Vast Resources plc Financing Update & Proposed $9.5 Million Pre-Payment Off-take With Mercuria Energy Group

 
TIDMVAST 
 
 
   Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining 
 
   25 January 2018 
 
   Vast Resources plc 
 
   ("Vast" or the "Company") 
 
   Financing Update & Proposed $9.5 million Pre-Payment Off-take 
 
   with Mercuria Energy Group 
 
   Highlights 
 
 
   -- Off-take offer from Mercuria Energy Trading ("Mercuria") for up to 100% 
      of the copper and zinc concentrate produced at the Company's Manaila 
      Polymetallic Mine ("Manaila") and Baita Plai Polymetallic Mine ("Baita 
      Plai") 
 
   -- Conditional Pre-payment Finance Term Sheet with Mercuria of up to $9.5m 
      over two tranches commencing from 5 March 2018 
 
   -- MOU with Sub-Sahara Goldia Investments ("SSGI") for early repayment of 
      funding following repayment of the bridging loan of US$1.68 million to be 
      repaid 9 March 2018 
 
   -- Charge over all Romanian assets to be released on 31 December 2018, or 
      earlier, following repayment of a further US$1.5 million to SSGI and 
      Romanian assets re-charged to Mercuria. 
 
 
   Vast Resources plc, the AIM-listed mining company with operating mines 
in Romania and Zimbabwe, is pleased to announce an update on the 
Company's off-take and financing arrangements.  This includes a binding 
Memorandum of Understanding "MOU") to vary the existing loan and 
guarantee agreement with SSGI, and an offer of an off-take agreement 
capable of acceptance by Vast ("Off-take Offer") coupled with a related 
conditional pre-payment finance term sheet ("Pre-payment Finance Term 
Sheet") with Mercuria.  Mercuria is part of Mercuria Energy Group, one 
of the largest integrated energy and commodity trading companies 
globally.  The terms of the Off-take Offer are on substantially more 
favourable terms than those of Vast's previous off-take partner and the 
arrangements overall, subject to finalisation and signing, would result 
in material benefits for the Company. Brandon Hill Capital acted as 
financial adviser to the Company in relation to the Pre-payment Finance 
Term Sheet with Mercuria. 
 
   Andrew Prelea, Chief Executive (Non Board) of Vast Resources, commented: 
 
   "I am delighted to present shareholders with our proposed financing 
strategy and off-take partner, which I believe could provide Vast with 
significantly improved borrowing and off-take terms.  In addition to the 
near-term benefits, which this pre-payment off-take financing facility 
should deliver to the Company, it also establishes the basis for a 
future working relationship with one of the most recognised and 
respected energy and trading companies globally, Mercuria Energy 
Trading.  The opportunity to partner with a company with such prestige 
as Mercuria is a tremendous endorsement of our assets in Romania, and 
also our ability to unlock the inherent value of our portfolio of mines 
and projects for all stakeholders 
 
   "On finalisation of this facility, we anticipate that the funds will 
enable us to deliver all of our near-term goals in Romania, specifically 
the expansion and optimisation of our Manaila mine, and, subject to the 
grant of the licence, the landmark commencement of production at our 
Baita Plai mine with no equity dilution to shareholders on the basis 
that the Company complies with the terms of the facility. 
 
   "The proposed funds from Mercuria will also support the accelerated 
repayment schedule that has been agreed with our partners at SSGI 
providing significant cost savings to the Company.  I would like to 
extend my thanks to the team at SSGI for their support over the past 12 
months, and I look forward to continuing our relationship as it develops 
over the coming months." 
 
   Transaction with Mercuria Energy Group 
 
   Summary of the Transaction 
 
 
   -- An Off-take Offer ("Off-take Offer") from Mercuria for the period from 
      January 2018 to December 2021 inclusive for up to 100% of the copper and 
      zinc concentrate produced at the Company's Manaila Polymetallic Mine 
      ("Manaila") and Baita Plai Polymetallic Mine ("Baita Plai") in Romania on 
      pricing terms significantly more attractive than those on Vast's previous 
      off-take contract. The Off-take Offer is capable of acceptance by Vast. 
 
 
   -- Conditional up to US$9.5 million Pre-payment Finance Term Sheet with 
      Mercuria relating to the Off-take Offer: 
 
          -- Funds to be drawn down US$4 million on or before 5 March 2018 
             ("Tranche A") and up to US$5.5 million on 1 July 2018 (or 
             subsequently as required) ("Tranche B") subject to Vast Resources 
             PLC meeting pre-agreed conditions. 
 
          -- Drawdown conditional on the Company accepting the Off-take Offer. 
 
          -- Drawdown of Tranche A is conditional, inter alia, on legal due 
             diligence, agreement of an inter-creditor management agreement 
             with SSGI, agreement of definitive documents, execution of 
             security documentation and the internal approvals of Mercuria.  It 
             is also conditional on 49.9% of the Company's 100% interest in 
             Sinarom Mining Group SRL being pledged as security for Tranche A. 
 
