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Baita Plai Revised Mine Plan & Investor Presentation

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Vast Resources PLC
·10-min read
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Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining

30 March 2021

Vast Resources plc
(‘Vast’ or the ‘Company’)

Baita Plai Revised Mine Plan & Investor Presentation

Vast Resources plc, the AIM-listed mining company, is pleased to announce the finalisation and release of a new mechanised mine plan for its producing Baita Plai Polymetallic Mine (‘Baita Plai’) in Romania, in line with the previous announcement made on 26 February 2021.

Full details of the new mine plan can be found on the Company’s website under Investor Presentations at the following link:

https://www.vastplc.com/investor-information/document-downloads/

Highlights include:

  • No further funding for capex required to implement the new mine plan and future capex will be funded from cashflows.

  • Net* revenue forecast:

    • $17.2m 1 April 2021 – 30 April 2022

    • $28.2m 1 May 2022 – 30 April 2023

    • $33.4m 1 May 2023 – 30 April 2024

    • $34.7m 1 May 2024 – 30 April 2025

  • Net operating cashflow forecast before debt, tax and new capex:

    • $4.9m 1 April 2021 – 30 April 2022

    • $15.2m 1 May 2022 – 30 April 2023

    • $20.9m 1 May 2023 – 30 April 2024

    • $21.9m 1May 2024 – 30 April 2025

Notes:

  1. *Net after royalties & transportation costs.

  2. The assumptions used are set out below

  3. Actual sales and production figures will be reported on a bi-annual basis.

  4. Guidance will be provided to the market as the Company advances the new mine plan.

  • The cashflows support a valuation of Baita Plai in excess of $100 million that represents a floor to the fundamental value of the mine with further potential upside.

  • The cashflow forecasts provide very strong underwriting for further debt investment, if required in the future, focused on further drilling and capacity upgrades.

  • Full-time dedicated international mine management team being appointed to supervise every aspect of mining and production.

  • Mining capacity is planned to increase by 65% under the new mechanised mine plan compared to the old labour intensive mine plan. The new mine plan includes the acquisition of three Load Haul Dump Loaders (LHDs), an Aramine Face Jumbo Drill Rig, two Resemin Muki 22 Long Hole Drilling Rigs and a Tomra XRT Ore processing & sorting machine. The new mechanised plan further reduces specific project risk.

  • Execution risk is expected to be significantly reduced compared with the old plan through the employment of senior international staff; the use of increased mechanisation; and the fact that shortly with the expediated development plan now possible through the new equipment, the mining areas will be in areas newly drilled by the Company and not in less stable old mining areas.

  • Production will continue during the development phase. Underground production will continue on Levels 17 & 18 in addition to the new mining area on Level 19.

  • Mill feed grades concentrated by x1.25 – x1.75 by utilising TOMRA advanced XRT processing technology.

  • 21% reduction in $/mined tonne.

  • Exploration drilling targeting the downdip extension of the Antonio skarn from 19 level to 22 level expected to commence in June 2021.

  • Exploration drilling to confirm historic drill hole data on the Antonio North skarn expected to commence in early 2022.

Andrew Prelea, Chief Executive Officer of Vast Resources PLC, commented:

“This upgraded mine plan, made possible with the employment of a mechanised approach to mining and with the benefit of XRT technology which will produce a primary crushed high-grade pre-concentrate that will feed to the mills and will be implemented by our new team of mine managers who bring with them many decades of practical experience in mine expansion and optimisation. The capex required for this process is fully funded from existing resources and we expect to deliver a healthy revenue and cashflow from this asset during the 12 months from 1 April 2021, building considerably in the years thereafter.

This is a robust and comprehensive mine plan which has been developed using rigorous technical parameters. On behalf of the board I believe the plan set out to shareholders today represents a benchmark for us to deliver on over the coming years in tandem with our broader expansion plans at Baita Plai and across our wider portfolio.”

Further Information

Overview of New Mine Plan

  • The new mine plan can be implemented with the Company’s existing financial resources.

  • The cashflows support a valuation of Baita Plai in excess of $100 million that represents a floor to the fundamental value of the mine with potential upside coming from:

    • Increased resource, subject to completion of further drilling,

    • Increased capacity

    • Grade improvement

    • Increased demand for Copper

    • Romanian asset pipeline access

    • Reduction in country and project risk

  • The new mine plan cashflows include the hiring of further international management on site at Baita Plai to support the new General Manager. The new hires include a newly identified Underground Mine Manager, Processing Plant Manager, a Health & Safety Manager and further superintendent level support.

  • The Company in co-operation with TOMRA Mining has concluded an initial investigation on ore from Baita Plai as part of the development of the new mining and processing plan. The objective of the work was to determine the amenability of ore from Baita Plai to be pre-concentrated using TOMRA Sensor-Based Sorting Technologies to produce a high-grade pre-concentrate Pre-Milling. The study showed a clear amenability for the ore to be separated using TOMRA's advanced XRT (X-Ray Transmission) technology to identify both massive mineralisations as well as fine mineral inclusions using its proprietary combination detection algorithms to produce a high-grade pre-concentrate and eliminate non-grade containing waste material.

  • XRT implementation and processing plant upgrades to be completed by December 2021.

  • The new mine plan presents a cost reduction of 21% in $ per mined tonne with an operational efficiency of 63 tonnes per Total Employee Costed “TEC” at steady state, versus the previous plan efficiency metric of 43 tonnes per TEC.

