Vast Resources plc Letter To Shareholders And Notice Of Gm

 
TIDMVAST 
 
 
   Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining 
 
   6 November 2020 
 
   Vast Resources plc 
 
   ('Vast' or the 'Company') 
 
   Letter to shareholders 
 
   Notice of General Meeting 
 
   Vast Resources plc, the AIM listed mining company, is pleased to 
announce that a General Meeting of the Company will be held as a virtual 
meeting as a result of the current Covid-19 restrictions at 2.30 p.m. on 
Monday 23 November 2020. 
 
   As a consequence of the current measures implemented by the UK 
Government, shareholders will not be permitted to attend the General 
Meeting but are strongly encouraged to submit their votes by proxy as 
soon as possible. Voting at the General Meeting will be carried out by 
way of poll so that votes cast in advance, and the votes of all 
shareholders appointing the chairman of the General Meeting as their 
proxy, can be taken into account. 
 
   The letter from the Chairman and Notice of the General Meeting along 
with the Form of Proxy have  been posted to shareholders today and will 
be made available on the Company's website, accessible under the 
Constitutional Documents section of the Document Downloads page and 
using the following link: 
 
   https://www.globenewswire.com/Tracker?data=zk09B4-CLlVbnspZV21o5MYqqPu-YvFKVYy_zh7ip7bK9qWlTvoS2qxLkAvJ6GKV4Ym-X9mHNIHGEHI2RS7NiE8MmwvLNGOO2E8ou3_5zlMZbQWvP2Tu-sy0-eXYv3lKGsEBnx2rY94jUxxsDq3FROXpm1Fek29H5t9sSLivcQNkfK4IzlmhyB2-8o1h1TlpEIeug1x2bzp0VYUTgWC2fA== 
https://www.vastplc.com/investor-information/document-downloads 
 
   The relevant text included in the letter from the Chairman is appended 
below. 
 
   **S** 
 
   For further information, visit 
https://www.globenewswire.com/Tracker?data=gCq9blWRwtIx1pBKrHuygXf3ujDBPeRXEp61QqV9Mg9PVZxMe70Oezln_j4k-NUTNd07zZxbVqp_W-ebCKzo8Q== 
www.vastplc.com, follow the Company on Twitter @vast_resources and 
LinkedIn, or please contact: 
 
 
 
 
Vast Resources plc                                www.vastplc.com 
 Andrew Prelea - CEO                               [phone] 
 Andrew Hall 
Beaumont Cornish - Financial & Nominated Adviser  www.beaumontcornish.com 
 Roland Cornish                                    [phone] 
 James Biddle 
SP Angel Corporate Finance LLP -- Joint Broker    www.spangel.co.uk 
 Richard Morrison                                  [phone] 
 Caroline Rowe 
Axis Capital Markets Limited -- Joint Broker      www.axcap247.com 
 Richard Hutchison                                 [phone] 
St Brides Partners Limted                         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"). 
 
   ABOUT VAST RESOURCES PLC 
 
   Vast Resources plc, 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 by recommencing production at previously producing 
mines. 
 
   The Company's Romanian portfolio includes an 80% interest in the 
producing Baita Plai Polymetallic Mine, located in the Apuseni Mountains, 
Transylvania, an area which hosts Romania's largest polymetallic mines. 
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. 
 
   The Company also owns the Manaila Polymetallic Mine in Romania, which 
was commissioned in 2015, currently on care and maintenance. The Company 
has been granted the Manaila Carlibaba Extended Exploitation License 
that will allow the Company to re-examine the exploitation of the 
mineral resources within the larger Manaila Carlibaba licence area. 
 
   In Zimbabwe, the Company is focused on the commencement of the joint 
venture mining agreement on the Chiadzwa Community Concession Block of 
the Chiadzwa Diamond Fields in Zimbabwe. 
 
   APPIX 
 
   TEXT OF THE LETTER FROM THE CHAIRMAN OF THE COMPANY 
 
   Notice of General Meeting at 2.30 pm on 23 November 2020 
 
   1.     Introduction 
 
   The Company has today announced the proposed acquisition of the minority 
interests in its Romanian projects. 
 
