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Romania the linchpin of Vast Resources' two-country plan

Published: 05:51 04 Dec 2015 EST

Glencore1
It plans to start production at its Baita polymetallic mine in west Romania in early 2016

Roy Pitchford, a man who was raised in Zambia, who has long been associated in the minds of many in the mining sector with Zimplats, and who subsequently did African Platinum, now lives in Bucharest.

This should tell investors something about the priorities he puts on the asset base inside Vast Resources (LON:VAST), which is a mix of Zimbabwean and, to a lesser extent, Zambian projects left over from the company’s days as African Consolidated Resources, and the new Romanian assets that came in under the tenure of the management regime from which Pitchford took over back in 2014.

Initially, says Pitchford, the inclination of the investors who had engineered his appointment to the company was to focus on the African portfolio, a plan that he wasn’t averse to either, given his background.

But a quick assessment of the Romanian assets soon changed his mind.

“I went through the opportunities in Zimbabwe and then had a look at Zambia,” he says.

“The Zambian operations were very complex, quite messy and quite expensive, although it wasn’t that the assets weren’t good; but when I had a look at the Romanian side of things it became very evident to me that Romania provided the best opportunity to grow the company. The actual mineral deposits presented a fantastic opportunity.”

So, after nearly two years with Roy Pitchford at the helm, Vast Resources now looks like this:

  • it has at last built, commissioned and produced first gold from its long-standing Zimbabwean 3.2mln ounce Pickstone-Peerless project
  • it’s also sold its first concentrate from the Manaila polymetallic mine in the central north east of Romania.
  • and it plans to start production at its Baita polymetallic mine in west Romania in early 2016.

How do these projects fit together?

In the person of Roy Pitchford, living and working in Bucharest and able to deploy all his African expertise remotely, quite well.

“The focus is on Romania,” he says. “Zimbabwe is a much smaller operation. Originally I was going to live there, but I need to understand Romania. To run Zimbabwe by remote control is easy because I know it so well. To run Romania by remote control is impossible.”

He talks of the cultural challenges, and of taking a sympathetic approach in getting the Romanians to change the way they do things.

“We respect and are sympathetic to the Romanian culture,” he says. “But we will now introduce mining best practice, and they need to appreciate that you never need to turn the mill off.”

There’s a danger, of course, of cultural clash, but that would be the case anywhere, and Pitchford is concerned to emphasise that the experience of Gabriel Resources (TSX:GBU) in Romania is not general.

Gabriel has ended up taking legal action against the Romanian government at an international level, but against that Pitchford cites the example of Carpathian Gold (CNSX:CPN), which has been able to make progress on its major discoveries in-country and has been more hindered by the squalls in the financial markets than by any problems with local officialdom.

“You can get licences,” says Pitchford. “It’s your attitude and approach and how you operate in the country that determines what happens, and to me the fact that everyone regards Romania as difficult creates an opportunity for me. I don’t have every man and his dog crawling all over the place as competitors. We have this first mover status. We can get into the sweet shop first.”

In fact, the company has already been into the sweet shop and plucked the Manaila and the Baita Plai projects out. Manaila is an open cast mine, once owned by the state, latterly by Chinese interests, and now 50.1% by Vast. Baita Plai is an underground mine but with higher grades.  Similarly it was owned by the state and latterly by Chinese interests, and now 80% by Vast.

As soon as Vast took Manaila on it was able to generate significant operational improvements, although it is still early days. But so far so good.

The plan now is to boost production at Manaila by re-commissioning the second mill and introducing a second float line there at a cost of around US$220,000.

“We think we will now get close to installed capacity of 20,000 tonnes per month,” says Pitchford, “and that means the cost per tonne of material produced will come down.”

What’s more the company’s mining licence at Manaila has just been renewed, in the process opening the way for it to apply for an extension to the perimeter and thereby allowing it to drill out a greater resource.

If the mineralisation can be extended at or close to the surface, that will be all to the good, as it will enable Vast to extend the open pit at Manaila before it goes underground.

“You always want to mine in the sunshine,” says Pitchford. “We think we can double the life of the open cast mine, and this will give us the chance to explore the underground in detail too.”

Meanwhile, work at Baita Plai, is now accelerating. An agreement was recently signed with the Romanian parastatal Baita SA, which pointed the way to the granting of a mining licence there in the near future; however, this has now been superseded by the court sanctioned completion of the company’s restructuring through the merger of its two Romanian subsidiaries giving the company a direct contractual route to the mining licence.

“We think we can start mining there within two months of the licence being granted,” says Pitchford. “Being cautiously optimistic, we’re saying it’s February.”

That would make three mines in the space of only a few months.

Not bad in a market that’s supposedly very bad for miners, but as the wise heads always say, it’s all about the right people and the right assets. After that, everything else follows.

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