Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining
31 October 2024
Vast Resources plc
('Vast' or the 'Company')
Final Results
Vast Resources plc, the AIM-listed mining company, is pleased to announce its audited final results for the 12-month period ended 30 April 2024.
A copy of the annual report will be available on the Company's website at www.vastplc.com and printed copies are being posted to shareholders.
**ENDS**
For further information, visit www.vastplc.com or please contact:
Vast Resources plc
Andrew Prelea (CEO)
www.vastplc.com
+44 (0) 20 7846 0974 Beaumont Cornish - Financial & Nominated Advisor
Roland Cornish
James Biddle
www.beaumontcornish.com
+44 (0) 20 7628 3396 Shore Capital Stockbrokers Limited - Joint Broker
Toby Gibbs / James Thomas (Corporate Advisory)
www.shorecapmarkets.co.uk
+44 (0) 20 7408 4050 Axis Capital Markets Limited - Joint Broker
Richard Hutchinson
www.axcap247.com
+44 (0) 20 3206 0320 St Brides Partners Limited
Susie Geliher / Charlotte Page www.stbridespartners.co.uk
+44 (0) 20 7236 1177 OVERVIEW OF THE YEAR ENDED 30 APRIL 2024
Vast Resources plc ('Vast' or the 'Group' or the 'Company') is focused on key mining opportunities in Romania, Zimbabwe and Tajikistan. These opportunities comprise the Baita Plai Polymetallic Mine ("BPPM”) in Romania, the Group's expected opportunity in Zimbabwe, and participation in two mining projects in Tajikistan. The Group continued to hold the Manaila Polymetallic Mine ("MPM”) in Romania on care and maintenance during the reporting period with the expectation of a funding round at a later stage. Subsequent to the year end, the Company entered into agreements with an ecological project to process and market mineral products at the former Hanes Gold Mine in Romania.
Financial
Revenues for the year ended 30 April 2024 were US$2.0 million compared to US$3.7 million for the year ended 30 April 2023. The decrease is due to a reduction in revenues from the Company's Tajikistan interest and slower concentrate sales in Romania in the second half of the year.7.1% increase in other administrative and overhead expenses for the year ended 30 April 2024 (US$4.2 million) compared to the year ended 30 April 2023 (US$3.9 million).Foreign exchange losses of US$1.3 million for the year ended 30 April 2024 compared to gains of US$1.4 million for the year ended 30 April 2023. These losses arise from the Company's USD denominated funding of its Romanian Lei functional currency subsidiaries and are partly compensated by foreign exchange translation gains of US$1.1 million. The Company funds its Romanian businesses in USD given this funding will ultimately be repaid from USD denominated sales.An increase in losses after taxation in the year ended 30 April 2024 (US$14.7 million) compared to the year ended 30 April 2023 (US$10.5 million). Eliminating the effects of foreign exchange gains and losses, the loss for the period has increased from US$11.9 million for the year ended 30 April 2023 to US$13.3 million for the year ended 30 April 2024.Cash balances at the end of the period were US$0.025 million compared to US$0.530 million at 30 April 2023.
Operational Development
BPPM milled production increased from 60,750 metric tonnes for the year ended 30 April 2023 to 86,171 metric tonnes for the year ended 30 April 2024. However, sales were slower this year, particularly in the second half of the year, due to logistical and product grade consistency considerations that require that production is blended over time to achieve optimal grades for marketing. With the anticipated ramp-up of future production, these factors would be eliminated.First shipment of the lead and zinc at the Takob processing plant in Tajikistan in October 2023. Despite a lull in production during the year due to weather related factors and internal matters at Takob unrelated to the direct functioning of the plant, production restarted after the year end.Entitlement to an effective 4.9% interest in Aprelevka, a Tajikistan gold mine, in consideration for the provision of management and mine development services. Aprelevka holds four active operational mining licences located along the Tien Shan Belt that extends through Central Asia, currently producing approximately 11,600oz of gold and 116,000 oz of silver per annum.Execution of a three-year marketing agreement with a Swiss investment company for the exclusive distribution of potentially high grade PGM concentrates produced within the EU. Vast will receive a 2.5% commission based on the sales value of the concentrates distributed under this agreement. No transactions were executed during the year due to the variable nature of grade tests which will require more work on sorting and blending the product to maximise payables. Given priorities during the year, work in this area has been delayed.Execution of a new exclusive offtake agreement with Trafigura Group Pte ('Trafigura') for all copper concentrate produced at BPPM, Trafigura is one of the world's leading independent commodity trading and logistics companies and is also the offtaker for the Takob mine in Tajikistan.On 14 July 2023, an employee was fatally injured in a mine transportation incident. The Directors and Management of Vast express their sincere condolences to the family and colleagues of the deceased. Post reporting date:
In June 2024, the Company decided to enter Vast Baita Plai SA ("VBPSA”), the operator of BPPM, into a period of voluntary reorganisation to be effected by a Court judged process under the Insolvency Act in Romania. This was executed in response to operational pressures caused by the Unions and certain BPPM employee demands and practices which were adversely impacting mine performance. The reorganisation does not affect the ownership or control of the mine and has been executed in the best interests of the Company and its shareholders.In August 2024, the Company's 100% subsidiary Vast Baita Plia SA ("VBPSA”) successfully extended the Head Licence held by Baita SA and under which VBPSA has the rights to mine polymetallics at BPPM for a further five years by way of Government Decision 6/2024 on 9 August 2024. In obtaining this approval, drilling results from the Company's drill campaign commenced in 2023 were submitted.In September 2024, the Company executed agreements with an ecological project to process and market products from clean-up operations at the former Hanes Gold Mine located in the Alba region of Romania.Significant progress has been made by the parties relating to the historic claim. The Attorney General's office has approved the terms of the settlement agreement relating to the historic claim and has recommended this to government for signature. The fully executed settlement is currently awaited to enable the Company to complete the process of recovery, and the Company remains confident of a successful conclusion. No amount has been recognised in the financial statements (see note 27). Funding
Equity:
Fundraising share issues during the year (gross proceeds before cost of issue):
£ $Shares issued Issued to 4,775,975 5,988,191440,666,667 Placing with investors 4,775,975 5,988,191 440,666,667 Post reporting date:
£ $Shares issued Issued to 1,966,000 2,535,3621,630,000,000 Placing with investors 1,966,000 2,535,362 1,630,000,000 On 29 February 2024 the Company approved a capital reorganisation under which the number of existing ordinary shares in issue were reduced by a factor of six. The shares issued during the year ended 30 April 2024 have been adjusted to reflect the reduction.
