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Final Results
Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining
31 October 2022
Vast Resources plc
(‘Vast’ or the ‘Company’)
Final Results
Vast Resources plc, the AIM-listed mining company, is pleased to announce its audited final results for the 12-month period ended 30 April 2022.
A copy of the annual report will be available on the Company’s website at www.vastplc.com and printed copies are being posted to shareholders.
For further information, visit www.vastplc.com or please contact:
Vast Resources plc | www.vastplc.com |
Beaumont Cornish – Financial & Nominated Advisor | www.beaumontcornish.com |
Shore Capital Stockbrokers Limited – Joint Broker | www.shorecapmarkets.co.uk |
Axis Capital Markets Limited – Joint Broker | www.axcap247.com |
St Brides Partners Limited | www.stbridespartners.co.uk |
ANNUAL REPORT
OVERVIEW OF THE YEAR ENDED 30 APRIL 2022
Vast Resources plc (‘Vast’ or the ‘Group’ or the ‘Company’) is focused on key mining opportunities in Romania, Zimbabwe and Tajikistan. These opportunities comprise the Baita Plai Polymetallic Mine (“BPPM”) in Romania, the Group’s anticipated diamond opportunity in Zimbabwe, and participation in a joint venture in Tajikistan which was concluded after the year end. The Group continued to hold the Manaila Polymetallic Mine (“MPM”) on care and maintenance during the reporting period and is in discussions with potential funders.
BPPM produced concentrate throughout the year and the Company continued to invest in BPPM to support the transition to mechanised mining. Long-hole stopping was successfully introduced in calendar Q3 2022 as the necessary step to significantly increase production volumes. The Company also entered into an agreement during the period to provide services to upgrade and optimise the processing plant at the operating fluorite and galena mine in Tajikistan.
Discussions continue regarding the conclusion of the Company’s diamond agreement with its Zimbabwe stakeholders in line with previous expectations, save on timing.
Financial
• An increase in revenues in the year ended 30 April 2022 (US$3.8 million) compared to the year ended 30 April 2021 (US$ 0.9 million).
• 6.6% increase in other administrative and overhead expenses for the year ended 30 April 2022 (US$4.5 million) compared to the year ended 30 April 2021 (US$4.2 million).
• Foreign exchange losses of US$3.8 million for the year ended 30 April 2022 compared to gains of US$2.6 million for the year ended 30 April 2021. These losses arise from the Company’s USD denominated funding of its Romanian Lei functional currency subsidiaries and are partly compensated by foreign exchange translation gains of US$2.2 million. The Company funds its Romanian businesses in USD given this funding will ultimately be repaid from USD denominated sales.
• An increase in losses after taxation in the year ended 30 April 2022 (US$15.5 million) compared to the year ended 30 April 2021 (US$7.7 million). Eliminating the effects of foreign exchange gains and losses, the loss for the period has increased 14% from US$10.3 million for the year ended 30 April 2021 to US$11.7 million for the year ended 30 April 2022.
• Cash balances at the end of the period US$0.130 million compared to US$1.385 million at 30 April 2021.
Operational Development
• The Company continued to invest in BPPM to support the transition to mechanised mining and the implementation of long hole stoping with the procurement of two Mantis CMR4 Jumbo drilling rigs and an Aramine miniLoader L130D with remote control capability.
• Mill feed production at BPPM increased from 14,452 tonnes for the year ended 30 April 2021 to 38,108 tonnes for the year ended 30 April 2022.
• As announced on 1 October 2021, the Company confirmed the suitability of X-Ray Sorting Technology (‘XRT’) to optimise MPM’s production profile resulting in a substantial improvement in the economics of the mine. The test results conducted by TOMRA indicate that an XRT machine can substantially reduce transportation and production costs. It is for these reasons that the Company is planning to recommence production which will be dependent upon obtaining financing which will be sought at the project level.
• The Company acquired an interest in a Tajikistan mining project under which Vast is providing the necessary services for the upgrade of the processing plant associated with a fluorite and galena mine. Vast is responsible for the management and execution of the project and, through its interest in the venture, will receive the equivalent of 12.25% royalty on sales of non-ferrous concentrate. Under the project agreements, the mine is to produce approximately 7,000 tonnes per month of ore containing no less than 1.5-2% lead, 1.2-1.4% zinc and 27% fluoride. Historically the Mine contained 30g/t silver and 1-2g/t gold in situ.
• Continued discussions to conclude the agreement with Zimbabwe Consolidated Diamond Company (Pvt) Ltd (“ZCDC”) regarding the right to mine diamonds for the Company at the community diamond concession.
Post reporting date:
• The Company commenced long-hole stoping at BPPM in calendar Q3 2022.
• A second milling circuit was completed at the processing plant at BPPM at the end of June 2022.
• BPPM commenced molybdenum concentrate production in August 2022.
• An official opening ceremony for the processing plant of the Tajikistan mine took place on 15 August 2022.
Funding
Equity:
Fundraising share issues during the year (gross proceeds before cost of issue):
£ | $ | Shares Issued | Issued to | |||
2,886,940 | 3,927,568 | 78,395,870 | Placing with investors | |||
645,600 | 855,428 | 53,580,952 | Subscription by investors | |||
1,057,884 | 1,400,000 | 145,366,144 | Settle debt | |||
4,590,424 | 6,182,996 | 277,342,966 |
Post reporting date:
£ | $ | Shares Issued | Issued to | |||
2,156,000 | 2,556,500 | 378,285,715 | Placing with investors | |||
1,743,325 | 2,121,265 | 249,046,446 | Subscription by investors | |||
1,420,845 | 1,750,000 | 511,963,302 | Settle debt | |||
5,320,170 | 6,427,765 | 1,139,295,463 |
• On 6 May 2021 the Company concluded a capital reorganisation which comprised two distinct parts, firstly a consolidation of the existing Ordinary Shares on a 1 for 100 basis, and then a subdivision of each resulting ordinary share of 10p into one new Ordinary Share and eleven new Deferred Shares. The effect of this reorganisation was to reduce the number of ordinary shares in issue by a factor of 100. Where relevant, comparative figures have been adjusted to reflect the capital reorganisation.
Debt:
• During the period the Company repaid US$1,400,000 of principal of the first tranche of the Atlas facility through the issuance of shares. Year end secured debt stood at US$ 10.075 million, comprising the Atlas facility of US$5.1 million and the Mercuria facility of US$4.975 million.
Post reporting date:
• On 16 May 2022, the Company repaid in full the outstanding bonds owed to Atlas and subsequently made a US$1 million debt reduction to the amount owed to Mercuria. These repayments were in part financed by a US$4 million asset backed debt facility from A&T Investments SARL.
Management
• Appointment of Nigel Wyatt as independent Non-executive Director on 23 August 2021.
• Appointment of Andrew Hall as Commercial Director on 7 December 2021.
• Roy Tucker relinquished his executive functions and remains a Non-Executive Director.
Political and Covid-19
• Covid-19 restrictions eased during the period but still continue to create additional costs and inefficiencies to business activities.
• The conflict in Ukraine has not had any direct adverse impact on Vast’s operations but has impacted commodity markets.
CHAIRMAN’S REPORT
The easing of Covid-19 pandemic restrictions was met by heightened geopolitical risks. While the conflict in Ukraine has not directly impacted the running of our operations in Romania, the uncertainty regarding economic global growth has contributed to copper prices being off their recent highs and impacted fuel, energy and transport costs generally. We believe that the fundamental value of our Romanian businesses remains unchanged and that, in the short term, the revenue diversification arising from the polymetallic composition of our deposits will provide some mitigation for the depressed copper price. Despite these challenges the Company successfully refinanced the Atlas bond facility in May 2022.
