Less to fear now we have seen the nadir
Dear JustinVast Resources plc is an AIM-quoted resource development company that converted from an exploration company to a mining company in 2015, with two operating mines; the Manaila polymetallic mine in Romania (100%), and the Pickstone-Peerless gold mine (25%) in Zimbabwe.
It has now executed the financing and off-take deal with Mercuria Energy. The four-year off-take for Manaila and Baita is coupled with a $9.5m finance term sheet. The first $4m tranche has been drawn down allowing Vast to finally crack on with its expansion strategy in Romania.
Vast also released a significant upgrade to the Manaila resource, underpinning a long mine life and justifying the construction of a new metallurgical complex. The financing and off-take is a major achievement and the company’s focus on operations will now intensify.
Both management and shareholders can take a collective sigh of relief as the previously announced $9.5m pre-payment off-take deal with Mercuria was executed on 21st March. Tranche A ($4m) has been drawdown, of which $1.68m has been directed to repay the bridging loan from Sub-Sahara Goldia Investments, which will result in considerable cost savings. Drawdown of Tranche B ($5.5m) remains as per the Term Sheet.
The execution of the term-sheet means that the concomitant off-take agreement with Mercuria is now live, covering up to 100% of the copper and zinc concentrate produced at Manaila and Baita Plai in Romania until April 2022, a 4-month extension from Dec 2021. The off-take will provide a more stable backdrop to support the company’s development, with more beneficial pricing terms than the previous off-take contract, allowing Vast to retain a higher proportion of the value of the concentrate, particularly important at the higher-grade Baita deposit.
On the back of 19 DD holes Vast has also upgraded the Manaila JORC resource, resulting in a 78% increase in open pit tonnes (2.6Mt to 4.6Mt) and a 249% increase in underground tonnes (0.31Mt to 1.1Mt). This implies a LOM in excess of 11-years at 360kpta throughput. Importantly open pit Indicated tonnes have increased threefold, increasing the confidence in the resource. At 0.98% Cu (OP) and 1.58% Cu (UG), the resource grade remains well above the current production grade.
We retain our current 1.03p valuation for Vast’s shares pending the imminent release of Jan-Mar production results, more clarity on the rejuvenated expansion plan in Romania (now that funds have been secured), and ensuing updates to our model.
Rio Tinto is a mining group based in the United Kingdom and Australia. Co. is engaged in the business of finding, mining and processing mineral resources. Co.'s major products are iron ore, aluminium, copper, diamonds, coal, uranium, gold and industrial minerals (borax, titanium dioxide and salt). Co.'s activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and Africa. Co.'s operations comprise four principal product groups - Iron Ore, Aluminium, Copper and Diamonds, and Energy & Minerals.
Vast Resources is a mining company with open pit polymetallic operations and a planned underground polymetallic mine in Romania, and an open pit gold mine in Zimbabwe. Co. holds gold and diamond related mining claims in Zimbabwe and has a presence in Zambia with interests in an earth and phosphate project. Co. mines and produces copper and zinc concentrate and gold bullion.
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