Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining

17 01 2020

Vast Resources plc
(“Vast” or the “Company”)

Interim Results: 1 May 2019 - 31 October 2019

Vast Resources plc, the AIM-listed mining company, is pleased to announce that it has released its unaudited interim report and financial results for period of 1 May 2019 to 31 October 2019.

The report can be found on the Company’s website at the following address:

www.vastplc.com

**ENDS**

For further information, visit www.vastplc.com or please contact:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”).

ABOUT VAST RESOURCES PLC

Vast Resources plc, is an AIM listed mining company with mines in Romania and Zimbabwe focused on the rapid advancement of high quality brownfield projects by recommencing production at previously producing mines in Romania and commencement of the joint venture mining agreement on the Chiadzwa Community Concession Block of the Chiadzwa Diamond Fields in Zimbabwe.

The Company’s portfolio includes an 80% interest in the Baita Plai Polymetallic Mine in Romania, where work is now currently underway towards developing and recommissioning the mine and the Community Concession Block in Chiadzwa, Zimbabwe.

Vast Resources owns the Manaila Polymetallic Mine in Romania, which was commissioned in 2015, currently on care and maintenance. 

Overview of the Interim Results for the six months to 31 October 2019

The Company has arranged financing which it has prioritised for the Baita Plai Polymetallic Mine (“BPPM”)  in Romania and the Chiadzwa Community Concession in Zimbabwe. The Company is in the process of drawing down on the first tranche of the Atlas Capital Markets facility ($7.1 million gross)  and expects to receive funds shortly. The first tranche will be applied to placing BPPM into production and to the repayment of financial creditors. The Manaila Polymetallic Mine (“MPM”) continues on care and maintenance with the expectation of a second funding round at a later stage. Prior to the receipt of the first tranche of funding, the Company has diverted resources from MPM to upgrade, develop, and maintain BPPM in order to accelerate the project to production and in December 2019 conducted a cold commissioning as well as a drilling campaign. Finally, discussions continue regarding the conclusion of the Company’s diamond joint venture with its Zimbabwe stakeholders. These discussions are in line with previous expectations, save on timing.

Financial

• Interim period follows change of accounting reference date from 31 March to 30 April as announced on 8 April 2019. Six month comparatives for 31 October 2018 have been included.
• 19% decrease in administrative and overhead expenses for the six month period ended 31 October 2019 ($2.0 million) compared to the six month period ended 31 October 2018 ($2.4 million).
• Foreign exchange losses of $0.8 million for the period compared to $1.4 million for the six month period ended 31 October 2018. Included within the $0.8 million of foreign exchange losses is $0.6 million in respect of the Company’s operations in Zimbabwe.
• 36% decrease in losses after taxation from continuing operations in the period ($3.5 million) compared to the six month period ended 31 October  2018 ($5.5 million).
• $15 million (net $13.5 million before costs) binding conditional bond facility signed.
• Cash balances at the end of the period $1.216 million compared to $0.775 million as at 31 October 2018.

Operational Development

• Concluded a joint venture with Chiadzwa Mining Resources (Pvt) Ltd, a company designated to represent Chiadzwa Community interests in the Chiadzwa Community Diamond Concession (the “Concession”).
• Continued discussions to finalise the joint venture agreement with Zimbabwe Consolidated Diamond Company (Pvt) Ltd (“ZCDC”) which will enable the Concession to procure a special grant for the mining of diamonds. Discussions are in line with expectations, save on timing.
• Transitioned resources from MPM to BPPM in order to continue the upgrade and development of BPPM.

Post period end:

• Revised an existing agreement with Botswana Diamonds PLC (“BOD”) resulting in BOD acquiring a 2.5% interest in the cashflows generated from Vast’s share in the Concession. In consideration for this interest BOD will provide know-how for all aspects of exploration, mining, processing and marketing in relation to the Concession.
• Cold commissioning of BPPM and commencement of drilling programme to establish a JORC.

Funding

Share issues during the period: gross proceeds before cost of issue

Post period end:

Debt Funding

• Documentation was signed for a US$15 million binding conditional bond issue deed for a facility up to US$ 15 million through an issuance of secured convertible bonds to a UK based fund, Atlas Capital Markets Ltd (“Atlas”).

Post period end

• Issued a drawdown notice for the funding of the first tranche of the Atlas facility. The Company expects to receive funds  shortly.

