Vast Resources reports higher costs at Manaila, delays at second Romanian licence

Vast Resources encountered technical difficulties at its Manaila polymetalic mine in Romania, leading to setbacks in production, while the process for securing a sub-licence for another project in the same east European country continued to face delays.

The company's Zimbabwe operations were the one bright spot, with gold production rising by 62% at its Pickstone-Peerless mine to reach 4,542 ounces over the three months to 30 June.

Output at the miner's African plant also reached steady state during the period, with output running at 20,000 tonnes per month.

Cash production costs at Pickstone-Peerless fell 24% to $695/oz..

On the other hand, at Manaila operating costs jumped 45% to $1,341 per tonne of concentrate as a result of mechanical breakdowns, the mining of high pyrite facies ore and the testing of new reagents, the company said in its quarterly production update.

Nevertheless, the AIM-listed outfit said work aimed at optimising the Manaila plant's output had been under way since May 2016 and management was confident "that this will reflect in increased plant efficiencies and concentrate grades".

In turn, the failure to establish a revenue stream at Manaila had led to a lack of the necessary funding to pursue an auger programme at the Faneata tailings dam locayed 7 kilometres from the Baita Plai polymetallic mine.

The granting of the separate licence for Baita Plai continued to face administrative delays, Vast said, although all the necessary legal work had been completed.

Vast also restated its figures for the March quarter, with its revised numbers now showing a 40% drop in cash costs per tonne of concentrate.

Since period-end the company had raised approximately £1.739m via share placings and open offers to existing shareholders and repaid a first tranche (50%) of £325,000 principal plus interest due to Darwin Capital, with no further drawdown from Darwin having been made.

"We note that the fine tuning of the plant at Manaila has cost some production efficiencies in the current quarter but is clearly aimed at longer term sustainable improvements – an optimist might conclude that the first hints of these gains may be manifested in the reported 3% decrease in operating cost per tonne milled to $33/tonne [...]

"The Zimbabwe gold operations appear to be performing well, but progress with the rehabilitation of the Romanian polymetallic assets seems to be taking longer and, perhaps proving more difficult, than hoped. There are, however, indications of some positive outcomes and we look forward to further progress reports in the coming months," analysts at SP Angel said.

As of 10:49 BST shares in Vast Resources were down by 12.12% to 0.29p.