   As referred to in the previous announcements of 10 September 2020, 12 
October 2020 and 26 October 2020, the Company is currently engaged in 
discussions with an international banking institution (the "Bank") to 
conclude an asset backed debt financing linked to Baita Plai 
Polymetallic Mine ("BPPM") to be used, inter alia, for refinancing the 
Tranche 1 Convertible Bonds issued by Atlas Special Opportunities LLC. 
It is a requirement of the Bank that potential conflicts of interest be 
resolved through the Company acquiring the outlying 20% interest in BPPM 
and the 10% interest in certain other Romanian assets (the "Transaction 
Assets"). 
 
   The Company believes this would likely also be a requirement of any 
other institution of similar standing and accordingly, in line with the 
Company's  previously stated intention of rolling up the minority 
interests in its Romanian projects and thus to eliminate the potential 
conflicts of interest, the Directors who have no conflict of interest in 
relation to the ownership of the Transaction Assets, being Brian Moritz, 
Paul Fletcher, Craig Harvey and Nick Hatch (the "Independent Directors") 
have negotiated a contract to acquire the Transaction Assets (the 
"Transaction"). This is proposed to be by way of the issue of new 
ordinary shares in the Company, conditional on Shareholders' approval in 
order to authorise the Directors to make the necessary allotment of 
shares. 
 
   As the Vendors in the Transaction include Andrew Prelea and Roy Tucker, 
who are Directors, the Transaction is a "Related Party Transaction" 
under the AIM Rules.  As such it is a requirement that the Independent 
Directors make a statement that they consider, having consulted with the 
Company's Nominated Adviser, that the terms of the Transaction are fair 
and reasonable as far as the Shareholders of the Company are concerned. 
 
   The purpose of this document is to explain the Transaction, including 
the related party aspects of it and the historic reasons why they exist, 
and to convene a General Meeting at which an Ordinary Resolution will be 
proposed to approve the Transaction and to approve the allotment of new 
Ordinary Shares in the Company to permit the Transaction to be 
completed. 
 
   2.     Particulars of the Transaction 
 
   The Transaction contract (the "Contract") is for the purchase of the 
whole share capital of the UK company AP Mining Group Limited ("APMG") 
by the Company from the vendors as listed below (the "Vendors") in 
consideration of the issue of 2,850,000,000 ordinary shares of 0.1p in 
the Company (the "Purchase Price").  APMG is a holding company. On 
completion APMG will have no debts and will own the Transaction Assets 
set out in 3 below. To facilitate funding arrangements entered into by 
Vast, there are the following charges over APMG and/or its assets. None 
of these charges is for the benefit of APMG: 
 
 
   -- A charge over the 20% of the share capital of Vast Baita Plai SA ("VBP") 
      owned by APMG in favour of Atlas Special Opportunities LLC 
 
   -- A charge over the shares of Blueberry Ridge Minerals SRL and over 
      receivables due from Blueberry Ridge Minerals SRL to EMA Resources Ltd 
 
   -- AP Mining Group Ltd has entered as Guarantor jointly with the Company the 
      Prepayment Agreement with Mercuria Energy Trading dated 21 March 2018 and 
      as Obligor jointly with the Company on the Intercreditor and Standstill 
      Deed with Mercuria Energy Trading SA and Atlas Special Opportunities LLC 
      dated 29 January 2020 
 
 
   The Contract is conditional on the passing by Shareholders of the 
Company in General Meeting of an Ordinary Resolution to approve the 
Contract and to permit the allotment of the Consideration Shares. It 
contains customary warranties given by the Vendors as to the good 
standing of APMG and its title to the Transaction Assets ("Resolution"). 
 
   The Vendors are as follows: 
 
 
 
 
                    Shares in APMG  Vast Resources PLC Shares 
  Vendor             "Sale Shares"    "Consideration Shares" 
Andrew Prelea               81,818              1,500,001,930 
Roy Tucker                  12,273                225,005,790 
Michael Kellow**            30,000                550,001,930 
Samuel Tucker*              12,273                225,005,789 
Alexander Prelea*           19,090                349,984,561 
                    --------------  ------------------------- 
                           155,454              2,850,000,000 
                    --------------  ------------------------- 
 
   *adult sons of Roy Tucker and Andrew Prelea respectively. 
 
   **former director of the Company. 
 
   As stated above, Andrew Prelea and Roy Tucker are Directors of the 
Company and are therefore related parties for the purposes of the AIM 
Rules. The other Vendors are not related parties. 
 
