Harare – AIM listed mining company, Vast Resources plc announced on Thursday that it has concluded an agreement with Red Mercury (Pvt) Ltd for exclusive access to the Heritage concession area which is popularly known as the Marange Diamonds Fields in the Chiadzwa region of Zimbabwe.

Vast Resources said the purpose of the agreement is to carry out initial due diligence on the area with a view to concluding a joint venture agreement.

It said the principal terms of which have been agreed are for exploration, mining and marketing.

The 15km Heritage Concession is close to an area of Vast’s historic Marange Diamond Fields claim and is understood to be an extension of the same geological system.

Red Mercury is a company owned by the Marange-Zimunya Community Share Ownership Trust (MZ Community Trust), which is registered as a Community Share Ownership Trust under the laws of Zimbabwe and which has received an undertaking from the Government of Zimbabwe for a licence to mine on the Heritage Concession.

In a press release, Vast Resources said Red Mercury will be responsible for providing a full mining licence.

On its part Vast said it will be responsible for sourcing funding necessary to develop an efficiently operating diamond mine on Heritage concession and this is subject to the results of exploration and Zimbabwe’s future indigenisation laws.

It said they agreed on a number of principals for the joint venture.

The parties agreed to give Vast effective control of exploration and mining on the Heritage Concession and also of marketing of the diamonds in consultation with Red Mercury.

They agreed also to comply with current indigenisation laws of a 51/49 ownership split, but, should the future indigenisation laws, if any, allow, provide for a profit split that will result in Mercury/MZ Community Trust receiving no less than 25 percent of the profits, plus a grant payment for the purpose of benefitting the local community equal to 10 percent of all expenditure on capital equipment procured for mining.

Thirdly they agreed that dividends are to be paid annually of at least 50 percent of profits which can be distributed lawfully and without breach of contract to third parties.

In the agreement they committed Vast to give support to the local community and participating jointly with Red Mercury in cultural heritage ancestral activities and also the promotion of local jewellery manufacturing with a proportion of the production.

The mining company said the due diligence access period is for two months or such longer period as the parties may agree.

“During the Due Diligence Period the parties are to use all reasonable efforts to conclude the Joint Venture for exploration, mining and marketing, according to the main principles and commercial terms which have been established and pre-agreed,” it said.

Following the accession of the new Government in Zimbabwe indigenisation laws were abolished for most types of mining but retained for diamonds.

Under the existing law, within such period as the Minister may prescribe, either 51 percent ownership is required by a Designated Entity or by a Community Share Ownership Trust such as MZ Community Trust or an indigenisation and empowerment option must be earned through the use of credits.

However there has been a more recent statement from the President of Zimbabwe that this law is about to change, and a change is widely expected.

Director of Vast Resources Zimbabwe Ltd and former CEO of Government owned Zimbabwe Consolidated Diamond Company Ltd, Mark Mabhudhu said they are optimistic that the concession will be profitable.

“The concession area has not been mined before and by virtue of its geographical positioning within the Marange Diamond Fields it is anticipated to contain economically viable diamondiferous alluvial as well as conglomerate ore resources,” he said.

Chief Executive of Vast, Andrew Prelea, expressed gratitude saying Shareholders will be aware that the company have long held an historic diamond interest in Zimbabwe.

 “With an evolving political backdrop, the country’s mining landscape is beginning to change and new opportunities are emerging.

“Whilst we await further developments on our historic claims, we are delighted to be strengthening our operating presence in the area and building on our relations in-country through this agreement with Red Mercury, which we believe paves the way for future growth.

“Having already agreed the principal terms of the future Joint Venture with the MZ Community Trust, we have confidence that once the Due Diligence Period is complete, subject to final results, we can move swiftly in building a valuable diamond arm of our business, which is mutually beneficial for all stakeholders. We are grateful for the opportunity to be a part of the re-emerging diamond sector in Zimbabwe and look forward to providing the market with further updates on developments in due course,” he said.

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