Delays in the signing of a US$13.5 million financing facility for the London-listed, Vast Resource by its financier has put the much awaited Katanga Mining deal with the government of Zimbabwe on hold and left the investor fretting as skepticism over the delay is weighing heavily on its stocks.
The funding was initially scheduled for last week.
Vast Resources along with the community of Chiadzwa which harbours the diamond fields formed a company, Katanga Mining Pvt Ltd which will get into a joint venture mining agreement with Zimbabwe Consolidated Diamond Company (ZCDC) which holds the mining rights.
The financing hence forms part of an agreement Vast entered with Katanga and ZCDC.
But the delay has hit Zimbabwe a major blow as the country was expected to finalize the deal last week in order to pave way for operations.
“The delay in signing the diamond agreement is purely a matter of availability due to international travel commitments of the relevant stakeholders. Discussions in line with previous expectations, save on timing, continue with both parties and the company looks forward to updating the market as and when there is anything further to report,” Vast said.
The delay in the financing has not spared Vast ‘stocks either, as it traded 20 percent lower at 0.34 pence in London on Tuesday afternoon.
Zimbabwe is keen on completing the Katanga diamond mining deal as it will present a new economic frontier for Chiadzwa community that is yet to benefit from the diamonds at their disposal.
The deal is also expected to increase investment into the diamond sector which is yet to establish its full potential.
Zimbabwe is leveraging on its extractives sector to resuscitate its moribund economy and targets to receipt US$ 12 billion annually from its minerals by year 2023.