- Vast Resources has revealed intentions to expand its debt facility with Mercuria and Alpha
- Extension allows company to finalize recovery of historic parcel of diamonds in Zimbabwe
- Asset-backed debt facilities carry risks, including the potential seizure of collateral if the borrower defaults on the loan.
Vast Resources plc, an AIM-listed mining company, has announced plans of an extension to the Asset Backed Debt facility from A&T Investments SARL (“Alpha”) and the debt owed to Mercuria Energy Trading SA (“Mercuria”) relating to Tranche A of the Prepayment Agreement. The extension will allow the company to finalize the settlement of historic claims in Zimbabwe.
Vast Resources plc is a multi-commodity mining and resource development company. It has exploration and development projects in Southern Africa (primarily in Zimbabwe) and Eastern Europe (Romania). The company's commodity portfolio includes gold, copper, diamond, silver, zinc and lead.
The debt owed to Mercuria and Alpha, totalling approximately £7.3m, was due to be repaid on or before Monday 15 May 2023, but the company is working on documentation of an extension until 30 June 2023. This will allow Vast Resources to finalize the recovery of a historic parcel of 129,400 rough diamonds held in safe custody at the Reserve Bank of Zimbabwe.
Andrew Prelea, Chief Executive Officer of Vast Resources, is currently in Zimbabwe to oversee the final stages of the recovery process. The recovery of the diamonds follows a High Court Order in the company's favor.
The Asset Backed Debt facility is a type of financing that involves using an asset as collateral for a loan. In this case, Vast Resources has used its assets, including mining concessions and equipment, as collateral for the debt facility. This allows the company to secure financing without having to sell its assets.
However, there are risks associated with asset-backed debt facilities. If the company defaults on the loan, the lender can seize the collateral. Additionally, if the value of the collateral decreases, the lender may require the borrower to provide additional collateral or pay down the loan.
Vast Resources has faced a number of challenges in recent years, including a decline in commodity prices and difficulties in obtaining financing. The company's debt levels have also been a concern for investors, with some analysts warning that the company may struggle to meet its debt obligations.
Despite these challenges, Vast Resources has continued to pursue its mining operations in Romania and Zimbabwe. The company has also explored new opportunities, including a joint venture with Botswana Diamonds to explore a diamond concession in Zimbabwe.
In conclusion, Vast Resources has secured an extension to its Asset Backed Debt facility with Mercuria and Alpha, allowing the company to finalize the recovery of a historic parcel of diamonds in Zimbabwe. While the extension provides some breathing room for the company, there are risks associated with the use of asset-backed debt facilities. Investors will be closely watching Vast Resources as it continues to navigate these challenges.