Vast Resources plc Financing Update & Proposed $9.5 Million Pre-Payment Off-take With Mercuria Energy Group
25 January 2018 - 11:00PM
UK Regulatory
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) +44 (0) 20 7236 1177
Beaumont Cornish - Financial & Nominated Adviser www.beaumontcornish.com
Roland Cornish +44 (0) 020 7628 3396
James Biddle
Brandon Hill Capital Ltd - Joint Broker www.brandonhillcapital.com
Jonathan Evans +44 (0) 20 3463 5016
SVS Securities Plc - Joint Broker www.svssecurities.com
Tom Curran +44 (0) 20 3700 0100
Ben Tadd
St Brides Partners Ltd www.stbridespartners.co.uk
Susie Geliher +44 (0) 20 7236 1177
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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