Romania
Production at the Baita Plai Polymetallic Mine (“BPPM”) increased over last year, and the Company made good progress in transitioning to a mechanised mining methodology, culminating in the commencement of long-hole stopping in calendar Q3 2022. This together with the completion of a second milling circuit in June 2022, will allow a significant increase in production at the mine.
The many priorities and challenges during the period prevented us from working more extensively on the recommencement of production at the Manaila Polymetallic Mine (“MPM”). The Company conducted an evaluation of the economics of the mine, and as part of this process, has assessed the suitability of X-Ray Sorting Technology (‘XRT’) to optimise the mine’s production profile. The assessment indicates that the implementation of XRT equipment would significantly improve the economics of MPM by reducing transportation and production expenses and the Company is actively engaging with potential new investors at the project level to support the re-start.
Zimbabwe
The Company continues discussions to conclude the agreement with Zimbabwe Consolidated Diamond Company (Pvt) Ltd (“ZCDC”) regarding the right to mine diamonds for the Company at the community diamond concession. All stakeholders continue to express their support and the Company anticipates that an agreement will be finalised in due course.
Tajikistan
The Company’s participation in a mining joint venture in Tajikistan marks an exciting development for the Company and is anticipated to provide an attractive income stream from the future sale of non-ferrous concentrates and other metals produced.
Directors and management
Executive management
On 7 December 2021, Andrew Hall was appointed to the Board as Commercial Director. Andrew Hall has spent the last fourteen years working in natural resources and finance linked businesses. Before joining the Company in December 2018, Mr Hall previously worked at a natural resource-focussed merchant bank where he established and managed the alternative finance distribution business covering asset managers, private equity, investment banks, family offices and trading houses.
Non-Executive Directors
On 23 August 2021, Nigel Wyatt was appointed as an independent Non-Executive Director of the Company. Nigel Wyatt is a Chartered Engineer, and a graduate of the Camborne School of Mines. He has held senior positions in several mining and engineering companies primarily in Southern Africa. Nigel has wide ranging experience in ore and diamond recovery technologies and the manufacture of electronic sorting equipment. His experience includes the design and erection of ore sorting and treatment plants.
Funding
On 16 May 2022, the Company repaid in full the outstanding bonds owed to Atlas and subsequently made a US$1 million debt reduction to the amount owed to Mercuria. These repayments were part financed by a US$4 million asset backed debt facility from A&T Investments SARL. The debt facility has a maturity of one year.
Share Capital
In May 2021 the Company’s ordinary share capital was reorganised and consolidated so that the number of ordinary shares in issue was reduced by a factor of 100. The capital reorganisation comprised two distinct parts, firstly a consolidation of the existing Ordinary Shares on a 1 for 100 basis, and then a subdivision of each resulting ordinary share of 10p into one new Ordinary Share of 0.1p and eleven new Deferred Shares of 0.9p each.
Corporate Governance
As stated in the Strategic Report, the Company has adopted the Quoted Company Alliance (‘QCA’) code on Corporate Governance. The Board strives to promote a corporate culture based on sound ethical values and behaviours. The Company maintains a strict anti-corruption and whistle blowing policy and the Directors are not aware of any event in any jurisdiction in which it operates that might be considered to be a breach of this policy. The Company has formally adopted Code of Conduct, Health and Safety, Environmental, and Human Rights policies which clearly articulate the Board’s expectations and strengthen the control environment of the organisation. The Company continues to operate a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. The Company is also committed to maintaining open dialogue with shareholders, employees and other stakeholders.
Appreciation
The continued support and resolve of shareholders and other stakeholders through times that have been challenging is much appreciated. To fellow directors, thank you for your advice and support, and to management and staff both in Romania and Zimbabwe for their continued effort on behalf of the Company. Above all we wish all our stakeholders well in these difficult times and remain committed to safeguarding the safety of our employees and the communities in which we operate.
Brian Moritz
Chairman
STRATEGIC REPORT
Principal activities, review of business and future developments
Vision
The vision of the Group continues to be to become a mid-tier mining group, one of the largest polymetallic (copper, zinc, silver, and gold) producers in Romania, and a major player in the re-emergence of the mining industry in Tajikistan and in Zimbabwe, where the Group now has a major focus on its diamond interests. The Group is also looking to expand its polymetallic and diamond footprint further afield to complement its Romanian and Zimbabwe strategy, and has recently entered into a joint venture in Tajikistan with a fluorite and galena mine to produce and market non-ferrous concentrate.
Principal activities
In Romania the Group has focused on operating the Baita Plai Polymetallic Mine (“BPPM”) which commenced production in October 2020. The Manaila Polymetallic Mine (“MPM”) has remained on care-and-maintenance during the period and the Company is actively engaged with new investors to support the restart.
In Zimbabwe, the Group continues to focus on concluding the agreement with Zimbabwe Consolidated Diamond Company (Pvt) Ltd (“ZCDC”) regarding the right to mine diamonds for the Company at the community diamond concession.
In Tajikistan, the Group entered into a joint venture in Tajikistan with a fluorite and galena mine to produce and market non-ferrous concentrate and other metals.
In both Romania and Zimbabwe, the Group holds further mining claims or other interests which are under appraisal.
Review of business
Romania
BPPM (100% interest)
Operations
The Company established a new mechanised plan at BPPM in March 2021 but experienced complications and delays in Q2 of year ended 30 April 2022 due to encountering friable ground at the faces that required extra tunnelling to come back into the resource. Despite these challenges, mill feed production at BPPM has increased from 14,452 tonnes for the year ended 30 April 2021 to 38,108 tonnes for the year ended 30 April 2022. The Company has continued to invest time and resources to fully implement the transition to mechanised mining and successfully began long-hole stoping in calendar Q3 2022 following the deliveries of two Mantis CMR4 Jumbo drilling rigs and an Aramine miniLoader L130D with remote control capability. This represents a major achievement for the Company and will support significantly increased production volumes going forward. We continue to hold MPM on care-and-maintenance and are actively engaged with new investors to support the restart of MPM.
Resources
The JORC compliant Resource & Reserve Report for BPPM comprises an Indicated & Inferred mineral resource of 608,000 tonnes at 2.58% copper equivalent based on a copper metal price of US$ 6,655/tonne. Under JORC an exploration target has been identified, which includes an historical mineral resource of between 1.8 million to 3 million tonnes with a copper grade range of 0.50–2.00%, gold range of 0.20–0.80 g/t and silver range of 40-80g/t. Subsequent to the publication of the JORC assessment, and following an analysis of historical data records, the exploration targets previously reported under the JORC were increased from 1.8 million – 3.0 million tonnes to 3.2 million - 5.8 million tonnes with copper grades in the range 0.50-2.00%, lead range 0.10-2.00%, zinc range 0.10-2.00%, gold range 0.20-0.80g/t, and silver range 40-80g/t further reinforcing the value of BPPM. The mineral resource estimate underpins the initial mine production life of approximately 3-4 years and the Company is in the process of conducting a drilling campaign in anticipation of increasing the JORC resource.
MPM (100% interest)
The Manaila Carlibaba exploitation perimeter contains a JORC-2012 compliant Indicated Mineral Resource of 3.6 million tonnes grading 0.93% copper, 0.29% lead, 0.63% zinc, 0.23g/t gold and 24.9g/t silver with Inferred Mineral Resources of 1.0 million tonnes grading 1.10% copper, 0.40% lead, 0.84% zinc, 0.24g/t gold and 29.2g/t silver. Under JORC underground exploration targets identified are 7.9 million – 23.6 million tonnes with copper grades in range of 0.4-1.3%, lead range 0.2-0.7%, zinc range 0.3-1.1%, and open pit exploration targets of 1.1 million – 3.2 million tonnes with copper grades in range of 0.4-1.1%, lead 0.1-0.4%, and zinc range 0.2-0.6%.