   The minority interests arose as a result of opportunities developed by 
Andrew Prelea prior to his joining the Company as an executive. At the 
time of his appointment as a Director of the Company on 1 March 2018, it 
was announced that, in order to eliminate possible future conflicts of 
interest, it was the intention of both the Company and of Andrew Prelea 
to negotiate terms under which Andrew Prelea's interest in the 
Transaction Assets, including BPPM, would be exchanged for the right to 
acquire shares in the Company. 
 
   3.       The Transaction Assets 
 
   The Transaction Assets comprise the following: 
 
   2,355 shares of RON 10 each in Vast Baita Plai SA ("VBP") 
 
   This comprises 20% of the total share capital of VBP) which company is 

the owner of Baita Plai Polymetallic Mine ("BPPM") and associated 
assets.  BPPM is considered by the Directors as the lead asset of the 
Group.  BPPM has commenced production in October 2020 and the first sale 
of concentrate is expected in early November 2020. 
 
   On 29 October 2020 the Company published a Mineral Resource Estimate for 
BPPM prepared by Craig Harvey MGSSA, MAIG, Group Geologist and Chief 
Operating Officer of the Company.  The estimate covers the area 
immediate to the 18 Level of the mine, the lowest level of present 
infrastructure, and is intended to provide certainty regarding the 
initial mine production life of approximately 3-4 years whilst historic 
mineral resources are verified.  The report estimates on a 100% 
ownership basis a Resource of 608,000 tonnes of which 376,000 tonnes is 
Indicated at a copper equivalent grade of 3.01% and 232,000 tonnes is 
Inferred at a copper equivalent grade of 1.88%.  In addition, the report 
refers to an exploration target in the range on a 100% ownership basis 
of 1,800,000-3,000,000 tonnes at a copper equivalent grade in the range 
of 0.50%-2.00%.  In this context the report refers to the historical 
statement at the time that the Company conducted preliminary due 
diligence on BPPM in October 2014 which stated that the mine had an 
official mineral resource on the NAEN Russian Code (non JORC) as 
submitted to the Romanian authorised body for natural resources of 1.88 
million tonnes.  These mineral resources, bar a portion represented by a 
single mineral resource block, are not included in the JORC Mineral 
Resource Estimate of 608,000 tonnes, but are assigned to the exploration 
target category until they are able to be further verified. 
 
   Details of BPPM's development and production plan together with internal 
cashflow projections were announced to the market on 7 September 2020 
and a copy of that announcement is attached to this letter. 
 
   In the year ended 30 April, 2020 BPPM made a loss of $1.627 million, so 
that the loss attributable to the assets being acquired is $0.355m. 
Further details of the results of BPPM for the year ended 30 April 2020 
are contained in Note 24 of the 30 April 2020 Annual Report of the 
Company. Following acquisition, BPPM will be consolidated within the 
Group Accounts with no requirement to show a non-controlled interest in 
relation thereto as has historically been the case and the carrying 
value of the interest being acquired will be determined in accordance 
with the Company's accounting policies in due course. 
 
   Blueberry Exploration Perimeter -- 10% of the Company's 29.41% interest 
 
   The Blueberry Project is a 7.285km(2) brownfield area of prospectively 
in the Golden Quadrilateral region of Romania located in the immediate 
vicinity of the Baia de Aries Mine.  Historic work across the perimeter 
area has demonstrated prospectively for gold and polymetallic 
mineralisation where sample values of up to 22.4g/t of gold were 
obtained from historic soil sampling.  A drilling programme and assaying 
has been completed which has delivered sufficient information to support 
an Inferred JORC Mineral Resource for gold and other polymetallic 
minerals in one or more of several distinct breccia pipes. 
 
   The Blueberry exploration perimeter is owned by Blueberry Ridge Minerals 
SRL in turn owned by EMA Resources Ltd.  In the year to 31 July 2019, 
the last year for which accounts are available, no profit or loss is 
attributable to the Blueberry exploration perimeter. 
 
