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Vast to divest from Zim gold assets

19th April 2019

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Aim-listed mining company Vast Resources has concluded a conditional sale contract for the proposed disposal to Southern African Trade Finance (SATF) of its noncore 50.01% interest in Ronquil Enterprises – the holder of its Zimbabwe gold assets – and the remaining 25.01% economic interest in the Pickstone Peerless gold mine and associated assets, principally the Eureka gold mine.

The consideration from SATF is $2.5- million, payable outside Zimbabwe, plus RTGS$2.5-million (Zimbabwe’s new local currency), equating to $1-million payable in Zimbabwe.

The deal, subject to the approval of shareholders by April 23, will enable the group to refocus on its two growth opportunities, namely the Baita Plai polymetallic mine, in Romania, and the Heritage diamond concession, in Zimbabwe.

“The Heritage Concession will require significant investment, not only financial, but human resources as well, to enable near-term positive cash flow for the business. The divesting of the gold assets in Zimbabwe allows us to focus all our Zimbabwe finance and management on this key component of the company’s growth,” said Vast CEO Andrew Prelea.

Bringing the two primary focus assets into production in real time and unlocking the value of the assets in the portfolio will create significant shareholder value.

It will also result in a fundamentally less complex balance sheet with about $38-million in reduced liabilities, which will assist with the future financing of the company.

“The transaction will also open up funding opportunities for the Romanian projects that have been delayed, owing to historical financial structures and arrangements that, in turn, hampered the company’s ability to progress our near-term goals,” he said.

After completion of the transaction, the company’s wholly owned Zimbabwe subsidiary, Canape, will have no material assets apart from RTGS$2.5-million, which will remain charged to Sub-Sahara Goldia Investments (SSGI) until the SSGI loan is fully repaid.

The $2.5-million consideration from SATF is payable outside Zimbabwe, and will be used to partly repay the SSGI loan, while the RTGS$2.5-million is payable in Zimbabwe and retained by SSGI as security until the loan is repaid in full.

“The transaction repays the [bulk] of the SSGI loan and gives the company the ability to repay more through the RTGS$2.5-million further consideration,” added chairperson Brian Moritz.

The transaction, together with the disposal of Canape and the repayment of part of the SSGI loan, reduces the other loan and liabilities on the company’s balance sheet, by nearly $38-million to $10.49-million.

The liabilities eliminated include a Canape historical loan of $11.66-million, the funding of both Pickstone Peerless and the not-yet-operational Eureka.

Significantly reducing these liabilities and simplifying the balance sheet puts Vast in a position to raise finance from other parties.

“The main focus of the company is the two growth opportunity pivotal assets, Baita Plai and the Heritage Concession which, when adequately financed, will produce near-term remittable cash flow for the company,” he said.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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