors will be reduced.

The Company projects that, when implemented, the annual cost base of the business (excluding CAPEX) will be reduced to US$1.9 million from US$5.3 million currently, representing a c.65% reduction in total annualised costs.

Working Capital Update

As at August 2, 2019, the Company had unaudited cash in bank of approximately US$ 1.45 million. As outlined above, the Company has received further assurances that the US$10 million loan advances due under the Updated FOA are in the process of being paid. However, the Board advises that, should these funds not be received by the revised backstop date and taking into account creditors on the balance sheet and existing forward commitments, including the necessary planned site survey at Barryroe and the proposed business reengineering, the Company would need to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of August 2019.

Planned Changes to Composition of Providence’s Board

As part of the re-engineering process, the Board feels that it is an opportune time to reduce the size and composition of the Board consistent with Providence’s business needs and is implementing the following changes to the Board:

• John O’Sullivan, Technical Director, will step down with immediate effect;
• James McCarthy, Non-executive Director, will not seek re-election at the upcoming 2019 Annual General Meeting (”AGM”) in September 2019;
• Lex Gamble, Non-Executive Director, will step down on December 31, 2019; and
• Philip O’Quigley, Non-executive Director, will not seek re-election at the 2020 AGM.

Link to Providence Resources Ireland country profile