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Vast Resources PLC shoots for production growth in gold and base metals

Published: 21:03 31 Mar 2016 AEDT

Manaila
Open cast mining at Manaila could now be extended

Blink twice and rub your eyes: Vast Resources PLC (LON:VAST) is a company that has brought two mines into production in the past 12 months and is on the cusp of delivering a third now too.

That sort of story is extremely thin on the ground these days, as mining has continued on through more than five years of bear market and sentiment has remained poor to say the least.

But the arrival of Roy Pitchford at the helm of Vast has certainly shaken things up. Contrary to expectations in the context of his successful track record in Africa, Pitchford didn’t pull the company out of its Romanian operations when he arrived.

Rather, he took one look, liked what he saw, and doubled down.

And so far so good. There have been some delays in getting the company’s Baita Plai operation restarted as Vast extracts the previous operating company from bankruptcy, but over at Manaila production got underway in July and the first concentrate was shipped in September.

With that initial success under his belt, Pitchford is now planning some significant expansion, and the first stage in that process was announced this week with the addition of new prospecting ground around the Manaila mining license.

The idea is that this will eventually yield up new material that will support both an additional mine life at Manaila and an increase in output.

“We’re mining and processing 10,000 tonnes of ore per month at our current level,” says Pitchford.

“But we are in the process of commissioning a second mill and flotation line to take the tonnage up to 20,000 tonnes per month. But if we do that, obviously the three-year life comes down, from an open cast perspective. With this prospecting license we cover an area that we believe will enable the extension of the open cut mine life.”

If that ground proves to be mineralised as the company expects, it should add “a couple of years” to the open cast mine life, says Pitchford. “We will be able to put back the underground mining by two-to-three years.”

But whether it’s open cut or underground the mineralisation at Manaila due to be exploited in phase 2 and phase 3 of operations should allow for a total mine life of seven and a half years at least.

All of which is good news in and of itself. But what it also shows is that contrary to the expectations of some in the market, Vast is demonstrating that it’s able to do business in Romania without any trouble.

“For us it’s a huge positive, a huge step forward getting this,” says Pitchford.

And if there is additional ore in the ground in and around the existing mine, that will then also unlock the next stage in Manaila’s development – the consolidation of infrastructure around the mine site.

At present the ore gets trucked out for processing, and the resulting tailings then get trucked to another location. Pitchford wants to bring the whole operation back to Manaila itself.

The idea, he says, is to get transport costs down. “But you don’t want to do that unless you’ve got a good long mine life.” Hence the move to secure the ground around Manaila and work it up, a process which is now getting underway.

What will this all mean for Vast?

Well, at the moment Manaila is producing between 250 tonnes and 300 tonnes per month of concentrate from a single mill and a single float line.

“With a second mill and a second float line and depending on how well the volumes go through this mill, we’re hoping that we can take the concentrate tonnages to between 500 tonnes and 600 tonnes per month,” says Pitchford.

What’s more, there would be two products rather than one: a lead-zinc concentrate and a separate copper concentrate. It should all add up to increased revenue per tonne on top of the overall increase in tonnage, and the second revenue stream will come at little additional cost.

A pretty outlook indeed, especially when coupled with Pitchford’s expansion plans for Vast’s other current operating mine, the Pickstone-Peerless gold mine in Zimbabwe.

Having also been brought on stream last year, this is now producing at the rate of 25-30 kilogrammes of gold per month, or around 900 ounces. Once low-grade areas that have already been cherry picked by artisanals are mined out, the grades should go up and so should output, possibly to as high as 40 kilogrammes per month, according to Pitchford.

Back in December research undertaken by Daniel Stewart predicted that that Vast will secure maiden revenues of US$18 mln this year, and nearly US$50 mln next year. Things can change pretty quickly in mining, and a contribution from Baita Plai now looks likely.

On the other hand commodity prices have improved since the research was written.

Either way, cash is coming in and things are on the move. What’s more, Pitchford’s can do attitude in Romania and Zimbabwe means that he’s now being offered plenty of other opportunities.

It will be interesting to see how he capitalises on them.

 

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