Vast disposes of gold assets in Zim to focus on metals in Romania

JOHANNESBURG (miningweekly.com) – Aim-listed Vast Resources’ shares rose by 25.40% on Monday, after it reported that it was planning to partially dispose of a noncontrolling interest in its Pickstone-Peerless and Giant gold mines, in Zimbabwe.

Through three principal transactions with Mauritian-based investment holding company SSA Group, Vast would make an effective disposal, of 49.99% of its 50% interest in each of the Pickstone and Giant mines for $4-million.

SSA has also agreed to provide Vast with a $4-million loan, repayable in four years at an interest rate of 1% a month to fund the overheads of Vast and capital expenditure at its projects in Romania.

The gross proceeds of the strategic investment will be used for general corporate operating costs, the completion of the upgrading of the Manaila polymetallic mine, in Romania, the development of the additional mining opportunities identified in that country and to negotiate with Grayfox for the early repayment of its loan.

The company explained in a statement that, while production at Pickstone has proved encouraging, the project is not projected to deliver cash to shareholders as free cash would be retained for expansion, including the exploitation of sulphide mineralisation.

“The current economic and political uncertainties in Zimbabwe, such as exchange controls that could become restrictive; the reintroduction of a quasi-Zimbabwe currency, the Zimbabwe Reserve Bank’s "dollar bond notes" that may result in excessive inflation as happened to the former Zimbabwe dollar; proposed new mining taxation to increase the tax receipts by the State from the mining sector; and the required forfeiture of base metal and precious metal mining claims to the State, supports leveraging the Zimbabwe assets while retaining exposure to future upside potential when these challenges are resolved,” the company added.
 
Vast CEO Roy Pitchford added that the transaction provided Vast with the financial strength to redirect capital to the area of the business which it believed would yield maximum long-term value accretion.

“By accelerating the development of our assets in Romania, enabling the company to become cash flow positive without the need for additional dilutionary fundraisings, I believe this transaction heralds a new phase of growth for Vast where we have the ability to rebuild shareholder value.”

“I am confident that Vast has the potential to be a significant copper and base metal producer in Europe,” he added.