Vast Resources (VAST ) said it is to acquire Gem Diamonds Botswana in a “highly compelling opportunity” for the Company to deliver diamond production in “a relatively short period.”
The London-listed mining company has unveiled its intention to acquire 90% of Gem Diamonds Botswana, a wholly owned subsidiary of the diamond producer Gem Diamonds ('Gem Diamonds') which owns the Ghaghoo Diamond Mine in Botswana ("Ghaghoo").
The Group told investors that the proposed acquisition of Ghaghoo, which will be conducted through a joint venture between Vast and Botswana Diamonds, will provide it with a 90% interest in a high quality and previously producing diamond asset benefiting from world-class infrastructure and capable of generating material revenues in the near term.’
To date, BOD and Vast have jointly undertaken extensive internal and third-party due diligence work on Ghaghoo. Both parties say this work indicates ‘significant potential upside in both the potential diamond grade and value as well as various operational efficiencies.
Vast said the acquisition is conditional, inter alia, on the procurement by the Company of a bank guarantee in favour of Gem Diamonds and on relevant regulatory and competition authority approvals in Botswana and is expected to complete during the latter part of 2021.
Vast said it does not intend to provide funding that may be required for the proposed acquisition from new equity raisings. As a result, the Company said it is currently engaged with third party financiers to support the development of Ghaghoo into production.
Vast noted that it is responsible for funding Okwa Diamonds, which stands as one of the four companies involved within the share sale agreement, up to $15m for the purposes of carrying out due diligence, acquiring GDB and placing the Ghaghoo Mine into steady state production.
The Ghaghoo mine, which is a 10.8ha kimberlite pipe in central Botswana 300km north west of Gaborone which is currently on care and maintenance, holds a mining licence until 2036. The mine was originally acquired by Gem Diamonds from De Beers and Xstrata in May 2007.
Vast said Ghaghoo is “substantially de-risked” from an exploration and development perspective, and also from the funding structure that it is advancing with third party financiers.
To date, the mine, which is said to be home to a ‘world class on-site treatment facility’ for 60,000t per month and full mining infrastructure, has previously had a full spectrum of stones recovered from its site including consistent recovery of high value fancy-coloured diamonds.
Commenting on the proposed acquisition, Andrew Prelea, Chief Executive Officer of Vast Resources stated: "The proposed acquisition of the Ghaghoo Mine in Botswana is a highly compelling opportunity for Vast to deliver diamond production in a relatively short period, benefitting from a fully equipped mine that has $250 million of investment, infrastructure and a significant Resource of quality gems that include large stones and fancy colours.
"Furthermore, this transaction also aligns with our longer-term strategy to maximise and crystallise the value of our interests in Zimbabwe and the Southern African region,” he said.
Reasons to VAST
Vast Resources is a United Kingdom AIM listed mining company with mines and projects in Romania and Zimbabwe. In Romania, the Company is focused on the rapid advancement of high-quality projects, particularly its wholly owned producing Baita Plai Polymetallic Mine.
Valuable Portfolio
Romania
The company previously reported the first commercial sale of concentrate produced at its Baita Plai Polymetallic Mine (‘Baita Plai’) in Romania last month. Vast confirmed at the time that this first delivery of concentrate has been completed ‘in accordance with expectations.’
The mine has a JORC compliant Reserve & Resource Report which underpins the initial mine production life of approximately 3-4 years with an in-situ total mineral resource of 15,695 tonnes copper equivalent with a further 1.8M–3M tonnes exploration target.
Last year, the company enlarged its exploration target at the Baita Plai Polymetallic Mine to between 3.2m–5.8m tonnes following the group’s analysis of further historical drilling data.
Elsewhere, Vast has been granted the Manaila Carlibaba Extended Exploitation Licence that will allow it to re-examine the exploitation of the mineral resources within the larger Manaila Carlibaba licence area.
Zimbabwe
In Zimbabwe, Vast is focused on the commencement of the joint venture mining agreement on the Chiadzwa Community Concession Block of the Chiadzwa Diamond Fields.
Multiple Re-Rating Catalysts
Vast is on track to surpass its initial copper concentrate sales delivery targets and expects delivery of between 350-400 tonnes of copper concentrate to commodity group Mercuria.
Production of Cu concentrate in October was estimated to be more than 50% of the total FY20 target with first deliveries to Mercuria expected imminently.
In December 2020, Vast completed a placing to raise £4.8 million ($6.45m) in proceeds at 0.132p to satisfy expected requirements from the international banking institution which it said will enable it to ramp up to full production at its Baita Plai Polymetallic Mine.
Andrew Prelea, CEO of Vast said the facility is “a key corporate and commercial objective for Vast, and one which I believe will prove beneficial for shareholders as we move into 2021.”
He said this development “will provide Vast with the financial optionality to successfully capitalise on the anticipated ramp up to full production at our Baita Plai Polymetallic Mine.”
Vast said it remains well funded following this placing and it reported earlier this month that it was making solid progress with the ramp up to full production at the Baita Plai Mine.
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