Vast Resources PLC (AIM:VAST) (AIM:VAST) said it reached an agreement to restructure convertible bonds issued to Atlas Special Opportunities LCC, announced in January 2020, into a non-equity linked extended loan.
Under a heads of terms agreement, the existing equity linked convertible bonds repayable on 29 January 2022 have been restructured into a senior secured loan with a fixed price premium and the repayment postponed to 30 June 2022. The par value of the bonds currently outstanding is $6.5mln (£4.7mln).
“The restructuring of the Atlas convertible bond to an extended fixed-term loan addresses the concerns of shareholders on a number of levels,” said Vast Resources chief executive Andrew Prelea.
“First and foremost, it eliminates the risk of conversion at the current share price levels. Furthermore, we believe the restructuring also highlights Atlas’s confidence in the company’s ability to perform as a producing mining company with a positive outlook regarding the settlement of the outstanding loan and premium within the extended period.”
Vast Resources also announced it has raised £1.76mln gross through a placing and a subscription of 27.98mln shares at a price of 6.3p each.
The funds will mainly be used to pay a $1mln advance to Atlas as part of the bond to loan restructuring announced today.
The money raised will also bridge mining and operational costs at its Baita Plai polymetallic mine in Romania after its offtake partner, Mercuria, requested that July’s concentrate production be offloaded together with August’s production to accommodate shipping schedules. Some funds will also go towards near-term production pipeline projects in both Romania and in Southern Africa.
“The primary use of funds raised today is to support the restructuring of the convertible bond to a longer-term straight debt facility, an important step for us in the reorganisation of our financing arrangements as we advance our production ramp up at Baita Plai,” said Prelea.
Operational update
The AIM-listed company also provided an operational update on progress at Baita Plai. It is on schedule to meet accumulated net operational cashflow projections to April 2022 in accordance with a revised mine plan announced in March 2021 that outlines a move away from traditional labour-intensive mining methods to a more modern mechanised mining method
Vast Resources said it has further restructured the management team at Baita Plai to ensure effective management as the mine moves into its full steady state production phase as access to three additional production faces is completed in August 2021.
Stancu Viorel has replaced Marcus Brewster as general manager of Baita Plai, reporting to Nicolae Turdean, the Romanian Country Manager. Viorel manages the underground operations as Edward Hollings continues to manage the processing plant.
The Aramine drill rig, originally announced as part of the mine plan, has been delayed and is now expected to be delivered in the fourth quarter due to supply chain issues. However, this delay has no impact on the current rate of mining, the company said.
Vast Resources has also decided to relocate the Tomra XRT processing machine, which will reduce capital expenditure for the overall project and simplify maintenance and operating procedures. It has also upgraded the haulage capacity for both 1 and 3 shafts so that it can install double deck cages which will immediately double the hoisting capacity of the shafts.
A new underground drilling rig has arrived in the country and exploration works will start in the second week of August.
Since mining and production commenced at Baita Plai there has been significant refurbishment undertaken both on the underground infrastructure and on the processing plant and the company also released a detailed summary of the work carried out.
“With Baita Plai continuing to improve and achieving the financial forecasts published on 30 March 2021, the board and management remain confident in achieving our short- and long-term targets,” said CEO Prelea.
“We wish to thank the current Baita Plai management team on site for the work they are doing to continue progress to reach peak production. Much has been achieved in a short period from a ‘mining’ perspective and we are confident in their ability to continue this momentum.”