The Company was granted the Manaila Carlibaba Exploitation License to 29 October 2025.
The increase in demand for copper together with production efficiencies confirmed by the assessment of the suitability of X-Ray Sorting Technology (‘XRT’) to optimise the mine’s production profile results in a substantial improvement in the economics of MPM. The test results conducted by TOMRA indicate that an XRT machine can substantially reduce transportation and production costs. It is for these reasons that the Company is engaged with potential new investors at the project level to support the restart of MPM.
Blueberry Polymetallic Gold Project (`Blueberry’) (29.41% effective interest).
The Group has an effective 29.41% economic interest in Blueberry through EMA Resources Ltd (‘EMA’) in a brown field perimeter located at Baia de Aries in the ‘Golden Quadrilateral’ of Western Romania on which historic work has demonstrated prospectivity for gold and polymetallic minerals. The Group has completed a drilling programme on the perimeter which has established sufficient information to support a maiden JORC resource. The Company has completed procedural and reporting requirements with the Romanian authorities. These have now been accepted and will allow the Company to apply for an exploitation licence. The results and net assets of the Blueberry project are immaterial to the Group and therefore have not been included in the Group financial statements under the equity method of accounting.
Other Romanian prospects
Given the Company’s focus on BPPM, the application for an Exploration Licence for our current claims at Magura Neagra and Piciorul Zimbrului (collectively known as ‘Zagra’) has been placed on hold and will recommence once internal resources are available.
The Group continues to believe that exploitation of the many mining opportunities that have become dormant in Romania over the last two decades will be an attractive prospect for global mining players seeking to capitalize on the projected increase in demand globally for copper occasioned by the global transition to clean energy and electric vehicles.The Group’s ‘first mover position’ in Romania has attracted interest in resuscitating the large-scale polymetallic resource projects in Romania.
Zimbabwe
The Group has now focused its Zimbabwe strategy on mining its anticpated diamond concession in Zimbabwe. This opportunity potentially offers high and near term positive cashflow and is unrestrained by tight currency controls.
Discussions with the various Zimbabwe stakeholders remain in line with previous expectations, other than on timing, and we anticipate that we will be able to commence our mining operations in due course.
Tajikistan
The Company, as one of a collective group of partners, entered into a new joint venture project (the “Project”) in Tajikistan with Open Joint Stock Company Korkhonai Boygardonii Takob (“Takob”).
The interest in the Project has been acquired as a result of the acquisition by a recently incorporated UK company, Central Asia Investments Ltd, in which Vast has a 49 percent interest of a 50 percent interest in Central Asia Minerals and Metals Ore Trading FZCO (“CAMM”) which has an agreement with Takob (the “Master Agreement”). Vast has an effective 24.5 percent indirect interest in the Project.
Takob, a wholly owned subsidiary of the Tajikistan Open Joint Stock Company “TALCO”, the country’s largest group of companies, is the owner of the operating Takob fluorite and galena mine (the “Mine”) in Tajikistan where the strategic fluoride concentrate is sold to TALCO’s chemical division (“TALCO Chemical LLC”), for the production of essential raw materials required for primary aluminium production.
Under the Master Agreement the Mine is to produce approximately 7,000 tonnes per month of ore containing no less than 1.5-2% lead, 1.2-1.4% zinc and 27% fluoride. Under the Master Agreement CAMM is to provide equipment, technology and technical expertise to upgrade and optimise the processing plant at the Mine, and will undertake the responsibility for the management and execution of the Project. Takob will continue to mine ore at the Mine and produce fluoride concentrate. Takob has undertaken to supply no less than 1,000,000 tonnes of ore to be processed in line with the Project that is anticipated to run with the current Resource statement for 12 years.
CAMM has also under the Master Agreement been appointed as exclusive agent for Takob to market and sell all non- ferrous concentrates and precious metals from Takob’s Mine including but not limited to lead, zinc, gold and silver. CAMM has secured financing and is fully funded for the Project. In consideration for CAMM’s financing obligations and provision of services under the Master Agreement CAMM will be entitled to receive 50 percent of net revenue from the sale of non-ferrous concentrate and precious metals.
In order for CAMM to provide the expertise required to fulfil its services and marketing obligations under the Master Agreement CAMM has entered a services agreement with Vast to provide the services required. Under this agreement Vast is entitled to charge for the services provided on the basis that 24.5 percent of the fees earned will be left outstanding until they can be financed from revenue arising from the Project. In addition to fees receiveable under the services agreement with CAMM Vast will receive the equivalent of 12.25 percent royalty of all sales of the non-ferrous concentrate and any other metals produced for its participation in the collective group.
As announced on 24 May 2022, CAMM executed a Memoradum of Undertstanding (“MoU”) with Open Joint Stock Company TALCO linked to processing the tailings produced by the Takob Mine processing facility. During the initial soil sampling phase the company reported visible signs of Lead, Zinc and precious metals, including Gold, Silver & Platinum Group Metals, in the tailings facility. Initial surface survey results show that there is a minimum of 1 million tons and up to 3.3 million tons. Over the past 40 years of mining the processing plant was focused on Calcium Fluoride recoveries, not on extraction of non-ferrous or precious metals.
Corporate
During the period the Company repaid US$1,400,000 of principal of the first tranche of the Atlas facility through the issuance of shares.
On 16 May 2022, the Company repaid in full the outstanding bonds owed to Atlas and subsequently made a US$1 million debt reduction to the amount owed to Mercuria. These repayments were in part financed by a US$4 million asset backed debt facility from A&T Investments SARL with maturity of one year.
Strategy
The Group’s strategy is to:
• Attract ongoing funding for the Group – including from institutional investment
• Attract appropriate joint venture partners and public institutions to invest in the Group and projects of mutual interest
• Grow into a mid-tier mining company both organically and through acquisitions financed principally by third parties
• Optimise operations to produce positive cashflows
• Add value to operations by increasing resources and reserves
• If expedient, hold significant minority stakes in new ventures operationally managed by the Group
• Finance growth, where possible in a non-dilutive manner
• Maintain exposure to Romania and Zimbabwe where the Group has acquired in-depth country knowledge
• Develop the Company’s existing relationship in Tajikistan with Talco with a view to expanding its portfolio within the country
• Expand the Company’s polymetallic and diamond footprint further afield to complement its Romanian and Zimbabwe strategy
• Continue to work with Government and local communities in Zimbabwe in the diamond sector, and to develop the diamond business in a transparent way for the benefit of all stake holders
Key performance indicators
In executing its strategy, the Board considers the Group’s key performance indicators to be:
Cash cost per tonne milled
• Cash cost per tonne is derived from aggregate cash costs divided by tonnes milled and measures productivity.
• BPPM cash cost per tonne was US$180 for the year (2021: US$201) and is derived from aggregate cash costs divided by tonnes milled and measures productivity.
• There has been no production at MPM this and last year given the mine was on care and maintenance.
Cash costs per tonne of concentrate
• Cash cost per tonne produced is calculated by dividing aggregate cash cost by concentrate tonnes produced and measures productivity.
• BPPM cash cost per tonne was US$7,654 for the year (2021: US$5,184) and is derived from aggregate cash costs divided by the tonnes produced. The increase this financial year is due to spiral development costs incurred to access higher grade resource to be mined. These costs have not been capitalised given their short useful economic life.