  • Exploration drilling targeting the downdip extension of the Antonio skarn from 19 level to 22 level is planned to commence in June 2021 and exploration drilling to confirm historic drill hole data on the Antonio North skarn is planned to commence in early 2022.

The Company has used the following assumptions in new mine plan:

  • The previously announced (29 October 2020) JORC Mineral Resources & Reserve grades have been applied and are able to be accessed earlier in the revised mine plan when compared to the previous mine plan.

  • XRT concentration allows for an increase in underground mining volumes with a requisite increase in the grade of the ore being sent from the XRT to the processing plant.

  • Plant volumes are consistent with the old mine plan but due to implementation of XRT with an improved feed grade to the mill as mentioned before.

  • Life of mine 15 years modelled on 3.7 million mined tonnes (which partially includes high confidence exploration target derived from historic data not in the current JORC).

  • Drilling campaign to increase resource (up to 5.8 million exploration target). Model conservatively assumes that from February 2024 grades will only be equivalent to historical in-situ grades:

    • Cu 1.27%

    • Zn 1.10%

    • Pb 0.61%

    • Au 0.49g/t

    • Ag 62.08g/t

  • The Company used the following sensitivities in connection with calculating the NPV of $107 million (using a 10% discount rate reflecting a relevant sector cost of capital rate plus a country risk premium) for Baita Plai:

Sensitivities (USD millions)

Discount rate

8%

10%

12%

Prices

15%

157

138

122

10%

145

127

113

0

122

107

94

-10%

98

86

76

-15%

86

75

66

  • Project cashflows includes experienced expat management team thereby reducing execution risk versus previous mine plan

  • Mechanised plan further reduces specific project risk & mine is in production

  • Metal price assumption used for revised cashflow forecasts:

Year 1

Year 2

Year 3

Year 4

Year 5

10 Year Average

Cu price $/t

8,950

8,850

8,750

8,500

7,800

7,800

Zn price $/t

2,825

2,825

2,725

2,625

2,525

2,525

Pb price $/t

1,975

2,000

2,000

2,000

2,000

2,000

Au price $/oz

1,725

1,725

1,700

1,700

1,650

1,650

Ag price $/oz

25.0

25.0

23.5

22.0

20.5

20.5

  • Year 1 and 2 worked from LME Futures

  • Year 3 and 4 interpolated to S&P

  • Year 5 based on S&P

  • Scope in the cashflows for increased copper/commodity price assumptions

  • Potential for further expansion of metal portfolio not factored into cashflows (e.g. Bismuth, Tungsten and Molybdenum).

Mine Plan Q&A

The Company is pleased to announce that Andrew Prelea and members of the executive management team will provide a live presentation via the Investor Meet Company platform on Tuesday 6 April 2021 at 10.30 a.m. UK time to discuss the mine plan and answer shareholder questions.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation. The management will also look to address some questions that have been submitted to the Company by private shareholders over recent weeks.

Investors can sign up to Investor Meet Company for free and add to meet Vast via:

https://www.investormeetcompany.com/vast-resources-plc/register-investor

Investors who already follow Vast on the Investor Meet Company platform will automatically be invited.

**ENDS**

For further information, visit www.vastplc.com, follow the Company on Twitter @vast_resources and LinkedIn, or please contact:

Vast Resources plc
Andrew Prelea - CEO
Andrew Hall - CCO

www.vastplc.com
+44 (0) 20 7846 0974

Beaumont Cornish - Financial & Nominated Adviser
Roland Cornish
James Biddle

www.beaumontcornish.com
+44 (0) 020 7628 3396

SP Angel Corporate Finance LLP – Joint Broker
Richard Morrison
Caroline Rowe

www.spangel.co.uk
+44 (0) 20 3470 0470

Axis Capital Markets Limited – Joint Broker
Richard Hutchison

www.axcap247.com
+44 (0) 20 3206 0320

St Brides Partners Limited
Susie Geliher



www.stbridespartners.co.uk
+44 (0) 20 7236 1177

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”).

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Nominated Adviser ("Nomad") to the Company in connection with this announcement and will not be acting for any other person or otherwise be responsible to any person for providing the protections afforded to clients of Beaumont Cornish or for advising any other person in respect of the matters set out in this announcement. Beaumont Cornish's responsibilities as the Company's Nomad are owed solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his or her decision to acquire any shares in the Company.

ABOUT VAST RESOURCES PLC: ROMANIAN OPERATIONS

Vast Resources plc is a United Kingdom AIM listed mining company with mines and projects in Romania and Zimbabwe.

In Romania, the Company is focused on the rapid advancement of high-quality projects by recommencing production at previously producing mines.

The Company’s Romanian portfolio includes 100% interest in the producing Baita Plai Polymetallic Mine, located in the Apuseni Mountains, Transylvania, an area which hosts Romania’s largest polymetallic mines. The mine has a JORC compliant Reserve & Resource Report which underpins the initial mine production life of approximately 3-4 years with an in-situ total mineral resource of 15,695 tonnes copper equivalent with a further 1.8M–3M tonnes exploration target. The Company is now working on confirming an enlarged exploration target of up to 5.8M tonnes.

The Company also owns the Manaila Polymetallic Mine in Romania, which was commissioned in 2015, currently on care and maintenance. The Company has been granted the Manaila Carlibaba Extended Exploitation License that will allow the Company to re-examine the exploitation of the mineral resources within the larger Manaila Carlibaba licence area.