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Vast Resources gets cash injection

Published: 08:53 30 Jan 2017 GMT

Gold bar
Market reaction to the deal was extremely positive

Shares in Vast Resources PLC (LON:VAST) shot up on Monday morning as it offloaded a chunk of its stakes in the Pickstone-Peerless and Giant gold mines.

SSCG Africa Holdings (SSA) is acquiring the interests in what is described as a strategic investment.

It will stump up US$4mln in cash for 49.99% of the company’s 50% interest in the Pickstone-Peerless gold mine and the Giant gold mine in Zimbabwe; in other words, Vast’s stake in these mines will reduce to 25%.

In addition, SSA will lend US$4mln to Vast. The loan will be repayable in four years’ time and will carry an annual interest rate of 12%.

Proceeds from the transaction will ensure Vast is fully funded to accelerate development of its core Romanian portfolio of polymetallic mining interests into positive cash flow.

"This transaction provides Vast with the financial strength to redirect capital to the area of the business which we believe will yield the maximum long term value accretion for the company. 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,” said Roy Pitchford, chief executive officer of Vast.

"We have been presented with a uniquely exciting opportunity to re-commission numerous high value brownfield mining assets across Romania, and through the application of a fully funded and robust investment strategy, I am confident that Vast has the potential to be a significant copper and base metal producer in Europe. 

“Our immediate priority is to expand and develop our current resources in and around the Manaila Polymetallic Mine complex and establish one of Europe's largest copper mining projects,” Pitchford said.

Shares in Vast Resources, which closed at 0.32 on Friday, shot up to 0.43p on the news before ebbing to 0.39p, up 24% on the day.

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