Interim Results <Origin Href="QuoteRef">VAST.L</Origin>
31/12/2015 07:10
Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining
31 December 2015
Vast Resources plc
("Vast" or the "Company")
Interim Results for the six months to 30 September 2015
Vast Resources plc, the AIM listed resource and development company, is
pleased to announce its interim results for the six months ended 30 September
2015.
Highlights
Financial
* Sale of minerals $1.04 million (2014 $nil)
* Loss of $3.64 million to 30 September 2015 (2014 $2.76 million)
* Cash balance of $1.89 million as at 30 September 2015 (2014 $0.26 million)
* Post period end: cash balance of $0.25million at 30 December 2015
Mine Development
* Acquisition of 50.1% interest in Manaila Polymetallic Mine - July 2015
* First gold pour at Pickstone-Peerless Gold Mine - September 2015
* First sale of concentrate at Manaila Polymetallic Mine - September 2015
* Post period end: merger completed with Mineral Mining SA, 27 November 2015,
thus granting contractual enforceable rights by the Company for a mining
sub-licence at Baita Plai Polymetallic Mine
* Baita SA request for meeting early January 2016 to conclude mining
sub-licence at Baita Plai Polymetallic Mine
Share Issues
* Exercise of 7 million warrants at 0.5p each - August 2015
Post period end
* Issue of 154,649,140 shares in consideration of repayment of $1.2m loan
* Issue of 23,097,237 shares in consideration of fundraising commission
obligations
* Exercise of 3 million warrants at 0.5p and 4.5 million warrants at 0.6p
General
* Creation of Share Appreciation Rights Scheme (SARS) for directors and senior
executives
CHIEF EXECUTIVE OFFICER'S REPORT
TRANSITION
Save for a residual exploration interest in Zambia, the transition from a
junior explorer to a mining and production company has been completed.
* The construction and commissioning of Pickstone-Peerless Gold Mine in
Zimbabwe has been completed.
* The exploration activities in Zimbabwe and Zambia have been terminated save
for the Nkombwa Hill Rare Earth project in Zambia which is being funded and
managed by a partner.
* Production at the Pickstone-Peerless Gold Mine and Manaila Polymetallic Mine
is ramping up to steady state.
* The Company's former Zimbabwean head office has been sold.
* The acquisition of 50.1% of the Manaila Polymetallic Mine in Romania has
been completed. More details of this acquisition are given in note 8.
* A merger agreement between two of Vast's Romanian subsidiaries was completed
on 27 November 2015 with the result that the subsidiary, African Consolidated
Resources SRL, is now contractually entitled to a mining sub-licence giving it
the right to operate the Baita Plai Polymetallic Mine in Romania.
* Production at the Baita Plai Polymetallic Mine is planned to commence in
early 2016.
* A small administrative office in Bucharest has been established to assist in
the management of the two Romanian mines, both of which have full onsite mine
management offices.
ROMANIA
Romania is the major focus of the Company for the foreseeable future. The
short-term objectives are:
Manaila Open Cast Mine
* Improvements to the open cast mine to facilitate increased mining volumes
and compliance with international best practices.
* Expansion of the mining licence area to increase the potential to expand the
open cast mine life.
* Plan and undertake an exploration programme to firm up the expansion of the
phase one open pit and the phase two underground mining resources.
* Complete metallurgical test work on the ore to assist in the design of the
proposed processing facilities that may be constructed at the mine, subject to
a positive feasibility study, to avoid transporting ore 34 kilometres to the
Iacobeni concentrator and tailings 20 kilometres to the tailings facility.
* Conversion of the resources and reserves defined according to the Russian
code to JORC, which will be undertaken during 2016.
Iacobeni Concentrator
* Recommission the second ball mill to increase milling capacity to 20,000
tons per month.
* Complete the repairing and re-commissioning of the second and third float
lines respectively to facilitate the production of high quality copper
concentrate and high quality zinc/lead concentrate.