Debt:
Earlier during the year, the Company made total payments of US$300,000 to its debt creditors to extend repayment to 30 November 2023. Subsequent to this, several extensions were made during the year at no extra cost, culminating in a new schedule of repayments announced on 29 April 2024 and which would begin on 7 May 2024 and in large part would be funded through refinancing. Given the delays in refinancing, the Company has not repaid any amounts to its lenders after the year end. The Company continues to discuss arrangements with both Alpha and Mercuria and has commenced alternative measures for settling the outstanding debts.
Management
The Company and the Board of Directors were very saddened by the passing of Andrew Hall, Commercial Director of Vast Resources. Andrew joined the Vast team in 2018 and has been a very valued member of the team. He will be greatly missed and fondly remembered.
Political and environmental
The rising tensions in the Middle East and the ongoing conflict in Ukraine has not had any direct adverse impact on the group's operations but has impacted commodity markets. Gold prices have hit record highs and copper futures have remained firm. A combination of anticipated US interest rate cuts, Chinese stimulus and geopolitical tensions have been bullish for commodity prices. The process concerning the settlement of the historical claim is now very well advanced.
CHAIRMAN'S REPORT
While this has been a highly challenging year for the Company, much work has been done and continues to be done by the management team and the Board to stabilise the business and originate new commercial opportunities. Diversifying revenue streams is key to reducing the Company's current dependence on a single operating asset and we acted on this during the year by increasing our Tajikistan footprint and, subsequent to the year end, by adding an important line of business to our operations in Romania. The Company continues to be in need of financing and this has constrained our ability to operate effectively and realise the potential of the Company's assets. The Company is therefore in discussions with multiple investors and funders to properly capitalise the business. Very significant progress has been made by the parties relating to our historic claim and following the Attorney General's office approval of the terms of the settlement agreement, the Company awaits the fully executed settlement to complete the process of recovery.
Romania
While production at Baita has increased over last year, sales have been slow and we have been disappointed by our progress. After the year end the Company decided to enter Vast Baita Plai SA, the operator of the Baita Plai Polymetallic Mine ("BPPM”), into a period of voluntary reorganisation to be effected by a Court judged process under the Insolvency Act in Romania. This was a reaction to a dispute with the Unions and certain members of the Baita Plai workforce which unreasonably compromised the ability of the mine to improve productivity. The reorganisation request was approved by the court and the Company has restructured operations.
After the year end, we entered into an important royalty agreement with a mine greening company. Vast has the inhouse expertise and assets to assist with further processing and commercialisation of product at a number of clean-up sites. This provides an exciting growth opportunity, diversification, low capital intensity, and offers near-term liquidity.
The Company continues to maintain the Manaila Polymetallic Mine ("MPM”) on care and maintenance while it seeks funding at the project level to restart the operation. The Company is in fact in dialogue with multiple investors regarding both MPM and BPPM who recognise the potential of these assets and have commenced due diligence.
Very sadly, on 14 July 2023, a mine employee at BPPM was fatally injured in a mine transportation incident. On behalf of the Directors and Management of Vast, I express sincere condolences to the family and colleagues. As always. the Company remains totally committed to safeguarding the safety of our employees and the communities in which we operate.
Tajikistan
In January 2024, we took an interest in a Tajikistan gold mining company ("Aprelevka”), in consideration for management services to improve production volumes and efficiencies. The team is pushing hard to achieve these goals and we believe that this will be a very important step to originating more opportunities in Tajikistan.
Zimbabwe
The Company has spent several years aiming to reach a satisfactory conclusion regarding the return of the historic claim. Very significant progress has recently been made. The Attorney General's office has approved the terms of the settlement agreement relating to the historic claim and has recommended this to the relevant government body for signature. The fully executed settlement is currently awaited to enable the Company to complete the process of recovery and the Company remains confident of a successful conclusion.
Directors and management
The Company and the Board of Directors were extremely saddened by the passing of Andrew Hall on 27 November 2023. Andrew joined the Company in 2018 and held the Commercial Director role for Vast Resources. Andrew has been a highly valued member of the team he will be greatly missed and fondly remembered.
