Ascot Resources Ltd. (TSX: AOT; OTCQX: AOTVF)
(“Ascot” or the “Company”) is pleased to provide an update on the
Premier Gold Project (“PGP” or the “project”) located in the Golden
Triangle of northwestern British Columbia with respect to progress
to date and development plans in 2022. This release includes a
detailed project schedule and an updated capital cost estimate for
the project. Building on the success of the Early Works program in
2021, Ascot remains on track to commence full-scale construction
activities and underground development in April 2022, with first
gold pour targeted for the first quarter of 2023. The Company
is also pleased to announce the receipt of the Environmental
Management Act Permit, completing the JPAA (Joint Permit
Application Amendment) for the project. All financial metrics
herein are in Canadian dollars, denoted as C$, unless otherwise
stated.
Derek White, President and CEO of Ascot
commented, “The Company made considerable progress on
pre-construction and Early Works activities in 2021 and is now
pleased to have received the final operating permit for the Premier
Gold Project. Despite facing various challenges last year,
including the loss of key equipment at sea due to weather events,
the Ascot team stepped up in meaningful ways and adapted to stay
the course towards production, positioning us to execute on the
project in 2022. We are excited to get the Premier mill restarted
with first gold pour anticipated around this time next year. The
Golden Triangle of northwestern B.C. has been a focal point for
Canadian mining mergers and acquisitions in recent years, and Ascot
has one of only three mills in the entire region. Notwithstanding
project delays and cost pressures, we are confident in our ability
to execute on the remainder of project construction during 2022, on
the path to becoming Canada’s next gold producer.”
Project Progress to Date
Before the Mines Act Permit issuance in December
(see News Release dated December 7, 2021), Ascot was able to
advance many project pre-construction activities as a part of the
Early Works program. The focus of the program was preparing for the
delivery of the Ball and SAG mills and their subsequent
installation inside the mill building (see Figure 1). This was a
major success for the project and was on time and on budget, such
that the construction activities inside the process plant are not
currently on the critical path schedule. Other major areas of Early
Works progress included initial earthworks activities for the new
water treatment plant, the Cascade Creek diversion channel, and the
Dago Pit liner for temporary waste and water collection. The
temporary construction camp with total capacity of approximately
170 people was also installed adjacent to the mill building.
Figure 1 – Interior of mill building
showing SAG (left) and Ball (right) mills
installedhttps://www.globenewswire.com/NewsRoom/AttachmentNg/fd74278b-9aa7-4800-b2f4-f92b15225a4b
Concurrent with project activities on site,
detailed engineering has been advanced to 70% complete. Designs for
these areas are substantially complete: Site roads, power supply,
water treatment plant, tailings facility, Cascade Creek diversion
channel, and several areas inside the mill. Remaining areas to be
engineered are the process plant piping, electrical, and
instrumentation. We anticipate substantial completion of detailed
engineering by approximately April 2022.
Project procurement has progressed well so far
despite numerous challenges in global shipping and transportation.
While there are increasing pressures related to supply chain and
inflation across the entire mining industry, the project is not
wholly exposed to these risks given the existing infrastructure and
the procurement completed to date. The Ball and SAG mills were
ordered in 2020, arrived on site in 2021 and were installed. Ascot
has ordered approximately 87% of the remaining fixed equipment for
the project. Key orders remaining in the plant relate mostly to
piping, instrumentation, and bulk consumables. Outside of the plant
construction, the major pieces of equipment yet to be received are
the replacement water treatment plant clarifier and tailings
thickener (see News Release dated December 7, 2021). Upon learning
of the loss of those items, Ascot quickly arranged the
re-fabrication orders for these items. The fabrication of the
clarifier and thickener are progressing well and Ascot anticipates
completion by the end of February 2022, followed by delivery
scheduled in April 2022.
Ascot is in the final stages of selecting a
supplier for our underground equipment fleet, which we currently
anticipate requiring on site in three tranches: the first in
September 2022, a second in January 2023, and the remainder in
August 2023 as the mining area expands. This is in addition to and
after the mobilization of the underground development mining
contractor in April 2022.
Ascot estimates construction of the Premier Gold
Project is approximately 23% complete as of year-end 2021. Major
areas of focus for the project in 2022 will be the underground
development and early access to initial mining areas, the delivery
and installation of the new water treatment plant, the completion
of the Cascade Creek diversion channel, the tailings facility
earthworks, and the completion of the process plant circuit. These
activities all lead towards starting mill commissioning later in
2022 ahead of initial gold pour anticipated in Q1 2023.