* Upgrade, modify and modernise the milling and flotation facilities to comply
with international standards.
* Eliminate material double handling wherever possible.
* Establish warehouse facilities for concentrate storage to enable offtake
contractors to make timeous payments for concentrates sold without waiting for
transport delays.
Baita Plai Polymetallic Mine
* Recommence underground mining operations early 2016. The initial steady
state objective is 10,000 tonnes per month.
* Service and recommission two of the three ball mills respectively; service
four flotation circuits and recommission a fifth for molybdenum.
* Commence a study to increase production to 20,000 tonnes per month, which is
the total installed processing capacity.
* Conversion of the resources and reserves defined according to the Russian
code to JORC, which will be undertaken during 2016.
* Review current mining methods and plan to reduce waste mining volumes.
* Undertake feasibility study on the merits and benefits of beneficiation of
ore prior to hoisting to surface and/or prior to milling.
* Evaluate near surface resources in adjacent undeveloped skarn pipes for
future mining compared to accessing the deeper levels of current mining areas.
* Plan the systematic modernisation of all mining and processing equipment and
plant.
S.C. Remin S.A.
Re-engage with S.C Remin S.A. and the Government of Romania to negotiate the
acquisition of target mines identified during the exclusivity period that
resulted from the past Memorandum of Understanding entered into by S.C, Remin
S.A. and Vast.
Remin remains the main focus of Vast in Romania. However, at the request of
the Government negotiations have been suspended pending changes planned for
mining and investment in Romania which are expected during 2016.
Other Projects
Having established the first mine in Romania with a second mine due to
commence operation in the near term, several additional mining projects are
being offered to the Company.
Subject to Manaila and Baita Plai performing to expectations, these new
opportunities will be evaluated. Any additional mining operations will be
conditional on adequate funding being available to the Company on terms that
are advantageous to stakeholders.
ZIMBABWE
The Pickstone-Peerless Gold Mine has been built and commissioned and is
building up to achieve its design capacity, expected to be achieved in early
2016.
FUNDING
Whilst the Company is now earning operational income on Manaila Polymetallic
Mine and Pickstone-Peerless Gold Mine it will require additional funding in
order to meet its capital requirements to bring Baita Plai Polymetallic Mine
into production and for the further CAPEX required to increase production.
The Company is in an advanced discussion with a funding source and the
Directors are very confident of being able to raise such funds as are
required.
CONCLUSION
The Directors believe that the Company's share price and market
capitalisation is being negatively affected by the decline in commodity prices
world-wide, which in turn is making investors in this sector reconsider their
holdings, causing some of them to sell their mining stocks.
Many large and small high cost producers are likely to be forced out of the
market, reducing supply/metal inventories. Very little exploration is being
undertaken to replace the metal currently being consumed, which, in our view,
coupled with the supply/inventory decline, will lead to a recovery in metal
prices in the medium to long term
Vast's focus will be to continue with its mine developments and improvements,
focussing in particular on Romania, and ensuring that it remains a low-cost
producer able to withstand the low price cycle and be ready to take advantage
of the upturn in prices when this occurs.
Staff and management have done a fantastic job in transforming Vast to become
a producing mining company. My sincere thanks to them, to the Board's
continued assistance to management, and to shareholders for their on-going
support.