Board and Management

Post period end

• Appointment of Paul Fletcher as Finance Director on 11 November 2019; Roy Tucker continues as Business Director.

CHAIRMAN’S STATEMENT

We had two key objectives for this reporting period. The first was to secure financing for our Romanian and Zimbabwe operations, and the second was to finalise the joint venture agreements in order to start mining activities at the Chiadzwa Community Diamond Concession (the “Concession”).

The team made good progress in securing a US$15 million facility from Atlas (net US$13.5 million before costs), and post period end we were very pleased that we were in a position to drawn down on the first US$ 7.1 million tranche of the facility. We anticipate that we will receive these funds shortly. They will be applied to fund the capital expenditure programme that will put  BPPM into production, as well as repay creditors. This clearly marks a significant turning point for the Company and we look forward to reporting on progress in the months to come.

While good progress was also made in concluding a joint venture agreement with the Chiadzwa Community, to date we have been unable to finalize the joint venture agreement with ZCDC, which, amongst other matters, will enable the Company and our other Zimbabwean stakeholders to procure a special grant for the exploration, development, and mining of the Concession. As Andrew highlights in his report, we were concerned in the unexpected  delay in signing the ZCDC joint venture agreement but we are pleased that discussions with the various Zimbabwe stakeholders are in line with previous expectations, other than on timing, and we remain confident that we will commence our mining operations in the near future. The Company is well placed to move quickly to monetise this opportunity with US$ 7.9 million binding and conditional funding available in the form of  tranches 2 to 4 of the Atlas facility.

As I mentioned in my report at the year end, the Company has been through a testing period marked equally by great opportunities and challenges. The Company and the management team has met these challenges head-on and the effort and commitment has paid dividends in recent months. The Company is now on a firm footing to realising the underlying value of its key Romanian asset, BPPM, and is well positioned to successfully execute on its Zimbabwe diamond opportunity upon finalisation of the ZCDC joint venture agreement.

Brian Moritz

Chairman

CHIEF EXECUTIVE OFFICER’S REPORT

This has been a busy and critical period in the Company’s development. We were able to register some notable accomplishments in the half year and after the period end that provide the necessary operational and financial platform to allow the Company to begin to unlock the underlying value of its key assets, the Baita Plai Polymetallic Mine (“BPPM”) and the Chiadzwa Community Diamond Concession (the “Concession”).

On 26th September we concluded a joint venture with Chiadzwa Mining Resources (Pvt) Ltd, a company designated to represent Chiadzwa Community interests in the Concession. This resulted in the formation of Katanga Mining (Pvt) Ltd (“Katanga”), a majority owned Vast company that will invest in Chiadzwa Community Company (Pvt) Ltd (“CCC”), a company with specific objectives to carry out exploration, resource development and mining in the Chiadzwa Community Diamond Concession. A further joint venture agreement between Katanga and the Zimbabwe Consolidated Diamond Company (Pvt) Ltd (“ZCDC”), a government entity which represents the Republic of Zimbabwe in the diamond sector is due to be signed, and which will result in the procurement of a special grant from the Zimbabwe authorities allowing the exploration and mining of diamonds within the Concession and will establish the final interests of Vast, the Community, and ZCDC in CCC.  While we appreciate and share shareholders’ concern in the unexpected delay in signing this second agreement with ZCDC, discussions with the various Zimbabwe stakeholders are in line with previous expectations , save on timing, and we are confident that we will commence our mining operations in the near future. Full details of the Chiadzwa joint venture will be announced at the same time as the conclusion and announcement of the ZCDC joint venture to which it is linked.

On 24th October documentation was signed with Atlas Capital Markets Ltd (“Atlas”) for a US$15 million binding conditional convertible bond facility. The authorities necessary for the bond issue were  approved by shareholders on 8th November. The facility  is divided into four tranches, the first tranche of US$7.1 million being applied to bringing BPPM into production and the repayment of two existing creditors, Sub-Sahara Goldia Investments  (US$ 1 million in full and final settlement) and Mercuria (US$ 1 million in partial settlement). Mercuria will continue to support the Company’s Romanian operations under a tripartite intercreditor agreement with Atlas and the Company. We are in the process of drawing down the US7.1 million tranche from Atlas which we anticipate receiving shortly and which will be applied  immediately to BPPM, enabling the commencement of production in H1  2020. This represents a very significant and critical step for the Company, as was also the announcement at the end of last year of the cold commissioning of BPPM and the commencement of a drilling programme. The results of the drilling programme will be used to further define the grades and resource and will support the process of confirming a JORC resource.

