Harare – Aim-listed, Vast Resources has concluded a conditional sale contract for the proposed disposal, to Southern African Trade Finance (SATF), of its noncore 50.01 percent interest in Ronquil Enterprises - the holder of its Zimbabwe gold assets; and the remaining 25.01 percent economic interest in the Pickstone Peerless gold mine and associated assets, principally the Eureka gold mine.

The consideration from SATF is $2.5 million, payable outside Zimbabwe, plus RTGS$2.5 million (Zimbabwe’s new local currency), equating to $1 million payable in Zimbabwe.

The deal, subject to the approval of shareholders by April 23, will enable the group to refocus on its two growth opportunities, namely the Baita Plai polymetallic mine, in Romania, and the Heritage diamond concession, in Zimbabwe.

“The Heritage Concession will require significant investment, not only financial, but in human resources, to enable near-term positive cash flow for the business. The divesting of the gold assets in Zimbabwe allows us to focus all of our Zimbabwe finance and management on this key component of the company’s growth,” says Vast CEO Andrew Prelea in a notice to shareholders on the Company’s website.

Bringing the two primary focus assets into production in real time and unlocking the value of the assets in the portfolio will create significant shareholder value.

It will also result in a fundamentally less complex balance sheet with about $38-million in reduced liabilities, which will assist with the future financing of the company.

“The result of the transaction will also open up significant funding opportunities to the company for the Romanian projects that have been delayed owing to historic financial structures and arrangements that in turn hampered the company’s ability to progress our near-term goals.”

After completion of the transaction, the company’s wholly owned Zimbabwean subsidiary, Canape, will have no material assets apart from RTGS$2.5-million, which will remain charged to SSGI until the SSGI loan is fully repaid.

The $2.5-million consideration from SATF is payable outside Zimbabwe, and applied in part repayment of the SSGI loan, while the RTGS$2.5-million is payable in Zimbabwe, and retained by SSGI as security until the loan is repaid in full.

Chairperson of Vast Brian Moritz in the same notice added that the transaction repays the majority of the SSGI loan and gives the company the ability to repay more through the RTGS$2.5-million further consideration and it should be noted that SSGI has a charge over the Company’s 50.1 percent interest in Ronquil.

The transaction, together with the disposal of Canape and repaying part of the SSGI loan, significantly reduces the other loan and liabilities on the company’s balance sheet, cutting it by nearly $38-million, to $10.49-million.

The liabilities eliminated include a Canape historic loan of $11.66-million, the funding of both Pickstone Peerless and the not-yet-operational Eureka.

Significantly reducing these liabilities and simplifying the balance sheet gives Vast the ability to be in a position to raise finance from other parties.

“The main focus of the company is the two-growth opportunity pivotal assets, Baita Plai and the Heritage Concession which, the board believes, when adequately financed, will produce near-term remittable cashflow for the company,” he says.

The detailed startup and operational plans for both assets are well advanced and subject, in the case of the Heritage Concession, to the final signature of a joint venture agreement.

“The main bridge to cross in achieving profits and cashflow is obtaining the finance needed for both on terms which are as attractive to the company as it is possible to obtain.”

Vast Resources has a 25 percent indirect interest in the Pickstone-Peerless Gold Mine, and mining claims surrounding the former Giant Gold Mine, in Zimbabwe, over both of which it retains Board control.

The 584ha Pickstone-Peerless Gold Mine is located 100km south-west of Harare and has historically produced over 400,000oz gold. Pickstone-Peerless has a current JORC Resource of 62 million tonnes grading 1.8 g/t, containing 3.56 million ounces of gold. Included in this Resource is an open-pittable Ore Reserve of 16.6Mt grading at 1.9 g/t for 1.02 million ounces of gold.

The miner also holds a 23.75 percent interest in the Eureka Gold Mine in Zimbabwe. The mine is situated about 150km north of Harare and 300km from the Pickstone-Peerless mine.

Eureka is a modern gold mine designed to produce up to 70,000oz of gold per annum from an open pit operation. Operations were suspended in 2000 due to high costs and low gold prices. The mine is currently on care and maintenance and Vast was focussed on recommencing production in the near term.

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