Vast signs agreements to process material from old Hanes gold mine, and updates on other activities

Vast Resources PLC (VAST) Follow | VASThas signed two separate association agreements to process and market products from the former Hanes gold mine in the Alba region of Romania. 

The agreements are in alignment with a strategic ecological project encouraged by the Romanian government to clean up former era derelict mining areas in the Alba region.

The first agreement is expected to be of a long-term nature, whilst the second agreement relates to the marketing of a fixed amount of 500 tonnes of high-grade gold concentrate and is expected to produce cashflow for Vast in the near term. 

Any funding required for the first agreement is expected to be provided from the proceeds from the second agreement, which is not expected to incur any expense for the company over and above normal operating costs.

The association agreement for the first project is with Explore Eco Mining srl, which holds the lease for the project area, and Big Med Arenda srl and XP Industries srl, and is for the processing of a former rock dump at the Hanes mine. 

The rock dump consists of more than 1.5 million tonnes of polymetallic ore containing gold grading between 1.2 grams per tonne and 2.5 grams per tonne. There is also another rock dump adjacent to the location of a similar size and content.

Eco intends to apply for permits and approvals for a processing facility at the former Hanes gold mine so that processing can, in the long term, take place on site.

But in the meantime the material will be processed at Vast’s Baita Plai polymetallic mine flotation plant, some 113km away by a major main road. The company believes it has adequate capacity to process the dumps at approximately 250 tonnes per day without impacting on the ongoing production of copper concentrate.  First deliveries to Baita Plai are scheduled for this week.

Vast will receive an effective royalty for providing technical support, processing and marketing services under the first agreement equal to 20% of the difference between revenue and all sales and production costs, including government royalites and taxes, payable monthly. The company in addition will be entitled to make a charge for processing material at Baita Plai in accordance with industry norms.  

The 20% effective royalty is convertible at the company’s option exercisable within one year into a 20% share in a new independent company. 

In the event that Eco requires funding for the operation not covered by its accumulated share of surplus, it may call on the company to fund up to 20% of the requirement. ained below.

Eco is an SPV owned by two local shareholders in Romania led by Radu Ciobutea, who has interest in the regeneration of the area.

The association agreement for the second project is with Albamin Industry srl and concerns the marketing of 500 tonnes of polymetallic concentrate held by Albamin in a dump containing high gold values in the range in excess of 25 grams per tonne. This material is currently being bagged for sale and is expected to be sold in the coming weeks.

The company will receive an effective royalty for marketing the concentrate equal to 20% of the difference between revenue and all expenses related to the operation, payable within five days of each concentrate sale.

It is not expected that the second association project will incur any expense for the company over and above normal operating costs. 

Following the signing of the first agreement, Vast has also signed an option with a separate, local non-profit organisation to prospect and prepare a resource estimate for the remaining three million tonnes of the original Hanes gold mine material. The company’s objective will be to shortly thereafter sign a processing and marketing agreement for the final concentrate on a similar 20% royalty basis. 

Meanwhile, at Baita Plai, Vast continues mining operations after the extension of the licence was granted as announced on 13 August 2024. Since the announcement of the licence extension, the company has reduced the staffing levels by more than 50%, thus significantly reducing costs and increasing efficiencies. A new management team has been installed and has opened the higher copper grade areas for mining. This is expected to result in significantly lowering costs per tonne of contained copper. The reorganisation has inevitably caused a short-term fall in production but the plan is to make this up going forward.

At Aprelevka, a joint venture in which Vast has a 4.9% interest in income, costs have been reduced and production increased. 

At Takob, production has restarted after a breakdown at the mill and a sale is expected at the end of this month.

“The Vast team have been exceptionally busy over recent months, laying the groundwork for an immediate increase in cashflow together with expanding our footprint in our key strategic geographies,” said chief executive Andrew Prelea. 

“These agreements should provide a good short term positive cash flow for Vast whilst at the same time being part of a strategic ecological project to clean up areas made derelict from mining activities in a former era. I look forward to providing further news on these initiatives, in addition to our other workstreams, in due course.”

View from VOX

Securing cash flow for a limited initial outlay is always a nifty manoeuvre, and is especially helpful at a time of depressed commodity prices. Vast continues to sniff out opportunities in Romania, and to cut out interesting deals. Now, we wait for the benefits to start showing through.