Funding
Whilst the Company is in default of the repayment terms to Alpha and Mercuria, ,the Company continues to discuss arrangements with both Alpha and Mercuria. Both lenders are and have been supportive. The Company has commenced alternative measures for settling the outstanding debts and also to address the short-term working capital needs of the group.
Corporate Governance
As stated in the Strategic Report, the Company has adopted the Quoted Company Alliance ('QCA') code on Corporate Governance. The Board strives to promote a corporate culture based on sound ethical values and behaviours. The Company maintains a strict anti-corruption and whistle blowing policy and the Directors are not aware of any event in any jurisdiction in which it operates that might be considered to be a breach of this policy. The Company has formally adopted Code of Conduct, Health and Safety, Environmental, and Human Rights policies which clearly articulate the Board's expectations and strengthen the control environment of the organisation. The Company continues to operate a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. The Company is also committed to maintaining open dialogue with shareholders, employees and other stakeholders.
Appreciation
The continued support and resolve of shareholders and other stakeholders through times that have been challenging is much appreciated. To fellow directors, thank you for your advice and support, and to management and staff both in Romania and Zimbabwe for their continued effort on behalf of the Company.
Brian Moritz
Chairman
STRATEGIC REPORT
Principal activities, review of business and future developments
Vision
The vision of the Group continues to be to become a mid-tier mining group, one of the largest polymetallic (copper, zinc, silver, and gold) producers in Romania, and a major player in the re-emergence of the mining industry in Tajikistan.
Principal activities
In Romania the Group has focused on operating the Baita Plai Polymetallic Mine ("BPPM”) which commenced production in October 2020. The Manaila Polymetallic Mine ("MPM”) has remained on care-and-maintenance during the period and the Company is engaged with new investors to support the restart.
In Tajikistan, the Group has a mining project with a fluoride and galena mine to produce and market non-ferrous concentrate and other metals and Vast has also been appointed on 16 January 2024 to manage and develop the Aprelevka Gold Mines for which it is entitled to an effective 4.9% share of the earnings before interest and tax in these operations.
The Group continues to focus on bringing the historic claim to a satisfactory conclusion, having made good progress this year.
In both Romania and Tajikistan, the Group holds further mining claims or other interests which are under appraisal.
Review of business
Romania
BPPM (100% interest)
Operations
BPPM produced concentrate throughout the year, increasing milled production from 60,750 metric tonnes for the year ended 30 April 2023 to 86,171 metric tonnes for the year ended 30 April 2024. While production increased, this was far below our internal expectations and fails to reflect the true potential of the mine. Sub-optimal working practices and labour disputes significantly impacted the Company's internal ramp-up projections. Sales were also slower this year, particularly in the second half of the year, due to logistical and product grade consistency considerations which management expects will be alleviated through higher anticipated production volumes across multiple faces. Primarily for these reasons, in June 2024, the Company decided to enter Vast Baita Plai SA ("VBPSA”), the operator of BPPM, into a period of voluntary reorganisation to be effected by a Court judged process under the Insolvency Act in Romania. This has had the desired effect of eliminating operational pressures caused by the Unions and certain BPPM employee demands and practices which were detrimental to mine performance. The reorganisation does not affect the ownership or controlc of the mine and BPPM has, after the year end, started to ramp up production, albeit from a reduced starting point which is initially designed to conserve cashflow. BPPM 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 focusing on selective narrow vein mining. While production has inevitably been impacted in the short-term, the reorganisation allows the Company to appropriately stage gate the ramp up of production in a manner that will protect cashflows from project downside risks.
The results from the first phase of the Company's drill campaign were promising and subsequent to the year-end successfully extended the Head Licence held by Baita SA and under which VBPSA has the rights to mine polymetallics at BPPM for a further five years. The mine does require continued investment to significantly increase volumes. To this end, and reflecting the potential of the asset, the Company is in discussions with multiple project-based investors who have begun due diligence. We were, however, very saddened on 14 July 2023, by a fatality at the mine. An employee was fatally injured in a mine transportation incident. The Directors and Management of Vast express their sincere condolences to the family and colleagues of the deceased.
Resources
The JORC compliant Resource & Reserve Report for BPPM comprises an Indicated & Inferred mineral resource of 608,000 tonnes at 2.58% copper equivalent based on a copper metal price of US$ 6,655/tonne. Under JORC an exploration target has been identified, which includes an historical mineral resource of between 1.8 million to 3 million tonnes with a copper grade range of 0.50-2.00%, gold range of 0.20-0.80 g/t and silver range of 40-80g/t. Subsequent to the publication of the JORC assessment, and following an analysis of historical data records, the exploration targets previously reported under JORC were increased from 1.8 million - 3.0 million tonnes to 3.2 million - 5.8 million tonnes with copper grades in the range 0.50-2.00%, lead range 0.10-2.00%, zinc range 0.10-2.00%, gold range 0.20- 0.80g/t, and silver range 40-80g/t further reinforcing the value of BPPM. The Company has also begun a drilling campaign for the purpose of establishing an enlarged JORC compliant Mineral Resource and in due course an Ore Reserve for its licence renewal in August 2024. The drilling campaign is supported by a Technical Programme Report prepared by the Chief Geologist for geological and geotechnical consultants, Formin SA, and countersigned by Top Consulting, Canada. The Report concludes that the fulfilment of the programme will give the Company the potential opportunity to upgrade the existing Mineral Resource with the inclusion of a JORC compliant Exploration Target of 11.65 to 12.65 million metric tonnes at 0.98% to 1.69% copper, 0.23% to 0.57% lead, and 0.17% to 0.62% zinc. Initial drill results received were very encouraging confirming the potential to extend the mining area.
