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Exercise of option to acquire Baita Bihor mine
VAST, the AIM listed resource and development company has announced that it has completed, to its satisfaction, due diligence on the Baita Bihor polymetallic mine in Romania and has consequently exercised its option to acquire 80 per cent. of the issued share capital of Mineral Mining SA, the owner of Baita Bihor.
VAST has also determined that the merger agreement between African Consolidated Resources srl (currently in the process of changing its name to Vast Resources SA, a wholly owned subsidiary of VAST) and Mineral Mining, announced on 25 February 2015, should become unconditional and proceed to completion. As a consequence of the Merger, all of the assets and liabilities of Mineral Mining will, by operation of law, be transferred to Vast Romania, and Mineral Mining will cease to exist as a corporate entity.
As previously announced, the Option was granted to VAST by the AP Group. After some re-negotiation between the AP Group and the vendor of the shares in Mineral Mining to it, which in turn has a consequential effect on the exercise price of the Option, the total consideration payable by the Company for the exercise of the Option is €1,220,000 of which €413,000 has now been paid from existing cash reserves, which includes the €200,000 paid to Mineral Mining by the AP Group as announced on 25 February 2015; a sum of €61,000 (in aggregate), payable by VAST in instalments over the next six months; and, the balance which is payable out of cash flow from the mining operation when such cash flow is available.
Following the exercise of the Option and the completion of the Merger, Vast Romania will have full ownership and possession of Baita Bihor, although, as announced on 25 February, it will still await the return of the mining licence. VAST has been advised that the transfer of all the mining assets of Mineral Mining by operation of law to a solvent company through the Merger ought to ensure that the licence to mine at Baita Bihor will be transferred to Vast Romania. It is anticipated that a three month pre-production period will be required to improve mine infrastructure, ventilation and flotation circuits as well as to develop an incline shaft to access another level of the mine.
A decision will be made shortly by the board of directors of the Company as to whether to commit to the expenditure required to achieve this in advance of the return of the Licence so as expedite the commencement of mining activities following receipt of the Licence.
Roy Pitchford, Chief Executive Officer of the Company, commented:
“I am delighted to announce that we have completed due diligence to acquire an 80 per cent. interest in Baita Bihor. With a total 1.8M tonne copper-silver-zinc-lead-gold-tungsten-molybdenum resource and significant further upside potential available, the project is a compelling investment case, offering near term development opportunities. This acquisition is a significant achievement in VAST’s development strategy, as we look to build our portfolio and establish a strong presence in Romania, which offers low sovereign risk, a pro-mining government, an experienced workforce and excellent infrastructure.”