Roy Pitchford
Chief Executive Officer
For further information, please contact:
Vast Resources plc www.vastresourcesplc.com
Roy Tucker (Finance Director) +44 (0) 1622 816918 +44 (0) 7920 189012
Roy Pitchford (Chief Executive Officer) +40 (0) 372 988 988 +40 (0) 7411 11900 +44 (0) 7793 909985
Strand Hanson Limited - Financial & Nominated Adviser www.strandhanson.co.uk +44 (0) 20 7409 3494
James Spinney
James Bellman
Daniel Stewart and Company - Joint Broker www.danielstewart.co.uk +44 (0) 20 7776 6550
Martin Lampshire
David Coffman
Dowgate Capital Stockbrokers Limited - Joint Broker www.dowgatecapitalstockbrokers.co.uk +44 (0)1293 517744
Jason Robertson
Neil Badger
St Brides Partners Ltd - Media and Public Relations Consultants www.stbridespartners.co.uk +44 (0) 20 7236 1177
Charlotte Heap
Susie Geliher
Consolidated statement of comprehensive income
for the six months ended 30 September 2015
For the six months ended
30 Sep 2015 30 Sep 2014
Unaudited Unaudited
Group Group
Note $'000 $'000
Revenue 1,041 -
Cost of sales (1,129) -
Gross loss 3 (88) -
Overhead expenses (3,703) (2,779)
Depreciation of property, plant and equipment (845) (245)
Loss on sale of property, plant and equipment (55) -
Share option expense - (37)
Other administrative and overhead expenses (2,803) (2,497)
Loss from operations (3,791) (2,779)
Finance income 130 -
Loss before and after taxation from continuing operations (3,661) (2,779)
Other comprehensive income
(Loss)/gain on available for sale financial assets (21) 18
Other income 43 -
Total comprehensive loss for the period (3,639) (2,761)
Total comprehensive loss attributable to:
- the equity holders of the parent company (2,985) (2,761)
- non-controlling interests (654) -
(3,639) (2,761)
Loss per share - basic and diluted 4 (0.26) (0.34)
Consolidated statement of changes in equity
for the six months ended 30 September 2015
Share capital Share premium Share option reserve Foreign currency translation reserve Available for sale reserve EBT reserve Retained deficit Total Non-controlling interests Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 March 2014 - Audited 14,075 62,893 504 (1,843) (31) (3,944) (39,077) 32,577 - 32,577
Total comprehensive loss for the year 18 (6,617) (6,599) (237) (6,836)
Share option charges - - (25) - - - - (25) - (25)
Interest in mining asset - - - - - - (7,404) (7,404) 9,403 1,999
Acquired through business combination
- Dallaglio Investments (Pvt) Ltd - - - - - - - - 2,000 2,000
- Mineral Mining SA - - - - - - - - (198) (198)
Shares issued:
- for cash consideration 715 3,089 - - - - - 3,804 - 3,804
- to settle liabilities 245 123 - - - - - 368 - 368
(including Directors)
At 31 March 2015 - Audited 15,035 66,105 479 (1,843) (13) (3,944) (53,098) 22,721 10,968 33,689
Total comprehensive loss for the period - - - - (21) - (2,964) (2,985) (654) (3,639)
Share option charges - - - - - - - - - -
Shares issued:
- for cash consideration 167 1,837 - - - - - 2,004 - 2,004
- to settle liabilities 11 44 - - - - - 55 - 55
At 30 September 2015 - Unaudited 15,213 67,986 479 (1,843) (34) (3,944) (56,062) 21,795 10,314 32,109
Consolidated statements of financial position
As at 30 September 2015
30 Sep 2015 31 Mar 2015
Unaudited Audited
Group Group
$'000 $'000
Assets Note
Non-current assets
Intangible assets 5 8,739 8,739
Property, plant and equipment 6 30,178 22,621
38,917 31,360
Current assets
Inventory 1,615 65
Receivables 3,603 4,134
Available for sale investments 3 24
Cash and cash equivalents 1,885 3,090
Restricted cash - 637
Total current assets 7,106 7,950
Total Assets 46,023 39,310
Equity and Liabilities
Capital and reserves attributable to equity holders of the Parent
Share capital 15,213 15,035
Share premium 67,986 66,105
Share option reserve 479 479
Foreign currency translation reserve (1,843) (1,843)
Available for sale reserve (34) (13)
EBT reserve (3,944) (3,944)
Retained deficit (56,062) (53,098)
21,795 22,721
Non-controlling interests 10,314 10,968
Total equity 32,109 33,689
Non-current liabilities
Secured borrowings 1,968 1,555
Unsecured borrowings 1,000 -
Other non-current liabilities 1,000 -
3,968 1,555
Current liabilities
Short term loan 7 3,362 1,229
Trade and other payables 4,748 2,837
Bank overdraft 1,836 -
Total current liabilities 9,946 4,066
