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Vast Resources waiting for Godot in Chiadzwa?

08 february 2021

AIM-listed Vast Resources said in September 2019 that it had concluded a joint venture with Chiadzwa Mining Resources, a company designated to represent Chiadzwa Community interests in the Chiadzwa Community Diamond Concession.

The joint venture resulted in the establishment of Katanga Mining, which will in turn partner with the Zimbabwe Consolidated Diamond Company (ZCDC) to mine diamonds in Marange.

Vast also revised an agreement with Botswana Diamonds, which will see the latter acquire a 2.5% interest in the cash flows generated from Vast's share in the Chiadzwa concession in exchange for providing "know-how for all aspects of exploration, mining, processing and marketing".

In March 2020, Vast Resources said it was expecting to conclude the joint venture agreement with ZCDC for the Chiadzwa community diamond project, before the end of that month.

The company said at the time that it had received official communication from the mines ministry that all internal processes leading to the conclusion of the joint venture were expected to be finalised end of March 2020.

Nothing happened at the end of March 2020 and the situation was further compounded by the COVID-19 pandemic.

The Zimbabwe government declared a 21-day lockdown in response to the pandemic, which commenced on 30 March 2020.

It later said that the Chiadzwa deal had been put on halt as a result of the lockdown to curb the spreading of the coronavirus.

"As a result of this the finalisation process was not completed in March, but finalisation remains expected to complete shortly," Vast said at the time.

When nothing happened "shortly" as Vast told its shareholders, it later said that it remains confident that despite the COVID-19 lockdown and other delays that had arisen due to matters unrelated to the relationship between the company and Harare, the project will be continued to the benefit of all stakeholders.

At this point, it resisted the temptation of stating timelines as to when the deal would be sealed.

The year 2020 came to an end with no deal in sight.

ZCDC rather snatched Vast's man responsible for diamonds, Mark Mabhudhu, to become its chief executive.

"Whilst we are of course sad to see Mark (Mabhudhu) leave Vast Resources PLC, we are extremely excited that we will be able to continue to work with him in his new role within the diamond mining sector in Zimbabwe," said Vast chief executive Andrew Prelea in September 2020.

"We are confident that with Mark in his new role, the diamond mining sector in Zimbabwe will be set for a new high."

Vast said Mabhundu's new position will not pose any impediment to the finalisation of a joint venture agreement with the ZCDC.

It would, however, be naïve for the AIM-listed company to think that its former diamond division head now heading ZCDC then the joint venture would be concluded in no time.

The government bureaucracy in Zimbabwe slows the conclusion of such deals and COVID-19 was a perfect scapegoat for last year's delay.

We have seen several government programmes in Zimbabwe going ahead despite the further spreading of the virus.

So the pandemic can no longer be attributed as the cause of the delay.

Even the ZCDC and ALROSA joint venture took some time before it was concluded, so the Vast deal is not an exception in Zimbabwe.

That said, it should be stated that Vast has so far shown patience exhibited by fictional characters, Vladimir (Didi) and Estragon (Gogo) in Samuel Beckett's famous play, Waiting for Godot.

Unlike the two characters who continued waiting for Godot who never arrived, one hopes that Vast will be rewarded for its patience.

The project is unique as it for the first time directly benefit the community as shareholders in a diamond company.

The Marange community previously complained that the diamond companies that were initially awarded licences after the 2006 rash excluded them from sharing the proverbial cake.

Thousands were driven away from their ancestral land, while a few benefitted from houses built by some of the diamond companies.

I do not doubt that the deal will come to fruition, but it will not be concluded "shortly" as the AIM-listed company expected.

Government bureaucracy is real and with that in mind, all the best waiting for Godot, Vast!

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished