Vast Resources days away from JORC estimate at Baita Plai
(AIM:VAST ) said in its final results for the 12-month period ended 30 April 2020 that it has been able to reach notable milestones at its Baita Plai Polymetallic Mine.
While the pandemic brought inevitable restrictions to operations in Romania, Vast said it was able to successfully work to safely minimise disruption to the start-up plan at Baita Plai.
Financial Highlights
- 5.4% decrease in FY20 admin and overhead expenses to $4.1 million (FY19: $4.3m).
- FX losses of $2.0m (FY19: $2.8m), including $0.64m in respect of the Company’s operations in Zimbabwe
- 16.4% decrease in losses after taxation to $8.3m (FY19: $10.0m).
- Cash balances at the end of the period of $0.478m (1H20: $1.216m).
* Comparatives have been drawn up for the thirteen-month period to 30th April 2019 following a change of accounting reference date as announced on 8th April 2019.
Operational Highlights
Drilling on the mine since this time has returned ‘highly encouraging’ results in-line with company expectations, with results correlating with historic underground mining assays.
While progress at Baita Plai is on track, Vast said there had been a delay in the finalisation of the joint venture agreement with government owned-Zimbabwe Consolidated Diamond Company for the Chiadzwa Community Diamond Concession in Zimbabwe.
Vast said it remains confident that it will conclude an agreement and its expectation is that this will occur once Covid-19 lock-down measures are lifted in Zimbabwe.
The group explained that an agreement at the Zimbabwe concession will enable the procurement of a Special Grant for Vast to explore, develop, and mine at the site.
Outlook
Vast confirmed to investors last week that its flotation plant at its Baita Plai mine is now fully operational and producing concentrate, with production already exceeding initial expectations.
The first phase of the company’s drilling campaign has now been successfully concluded and it expects to be publishing a JORC 2012 compliant resource by the end of October 2020. Further drilling will also be conducted to produce expanded JORC 2012 Mineral Resource.
With Baita Plai funded, Vast has passed a significant milestone, and with the successful start of production, the Company expects to become cash flow positive in a short period of time.
Vast believes that the Covid-19 pandemic will have very limited impact on the short-term performance of the mine due to Baita Plai’s net cash flow generation which is protected ‘by a low-cost base and therefore is resilient to significant decreases in commodity prices.’
Andrew Prelea, CEO of Vast Resources recently said, “Following the completion at the end of 2021 of the current underground development down to the next level, Baita Plai is expected to be one of the lowest cost per ton copper producers globally.”
He added, “The low operating costs will ensure Baita Plai remains a viable commercial operation regardless of the potential future commodity market fluctuations.”
Vast is on track to surpass its initial copper concentrate sales delivery targets and expects delivery of between 350-400 tonnes of copper concentrate to commodity group Mercuria.
Vast said it believes that the business environment in Zimbabwe will improve as the government establishes an attractive base for sustainable foreign investment as well as further Romanian opportunities following the recommencement of production at Baita Plai.
‘A combination of a bullish outlook on polymetallics together with a reduction in Romanian and Zimbabwean country risk premiums will provide significant medium-term growth in the share price and bode well for the financial performance of these businesses,’ Vast noted.
Shares in VAST have traded down from highs of 0.23p in August to open at 0.168p following publication of the FY20 Results.
3 Reasons to Follow Vast
Vast Resources has successfully transitioned from an exploration to production, with a portfolio of high-quality assets.
In the near-term, catalysts for a re-rating of the stock are 3-fold:
- Production of Cu concentrate in October was estimated to be more than 50% of the total FY20 target with first deliveries to Mercuria expected imminently. Vast is on track to surpass its initial copper concentrate sales delivery targets and expects delivery of between 350-400 tonnes of copper concentrate to commodity group Mercuria.
- The Company expects to complete its asset-backed debt-financing for Baita Plai in December after it secured the facility with an unnamed international banking institution earlier this year
- Further positive Newsflow on the associated JORC resource.
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