• There has been no production at MPM this year given the mine has been on care and maintenance.
Plant production volumes as a measure of asset utilisation
• BPPM processed mill feed of 38,108 tonnes (2021: 14,452 tonnes).
• There has been no production at MPM this and last year given the mine was on care and maintenance.
Total resources and reserves
• These indicators measure our ability to discover and develop new ore bodies, including through acquisition of new mines, and to replace and extend the life of our operating mines. We have published JORC-2012 compliant resource estimates for both BPPM and MPM which are described above. The alluvial diamond interest in Zimbabwe where there is an expectation of a right to mine is considered very prospective, but by its nature is not susceptible to the estimation of a JORC resource.
The rate of utilization of the Group’s cash resources. This is discussed further below.
Cash resources
The Group’s year end position was US$0.103 million (2021: US$1.385 million).
During the year cash used in operations were US$3.562 million, with a significant portion of the balance directly related to developing, supporting and maintaining our mining assets.
Cash outflows from investing activities were US$1.844 million comprising additions to property, plant, and equipment of $1.467 million in the Group’s Romanian operations and a $0.417 million investment in the Company’s associate, CAMM.
Cash net inflows from funding activities were US$ 4.164 million, comprising the net of the proceeds from the issuance of shares of US$4.528 million less repayment of loans and borrowings and finance expenses of US$0.364 million.
The Directors monitor the cash position of the Group closely to plan sufficient funds within the business to allow the Group to meet is commitments and continue the development of assets. As part of this process, the Directors closely monitor capital expenditure and the regulatory requirements of the licences to ensure they continue in good standing.
Principal risks and uncertainties
Risk – Going concern
The Group will require funding to make further debt reductions to the Mercuria loan, and to refinance the Alpha debt facility which becomes due on 13 May 2023, and to provide general working capital. BPPM is currently producing and is expected to be operationally profitable within the financial year to 30 April 2023. The Directors are confident that the Company will be able to obtain funds for such requirements from debt providers and investors given the fundamental value of its assets and project pipeline, supported by expectations for strong demand for copper, and production at BPPM. However, while the Company is in discussions with potential investors and debt providers, no binding funding agreement is in place at the date of this Report. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's and Company's ability to continue as a going concern. The financial statements do not include the adjustment that would result if the Group and Company were unable to continue as a going concern.
Mitigation/Comments
The Company is in discussions for financing that is better suited to its current operational and risk profile. This includes medium-term financing at prices reflecting the reduced financial risk profile of the Company. The Board will also continue to engage with providers of commodity trade finance, potential joint venture and other investors in order for them to understand the fundamental strength of the Group’s business and attract additional funding when required. The Board also will, whenever possible, retain sufficient cash margin to offset contingencies. The Group’s diamond investments would not be subject to remittance restrictions as the Group is advised that foreign currency regulations will allow export proceeds not required to meet costs in Zimbabwe to be retained offshore.
Risk – Mining
Mining of natural resources involves significant risk. Drilling and operating risks include geological, geotechnical, seismic factors, industrial and mechanical incidents, technical failures, labour disputes and environmental hazards.
Mitigation/Comments
Use of strong technical management together with modern technology and electronic tools assist in reducing risk in this area. Good employee relations are also key in reducing the exposure to labour disputes. The Group is committed to following sound environmental guidelines and is keenly aware of the issues surrounding each individual project.
Risk - Commodity prices
Commodity prices are subject to fluctuation in world markets and are dependent on such factors as mineral output and demand, global economic trends and geo-political stability.
Mitigation/Comments
The Group’s management constantly monitors mineral grades mined, cost of production, and commodity diversity to ensure that mining output becomes or remains economic. The anticipated marginal contributions going forward at both BPPM and the Zimbabwe diamond project opportunity are high versus fixed costs which provides a degree of liquidity protection in the event prices decline significantly.
Risk – Management and Retention of Key Personnel
The successful achievement of the Group's strategies, business plans and objectives depend upon its ability to attract and retain certain key personnel.
Mitigation/Comments
The Group’s policy is to foster a management culture where management is empowered and where innovation and creativity in the workplace are encouraged. The Group has in place a “Share Appreciation Rights Scheme” for Directors and senior executives to provide incentives based on the success of the business and continues to consult third party benchmarks for remuneration. It has also introduced more specific incentive arrangements for the Group’s diamond business in Zimbabwe.
Risk - Country and Political
The Group’s activities are based in Romania, Zimbabwe and Tajikistan. Emerging market economies could be subject to greater risks, including legal, regulatory, economic, bribery and political risks, and are potentially subject to rapid change. In addition, there are risks particular to Zimbabwe arising from a scarcity of foreign exchange, difficulty with foreign remittances of funds and the, now albeit very substantially mitigated, risk of indigenisation.
Mitigation/Comments
The Group’s management team is experienced in its areas of operation and skilled at operating within the framework of the local culture in Romania and Zimbabwe to progress its objectives. The Group routinely monitors political and regulatory developments in each of its countries of operation. In addition, the Group actively engages in dialogue with relevant government representatives to keep abreast of all key legal and regulatory developments applicable to its operations. The Group has several internal processes and checks in place to ensure that it is wholly compliant with all relevant regulations to maintain its mining or exploration licences within each country of operation.
Risk - Social, Safety and Environmental
The Group's success may depend upon its social, safety and environmental performance, as failures can lead to delays or suspension of its mining activities.
Mitigation/Comments
The Group takes its responsibilities in these areas seriously and monitors its performance across these areas on a regular basis. The Group has adopted and obtained ISO 9001:2015 for Quality, ISO 45001: 2018 for Safety, and ISO 140001: 2015 for Environment. The Group adheres to all Covid-19 rules, regulations, and guidelines in preventing transmission of the infection through the workforce.
Corporate Governance
The Company has adopted the QCA (Quoted Company Alliance) Code on corporate governance. Details of how the Company complies with this are set out on the Company’s website. Principles which are required to be dealt with under the Code in the Company’s Annual Report are set out below.
Business model and strategy
This is described above under Strategy and elsewhere in this Report.
Risk Management
In addition to its other roles and responsibilities, the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company.
The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the Executive Directors. The Board works closely with and has regular ongoing dialogue with the Company Financial Director and other Executive Directors and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.
The risks facing the Company are detailed above. The Board seeks to mitigate such risks so far as it is able to, as explained above, but certain important risks cannot be controlled. The CEO is primarily responsible to the Board for risk management.
In particular, the products the Company mines and is seeking to identify are traded globally at prices reflecting supply and demand rather than the cost of production. In Romania, the Company seeks to protect its cash flow by means of a long-term offtake agreement, but it does not hedge future production.
Maintenance of a well-functioning Board of Directors led by the Chairman
Membership of the Board at the date hereof is as follows:
Name Role Appointed
Brian Moritz Non-executive Chairman 3 October 2016
Andrew Prelea Chief Executive Officer 1 March 2018
Roy Tucker Non-Executive Director 5 April 2005
Paul Fletcher Finance Director 6 November 2019
Craig Harvey Chief Operating Officer 1 March 2018
Nick Hatch Non-Executive Director 9 May 2018
Nigel Wyatt Non-Executive Director 23 August 2021
Andrew Hall Commercial Director 7 December 2021
The Non-executive Directors other than Roy Tucker are considered to be independent.
All the Directors are subject to re-election at intervals of no more than three years.
The table illustrates the success of the Board in refreshing its membership.
The Board is well balanced both in its skill sets and in the domicile of its members. Of the Executive Directors, Andrew Prelea is resident in Romania, Andrew Hall and Paul Fletcher in the UK, and Craig Harvey splits his time between Romania and Southern Africa, with the majority of his time now spent in Romania. All the Non-Executive Directors are resident in the UK.
