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Potential acquisition of an interest in Manaila mine
Vast, the AIM listed resource and development company, announces that it has progressed the its diligence investigation on the currently operating open pit polymetallic Manaila Mine in Suceava County, northern Romania to an advanced stage further to a pre-sale agreement to purchase a 50.1 per cent interest in Manaila via an acquisition of 50.1 per cent of the issued share capital of Sinarom Mining Group SRL, the company which currently owns Manaila.
The Pre-Sale Agreement between the Company and Ni Jin Ming, is subject to completion of satisfactory due diligence by Vast and to the conclusion of a detailed sale agreement, solely at Vast’s discretion, but has provision for penalties of US$2m in favour of Vast should the Vendor choose not complete the transaction. The due diligence and subsequently the final transaction document are expected to be completed within the next three weeks.
Further updates in relation to the satisfaction of conditions precedent to the Pre-Sale Agreement and the final sale agreement will be made in due course.
As announced on 10 December 2014, Vast is investigating a number of opportunities in Romania. Further to the Company’s announcement on 24 March 2015, Manaila will complement the Company’s existing interest in the Baita Bihor Polymetallic Mine and is proximal to the polymetallic interests of the Romanian State mining company, Remin SA, having been formerly owned by Remin SA prior to the state company’s closure.
The Pre-Sale Agreement summary:
– At its sole discretion, Vast will acquire a 50.1 per cent. interest in the share capital of Sinarom for a nominal sum, with the Vendor retaining a 49.9 per cent. interest.
– Vast has the right, but not the obligation, to lend Sinarom up to US$5m for the purpose of rehabilitation or further development of Manaila without any dilution of Vendor’s 49.9 per cent. interest (the “Rehabilitation Loan”).
– Dividends or equivalent distributions will be paid from Sinarom as soon as lawfully possible in priority to repayment of the Rehabilitation Loan until Sinarom has paid aggregate dividends or equivalent distributions of US$5m. Thereafter the Rehabilitation Loan will be repaid in priority to further dividends.
– Vast will assume management control of Manaila on signing of the final sale agreement.
The Manaila Mine
The orebody is relatively flat lying, dipping at an average of 25 degrees to the northeast and is between 1 metre and 40 metres thick, averaging approximately 8 metres. Economic mineralisation comprises copper, lead, zinc, gold and silver. Total mineral resources estimated in accordance with the Russian Reserves and Resource Reporting System comprise 1.8Mt in-situ of Pb @ 0.95%, Zn @ 1.86%, Cu @ 1.17%, Au @ 0.63g/t and Ag @ 45.97g/t.
The mine is located within the Tulghes Terrane of the Carpathian belt. The Tulghes metamorphic unit is characterised by low degree metamorphism. The polymetallic mineralisation is associated with the Tg3-formation (meta acid volcanics) and quartz-sericite schist. The polymetallic sulphides hosted within the Tg3 formation are represented by pyrite-chalcopyrite disseminations. There is considerable exploration potential within the Mine and satellite targets within the licenced area.
The mineral deposit can be mined in three distinct phases with Phase 1 representing the continuation of the existing open pit mining for a further three years. Potential exists to enlarge the open pit along strike towards the southeast. The current mining license abuts a farm boundary and a drill hole (F25) across the boundary has returned values of 1.95% Cu, 3.08% Zn and 4.06% Pb. An extension of the mining license may be applied for to incorporate this area into the existing mining lease. Total mineral resources estimated in accordance with the Russian Reserves and Resource Reporting System for Phase 1 but excluding any licence extensions to the South East, comprise 0.35Mt in-situ at Pb @ 1.10%, Zn @ 2.00%, Cu @ 1.25%, Au @ 0.70g/t and Ag @ 50.0g/t.
The Phase 2 and Phase 3 operations are currently planned to be underground mines. Due to the undulating topography and faulting on the ore body, Vast has initially decided to examine the economics of an underground operation. Further detailed work may reveal that an open pit mine is feasible on portions of the Phase 2 or Phase 3 ore body.
The Operation
The mine’s infrastructure includes a processing plant comprising crushing, milling and flotation circuits to produce copper, lead and zinc, with gold and silver credits and with a current design capacity of 20ktpm. The land upon which the processing facility is located is within the town of Iacobeni, which is 26km away from the mine. There is a tailings storage facility lined with high-density polyethylene for deposition of flotation tailings.
The current mining operations are producing a 13 per cent. copper and 3g/t gold concentrate due to poor mining practices that result in dilution of ore sent to the processing plant. There is limited in-pit grade control and poor adherence to pit design parameters. Furthermore, unnecessary costs are being incurred as ore is currently trucked to the processing plant in Iacobeni and the tailings are then transferred by truck a further 14km to the tailings storage facility.
Vast has identified the opportunity to significantly improve the efficiency of the existing mining operation.
Vast’s immediate plans, should it choose to progress the transaction, are to:
– operate one mill at a capacity of 500 tonnes per day;
– operate two float banks to recover copper and zinc with gold and silver as by-product credits. Only one float bank is being used at present;
– optimise the crushing belt circuit to lower power cost and eliminate double handling of ore between crusher and mill;
– refurbish existing equipment as required;
– stabilise open pit high wall by creating high benches and berms;
– implement in-pit grade control to minimise dilution during the mining process.
Within the six months following completion of the transaction, Vast plans to install and commission a crushing circuit and a modular flotation recovery plant at the mine site.