Total Equity and Liabilities 46,023 39,310
Consolidated statements of cash flow
for the six months ended 30 September 2015
For the six months ended
30 Sep 2015 30 Sep 2014
Unaudited Unaudited
Group Group
$'000 $'000
CASH FLOW FROM OPERATING ACTIVITES
Loss for the period (3,791) (2,779)
Adjustments for:
Depreciation 845 245
Loss (profit) on sale of property, plant and equipment 55 (116)
Exchange losses 89 6
Interest received (41) -
Liabilities settled in shares 55 -
Share option expense - 37
(2,788) (2,607)
Changes in working capital:
Decrease in receivables 821 1
Increase in inventories (1,288) (324)
(Decrease)/Increase in payables (1,221) 1,233
(1,688) 910
Cash used in operations (4,476) (1,697)
Investing activities:
Payments to acquire intangible assets - (54)
Payments to acquire property, plant and equipment (4,884) -
Proceeds on disposal of property, plant and equipment - 1,449
Restricted cash movement 637 -
Other income 43 -
(4,204) 1,395
Financing Activities:
Proceeds from the issue of ordinary shares, net of issue costs 2,004 -
Movement in secured borrowings 413 -
Movement in unsecured borrowings 1,000 -
Movement in short term loans 2,133 -
Movement in bank overdraft 1,836 -
Total proceeds from financing activities 7,386 -
Decrease in cash and cash equivalents (1,294) (302)
Cash and cash equivalents at beginning of period 3,090 568
Exchange (loss)/gain on cash and cash equivalents 89 (6)
Cash and cash equivalents at end of period 1,885 260
Interim report notes
1 Interim Report
The condensed interim financial statements, which
are unaudited, are for the six months ended 30 September 2015 and consolidate
the financial statements of the Company and all its subsidiaries. The
statements are presented in United States Dollars.
The financial information set out in these condensed interim financial
statements does not constitute statutory accounts as defined in Section 434(3)
of the Companies Act 2006. The condensed interim financial statements should
be read in conjunction with the consolidated financial statements of the Group
for the year ended 31 March 2015 which have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRSs"). The Auditor's report on those financial statements was unqualified
and did not contain a statement under s.498(2) or s.498(3) of the Companies
Act 2006.
While the Auditors' report for the year ended 31 March 2015 was unqualified,
it did include an emphasis of matters concerning going concern and the
political and economic stability in Zimbabwe, to which the Auditors drew
attention by way of emphasis without qualifying their report. Full details of
these comments are contained in the report of the Auditors on Pages 13 and 14
on the annual financial statements for the year ended 31 March 2015, released
elsewhere on this website on 15 September 2015.
The accounts for the period have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34")
and the accounting policies are consistent with those of the annual financial
statements for the year ended 31 March 2015, unless otherwise stated, and
those envisaged for the financial statements for the year ended 31 March 2016.
After review of the Group's operations and of the funding opportunities open
to the Group, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future. Accordingly, the Directors continue to adopt the going concern basis
in preparing the unaudited condensed interim financial statements.
This interim report was approved by the Directors on 30 December 2015.
2 Accounting policies
The following accounting policies have been adopted in addition to those
stated in the annual financial statements for the year ended 31 March 2015:
Inventory
Mining inventory includes run of mine stockpiles, minerals in circuit,
finished goods and consumables. Stockpiles, minerals in circuit and finished
goods are valued at their cost of production to their point in process using a
weighted average cost of production, or net realisable value, whichever is the
lower. Low grade stockpiles are only recognised as an asset when there is
evidence to support the fact that some economic benefit will flow to the
Company on the sale of such inventory. Consumables are valued at their cost of
acquisition, or net realisable value, whichever is the lower.