Non-executive Directors are committed to devote 3 days per month to the Company. Executive Directors devote substantially the whole of their time to the Company.
Where possible Directors are physically present at board meetings. However, due to the wide divergence of locations, Directors may be present by telephone. The position is also impacted currently by the Covid-19 situation.
During the year ended 30 April 2022 there were 17 board meetings of the Company which save for the absence by one Director on one occasion were attended by all the Directors. There were a further 10 meetings of a formal nature. There was also one General Meeting in addition to the Annual General Meeting.
Appropriate skills and experience of the Directors
The CVs of the Directors - four executives and four non-executives - as disclosed on the website, are set out below. In addition, the Company has employed the outsourced services of Ben Harber of Shakespeare Martineau as company secretary.
Andrew Prelea – Chief Executive Officer
Andrew has been involved in the mining sector for 10 years and with Vast since 2013. He has spearheaded the development of the Company’s Romanian portfolio. Beginning his career in the early 1990s as a bulk iron ore and steel trader in Romania, he then went on to develop his career in the property and earthmoving sector in Australia before returning to Romania in 2003, initially to focus on the development of properties for the Romanian Ministry of Defence and latterly, private sector developments. Throughout his 29 year career, Andrew has developed extensive investor and public relations experience and has advised the Romanian government on wide ranging high-level topics including social housing and economic policy. He has built a strong network of contacts across the mining and metals industries and Europe and southern Africa, in addition to policy makers and governmental authorities in both Romania and Zimbabwe.
Brian Moritz - Chairman
Brian is a Chartered Accountant and former Senior Partner of Grant Thornton UK LLP, London; he formed Grant Thornton’s Capital Markets Team which floated over 100 companies on AIM under his chairmanship. In December 2004, he retired from Grant Thornton UK LLP to concentrate on bringing new companies to the market. He specialises in natural resources companies, primarily in Africa, and was formerly chairman of Metal Bulletin plc, African Platinum plc and Chromex Mining plc as well as currently being chairman of several junior mining companies.
Roy Tucker – Non-Executive Director
Roy is a Chartered Accountant with some 50 years of high level and broad spectrum professional and business experience. He has been the founder of a London banking group, served on bank boards and had a position as a major shareholder of a substantial London commodity house. He is also the founder of Legend Golf and Safari Resort in South Africa. He has substantial investment in the Romanian property sector.
Paul Fletcher – Finance Director
Paul is a Chartered Accountant and Fellow of the Association of Corporate Treasurers with 30 years’ experience working in the commodity and financial services industries. He has held a variety of senior international finance and operational roles in trading, processing, and financial businesses in the US, Europe, and Asia.
Andrew Hall – Commercial Director
Andrew has spent the last fourteen years working in natural resources and finance linked businesses. Before joining the Company in December 2018, Andrew previously worked at a natural resources focussed merchant bank where he established and managed the alternative finance distribution business covering asset managers, private equity, investment banks, family offices and trading houses.
Craig Harvey – Chief Operating Officer
Craig began his career with Gold Fields of SA in 1988 as a bursary student in Economic Geology where he worked on various gold, platinum, coal and exploration projects. At Harmony Gold he managed the mineral resources on various operations and was involved in due diligence on acquisitions. He joined Simmer and Jack with a focus on shallow hydro-thermal gold deposits in the Eastern Transvaal and later moved into a corporate role managing and auditing the mineral resource process across all gold and uranium operations. Craig spent 3 years in a Principal Consultant role for Ravensgate based in Perth, Australia, where he conducted numerous resource estimations, valuations and technical reports mainly in gold, uranium, copper and iron ore. Craig joined Vast Resources as a consultant in 2013 and became Chief Operating Officer in March 2017. During his tenure with Vast Resources, he has been heavily involved in both Zimbabwe and Romania.
Nick Hatch – Non-Executive Director
Nick has more than 36 years’ experience in mining investment banking, primarily as a mining analyst and in managing mining & metals research and equities teams. He was most recently Director of Mining Equity Research at Canaccord Genuity in London. Nick’s experience includes researching and advising on mining companies and projects across the globe and across the commodity spectrum and includes companies of all sizes. Nick left investment banking in 2017, and has set up his own company, Nick Hatch Mining Advisory Ltd, to provide mining research, business development and financing advice. He holds a degree in Mining Geology and is a Chartered Engineer.
Nigel Wyatt – Non-Executive Director
Nigel is a Chartered Engineer, a graduate of the Camborne School of Mines. He has held senior positions in several mining and engineering companies primarily in Southern Africa. These include CEO of Chromex Mining Plc, group marketing director of a De Beers subsidiary group supplying specialised, materials, engineering and technology to the mining and industrial sectors, and commercial director of Dunlop Industrial Products (Pty) Ltd, South Africa. He has wide ranging experience in ore and diamond recovery technologies and the manufacture of electronic sorting equipment. His experience includes the design and erection of ore sorting and treatment plants.
The Company believes that the current balance of skills on the Board, as a whole, reflects the broad range of commercial and professional skills that the Company requires. Among the Executive Directors, Andrew Prelea is experienced in general management, including identifying and negotiating new business opportunities; Paul Fletcher is a Chartered Accountant and Fellow of the Association of Corporate Treasurers with broad international and financial management experience in the commodity sector, Craig Harvey is a qualified geologist experienced in constructing and operating mines, and Andrew Hall is experienced in natural resource and finance linked businesses.
Among the Non-executives Brian Moritz is a Chartered Accountant with senior experience. In addition to his financial skills he has former experience as a Registered Nominated Adviser. Roy Tucker is a Chartered Accountant with many years’ experience in general executive management. Nick Hatch is a qualified geologist with experience in evaluating mining companies and natural resource projects. Nigel Wyatt is a Chartered Engineer, a graduate of the Camborne School of Mines with wide ranging experience in the commercial aspects of mining and in ore and diamond recovery technologies.
Importantly, three Directors without geological qualifications have significant experience with junior companies in the natural resources sector.
Evaluation of Board Performance
The Group is in the process of fast evolution and at this stage in the Company’s development it is not deemed necessary to adopt formal procedures for evaluation of the Board or of the individual Directors. There is frequent informal communication between members of the Board and peer appraisal takes place on an ongoing basis in the normal course of events. However, the Board will keep this under review and may consider formalised independent evaluation reviews at a later stage in the Company’s development.
Given the size of the Company, the whole Board is involved in the identification and appointment of new Directors and as a result, a Nominations Committee is not considered necessary at this stage. The importance of refreshing membership of the Board is recognised and has been implemented. In 2018 Andrew Prelea was appointed to replace Roy Pitchford as CEO, and Nick Hatch replaced Brian Basham as a Non-executive Director. In November 2019, Paul Fletcher was appointed to the Board as Finance Director, and in 2021 Nigel Wyatt was appointed to replace Eric Diack as Non-executive Director, and Andrew Hall appointed to the Board as Commercial Director. Nevertheless, it is envisaged that the Board will be strengthened in due course as and when new projects are operated by the Company.
Maintenance of Governance Structures and Processes
The corporate governance structures which the Company is able to operate are limited by the size of the Board, which is itself dictated by the current size and geographical spread of the Company’s operations, with Directors resident in the UK, Romania and Southern Africa. With this limitation, the Board is dedicated to upholding the highest possible standards of governance and probity.