   Piciorul Zimbrului -- 10% 
 
   The 10km(2) Piciorul Zimbrului prospecting permit is located in the 
Zagra-Telciu area in Bistrita Nasaud County of Romania and lies adjacent 
to the Company's Magura Neagra licence. The Company has undertaken a 
drilling programme focussing on 6 previously identified veins with 
associated gold and copper mineralisation along an underground drive 
developed for 820m.  The results to date are as expected, and when full 
results are to hand the Company will be applying for a full exploitation 
licence. 
 
   No profit or loss is attributable to Piciorul Zimbrului in the year 
ended 30 April 2020. 
 
   Magura Neagra -- 10% 
 
   The 21km(2) Magura Neagra prospecting permit is located in the 
Zagra-Telciu area in Bistrita Nasaud County of Romania and lies adjacent 
to the Company's Piciorul Zimbrului licence.  The Company has undertaken 
a drilling programme targeting sets of polymetallic veins together with 
areas of disseminated sulphide mineralisation.  The results to date are 
as expected, and when full results are to hand the Company will be 
applying for a full exploitation licence. 
 
   No profit or loss is attributable to Magura Neagra in the year ended 30 
April 2020. 
 
   In addition, the Transaction Assets include potential interests in 
former Romanian state owned mines including Remin (10%). 
 
   4.       The Purchase Price 
 
   The Purchase Price is to be satisfied by the issue to the Vendors of 
2,850,000,000 ordinary shares of 0.1p each in the Company 
("Consideration Shares"), which will, after completion, represent some 
16.47% of the enlarged share capital of the Company. At the closing 
market price on 5 November 2020 of 0.17p per share the total Purchase 
Price would be GBP4.845m equivalent at the latest exchange rate to 
US$6.339m. 
 
   Subject to the passing of the resolution to be proposed at the General 
Meeting, application will made be made for the Consideration Shares, 
which will rank pari passu with the existing ordinary shares in issue, 
to trading on AIM.  Admission is expected to be on or around 24 November 
2020. 
 
   The Vendors, who are listed in 2 above, comprise partly Related Parties 
within the AIM Rules definition (60.52%) and partly Non Related Parties 
(39.48%).  The Purchase Price has been determined as a result of a 
negotiation between the Vendors and the Company through the agency of 
the Independent Directors, and takes into account the effect of various 
previous agreements relating to the funding of the Transaction Assets, 
in particular BPPM. 
 
   In conducting negotiations to determine a purchase price that could be 
agreed between all the Parties, it was recognised by the Independent 
Directors that the existing 80% holding in BPPM represented in their 
opinion the substantial majority of the value of the Company as 
recognised by investors as a whole. 
 
   In coming to a view of the value of the Transaction Assets, the 
Independent Directors decided that the appropriate valuation approach 
was the 'market' approach since this would reflect all available public 
information.  Accordingly, they carried out such a valuation internally 
on this basis measured in shares of the Company.  This approach involved 
the assessment of the relative value of each Vast business unit as 
derived from the Company's market capitalisation. 
 
   The Independent Directors formed the view that the Purchase Price should 
be expressed (and paid) in shares rather than in cash as any 
uncertainties in the perceived value of BPPM would very largely cancel 
out as, if the perceived value of BPPM were to increase, so almost pro 
rata would the money value of the Consideration Shares. 
 
   5.     Value of the Transaction Assets 
 
   The Independent Directors have considered the need to commission a 
third-party valuation report for the purposes of the Transaction and 
have come to the conclusion that they hold sufficient technical, 
financial and market experience individually and collectively to be in a 
position to make an independent evaluation of the value of the 
Transaction without the need to employ a third-party valuer. 
 
   Accordingly, the Independent Directors have carried out a comprehensive 
discounted cashflow ("DCF") valuation of BPPM updated for all the 
variables included in the current mine production and development plan 
at BPPM and consistent with the Company's published announcements.  The 
model base case adjusted downwards to the lower end of our imputed 
sensitivities by the use of what they considered conservative metal 
price forecasts indicates a gross value (based on the simple average 
consensus view of APEX commodity forecast Q3 2020) of $70m for BPPM 
using a country discount rate of 12.5% based upon their assessment of 
the appropriate discount rate under the capital asset pricing model.  In 
particular, the forward copper price used was only marginally above the 
current spot price.  Therefore, it was noted that the use of higher 
metal prices forecasts widely available in the public domain, would have 
produced a significantly increased the value. 
 