Production expenses
Production expenses include all direct costs of production, including
depreciation of property plant and equipment involved in the mining process,
but excluding mine and company overhead.
Provision for rehabilitation of mining assets
Provision for the rehabilitation of a mining property on the cessation of
mining is recognised from the commencement of mining activities. This
provision accounts for the full cost to rehabilitate the mine according to
good practice guidelines in the country where the mine is located, which may
involve more than the stipulated minimum legal commitment.
When accounting for the provision the Company recognises a provision for the
full cost to rehabilitate the mine and a matching asset accounted for within
the non-current mining asset. The rehabilitation provision is be discounted
using a risk free rate which is linked to the currency in which the costs are
expected to be incurred and the applicable inflation rate applied to the cash
flows. The unwinding of the discounting effect is recognised within finance
expenses in the income statement.
Revenue
Revenue from the sales of goods is recognised when the Group has transferred
the significant risks and rewards of ownership to the buyer and it is probable
that the Group will receive the previously agreed upon payment. These criteria
are considered to be met when the goods are delivered to the buyer. Where the
buyer has a right of return, the Group defers recognition of revenue until the
right to return has lapsed. However, where high volumes of sales are made to
established wholesale customers, revenue is recognised in the period where the
goods are delivered less an appropriate provision for returns based on past
experience. The same policy applies to warranties.
Provided the amount of revenue can be measured reliably and it is probable
that the Group will receive any consideration, revenue for services is
recognised in the period in which they are rendered.
3 Gross loss
The gross loss has arisen during the first two
months of production where production throughput has not yet reached a steady
state level, which allows for full absorption of mining and processing costs.
This situation is not unusual during the first weeks of mine operations and
management is confident the trend will reverse in the second half of the year.
4 Loss per share
For the six months ended
30 Sep 2015 30 Sep 2014
Group Group
Loss per ordinary share has been calculated using the weighted average number of ordinary shares in issue during the relevant financial year.
The weighted average number of ordinary shares in issue for the period is: 1,383,278,837 818,897,396
Losses for the period: ($'000) (3,639) (2,761)
Loss per share basic and diluted (cents) (0.26) (0.34)
The effect of all potentially dilutive share options is anti-dilutive.
5 Intangible assets
Group Deferred exploration costs Mining options Total
$'000 $'000 $'000
Balance 31 March 2014 24,410 4,300 28,710
Reclassification of deferred costs (95) (95)
Discontinued operations (1,132) (1,132)
Transfer to property, plant and equipment (15,654) (3,153) (18,807)
Additions during the year 63 63
Impairment loss - - -
Balance 31 March 2015 7,592 1,147 8,739
Additions during the period - - -
Impairment loss - - -
Balance 30 September 2015 7,592 1,147 8,739
6 Property, Plant and equipment
Plant and machinery Fixtures, fittings and equipment Computer assets Motor vehicles Buildings and Improvements Mining assets Capital Work in progress Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost at 31 March 2014 2,718 141 216 419 1,490 - - 4,984
Additions during the year - 1 - - - - 393 394
Acquired through business combination 481 2 1 17 2,121 - - 2,622
Transferred from intangibles - - - - - 18,807 - 18,807
Disposals during the year (706) (39) (3) (167) (1,418) - - (2,333)
Cost at 31 March 2015 - Audited 2,493 105 214 269 2,193 18,807 393 24,474
Additions during the period 1,011 3 55 131 - 1,556 3,022 5,778
Acquired through business combination 478 6 - 68 1,122 901 - 2,575
Reclassification 3,129 30 - - 117 - (3,276) -
Disposals during the period (257) (23) (102) (30) (23) - - (435)
Foreign exchange movements 24 - - 2 88 1 - 115
Cost at 30 September 2015 - Unaudited 6,878 121 167 440Recent news on Vast Resources
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