The Chairman, Brian Moritz:
• leads the Board and is primarily responsible for the effective working of the Board;
• in consultation with the Board ensures good corporate governance and sets clear expectations with regards to Company culture, values and behaviour;
• sets the Board’s agenda and ensures that all Directors are encouraged to participate fully in the activities and decision-making process of the Board.
The CEO, Andrew Prelea:
• is primarily responsible for developing Vast’s strategy in consultation with the Board, for its implementation and for the operational management of the business;
• is primarily responsible for new projects and expansion;
• in conjunction with the CFO and Commercial Director is responsible for attracting finance and equity for the Company;
• runs the Company on a day-to-day basis;
• implements the decisions of the Board;
• monitors, reviews and manages key risks;
The Chief Operating Officer, Craig Harvey:
• is responsible for operational improvements and efficiency of mining operations in Romania;
• is responsible for expansion and exploration of projects at the mine level;
• is responsible for the Baita Plai mine ramp-up;
• assists and advises on the operation and expansion of other operations and projects;
• provides technical input on new projects.
The Finance Director, Paul Fletcher:
• is responsible for the administration of all aspects of the Group;
• oversees the accounting and treasury function of all Group companies;
• in conjunction with the CEO, is responsible for the financial risk management of the Company;
• is responsible for financial modelling to support fund raising initiatives and structuring trade related funding;
• is responsible for financial planning and analysis;
• deals with all matters relating to the independent audit;
The Commercial Director, Andrew Hall:
• works with the CEO on the Company’s strategic business initiatives and capital raising;
• is responsible for offtake relationships;
• is responsible for leading the Company’s external and investor communications;
• is the main point of contact with the Company’s Nomad
Roy Tucker has assumed the role of Non-Executive Director during the year. Through a period of transition, Roy also provides legal, consultancy and compliance services to the Company.
The Remuneration Committee is currently chaired by Nick Hatch and comprises Nick Hatch, Brian Moritz and Nigel Wyatt. The Remuneration Committee is responsible for establishing a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual Directors. The Committee’s policy is to provide a remuneration package which will attract and retain Directors and management with the ability and experience required to manage the Company and to provide superior long-term performance.
The Audit and Compliance Committee is currently chaired by Brain and comprises Brian Moritz and Nick Hatch. It normally meets twice per annum to inter alia, consider the interim and final results. In the latter case the auditors are present and the meeting considers and takes action on any matters raised by the auditors arising from their audit.
Matters reserved for the Board include:
• Vision and strategy
• Production and trading results
• Financial statements and reporting
• Financing strategy, including debt and other external financing sources
• Budgets, acquisitions and expansion projects, divestments and capital expenditure and business plans
• Corporate governance and compliance
• Risk management and internal controls
• Appointments and succession plans
• Directors’ remuneration
Shareholder Communication
The Board is committed to maintaining effective communication and having constructive dialogue with its shareholders in accordance with Principle Two of the Quoted Companies Alliance Code as adopted by the Company. The Company is desirous of obtaining an institutional shareholder base, and institutional shareholders and analysts will have the opportunity to discuss issues and provide feedback at meetings with the Company.
The Investors section of the Company’s website provides all required regulatory information as well as additional information shareholders may find helpful including: information on Board members, advisors and significant shareholdings, a historical list of the Company’s Announcements, its corporate governance information, the Company’s publications including historic annual reports and notices of annual general meetings, together with share price information.
The results of shareholder meetings will be publicly announced through the regulatory system and displayed on the Company’s website with suitable explanations of any actions undertaken as a result of any significant votes against resolutions.
Section 172 (1) Statement
The Directors of the Company must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006. This Section 172 statement explains how the Directors fulfil these duties.
Each Director must act in a way that they consider, in good faith, would be most likely to promote the Company’s success for the benefit of its members as a whole, and in doing so have regard (among other matters) to:
S172(1) (a) “The likely consequences of any decision in the long term”
The Board has focused its resources primarily on two key mining opportunities in Romania and Zimbabwe. These opportunities comprise BPPM in Romania, and the Group’s expected diamond concession in Zimbabwe. The Board is also looking to expand the Company’s polymetallic and diamond footprint further afield to complement its Romanian and Zimbabwe strategies. For further details on the Company’s strategy and the key performance indicators, please see page 9 and 10 of the annual report. The Board has implemented processes to identify, measure, manage, and mitigate risks and uncertainties arising from the implementation of its strategy. These risks and uncertainties are highlighted on pages 10, 11 and 12 of the annual report and the processes by which they are managed are highlighted under the Risk Management principles set out on the Corporate Governance section on page 12 of the annual report.
S172(1) (b) “The interests of the Company’s employees”
The successful achievement of the Group's strategies, business plans and objectives depend upon its ability to attract, motivate, and protect the safety of its employees. Health and Safety, and Human Rights policies clearly articulate the Board’s expectations and safeguard the interests of the Company’s employees. The Group’s policy is to foster a management culture where management is empowered and where innovation and creativity in the workplace are encouraged and rewarded. This is reflected in the performance programs that the Company has implemented.
S172(1) (c) “The need to foster the company’s business relationships with suppliers, customers and others”
The Company has ongoing dialogue with its customers and suppliers and ensures that a strong relationship is maintained at the level of senior management. This ensures alignment with the Company’s business objectives and promotes strong collaboration. As mentioned on page 16 of the annual report, under Shareholder Communication, the Board maintains effective communication with its shareholders and provides updates and information through public announcements on the regulatory system and on the Company website.
S172(1) (d) “The impact of the company’s operations on the community and the environment”
As mentioned on page 11 of the annual report, under Risk – Social, Safety and Environmental, the Group monitors its performance across these areas on a regular basis. The Group has adopted and obtained ISO 9001:2015 for Quality, ISO 45001: 2018 for Safety, and ISO 140001: 2015 for Environment. The Group adheres to all Covid-19 rules, regulations, and guidelines in preventing transmission of the infection through the workforce. As mentioned in the Chairman’s Report on pages 5 and 6 of the annual report, the Company has also implemented formal policies on these areas.
S172(1) (e) “The desirability of the company maintaining a reputation for high standards of business conduct”
As more fully explained on pages 5 and 6 of the Chairman’s Report and under the Corporate Governance section on page 12 of the annual report the Board strives to promote a culture based on high business conduct standards.
S172(1) (f) “The need to act fairly as between members of the company”
Having assessed all necessary factors, and as supported by the processes described above, the Directors consider the best approach to delivering on the Company’s strategy. This is done after assessing the impact on all stakeholders and is performed in such a manner so as to act fairly as between the Company’s members.
Outlook
The Company has continued to invest time and resources to implement the full transition to mechanised mining and successfully began long hole stoping in calendar Q3 2022 following the deliveries of two Mantis CMR4 Jumbo drilling rigs and an Aramine miniLoader L130D with remote control capability. This represents a major achievement for the Company and will support significantly increased production volumes going forward. MPM continues to hold significant value for the Company, supported by strong demand for copper and improved production techniques. The priorities this year prevented the team from devoting time to realising the value of the asset and we are re-engaging with investors to support at the project level the restart of MPM.
In Zimbabwe, we continue to anticipate that we will be able to conclude our mining agreement despite the delays; and in Tajikistan we see near term opportunity to develop our position in the country in polymetallics.
The economic fundamentals for the Company’s polymetallic business are strong. Increased demand for copper and tightness in supply have significantly lifted copper prices, despite recent declines due to the conflict in Ukraine. The forecast global growth in electric vehicles remains likely to create, over the next decade, a shortage of copper as producers struggle to meet demand as a consequence of declining grades, water supply issues and community resistance holding back discovery and exploitation of new resources.
