AIM-listed mining concern, Vast Resources, is disposing its minority non-controlling interest in Pickstone-Peerless Gold Mine and Giant Gold Mine, as it deleverages its exposure to Zimbabwe.
BY BUSINESS REPORTER
The disposal, plus the loan facility, would rake in $8 million for Vast, to be used to accelerate development of the company’s core Romanian portfolio of polymetallic mining interests into positive cash flow.
The disposal of the 49,99% shareholding to SSCG Africa Holdings Ltd will raise $4 million.
SSCG Africa Holdings Ltd will give Vast a long term loan of $4 million at a cost of 12% per annum and secured on the group’s mineral assets.
Vast Resources said the obtaining political and economic environment has also necessitated the need to sell the non-controlling interest in Pickstone-Peerless Gold Mine and Giant Gold Mine.
“The current economic and political uncertainties existing in Zimbabwe such as; exchange controls that could become restrictive; reintroduction of a quasi-Zimbabwe currency, Zimbabwe Reserve Bank ‘dollar bond notes’ that may result in excessive inflation, as happened to the former Zimbabwe dollar; proposed new mining taxation to increase the tax receipts by the state from the mining sector; and the required forfeiture of base metal and precious metal mining claims to the state, supports leveraging the Zimbabwe assets, while retaining exposure to future upside potential when these challenges are resolved,” it said.
Vast chairman, Brian Moritz, said while the transaction was pivotal for the group to focus its efforts in Romania, it was also an opportunity to deleverage its exposure to Zimbabwe.
“… we are deleveraging our exposure to Zimbabwe — a decision I believe to be prudent given the prevailing political and economic uncertainties of that country. I do believe, however, that retaining a foothold in Zimbabwe to ensure we are ‘on the ground’ when conditions improve in the country is a sensible approach, particularly when there is little risk to do so, with limited obligations to provide further capital,” Moritz said.
“However, if all parties chose to invest in the expansion of these gold operations, SSA has expressed its willingness to support this through its offer to fund Vast’s contribution by way of a loan should Vast elect not to participate with a cash injection from its own or shareholders’ resources.”
Roy Pitchford, chief executive of Vast, said SSA “has demonstrated itself to be an extremely knowledgeable and enthusiastic strategic investor”.
“With exceptional influence in Africa, particularly Zimbabwe, SSA’s involvement in the development of other associated gold projects will, I believe, provide further ancillary benefits in the future,” he said.
SSA is a Mauritian-based investment holding company that is solely focussed on investing in Africa.