MPM (100% interest)
The Manaila Carlibaba exploitation perimeter contains a JORC (2012) compliant Indicated Mineral Resource of 3.6 million tonnes grading 0.93% copper, 0.29% lead, 0.63% zinc, 0.23g/t gold and 24.9g/t silver with Inferred Mineral Resources of 1.0 million tonnes grading 1.10% copper, 0.40% lead, 0.84% zinc, 0.24g/t gold and 29.2g/t silver. JORC underground exploration targets identified are 7.9 million - 23.6 million tonnes with copper grades in range of 0.4-1.3%, lead range 0.2-0.7%, zinc range 0.3-1.1%, and open pit exploration targets of 1.1 million - 3.2 million tonnes with copper grades in range of 0.4-1.1%, lead 0.1-0.4%, and zinc range 0.2-0.6%. The Company was granted the Manaila Carlibaba Exploitation License to 29 October 2025. The increase in demand for copper together with production efficiencies confirmed by the assessment of the suitability of X-Ray Sorting Technology ('XRT') to optimise the mine's production profile results in a substantial improvement in the economics of MPM. The test results conducted by TOMRA indicate that an XRT machine can substantially reduce transportation and production costs. It is for these reasons that the Company is in discussions with potential new investors at the project level to support the near-term restart of MPM.
Blueberry Polymetallic Gold Project (`Blueberry') (29.41% effective interest).
The Group has an effective 29.41% economic interest in Blueberry through EMA Resources Ltd ('EMA') in a brown field perimeter located at Baia de Aries in the 'Golden Quadrilateral' of Western Romania on which historic work has demonstrated prospectivity for gold and polymetallic minerals. The Group has completed a drilling programme on the perimeter which has established sufficient information to support a maiden JORC resource. The Company has completed procedural and reporting requirements with the Romanian authorities. These have now been accepted and will allow the Company to apply for an exploitation licence. However, there have been continued delays in the grant of the licence due to procedural delays which are not related to the asset. During the year the group extracted 200 kg of samples and performed extraction techniques that achieved gold recoveries in excess of 85%, exceeding the anticipated 44% yield submitted to the Romanian authorities as part of the licence application process. An investor group has expressed an interest in the asset and due diligence is expected to commence in late November 2024. The results and net assets of the Blueberry project are immaterial to the Group and therefore have not been included in the Group financial statements under the equity method of accounting.
Hanes Gold Mine (20% effective interest)
On the 11 September 2024 the Company announced that it had executed two association agreements with an ecological project to process and market products from clean-up operations at the former Hanes Gold Mine located in the Alba region of Romania. 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 Au concentrate. Any funding requirement 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 Company has also entered into an Ecological Option Agreement with a local Non-Profit Organisation to prospect and prepare a Mineral Resource estimate for the remaining 3 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 to the first association agreement as a further element of the strategic eco project for the rehabilitation of the former mining area.
Other Romanian prospects
Given the Company's focus on BPPM, the application for an Exploration Licence for our current claims at Magura Neagra and Piciorul Zimbrului (collectively known as 'Zagra') has been placed on hold and will recommence once internal resources are available. The Group continues to believe that exploitation of the many mining opportunities that have become dormant in Romania over the last two decades will be an attractive prospect for global mining players seeking to capitalize on the projected increase in demand globally for copper occasioned by the global transition to clean energy and electric vehicles.
The Group's 'first mover position' in Romania has attracted interest in resuscitating the large-scale polymetallic resource projects in Romania.
Tajikistan
Takob processing Project (12.25% effective interest)
The Company, as one of a collective group of partners, has a mining project (the "Takob project”) in Tajikistan with Open Joint Stock Company Korkhonai Boygardonii Takob ("Takob”). The interest in the Takob project was acquired as a result of the acquisition by a recently incorporated UK company, Central Asia Investments Ltd, in which Vast has a 49 percent interest of a 50 percent interest in Central Asia Minerals and Metals Ore Trading FZCO ("CAMM”) which has an agreement with Takob (the "Master Agreement”). Vast has an effective 24.5 percent indirect interest in the Takob project. Takob, a wholly owned subsidiary of the Tajikistan Open Joint Stock Company "TALCO”, the country's largest group of companies, is the owner of the operating Takob fluorite and galena mine (the "Mine”) in Tajikistan where the strategic fluoride concentrate is sold to TALCO's chemical division ("TALCO Chemical LLC”), for the production of essential raw materials required for primary aluminium production.
Under the Master Agreement the Mine is to produce approximately 7,000 tonnes per month of ore containing no less than 1.5-2% lead, 1.2-1.4% zinc and 27% fluoride. Under the Master Agreement CAMM is to provide equipment, technology and technical expertise to upgrade and optimise the processing plant at the Mine, and has undertaken the responsibility for the management and execution of the Takob project. Takob will continue to mine ore at the Mine and produce fluoride concentrate. Takob has undertaken to supply no less than 1,000,000 tonnes of ore to be processed in line with the Project that is anticipated to run with the current Resource statement for 12 years.