Management believes that the business environment in Zimbabwe will improve as the government seeks to establish an attractive base for sustainable foreign investment, and that the Group, having established production at BPPM and having acquired significant first mover know-how, will begin to see traction on its other Romanian opportunities. Management believes that a combination of a bullish outlook on polymetallics together with a reduction in Romanian and Zimbabwean country risk premiums has the potential to provide significant medium-term growth in the share price and the financial performance of these businesses.
Many thanks to fellow Board members and management for the commitment and hard work that has been put into the Group. I also thank all our stakeholders for their support through these challenging times.
On behalf of the Board,
Andrew Prelea
Group Chief Executive Officer
REPORT OF THE DIRECTORS
for the year ended 30 April 2022
The Directors present their report together with the audited financial statements for the twelve-month period ended 30 April 2022.
Results and dividends
The Group statement of comprehensive income is set out on page 28 of the annual report and shows the profit for the period.
The Directors do not recommend the payment of a dividend (2021: nil).
Financial instruments
Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note 21 of the financial statements.
Directors
The Directors who served during the period and up to the date hereof were as follows: -
Date of Appointment
Roy Tucker 5 April 2005
Brian Moritz 3 October 2016
Andrew Prelea 1 March 2018
Craig Harvey 1 March 2018
Nick Hatch 9 May 2018
Paul Fletcher 6 November 2019
Nigel Wyatt 23 August 2021
Andrew Hall 7 December 2021
Directors’ interests
The interests in the shares of the Company of the Directors who served during the period were as follows:
30 April 2022 | 30 April 2021 | |
Ordinary Shares | New Ordinary Shares | |
Andrew Hall | 115,550 | 115,550 |
Nigel Wyatt | - | - |
Paul Fletcher | 705,481 | 340,481 |
Craig Harvey | 56,500 | 56,500 |
Nick Hatch | - | - |
Brian Moritz | 250,000 | 250,000 |
Andrew Prelea | 16,065,147 | 16,065,147 |
Roy Tucker | 2,945,757 | 2,945,757 |
Total | 20,138,435 | 19,773,435 |
Cash-settled share rights
The following rights are held by Directors in a cash-settled share rights performance programme:
Subscription price | Outstanding at 30 April 2021 | Exercised during | Lapsed during last 12 months | Outstanding at 30 April 2022 | |||
Roy Tucker | £6.00 | 27,500 | - | (27,500) | - | ||
Total | 27,500 | - | (27,500) | - |
See note 23 for further details of this programme.
Share Appreciation Rights Scheme
The following Directors have been granted rights under the Company’s Share Appreciation Rights Scheme:
In issue at | Grant date | Awarded during period | Exercised / lapsed during period | In issue at | Vesting period | |||
30 April 2021 | 30 April 2022 | |||||||
Start | Finish | |||||||
Paul | 50,000 | 04-Nov-19 | 50,000 | 04-Nov-19 | 03-Nov-22 | |||
Fletcher | 50,000 | 04-Nov-19 | 50,000 | 04-Nov-19 | 31-Mar-23 | |||
175,000 | 24-Nov-20 | 175,000 | 24-Nov-20 | 23-Nov-23 | ||||
175,000 | 24-Nov-20 | 175,000 | 31-Mar-21 | 31-Mar-24 | ||||
05-Jul-21 | 2,000,000 | 2,000,000 | 31-Dec-22 | 31-Dec-25 | ||||
Nick | 50,000 | 24-Nov-20 | 50,000 | 24-Nov-20 | 23-Nov-23 | |||
Hatch | 50,000 | 24-Nov-20 | 50,000 | 31-Mar-21 | 31-Mar-24 | |||
Craig | 90,000 | 01-Mar-18 | (90,000) | 0 | 31-Mar-19 | 31-Mar-22 | ||
Harvey | 90,000 | 01-Mar-18 | 90,000 | 31-Mar-20 | 31-Mar-23 | |||
90,000 | 04-Nov-19 | 90,000 | 04-Nov-19 | 03-Nov-22 | ||||
90,000 | 04-Nov-19 | 90,000 | 04-Nov-19 | 31-Mar-23 | ||||
100,000 | 24-Nov-20 | 100,000 | 24-Nov-20 | 23-Nov-23 | ||||
100,000 | 24-Nov-20 | 100,000 | 31-Mar-21 | 31-Mar-24 | ||||
05-Jul-21 | 2,000,000 | 2,000,000 | 31-Dec-22 | 31-Dec-25 | ||||
Andrew | 180,000 | 01-Mar-18 | (180,000) | 0 | 31-Mar-19 | 31-Mar-22 | ||
Prelea | 180,000 | 01-Mar-18 | 180,000 | 31-Mar-20 | 31-Mar-23 | |||
180,000 | 04-Nov-19 | 180,000 | 04-Nov-19 | 03-Nov-22 | ||||
180,000 | 04-Nov-19 | 180,000 | 04-Nov-19 | 31-Mar-23 | ||||
05-Jul-21 | 2,000,000 | 2,000,000 | 31-Dec-22 | 31-Dec-25 | ||||
Roy | 90,000 | 01-Mar-18 | (90,000) | 0 | 31-Mar-19 | 31-Mar-22 | ||
Tucker | 90,000 | 01-Mar-18 | 90,000 | 31-Mar-20 | 31-Mar-23 | |||
90,000 | 04-Nov-19 | 90,000 | 04-Nov-19 | 03-Nov-22 | ||||
90,000 | 04-Nov-19 | 90,000 | 04-Nov-19 | 31-Mar-23 | ||||
112,500 | 24-Nov-20 | 112,500 | 24-Nov-20 | 23-Nov-23 | ||||
112,500 | 24-Nov-20 | 112,500 | 31-Mar-21 | 31-Mar-24 | ||||
05-Jul-21 | 2,000,000 | 2,000,000 | 31-Dec-22 | 31-Dec-25 | ||||
Andrew | 50,000 | 04-Nov-19 | 50,000 | 04-Nov-19 | 03-Nov-22 | |||
Hall | 50,000 | 04-Nov-19 | 50,000 | 04-Nov-19 | 31-Mar-23 | |||
100,000 | 24-Nov-20 | 100,000 | 24-Nov-20 | 23-Nov-23 | ||||
100,000 | 24-Nov-20 | 100,000 | 31-Mar-21 | 31-Mar-24 | ||||
05-Jul-21 | 2,000,000 | 2,000,000 | 31-Dec-22 | 31-Dec-25 | ||||
2,715,000 | 10,000,000 | (360,000) | 12,355,000 | |||||
See note 23 for further details of the SARS.
Directors’ remuneration
2022 | 2021 | ||||||||
Salary/Fees | Other | Total | Salary/Fees | Other | Total | ||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||
Nigel Wyatt | 20 | - | 20 | - | - | - | |||
Paul Fletcher | 193 | 7 | 200 | 132 | 3 | 135 | |||
Craig Harvey | 192 | - | 192 | 180 | - | 180 | |||
Nick Hatch | 30 | - | 30 | 29 | - | 29 | |||
Brian Moritz | 31 | - | 31 | 29 | - | 29 | |||
Andrew Prelea | 258 | - | 258 | 227 | - | 227 | |||
Roy Tucker | 135 | - | 135 | 150 | - | 150 | |||
Andrew Hall | 75 | 10 | 85 | - | - | - | |||
Total | 934 | 17 | 951 | 747 | 3 | 750 |
* The Company has developed a practice of deferring payment of varying proportions of sums earned by Directors until the Company liquidity position improves.
