Vast Resources has signed documentation for a new US$13,5 million financing arrangement which is set to cover the costs of reaching production at the both the Baita Plai mine in Romania and the Chiadzwa diamond project in Zimbabwe.

A UK based fund, Atlas Capital Markets, is to be issued US$15mln of secured convertible bonds issued at 90 percent of par, and, carrying 5 percent interest per year. The bonds mature two years after issuance.

Included in the terms is a ‘non-conversion period’ giving protection from equity dilution following the date of the second tranche of bonds – it provides for six-months protection after the first tranche and potentially then 12-months after the second tranche of bonds.

Proceeds will be released to Vast in four tranches, tied to cashflow, with the first tranche comprising some US$7,1 million of bonds.

Vast told investors that the bond financing does not affect the ongoing process with a Swiss bank or other potential financiers and it continues efforts to secure a long-term financing facility for its Romanian assets including Baita Plai.

“The bonds provide the required capital to enable the company to bring its two core assets, Baita Plai in Romania and the diamond concession in Zimbabwe, into production,” said Andrew Prelea, Vast’s chief executive.

“The agreed non-conversion period, the early redemption and cash settlement options give us flexibility and enable us to limit dilution.”

Prelea added: “The Atlas facility will accelerate the start of production at Baita Plai while we continue to work on the establishment of a long term finance facility for Baita Plai and other assets in Romania, whether with the Swiss bank or otherwise.

“We are pleased to have established a new relationship with Atlas Capital Markets and look forward to working together.”