Vast can see clearly now, the rain has gone
Vast 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.Vast is on the cusp of emerging from a transitional period. The company is close to securing funds to execute its expansion plans in Romania, which should result in significantly higher production and lower operating costs. The key to this strategy is building a new processing facility for the company’s Manaila mine and developing a second open pit at the Carlibaba prospect. In Zimbabwe, the construction of the sulphide plant is almost complete, which will also boost gold production and allow higher-grade sulphide ore to be processed.
If Vast successfully ramps up production at Manaila, it will be well-positioned to benefit from the forecast up-tick in copper demand, driven by the global build-out of the electric vehicle industry. It is also raring to press ahead with recommissioning the high-grade Baita Plai polymetallic mine in Romania. With considerable mine infrastructure in place, Vast is targeting a low-capital intensity re-start. The execution of the final association licence now seems to be moving closer, according to Vast’s update released yesterday.
Vast needs up to $10m in further funding to fully execute its growth strategy in Romania. The funds, provided by debt, will be directed towards the construction of a new metallurgical processing facility at Manaila, as well as providing the re-start capex for the Baita Plai mine. A number of funding options are on the table, and the company is evaluating several proposals with the aim of minimising dilution and retaining a greater proportion of the group’s assets in Romania. Watch this space!!!
We currently value Vast shares at 1p/sh using a sum-of-the-parts valuation method based on our DCF models of Vast’s three main assets. Despite a leap in the shares on the Baita news, this indicative valuation suggests that Vast is still trading at only half our NAV estimate. There should be potential for further value accretion if Vast delivers on its expansion plans, and on the back of higher metal prices.
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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