CAMM has also under the Master Agreement been appointed as exclusive agent for Takob to market and sell all non-ferrous concentrates and precious metals from Takob's Mine including but not limited to lead, zinc, gold and silver. An exclusive offtake contract has been entered into with Trafigura PTE. Ltd, one of the world's leading independent commodity trading and logistics companies for the sale of bulk concentrates produced by the Takob project. CAMM has secured financing and is fully funded for the Takob project. In consideration for CAMM's financing obligations and provision of services under the Master Agreement CAMM is entitled to receive 50 percent of net revenue from the sale of non-ferrous concentrate and precious metals. In order for CAMM to provide the expertise required to fulfil its services and marketing obligations under the Master Agreement CAMM has entered a services agreement with Vast to provide the services required. Under this agreement Vast is entitled to charge for the services provided on the basis that 24.5 percent of the fees earned will be left outstanding until they can be financed from revenue arising from the Takob project. The project made good progress with the Takob mine and achieved steady state production of a 95% minimum fluorite (CaF₂) concentrate thus achieving satisfaction of a major performance condition of the contract. In addition to fees receivable under the services agreement with CAMM Vast is entitled to receive the equivalent of 12.25 percent royalty of all sales of the non-ferrous concentrate and any other metals produced for its participation in the collective group. The first shipment of the lead and zinc at the Takob processing plant in Tajikistan in October 2023. Despite a lull in production during the year due to weather related factors and internal matters at Takob unrelated to the direct functioning of the plant, production restarted after the year end.
Takob Tailings Project
CAMM also executed a Memorandum of Understanding ("MoU”) with Open Joint Stock Company TALCO linked to processing the tailings produced by the Takob Mine processing facility. During the initial soil sampling phase, the company reported visible signs of Lead, Zinc and precious metals, including Gold, Silver & Platinum Group Metals, in the tailings facility. Initial surface survey results show that there is a minimum of 1 million tons and up to 3.3 million tons of material. Over the past 40 years of mining the processing plant was focused on Calcium Fluoride recoveries, not on extraction of non-ferrous or precious metals.
Aprelevka Gold Mines
In January 2024 the Company was appointed by Gulf International Minerals Ltd ("Gulf”) to manage and develop the Aprelevka Gold Mines in the Tien Shan Belt of Tajikistan. Gulf has a 49% interest in a venture with the Government of Tajikistan (holding 51%) which own the Joint Tajik-Canadian Limited Liability Company, Aprelevka. Under the agreement with Gulf, Vast will be entitled to:
a 10% share of the earnings before interest and tax that Gulf receives from its 49% interest in Aprelevka;a right of first refusal to convert its entitlement into an equity interest of 10% in Gulf at any time from 1 January 2025 to 15 January 2027, and;a right to acquire at market price up to a further 20% of the shares of Gulf at any time from 1 January 2025 to 15 January 2027.
Aprelevka holds four active operational mining licences located along the Tien Shan Belt that extends through Central Asia, currently producing approximately 11,600oz of gold and 116,000 oz of silver per annum. It is the intention of the Company to assist in increasing Aprelevka's production from these four mines closer to the historical peak production rates of approximately 27,000oz of gold and 250,000oz of silver per year from the operational mines.
Two additional mines have been explored, and eight further licenced mining areas that are currently being prospected have shown positive results. Aprelevka also has three existing tailings dams that can be reprocessed containing high gold values of which two tailings dams can be exploited in the near term.
Since the year end, the Company has made progress at the Aprelevka mine, realising costs savings and improving gold recoveries and production volumes as envisaged at the time of Bay Square's acquisition of Gulf in January 2024.The objective is to substantially increase volumes and profitability in the next twelve months and to complete a JORC compliant resource study.
Zimbabwe
As stated in the Chairman's Report, very significant progress has recently been made by the parties relating to our historic claim. This has been a long outstanding issue and the company remains confident of a final settlement following the approval by the Attorney General's office of the terms of the settlement agreement and its recommendation to the relevant government body for signature. The fully executed settlement agreement is currently awaited to enable the Company to complete the process of recovery.
Corporate
The Company made a total payment of US$300,000 to its debt creditors to extend repayment to 30 November 2023. Subsequent to this, several extensions were made during the year at no extra cost, culminating in new schedule of repayments announced on 29 April 2024 and which would begin on 7 May 2024 and in large part funded through refinancing. Given the delays in refinancing, the Company has not repaid any amounts to its lenders after the year end. The Company continues to discuss arrangements with both Alpha and Mercuria and has commenced alternative measures for settling the outstanding debts.
As reported last year, Craig Harvey, Technical Director and Chief Operating Officer (COO) resigned on 3 March 2023. This has added considerably to existing management and Board workload. The Company has initiated a search for a COO Board position and hopes to fill the position in the coming months.
