LONDON – London quoted mining outfit, Vast Resources said on Monday it had concluded a conditional sale agreement for a proposed disposal of its noncore 50, 01 percent shareholding in Ronquil Enterprises for a proposed US$3,5 million deal, as it shifts focus to diamond mining.
Vast says it also wants to give greater attention to its Romania based Baita Plai polymetallic mine.
The transaction is subject to shareholder approval on April 23, 2019.
Ronquil is the holder of Vast’s Zimbabwe based gold asset, which is the remaining 25, 01 percent interest in Pickstone Peerless and Eureka Gold Mine.
The interests will be sold to Southern African Trade Finance (SATF), according to a statement released Monday.
According to the statement, SATF has offered a consideration of US$$2,5 million to be settled outside Zimbabwe.
In addition, it will pay an extra RTGS$2,5 million.
RTGS is the new currency introduced by the Reserve Bank of Zimbabwe in February, and RTGS2,5 million equates to about US$1 million, which will be settled in Harare.
“The Heritage Concession (in Zimbabwe) will require significant investment, not only financial, but in human resources, to enable near-term positive cash flow for the business,” said Vast chief executive officer, Andrew Prelea.
“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,” Prelea said.
He said bringing the two assets online will unlock funding and create value for shareholders, while reducing liabilities by about US$38 million.
Financing operations going forward will be boosted after the transaction, according to Prelea.
“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,” he said.
Analysts said after completion of the transaction, the company’s wholly owned Zimbabwean subsidiary, Canape, will have no material assets apart from RTGS$2, 5 million.
“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,” said Brian Moritz, the chairman of Vast Resources.
“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 said.
“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,” Moritz added.