   On the $70m value basis the value for the 20% interest in BPPM which is 
being acquired would be $14m (GBP10.7m) This compares favourably to 
market value of Consideration Shares as set out above, being US$6.339m 
(GBP4.845m) and would of course compare yet more favourably had the 
widely available higher metal prices been applied. 
 
   For the information of Shareholders, a value of US$70m for BPPM alone -- 
ie without attributing any value to the additional Romanian assets -- is 
equivalent to 0.38p per Consideration Share. 
 
   The Independent Directors have for the purposes of assessing the 
Transaction, not attributed any value to the other assets being 
acquired; but note that any such value would add to the value of the 
Consideration Shares. 
 
   6.     Conclusion 
 
   As stated above, under the AIM Rules the Transaction is a 'Related Party 
Transaction'. 
 
   In the light of this, the Independent Directors state that having 
considered: 
 
 
   1. the need to remove the conflict of interest due to the intended financing 
      transaction with the Bank; 
 
   2. the advantage to the Company of removing as far as reasonably possible 
      any conflict of interest with the Chief Executive Officer of the 
      Company; 
 
   3. their assessment of a purchase price that would represent value for the 
      Company for the Transaction Assets acquired; 
 
   4. the confirmation of value provided by the separate DCF calculations; and 
 
 

   that having consulted with the Company's Nominated Adviser the terms of 
the Transaction are fair and reasonable in so far as the Shareholders 
are concerned. 
 
   7.     General Meeting and Action to be taken by Shareholders 
 
   Attached to this letter is a Notice convening the General Meeting to be 
held as a virtual meeting as a result of the current Covid 19 
restrictions at 2.30pm on 23 November 2020 at which an Ordinary 
Resolution is proposed to approve the Transaction and to authorise the 
Directors to allot 2,850,000,000 Ordinary Shares of 0.1p each in the 
Company to the Vendors. 
 
   As a consequence of the current measures implemented by the UK 
Government, Shareholders will not be permitted to attend the General 
Meeting but are strongly encouraged to submit their votes by proxy as 
soon as possible.  Voting at the General Meeting will be carried out by 
way of poll so that votes cast in advance and the votes of all 
shareholders appointing the chairman of the General Meeting as their 
proxy can be taken into account. 
 
   Shareholders have been sent a Form of Proxy for use at the General 
Meeting.  Shareholders are requested to complete and return the Form of 
Proxy in accordance with the instructions printed thereon.  To be valid, 
completed Forms of Proxy must be received by the Registrar as soon as 
possible, and in any event not later than 2.30pm on 19 November 2020. 
 
   The Board understands that the General Meeting also serves as a forum 
for Shareholders to raise questions and comments.  If Shareholders do 
have any questions or comments relating to the business of the meeting 
that they would like to ask the Board, they are asked to submit those 
questions in writing via email to 
https://www.globenewswire.com/Tracker?data=CAJntq0KCtAyzrvnKgG1bDfyS4fRidkkSrGTy2LK312P6egBDKs2RLQE2FUUfo_71dLwzzjyyc2RWvYUHdTJlCaDtlpytpORn99ZRRc7cjBIVrAzJPm6BbXdZetlTxhlhCiSPEzB3ETe5_2x_IuMfqddhYE3I8uw_QKqQhMlpls= 
[e-mail] by no later than 6.00pm on 
20 November 2020.  These questions will be posed to the Board and an 
audio recording of the conversation will be uploaded to the website at 
https://www.globenewswire.com/Tracker?data=gCq9blWRwtIx1pBKrHuygRvayLbd9wDN0sIX1J_gL9nH_WmUCYU19WzABsNzxN-ikyOgwY7a_gfj8ahveiPvLw== 
www.vastplc.com later on the day of the General Meeting. 
 
   8.     Recommendation 
 
   The Independent Directors believe the Transaction to be in the best 
interest of the Company and for the benefit of the Shareholders as a 
whole. 
 
   The Independent Directors unanimously recommend the shareholders to vote 
in favour of the Resolutions to be posed at the General Meeting as they 
intend to do in respect of their own beneficial holdings amounting in 
aggregate to 49,698,104 ordinary shares representing approximately 0.34% 
of the ordinary shares of the Company expected to be in issue on 9 
November 2020. 
 
 
 
 

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November 06, 2020 13:27 ET (18:27 GMT)

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