Strategy
The Group's strategy is to:
Attract appropriate funding for the Group - including from institutional investmentAttract appropriate joint venture partners and public institutions to invest in the Group and projects of mutual interestGrow into a mid-tier mining company both organically and through acquisitions financed principally by third partiesOptimise operations to produce positive cashflowsAdd value to operations by increasing resources and reservesIf expedient, hold significant minority stakes in new ventures operationally managed by the GroupFinance growth, where possible in a non-dilutive mannerMaintain exposure to Romania and Zimbabwe where the Group has acquired in-depth country knowledgeDevelop the Company's existing relationship in Tajikistan with Talco with a view to expanding its portfolio within the countryExpand the Company's polymetallic footprint further afield to complement its Romanian strategy Key performance indicators
In executing its strategy, the Board considers the Group's key performance indicators to be:
Cash cost per tonne milled
Cash cost per tonne is derived from aggregate cash costs divided by tonnes milled and measures productivity.BPPM cash cost per tonne was US$94 for the year (2023: US$131) and is derived from aggregate cash costs divided by tonnes milled and measures productivity.There has been no production at MPM this and last year given the mine was on care and maintenance.
Cash costs per tonne of concentrate
Cash cost per tonne produced is calculated by dividing aggregate cash cost by concentrate tonnes produced and measures productivity.BPPM cash cost per tonne was US$3,765 for the year (2023: US$5,139) and is derived from aggregate cash costs divided by the tonnes produced.There has been no production at MPM this year given the mine has been on care and maintenance.
Plant production volumes as a measure of asset utilisation
BPPM processed mill feed of 86,171 tonnes (2023: 60,750 tonnes).There has been no production at MPM this and last year given the mine was on care and maintenance. Total resources and reserves
These indicators measure our ability to discover and develop new ore bodies, including through acquisition of new mines, and to replace and extend the life of our operating mines. We have published JORC-2012 compliant resource estimates for both BPPM and MPM which are described above.
The rate of utilization of the Group's cash resources. This is discussed further below.
Cash resources
The Group's year end position was US$0.025 million (2023: US$0.530 million).
During the year cash used in operations were US$3.971 million, with a significant portion of the balance directly related to developing, supporting and maintaining our mining assets.
Cash outflows from investing activities were US$0.495 million comprising additions to property, plant, and equipment.
Cash net inflows from funding activities were US$ 3.961 million, comprising the net of the proceeds from the issuance of shares of US$5.227 million less net repayment of loans and borrowings and finance expenses of US$1.266 million.
The Directors monitor the cash position of the Group closely to plan sufficient funds within the business to allow the Group to meet is commitments and continue the development of assets. As part of this process, the Directors closely monitor capital expenditure and the regulatory requirements of the licences to ensure they continue in good standing.
Principal risks and uncertainties
Risk - Going concern
The Group will require funding in order to repay the Mercuria and Alpha debt facilities, and to meet its ongoing working capital needs. The original maturity date for these debt facilities was 15 May 2023 and this has been extended on several occasions. Subsequent to the year end, these loans became due and the Company received notice from Alpha that it would commence enforcement procedures of the security given to it by a third party, who is a shareholder of the Company. The Company has been given confirmation by the third party that it is not his intention to take action against the Company should Alpha commence enforcement action against him. No enforcement proceedings have been initiated to date and the Company continues to discuss arrangements with both Alpha and Mercuria and plans to repay the debts from the proceeds of the historic claim and/or from refinancing. Significant progress has been made regarding the settlement of the historic claim following the approval of a settlement agreement by the Attorney General's office and its recommendation to the relevant government body to sign. The Company has also received assurances from its previously announced refinancier of its commitment to provide restructuring finance. However, in view of the historical delays in executing these sources of liquidity, the Group has commenced discussions with several strategic investors to invest at the project level in both the Manaila Polymetallic Mine ("MPM”) and the Baita Plai Polymetalic Mine ("BPPM”) and has also initiated other alternative measures. The expectation is that these measures will allow the Group to repay debt and will also provide the necessary funding to restart MPM and fund the increase in capacity at BPPM.
The Company has also implemented a number of measures to improve the short-term operational and financial position of the Group. In June 2024, the Company decided to enter Vast Baita Plai SA ("VBPSA”), the operator of BPPM, into a period of voluntary reorganisation to be effected by a Court judged process under the Insolvency Act in Romania. This has allowed the operation to significantly reduce both the labour force and operational costs and to improve working practices with the objective conserving the Group's cash resources, improve project outcomes, and provide a stable platform for phased growth. The voluntary reorganisation process is ongoing with a Court date set for 14 November 2024, at which the Company's Judicial Administrator will present the rejected creditors and argue the merits for rejecting any creditors from the initial creditors table, as well as presenting the progress made since entering reorganisation, and present the initial step plan for the reorganisation to be approved by the creditors in due course, of which Vast Resources PLC will be the majority voting creditor. In September 2024, the Group has also executed agreements with an ecological project to process and market products from a rock and tailing dumps at the former Hanes gold mine in Romania. This is expected to bring near-term liquidity and to be a future source of earnings for the Group. The Company's expectation is the combination of these measures together with the initiatives described earlier, will provide the necessary funding for settling the outstanding debt of the Group and to satisfy the working capital needs of the Group.
Having regard to the risks outlined in the Strategic Report regarding the voluntary reorganisations of the Group's Romanian subsidiaries, and that there is neither a legally binding extension of the Mercuria and Alpha nor alternative legally binding funding or investing arrangements at the date of this report, these conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's and Company's ability to continue as a going concern. The financial statements do not include the adjustment that would result if the Group and Company were unable to continue as a going concern.
