Vast Resources (LON: VAST) resources shares are down 7% this morning. VAST shares actually dropped more like 10% and then began to recover. The problem is some reports that there was a strike at their mine in Romania. Something that Vast has hastened to explain. We can view this explanation as being entirely fine, it’s just one of those things that happens. Or we can think of it as a view into how management is actually running the company - and views can differ there too.
The announcement: “Certain Romanian press outlets reported strike action by mine workers at Baita Plai. The strike action, which was undertaken illegally, was reported from the mine and coordinated by a small number of individuals. The majority of the workforce remain supportive of the Company and continue to perform their duties on site without impediment; as such the impact on operations at Baita Plai is expected to be minimal. The situation has arisen due to a delayed payment of a concentrate shipment made on 10 September 2023 which resulted in the scheduled salary payment, which had been agreed for 20 September 2023, not being made. The Company today has received confirmation that payment has been made for this shipment and the Company will make the outstanding payment due upon receiving cleared funds and will update the market as appropriate thereafter.”
Vast Resources share price from Google Finance
As we say, we can think of this as just one of those things. All sorted, no great harm done and the workers will be back pronto. But we can also think of this as an insight into how Vast is running the company internally.
A shipment of concentrate that was only made on 10 Sept is the basis for the payroll going out on the 20th Sept? That’s really running things very tight indeed. At which point we might say that’s great, they’re being very abstemious in their use of working capital there. We should be proud of them. But it’s also possible to look at that and think they’re running it much too tight. To the point that if they’re doing that - only 10 days for shipment, receipt, checking of and payment for concentrate? - then how short of working capital are they? And are they going to come back and ask for more soon enough?
As we say, opinions can differ on this. We think we’d tend toward too tight but perhaps that’s just us. We would though suggest that the importance of this is not the strike, nor the wage non-payment, but what that says about capital usage within Vast Resources.