Why Vast Resources shares could be set to explode higher

Vast Resources is a mining and development company listed on London’s Aim that mines copper, gold, polymetallic ores in Zimbabwe and Romania.

Vast Resources has projects in both Zimbabwe and Romania such as Chiadzwa Diamond Fields located in Marange, Baita Plai and Manaila-Carlibaba facility which we will discuss in-depth later in the article.

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In late April, the group announced a fundraise of £420,000 at a premium to the previous closing price to buy mechanised equipment to help the increasing mining volumes planned at the Baita Plai Polymetallic Mine. 

In its latest operational update, Vast Resources noted a 236% jump in total gross revenue to £2.29m from £970,000 in the first quarter of 2022, which also included contributions from Tajikistan despite working with limited financial resources.

However, potential pipeline revenue prospects are underway in the attempt to keep the business well-funded. The group generated £1.67m in total revenues from other projects between the fourth quarter of 2021 and the first quarter of 2022.

The business is also in the process of refinancing the Atlas bond facility, while it continues to arrange concentrate sales from Baita Plai to provide additional cash flow.

Vast has a level of debt that should not be ignored but may become insignificant should the company deliver on their plans to develop, and increase production from, its portfolio of assets.

Vast Resources is a high-risk junior miner and is not for the faint of heart. However, with a market cap of just £9.3m, the adventurous may want to pay the stock closer attention.

Projects

Romania

Baita Plai

Baita Plai is located in Transylvania’s Apuseni Mountains, which is home to Romania’s largest polymetallic and uranium mines.

The mine has a complete infrastructure, comprising underground, surface, and processing equipment, as well as a fully working EU-registered tailings facility.

Baita Plai Mine focused on copper output in Q1 2022, with a 24.2% increase in tonnes milled and a 16.8% increase in Dry Metric Tonne production from the fourth quarter to the first quarter of 2022.

Mining was mostly low-grade ore during the quarter as the ramp down to sub-level 3 under level 18, which has now just intersected the Antonio skarn, was being built.

The Baita Plai Polymetallic Mine has a $107m NPV at 10%, before any improvement to the project’s economics including a possible increase in the resource and capacity at the mine. Vast

Tajakistan

Vast Resources announced a partnership in Tajikistan with Open Joint Stock Company Korkhonai Boygardonii Takob in early May.

Vast Resources has a 49% of the 50% stake in Central Asia Minerals and Metals Ore Trading (CAMM) which already holds a relationship with Takob, and Vast has an effective indirect interest in the Takob Project of 24.5%.

Tajikistan Open Joint Stock Company “TALCO” is the owner of Takob which owns the operating Takob fluoride and galena mine in Tajikistan and produces the fluoride concentrate which is sold to TALCO’s chemical division for the production of essential raw materials for primary aluminium production.

The mine reported in the past that it contains 30g/t silver and 1-2g/t gold in situ and according to the deal, the mine will have an output of 7,000 tonnes of ore per month with a minimum of 1.5-2% lead, 1.2-1.4% zinc, and 27% fluoride, along with a supply of two months worth of output on-site.

The terms of the deal also state that CAMM will manage and execute the project and supply the equipment, technology, and technical experience to update and optimise the mine’s processing facility for which CAMM has acquired funding. In return, CAMM will receive 50% of net revenue from the sale of non-ferrous concentrate and precious metals.

Vast Resources will also earn a 12.25% royalty on all sales of the non-ferrous concentrate and any other metals generated for its participation in the collective group, in addition to the fees payable under the services agreement with CAMM.

Manaila Carlibaba Project

The Manaila Carlibaba project is an important project for Vast Resources. The aim is to restart the project after Baita Plai and the Chiadzwa Community Concession enter peak production levels.

The 138.6-hectare Manaila-Carlibaba exploration licence has a JORC 2012 compliant Measured and Indicated Mineral Resource of 3.6Mt grading 0.93% copper, 0.29% lead, 0.63% zinc, 0.23g/t gold, and 24.9g/t silver, as well as Inferred Mineral Resources of 1.0Mt grading 1.10% copper, 0.40% lead, 0.84% zinc, 0.24g/t gold, and 29.2g/t silver.

Vast proposes to build a larger mining and processing facility at Manaila-Carlibaba, which will eliminate the need for expensive road transport of mined ore to the existing processing facility at Iacobeni, about 30 kilometres distant and its preliminary studies suggest the prospect of a new open-pit mine to explore mineral resources to a depth of around 125 metres below the surface.

Blueberry Gold Project

Blueberry Project, is a 7.285kmsq brownfield area located in the “Golden Quadrilateral” which is in the area of the Baia de Aries mine, where Vast Resources has 29.41% interest.

Vast’s stake in Blueberry Gold Project is held through EMA Resources, which is a subsidiary company of Vast, which is expected to become a sole entity eventually to qualify for an IPO.

Vast will be in charge of future mining operations at Blueberry, as well as the exploration programme and the IPO process, in exchange for a fee of 10% of pre-IPO costs.

The Golden Quadrilateral offers strong polymetallic prospects and is said to have generated almost 55m ounces of gold in the past with soil samplings supporting sample values of up to 22.4g/t gold.

A drilling and assaying campaign is now ongoing, and it is expected to yield enough data to support an Inferred JORC Mineral Resource for gold and other polymetallic minerals such as silver, copper, lead, and zinc in one or more separate breccia pipes.

Zagra Licenses

Piciorul Zimbrului and Magura Neagra are collectively known as Zagra.

The 10km2 Piciorul Zimbrului prospecting permit is located in the Zagra-Telciu area in Bistrita-Nasaud County of Romania and lies adjacent to Vast’s 21km2 Magura Neagra prospecting permit.

After the initial exploratory work, Vast completed the drilling programme in the Piciorul Zimbrului licence, focusing on six previously detected veins with linked copper and gold mineralisation along an underground route constructed for 820m at a level of 835m above main sea level.

IPEG Cluj, the former state exploration corporation, has conducted 1,200m of underground development and diamond drilling, as well as 862m of surface diamond drilling and geological mapping over a 4km region.

Vast has also begun drilling in the Magura Neagra licence, to find polymetallic veins and regions of scattered sulphide deposit.

Zimbabwe

Vast Resources signed a partnership agreement with Chiadzwa Mineral Resources which is a company that represents the Chiadzwa Community interests which led to the creation of Katanga Mining. Katanga Mining and Zimbabwe Consolidated Diamond Company also aim to enter into a joint venture and will be announced at the same time as the details of the Chiadzwa JV.

The Chiadzwa Diamond Fields in Marange is one of the richest alluvial diamond deposits worldwide.

Vast Resources Shares

Vast Resources shares have given up 10% this year and trade at just a fraction of their 2018 levels. The company is producing revenue and has a number of assets under evaluation that may provide a catalyst for a re-rating. Their financial position will need careful consideration, but the need to raise capital and refinance is common place within the sector.

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