As anticipated in Ascot’s News Release dated December 7, 2021,
the B.C. Ministry of Environment and Climate Change Strategy has
issued to Ascot the Environmental Management Act Permit PE-8044.
This permit amendment is primarily related to water discharge
requirements during the production phase at PGP and solidifies
Ascot’s fully-permitted status. The receipt of this permit is
another key condition to draw down the remaining US$75M under the
Company’s project finance facility with Sprott Private Resource
Lending Corp. and Beedie Capital.
Project Schedule
As previously announced (see News Release dated
December 7, 2021), most outdoor construction activities have been
paused for the winter and underground development has been delayed
until approximately April 2022. An overview of the project schedule
is shown in Figure 2. During Q1 2022, minor works will be
progressed inside the mill building, and detailed engineering and
the remaining procurement will be concurrently advanced.
Figure 2 – Overview schedule of
activities for
PGPhttps://www.globenewswire.com/NewsRoom/AttachmentNg/8f72f49f-f1cb-417f-a0f0-c38db0fb5e85
Ascot is planning to ramp-up full-scale
construction activities in April 2022. Critical work areas include
the construction and installation of the new water treatment plant,
the excavation of the Cascade Creek diversion channel, the tailings
facility earthworks, process plant piping and instrumentation, and
initial underground mining development.
The replacement clarifier and thickener are
scheduled to be delivered to site in April 2022, which includes
approximately one month of contingency for shipment to account for
ongoing global supply chain pressures. Installation of the new
water treatment plant, the foundation for which has already been
excavated, is anticipated to be complete by November 2022, allowing
the commencement of process plant commissioning.
Concurrently, underground development is
scheduled to begin in late April 2022 starting from the S1 Portal
at the Big Missouri deposit. Initial development and stoping ore is
anticipated to be accessed by October 2022, which will enable
process plant commissioning to begin by year-end 2022, followed by
the first gold pour early in 2023. In order to hedge against mining
and grade variability, three initial Big Missouri stoping areas are
planned to be accessed in 2022, concurrent with primary development
towards the Silver Coin deposit.
Capital Forecast
In March of 2021, before starting
pre-construction activities including Early Works, Ascot announced
an updated project capital cost estimate of C$176M (see News
Release dated March 18, 2021). Now with the Mines Act Permit in
hand and a more definitive project schedule, Ascot is reporting an
updated project capital estimate of C$224M, reflecting an increase
of 27% over the March 2021 figure. A breakdown of the cost
increases by area is provided in Table 1. At a high level, the
factors that have caused cost increases to the project, in order of
influence, are: fixed indirect costs caused by schedule delays,
weather impacts, piping and instrumentation labour productivity,
indirect cost inflation, supply chain pressures, and COVID-19
protocols.
Table 1 – Change in project capital
estimate by area compared to 2021 Estimate
(C$millions)
AREA |
2022 ESTIMATE |
2021 ESTIMATE |
VARIANCE |
SITE DEVELOPMENT |
7.6 |
8.3 |
-0.7 |
PROCESS PLANT |
52.0 |
44.5 |
+7.5 |
WASTE AND WATER MANAGEMENT |
21.0 |
17.1 |
+3.9 |
ON-SITE INFRASTRUCTURE |
27.4 |
25.5 |
+1.9 |
INDIRECT AND OWNERS COSTS |
83.3 |
53.0 |
+30.3 |
MINING DEVELOPMENT |
18.3 |
14.6 |
+3.7 |
TOTAL COST EXCL. CONTINGENCY |
209.6 |
163.0 |
+46.6 |
CONTINGENCY |
14.7 |
13.0 |
+1.7 |
TOTAL COST INCL. CONTINGENCY |
224.3 |
176.0 |
+48.3 |
figures may not add due to rounding
- Indirect
and Owners Costs +C$30M: The camp and construction
facilities cost increased primarily due to delays in the project
schedule requiring the temporary construction camp to be on site
for longer than initially planned. Higher food costs, COVID-19
protocols, and snow clearing have also contributed to the increase.