Mitigation/Comments
In the event that the receipt of the historic claim proceeds and/or refinancing is successfully executed, management is confident that with continued progress in the realisation process Mercuria and Alpha would remain supportive. To date, Mercuria and Alpha have extended the original repayment date several times and have as yet not taken any action against the Company to enforce repayment. However, as mitigation, the Company continues to engage with investors and debt providers in order to provide liquidity to repay the Mercuria and Alpha debt and to articulate the fundamental strength of the Group's business so as to attract additional funding when required.
Risk - Mining
Mining of natural resources involves significant risk. Drilling and operating risks include geological, geotechnical, seismic factors, industrial and mechanical incidents, technical failures, labour disputes and environmental hazards.
Mitigation/Comments
Use of strong technical management together with modern technology and electronic tools assist in reducing risk in this area. Good employee relations are also key in reducing this exposure and consequently, after the year end, the Company entered its mining operation at Baita into reorganisation so as to address suboptimal performance arising from the Unions and certain BPPM employee demands and practices which were adversely impacting mine performance. The reorganisation gives VBPSA the opportunity to dismiss, without significant cost, those employees involved in behaviour detrimental to the Company, but also the possibility to re-employ those employees whom VBPSA wishes to retain on new contracts materially more advantageous to BPSA. Certain employees were demanding a reduction in working hours of about 25% and an increase in paid holidays to almost twice that required under National regulations. The Hiring of employees is well advanced and the management is confident that this will restore good labour relations, benefiting all stakeholders. The Group is committed to following sound environmental guidelines and is keenly aware of the issues surrounding each individual project.
Risk - Commodity prices
Commodity prices are subject to fluctuation in world markets and are dependent on such factors as mineral output and demand, global economic trends and geo-political stability.
Mitigation/Comments
The Group's management constantly monitors mineral grades mined, cost of production, and commodity diversity to ensure that mining output from its active projects become economic and that its mining investments are recoverable. The anticipated marginal contributions going forward at BPPM are high versus fixed costs which provides a degree of liquidity protection in the event prices decline significantly.
Risk - Management and Retention of Key Personnel
The successful achievement of the Group's strategies, business plans and objectives depend upon its ability to attract and retain certain key personnel.
Mitigation/Comments
The Group's policy is to foster a management culture where management is empowered and where innovation and creativity in the workplace are encouraged. The Group has in place a "Share Appreciation Rights Scheme” for Directors and senior executives to provide incentives based on the success of the business and consults third party benchmarks for remuneration.
Risk - Country and Political
The Group's activities are based in Romania, Zimbabwe and Tajikistan. Emerging market economies could be subject to greater risks, including legal, regulatory, economic, bribery and political risks, and are potentially subject to rapid change.
Mitigation/Comments
The Group's management team is experienced in its areas of operation and skilled at operating within the framework of the local culture in Romania, Tajikistan and Zimbabwe to progress its objectives. The Group routinely monitors political and regulatory developments in each of its countries of operation. In addition, the Group actively engages in dialogue with relevant government representatives to keep abreast of all key legal and regulatory developments applicable to its operations. The Group has several internal processes and checks in place to ensure that it is wholly compliant with all relevant regulations to maintain its mining or exploration licences within each country of operation.
Risk - Social, Safety and Environmental
The Group's success may depend upon its social, safety and environmental performance, as failures can lead to delays or suspension of its mining activities.
Mitigation/Comments
The Group takes its responsibilities in these areas seriously and monitors its performance across these areas on a regular basis. The Group has adopted and obtained ISO 9001:2015 for Quality, ISO 45001: 2018 for Safety, and ISO
140001: 2015 for Environment. As mentioned earlier, we were very saddened on 14 July 2023 by a fatality at BPPM.
Risk - Voluntary reorganisations of the Group's Romanian subsidiaries
On 10 June 2024, the Company announced that Vast Baita Plai SA, the Company's wholly owned Romanian subsidiary that holds the Baita Plai association licence, had entered into a voluntary reorganisation to be effected by a Court judged process under the Insolvency Act in Romania. Although the reorganisation is under a judicial court process, it is of a voluntary nature under which administrators are appointed by the Company. Vast Baita Plai SA, and with it Baita Plai, continue to be controlled by and operated by the Company through Andrew Prelea as Special Administrator, appointed under that judicial process. Sinarom Mining Group Srl, the Company's wholly owned Company holding the Manaila licence recently completed a similar voluntary reorganisation plan which was approved by the Romanian courts and under which the operations continue to be controlled by the Company. Failure to comply with the rules and regulations of the insolvency process could result in bankruptcy proceedings being enacted at Sinarom Mining Group Srl. In the case of Vast Baita Plai SA, a court date has been set for 14 November 2024, at which the Company's Judicial Administrator will present the rejected creditors and argue the merits for rejecting any creditors from the initial creditors table, as well as presenting the progress made since entering reorganisation, and present the initial step plan for the reorganisation. The final reorganisation plan will require creditor approval by June 2025, and Vast Resources PLC will be the majority voting creditor at the time of the anticipated approval. Failure to adhere to comply with the rules and regulations through the insolvency process could result in bankruptcy proceedings being enacted at Vast Baita Plai S.A.