As at 30 April 2022 a total of US$647,230 was owed to Directors (Brian Moritz – US$88,442, Nick Hatch – US$78,040, Roy Tucker US$222,463, Nigel Wyatt – US$20,095, Paul Fletcher US$90,453, Andrew Prelea US$83,059, Craig Harvey US$56,960, and Andrew Hall – US$US$7,718). As at 30 April 2021 a total of US$346,646 was owed to the Directors (Brain Moritz - US$55,086, Nick Hatch US$56,185, Eric Diack US$47,876, and Roy Tucker US$187,499).
Future developments
The Company’s plans for future developments are more fully set down in the Strategic Report, on pages 7 to 17 of the annual report.
Research and development
The Company has assessed the suitability of X-Ray Sorting Technology (‘XRT’) to optimise the production profile of both BPPM and MPM. The test results received from TOMRA indicate that the implementation of XRT equipment significantly improves the economics of both mines, and in the case of MPM the improvement is particularly significant.
Disabled employees
The Group gives full consideration to applications for employment from disabled persons where the candidate’s particular aptitudes and abilities are consistent with adequately meeting the requirements of the job. Opportunities are available to disabled employees for training, career development and promotion.
Where existing employees become disabled, it is the Company’s policy to provide continuing employment wherever practicable in the same or an alternative position and to provide appropriate training to achieve this aim.
Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware. Vast’s auditor, Crowe U.K. LLP, was initially appointed on 25 April 2016 and it is proposed by the Board that they be reappointed as auditors at the forthcoming AGM.
Events after the reporting date
These are more fully disclosed in Note 27.
By order of the Board
Ben Harber
Secretary
29 October 2022
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with UK-adopted International Accounting Standards and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgments and accounting estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
* prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.
The maintenance and integrity of the Group’s website is the responsibility of the Directors.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VAST RESOURCES PLC
Opinion
We have audited the financial statements of Vast Resources plc (the “Parent Company”) and its subsidiaries (the “Group”) for the year ended 30 April 2022, which comprise:
the Group statement of comprehensive income for the year ended 30 April 2022;
the Group and Parent Company statement of changes in equity for the year ended 30 April 2022;
the Group and Parent Company statements of financial position as at 30 April 2022;
the Group and Parent Company statements of cash flows for the year then ended; and
the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK-adopted International Accounting Standards.
In our opinion the financial statements:
give a true and fair view of the state of the Group’s and of the Parent Company's affairs as at 30 April 2022 and of the Group’s loss for the period then ended;
have been properly prepared in accordance with UK-adopted International Accounting Standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to the basis of preparation and going concern assessment note on page 33 in the financial statements of the annual report, which indicates that the group will require the receipt of additional funds from either debt providers, investors or royalty financiers and whilst discussions are on-going no binding agreements are in place. As stated in this note, these events or conditions, along with the other matters as set forth in the note, indicate that a material uncertainty exists that may cast significant doubt on the company’s and group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and company’s ability to continue to adopt the going concern basis of accounting included:
Obtaining managements going concern assessment and testing the mathematical accuracy of the model;
Considering the key assumptions into the model including metal prices, operating expenditure and production volumes and agreeing to forecast data;
Reviewing the disclosures made in the financial statements relating to going concern and agreeing it is consistent with management’s assessment; and
Performing our own sensitivity analysis having regard to the risk that key financing events are delayed or do not occur. This included assessing the ability of management to raise finance in the past, and the current progress in any new financing negotiations.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to be $210,000 (2021: $230,000), based on approximately 1% of the Group’s assets. Materiality for the Parent Company financial statements as a whole was set at $125,000 (2021: $140,000).
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. This is set at $140,000 (2021: $172,000) for the Group and $87,500 (2021: $105,000) for the Parent Company.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of $6,000. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
Of the Group’s reporting components, in addition to the Parent Company, we identified two entities comprising one component requiring audit procedures to be performed for group reporting purposes, the component is located in Romania. The components within the scope of our work accounted for 100% of the group’s total assets and 100% of the result for the period. The work on these components was performed by local auditors under our direction and review.
We issued instructions to the local auditors which included details of the significant areas to be covered, including the key audit matters detailed below, and the information required to be reported back. We reviewed the audit work performed by the component auditors, communicated our findings therefrom and any further work required by us was then performed by the local auditor.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the ‘Material uncertainty related to going concern section, we have determined the following key audit matters. This is not a complete list of all risks identified by our audit.
Key audit matter | How the scope of our audit addressed the key audit matter |
Carrying value of property, plant and equipment | We reviewed management’s assessment as to whether there is any indication of impairment to the assets in line with IAS 36 – Impairment of assets. That assessment concluded that there whilst there were indications of impairment in relation to the reduction of market capitalisation of the business, as well as an operating loss, this was due to the assets either being under care and maintenance until resources are available to put them into production or the assets being in their early stage of production following a period of additional capital expenditure. In particular, we had regard to:
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Carrying value of investments and intercompany receivables – Parent Company | We obtained management’s assessment of the impairment of investment in subsidiaries and the intercompany receivables. This is intrinsically linked to the assessment to the carrying value of property, plant and equipment. In addition to the work undertaken on that account area, we considered the following matters:
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Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.
Other information
The directors are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the Group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were relevant company law and taxation legislation in the UK and Romania being the principal jurisdictions in which the Group operates.
We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases in particular where significant judgements are involved (see Key Audit Matters above).
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in the case of misstatement resulting from fraud because fraud may involve sophisticated and carefully organised schemes designed to conceal it, including deliberate failure to record transactions, collusion or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
John Glasby (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
29 October 2022
Group statement of comprehensive income
for the year ended 30 April 2022
30 Apr 2022 | 30 Apr 2021 | ||
12 Months | 12 Months | ||
Group | Group | ||
Note | $’000 | $’000 | |
Revenue | 3,781 | 896 | |
Cost of sales | (7,403) | (2,642) | |
Gross loss | (3,622) | (1,746) | |
Overhead expenses | (9,380) | (2,439) | |
Depreciation of property, plant and equipment | 2 | (812) | (724) |
Profit / (loss) on sale of property, plant and equipment | - | 2 | |
Share option and warrant expense | 2, 23 | (356) | (178) |
Sundry income | 59 | 88 | |
Exchange gain / (loss) | 2 | (3,754) | 2,612 |
Other administrative and overhead expenses | (4,517) | (4,239) | |
Fair value movement in available for sale investments | (3) | (29) | |
Loss from operations | (13,005) | (4,214) | |
Finance income | 4 | - | 4 |
Finance expense | 4 | (2,487) | (3,509) |
Loss before taxation from continuing operations | (15,492) | (7,719) | |
Taxation charge | 5 | - | - |
Total (loss) taxation for the period | (15,492) | (7,719) | |
Other comprehensive income | |||
Items that may be subsequently reclassified to either profit or loss | |||
Exchange gain /(loss) on translation of foreign operations | 2,219 | (1,740) | |
Total comprehensive expense for the period | (13,273) | (9,459) | |
Total profit / (loss) attributable to: | |||
- the equity holders of the parent company | (15,492) | (7,755) | |
- non-controlling interests | - | 36 | |
(15,492) | (7,719) | ||
Total comprehensive profit / (loss) attributable to: | |||
- the equity holders of the parent company | (13,273) | (9,495) | |
- non-controlling interests | - | 36 | |
(13,273) | (9,459) | ||
(Loss) per share - basic and diluted – US$ cents | 8 | (5.73) | (4.90) |
The accompanying accounting policies and notes on pages 33 to 64 of the annual report form an integral part of these financial statements.
Group statement of changes in equity
for the year ended 30 April 2022
Share capital | Share premium | Share option reserve | Foreign currency translation reserve | Retained deficit | Total | Non-controlling interests | |
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