Road maintenance and site services costs across the Premier site
are higher than estimated. Freight and logistics costs are higher
due to the global supply chain crisis.Construction management costs
increased due to the construction period being delayed until end of
December 2022 compared with end of September 2022 as originally
planned. Insurance costs are higher than previous estimate due to
additional insurance coverage on the tailings storage
facility.
- Process
Plant +C$8M: Lower labour productivity has been used for
the piping and instrumentation activities going forward. Cost for
systems and instrumentation for electrical equipment in the mill
have increased due to supply chain pressures and inflation.
As at year-end 2021, Ascot had incurred a total
of C$60M on the project. Based on the updated capital cost
estimate, there remains C$164M left to spend on the project,
including a C$15M contingency, representing a buffer of 11.3% on
the project costs going forward less mining costs. Varying levels
of contingency were assigned to different project areas based on
risk assessment. Of the remaining C$164M in costs yet to be spent,
approximately C$103M has been committed under purchase orders as of
year-end 2021.
Ascot has a higher degree of confidence in the
updated capital estimate as it is based on real-world costing
through the Early Works program, and because the Company has now
ordered most of the remaining key equipment and materials to
complete the project. The only remaining items that have yet to be
ordered are process plant piping, control systems, and limited
amounts of steel works – all of which have been assigned higher
levels of contingency.
Ascot ended 2021 with a cash balance of
approximately C$59M (unaudited), and there remains US$75M (~C$94M)
undrawn on the project finance facility, bringing total available
liquidity to approximately C$153M. This is less than C$164M left to
spend, which does not include various corporate costs including but
not limited to exploration drilling, G&A, working capital and
minimum cash balance requirements, security deposits, and permit
maintenance costs. As a result, Ascot will be pursuing additional
funding options in the near future to address capital requirements
arising from the aforementioned project delays.
Qualified Person
John Kiernan, P.Eng., Chief Operating Officer of
the Company is the Company’s Qualified Person (QP) as defined by
National Instrument 43-101 and has reviewed and approved the
technical contents of this news release.
On behalf of the Board of Directors of
Ascot Resources Ltd.“Derek C. White”President &
CEO
For further information contact:David Stewart,
P.Eng.VP, Corporate Development & Shareholder
Communicationsdstewart@ascotgold.com778-725-1060 ext. 1024
About Ascot Resources Ltd.
Ascot is a Canadian-based junior exploration and
development company focused on re-starting the past-producing
Premier gold mine, located in British Columbia’s prolific Golden
Triangle. Ascot shares trade on the TSX under the ticker AOT.
Concurrent with progressing the development of Premier, the Company
continues to successfully explore its properties for additional
high-grade underground resources. Ascot is committed to the safe
and responsible development of Premier in collaboration with
Nisga’a Nation as outlined in the Benefits Agreement.
For more information about the Company, please
refer to the Company’s profile on SEDAR at www.sedar.com or visit
the Company’s web site at www.ascotgold.com, or for a virtual tour
visit www.vrify.com under Ascot Resources.
The TSX has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Statement Regarding
Forward-Looking Information
Statements, trend analysis and other information
contained in this press release about anticipated future events or
results may constitute forward-looking information under Canadian
securities laws (“forward-looking statements”). Forward-looking
statements are often, but not always, identified by the use of
words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”,
“expect” and “intend” and statements that an event or result “may”,
“will”, “should”, “could” or “might” occur or be achieved and other
similar expressions. For example, forward-looking statements
contained in this news release are found under, but are not limited
to being included under, the headings Project Progress to Date,
Project Schedule, and Capital Forecast. All statements, other than
statements of historical fact, included herein are forward-looking
statements, including statements regarding the estimated
construction schedule, the project capital cost estimate, the
Company’s exploration and development plans, the success of the
Project and related matters. Although Ascot believes that the
expectations reflected in such forward-looking statements and/or
information are reasonable, undue reliance should not be placed on
forward-looking statements since Ascot can give no assurance that
such expectations will prove to be correct. These statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking statements, including the
risks, uncertainties and other factors identified in Ascot’s
filings with Canadian securities regulators, available on Ascot’s
profile on SEDAR at www.sedar.com, and assumptions made with regard
to: the estimated costs associated with construction of the Premier
Gold Project; the timing of the anticipated start of production at
the Project and the ability of the Company to execute on its
planned Project timeline. Forward-looking statements are based on
estimates and opinions of management at the date the statements are
made. Ascot does not undertake any obligation to update
forward-looking statements.
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