Mitigation/Comments
The Group via its special administrator, Andrew Prelea, work closely with the Judicial Administrator to ensure that all processes are conducted in accordance with all applicable rules and regulations and that the necessary creditor approval processes are adhered to in order to achieve a satisfactory outcome.
Corporate Governance
The Company has adopted the QCA (Quoted Company Alliance) Code on corporate governance. Details of how the Company complies with this are set out on the Company's website. Principles which are required to be dealt with under the Code in the Company's Annual Report are set out below.
Business model and strategy
This is described above under Strategy and elsewhere in this Report.
Risk Management
In addition to its other roles and responsibilities, the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company.
The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the Executive Directors. The Board works closely with and has regular ongoing dialogue with the Company Financial Director and other Executive Directors and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.
The risks facing the Company are detailed above. The Board seeks to mitigate such risks so far as it is able to, as explained above, but certain important risks cannot be controlled. The CEO is primarily responsible to the Board for risk management.
In particular, the products the Company mines and is seeking to identify are traded globally at prices reflecting supply and demand rather than the cost of production. In Romania, the Company seeks to protect its cash flow by means of a long-term offtake agreement, but it does not hedge future production.
Maintenance of a well-functioning Board of Directors led by the Chairman
Membership of the Board during the year is as follows:
Name Role Appointed Brian MoritzNon-Executive Chairman2 October 2016Andrew PreleaChief Executive Officer1 March 2018Roy TuckerNon-Executive Director5 April 2005Paul FletcherFinance Director6 November 2019Nick HatchNon-Executive Director9 May 2018Nigel WyattNon-Executive Director23 August 2021Andrew HallCommercial Director6 December 2021 (Died 27 November 2023) The Non-Executive Directors other than Roy Tucker are considered to be independent.
All the Directors are subject to re-election at intervals of no more than three years.
The table illustrates the success of the Board in refreshing its membership.
The Board is well balanced both in its skill sets and in the domicile of its members. Of the Executive Directors, Andrew Prelea is resident in Romania, and Paul Fletcher in the UK. All the Non-Executive Directors are resident in the UK.
Non-Executive Directors are committed to devote 3 days per month to the Company. Executive Directors devote substantially the whole of their time to the Company.
Where possible Directors are physically present at board meetings. However, due to the divergence of locations, Directors may be present by telephone.
During the year ended 30 April 2024, in addition to several informal Board discussions attended by all the Directors, there were nine Board meetings of the Company of which six were attended by all Directors and three were attended by all but one Director. There were a further eight meetings of a formal nature. There was also one General Meeting in addition to the Annual General Meeting.
Appropriate skills and experience of the Directors
The CVs of the Directors - three executives (two post 27 November 2023) and four non-executives - as disclosed on the website, are set out below. In addition, the Company has employed the outsourced services of Ben Harber of Shakespeare Martineau as company secretary.
Andrew Prelea - Chief Executive Officer
Andrew has been involved in the mining sector for 12 years and with Vast since 2013. He has spearheaded the development of the Company's Romanian portfolio. Beginning his career in the early 1990s as a bulk iron ore and steel trader in Romania, he then went on to develop his career in the property and earthmoving sector in Australia before returning to Romania in 2003, initially to focus on the development of properties for the Romanian Ministry of Defence and latterly, private sector developments. Throughout his 31 year career, Andrew has developed extensive investor and public relations experience and has advised the Romanian government on wide ranging high-level topics including social housing and economic policy. He has built a strong network of contacts across the mining and metals industries and Europe and southern Africa, in addition to policy makers and governmental authorities in Romania, Tajikistan, and Zimbabwe.
Brian Moritz - Chairman
Brian is a Chartered Accountant and former Senior Partner of Grant Thornton UK LLP, London; he formed Grant Thornton's Capital Markets Team which floated over 100 companies on AIM under his chairmanship. In December 2004, he retired from Grant Thornton UK LLP to concentrate on bringing new companies to the market. He specialises in natural resources companies, primarily in Africa, and was formerly chairman of Metal Bulletin plc, African Platinum plc and Chromex Mining plc as well as currently being chairman of several junior mining companies.
Roy Tucker - Non-Executive Director
Roy is a Chartered Accountant with some 50 years of high level and broad spectrum professional and business experience. He has been the founder of a London banking group, served on bank boards and had a position as a major shareholder of a substantial London commodity house. He is also the founder of Legend Golf and Safari Resort in South Africa. He has substantial investment in the Romanian property sector.
Paul Fletcher - Finance Director
Paul is a Chartered Accountant and Fellow of the Association of Corporate Treasurers with 32 years' experience working in the commodity and financial services industries. He has held a variety of senior international finance and operational roles in trading, processing, and financial businesses in the US, Europe, and Asia.
Andrew Hall - Commercial Director
The Company and the Board of Directors were extremely saddened by the passing of Andrew Hall on 27 November 2023. Andrew was a very valued member of the team. He will be greatly missed and fondly remembered. Andrew had spent the last fourteen years working in natural resources and finance linked businesses. Before joining the Company in December 2018, Andrew had previously worked at a natural resource focussed merchant bank where he established and managed the alternative finance distribution business covering asset managers, private equity, investment banks, family offices and trading houses.
Nick Hatch - Non-Executive Director
Nick has more than 38 years' experience in mining investment banking, primarily as a mining analyst and in manag