On 28th November the Company revised an existing agreement with Botswana Diamonds PLC (“BOD”). Upon finalising the Katanga / ZCDC agreement, BOD will receive an interest of 2.5% in Vast Resources Enterprises Ltd (“VRE”) with Vast retaining an interest of 97.5%. In consideration for this interest BOD will provide know-how on all aspects of exploration, mining, processing and marketing in relation to the Concession.

We enter 2020 in a far stronger position than at any time in the Company’s history. We are resourced to place BPPM into production in the near future and we are well placed to execute our Zimbabwe diamond strategy as soon as the agreement with ZCDC is concluded, a process that we believe will be concluded shortly.

Andrew Prelea

Chief Executive Officer

For further information visit www.vastplc.com or please contact:

Condensed consolidated statement of comprehensive income

for the six months ended 31 October 2019

Condensed consolidated statement of changes in equity

for the six months ended 31 October 2019

Condensed consolidated statement of financial position

As at 31 October 2019

Condensed consolidated statement of cash flow

for the six months ended 31 October 2019

Interim report notes

1            Interim Report

These condensed interim financial statements, which are unaudited, are for the six months ended 31 October 2019 and consolidate the financial statements of the Company and all its subsidiaries. The statements are presented in United States Dollars.

The financial information set out in these condensed interim financial statements does not constitute statutory accounts as defined in Section 434(3) of the Companies Act 2006. The condensed interim financial statements should be read in conjunction with the consolidated financial statements of the Group for the period ended 30 April  2019 which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRSs”). The Auditor's report on those financial statements was unqualified and did not contain a statement under s.498(2) or s.498(3) of the Companies Act 2006.

While the Auditors’ report for the period ended 30 April 2019 was unqualified, it did include a material uncertainty related to going concern, to which the Auditors drew attention by way of emphasis without qualifying their report. Full details of these comments are contained in the report of the Auditors on Pages 23-27 of the annual financial statements for the period ended 30 April 2019, released elsewhere on this website on 30 September 2019.

The accounts for the period have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) and the accounting policies are consistent with those of the annual financial statements for the period ended 30 April 2019, unless otherwise stated, and those envisaged for the financial statements for the year ended 30 April 2020.

New IFRS accounting standards

IFRS 16 Leases  became effective for the Group from 1 January 2019. The principal impact of IFRS 16 will be to change the accounting treatment by lessees of leases currently classified as operating leases. Lease agreements will give rise to the recognition by the lessee of an asset, representing the right to use the leased item, and a related liability for future lease payments. Lease costs will be recognised in the income statement in the form of depreciation of the right of use asset over the lease term, and finance charges representing the unwind of the discount on the lease liability. The adoption of IFRS 16 does not materially impact the carrying value of lease liabilities given the Group’s negligible leasing exposure.  As the effects of applying these standards are considered immaterial to the Group, the Group has elected not to demonstrate the impact of these standards on the current period’s results and not to restate prior periods on adoption of the new standards in 2019.

Going concern

After review of the Group’s operations and of the funding opportunities open to the Group, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the unaudited condensed interim financial statements.

This interim report was approved by the Directors on 17 January 2019.

2            Segmental analysis (continued)

2            Segmental analysis (continued)

3            Property, Plant and equipment

4            Loss per share

5            Inventory

6            Receivables

7            Loans and borrowings

8            Payables

9            Provisions

10          Events after the reporting date

On 28th November the Company revised an existing agreement with Botswana Diamonds PLC (BOD), BOD will now be a consulting partner in the development of the Chiadzwa Community Concession in Zimbabwe, providing know-how on all aspects of exploration, mining, processing and marketing. Upon finalising the Katanga / ZCDC agreement, BOD will receive an interest of 2.5% in Vast Resources Enterprises Ltd (“VRE”).

On 16^th December the Company announced the cold commissioning of BPPM and on 23^rd December the commencement of a drilling programme, the results of which will be used to further define the grades and resource and will support the process of confirming a JORC resource.

On 2^nd January the Company has submitted a drawdown request for the First Tranche Issuance to Atlas Capital Markets Limited in accordance with the terms and conditions of the Bond Issuance Deed.

Attachment

• Interim Results