          -- Drawdown of Tranche A is further conditional upon a shareholders' 
             resolution of the Company granting authority for the Company to 
             issue warrants sufficient at the share price at the date of 
             signature of the final pre-payment finance agreement (the "Signing 
             Date")to convert, if exercised, into a share value of US$ 4.4 
             million ("Warrants").  The Warrants would be charged as additional 
             security for Tranche A and would be exercisable in the event of 
             default by the Company, but not otherwise, to the extent necessary 
             to repay Tranche A.  The exercise price of the Warrants for this 
             purpose would be the value weighted average price of the Company's 
             shares in the ten business days preceding the conversion date. The 
             maximum number of shares which can be issued under the Warrants 
             will be set at the Signing Date, but based on last night's closing 
             share price is 526 million representing 10.27% of the Company's 
             existing issued share capital.  The Warrants would be released 
             from charge after repayment of Tranche A. 
 
 
 
   -- Drawdown of Tranche B is subject, in addition to customary due diligence 
      and agreement of documentation, to a technical and financial due 
      diligence on Manaila and Baita Plai and the completion of a Baita Plai 
      plant investment plan validating the business of that mine.  Tranche B 
      would be secured on the Romanian assets of the Company. 
 
 
 
 
   The Company will convene a General Meeting as soon as it can be arranged 
for the purpose of proposing a resolution to grant authority for the 
issue of the Warrants. 
 
   Variation of the existing loan and guarantee agreement with Sub-Sahara 
Goldia Investments ("SSGI") 
 
   The Company has entered into a Memorandum of Understanding ("MOU") with 
SSGI which, conditional upon the Company entering into a binding 
off-take agreement from Manaila and a binding pre-payment agreement 
satisfactory to SSGI by 5 March 2018, amends the existing loan and 
guarantee agreement as follows: 
 
 
   -- US$1.68 million interim bridging loan (announced 13 September 2017) to be 
      repaid 9 March 2018 in accordance to the current agreement. 
 
   -- Accelerated repayment schedule agreed whereby the full US$4.08 million 
      (including loan arrangement fee) (as announced on 30 January 2017) to be 
      repaid by 31 December 2019, 13 months early and in accordance with cash 
      flow projections. 
 
   -- Charge over 49.9% of the Company's 100% interest in Sinarom Mining Group 
      SRL to be released following repayment of US$ 1.6 million on 9 March 
      2018. 
 
   -- Charge over all Romanian assets to be released on 31 December 2018, or 
      earlier, following repayment of a further US$1.5 million in aggregate in 
      accordance with the accelerated repayment schedule. 
 
 
 
 
   Background on Mercuria 
 
   Founded in 2004, Mercuria Energy is one of the largest independent 
commodities groups in the world. Through its various subsidiaries, the 
group focuses primarily on energy and has activities all along the 
commodity value chain that form a balanced combination of commodity 
flows and strategic assets. 
 
   With a strong balance sheet and net asset value of close to USD 3 
billion, more than 1,000 people are operating from offices worldwide to 
sustain Mercuria's extensive business reach, while leveraging their 
market knowledge, diversity, and experience. 
 
   In 2014, Mercuria Group completed the acquisition of the physical 
commodities trading businesses of JPMorgan Chase & Co. In 2016, Mercuria 
welcomed the strategic investment by China National Chemical Corporation 
("ChemChina"), in addition to the investment by China Materials Storage 
and Transportation Development ("CMST") into the Henry Bath warehousing 
business.  In 2017, Mercuria Group completed the acquisition of the gas 
and power trading unit of Noble Americas Corp. 
 
   **S** 
 
   For further information, visit www.vastresourcesplc.com or please 
contact: 
 
 
 
 
Vast Resources plc                                www.vastresourcesplc.com 
 Andrew Prelea (Chief Executive Officer)           [phone] 
Beaumont Cornish - Financial & Nominated Adviser  www.beaumontcornish.com 
 Roland Cornish                                    [phone] 
 James Biddle 
Brandon Hill Capital Ltd - Joint Broker           www.brandonhillcapital.com 
 Jonathan Evans                                    [phone] 
SVS Securities Plc - Joint Broker                 www.svssecurities.com 
 Tom Curran                                        [phone] 
 Ben Tadd 
 
  St Brides Partners Ltd                            www.stbridespartners.co.uk 

  Susie Geliher                                     [phone] 
  Charlotte Page 
 
 
   The information contained within this announcement is deemed by the 
Company to constitute inside information as stipulated under the Market 
Abuse Regulations (EU) No. 596/2014 ("MAR"). 
 
   Notes 
 
   Vast Resources plc is an AIM listed mining and resource development 
company focussed on the rapid advancement of high quality brownfield 
projects and recommencing production at previously producing mines in 
Romania. 
 
   Vast Resources currently owns and operates the Manaila Polymetallic Mine 
in Romania, which was commissioned in 2015 and is focussed on its 
expansion through the development of a second open pit operation and new 
metallurgical complex at the Carlibaba Extension Area.  The Company's 
portfolio also includes an 80% interest in the Baita Plai Polymetallic 
Mine in Romania, where work is currently underway towards obtaining the 
relevant permissions to start developing and ultimately commissioning 
the mine. 
 
   The Company also has interests in a number of projects in Southern 
Africa including a controlling 25% interestin the producing 
Pickstone-Peerless Gold Mine in Zimbabwe. 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Vast Resources plc via Globenewswire 
 
 
  http://www.acrplc.com/ 
 

(END) Dow Jones Newswires

January 25, 2018 07:00 ET (12:00 GMT)

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