Vast Resources PLC (AIM:VAST) said plans for higher production volumes at its Baita Plai mechanised mine in Romania have been pushed back in the short term as a result of labour shortages, geo-technical challenges, supply chain issues and COVID-19 prevention measures.
The AIM-listed mining company stressed that the fundamentals of the mechanised mine plan remain in place and that the ramp up of mining and production continues to advance.
The company said it has addressed the operating issues behind the delay and believes that Baita Plai is on target to become profitable on a monthly basis by the end of 2021.
Vast Resources added that its internal projections for the period from May 2022 to April 2023 remain substantially the same as previously indicated, while those prior to May 2022 to April 2023 have been revised down.
READ: Vast Resources looks undervalued compared with peers, says Shore Capital
Turning to its evaluation of the recommencement of production at its Manaila Polymetallic Mine in Romania, Vast said it is now actively engaged in several financing discussions focused on both Manaila and Baita Plai.
Upon conclusion of the discussions, it is intended that Vast’s existing finance creditors will be refinanced and the restart of production at Manaila will be supported via a non-equity linked finance structure, such as royalty finance.
Paul Fletcher, chief financial officer of Vast Resources, said: "Since 2019, the fundamental value of both Baita Plai and Manaila has grown significantly. Independent commentators have placed values on Baita Plai and Manaila in excess of US$100mln, with Baita contributing US$80mln. This represents a substantial premium over the company's existing share price.
“We believe there is the potential for significant further valuation upside to these assets which can be delivered through successful execution of the Baita Plai mining plan and the Manaila restart. We are now focused on executing the ramp up of Baita Plai's production and bringing Manaila back into production as we look to establish Vast as a mid-tier polymetallic mining company."
Meanwhile, Vast Resources said the planned restructuring of its Atlas Bond will not take place after Atlas and Mercuria failed to agree the conditions of the restructure.
The status of the Atlas Bond therefore reverts to the status quo ante as an equity linked bond in accordance with its original terms, the company said.
Commenting on its plans to develop of a diamond business in Zimbabwe, the company said there has been a breach of confidentiality regarding details of its discussions to settle a historic claim.
The company said it “is aware that an individual, who has been made aware of certain details concerning the status of the settlement under strict confidentiality agreements that are still current, is now proposing to make these details more widely known”.
Vast said it has instituted an internal enquiry by the senior independent non-executive director into the circumstances under which the confidential information was disclosed.
It has instructed its corporate lawyers to notify the counterparty of the potential breach of his legally binding and enforceable confidentiality agreements.
“Should the counterparty continue in breach the lawyers are instructed to take all necessary action,” it said.
It added that while it remains hopeful of concluding a transaction regarding the settlement discussions and its diamond business generally, “there is at this stage no definitive timing as to whether or where or when such a settlement will be concluded”.
But the company said it remains confident of a positive outcome.
Vast also said it intends to appoint Andrew Hall, its chief commercial officer, to the board. In addition to his existing responsibilities, Hall will assume overall responsibility for the company's external communications.