(All dollar amounts are in US Dollars unless
otherwise specified)
Ascendant Resources Inc. (TSX: ASND) (OTCQX:
ASDRF; FRA: 2D9) ("Ascendant" or the "Company”) is pleased to
announce it has filed on SEDAR the Technical Report titled
Preliminary Economic Assessment for the Expansion of the El Mochito
Mine (“PEA”) for its producing zinc-lead-silver mine in Honduras.
The PEA was prepared in accordance with National Instrument 43-101
and supports the results initially announced on October 22, 2018,
demonstrating robust economics and reducing All-in Sustaining Costs
to US$0.97 per zinc equivalent pound for Life of Mine (“LOM”).
Key highlights1 of the PEA are summarized
below:
Table of
Key Project Highlights |
|
Project IRR after taxes & royalties |
58% |
Incremental Project NPV (8%) after taxes & royalties |
$83.0 million |
|
|
Incremental Project undiscounted after-tax cash flow |
$146.5 million |
|
|
Project construction period |
2 years |
Project Payback period |
2 years |
Life of mine (including current operations) |
10 years |
Metal Prices assumed |
|
Zinc |
$1.21/lb |
Lead |
$1.09/lb |
Silver |
$15/oz |
LOM Process recovery |
|
Zn |
90% |
Pb |
75% |
Ag |
75% |
Average Annual Metal production (rounded) |
|
Zn |
41 kt |
Pb |
10 kt |
Ag |
742 koz |
ZnEq |
120 million lbs |
Total LOM payable ZnEq production (rounded) |
1,038 million lbs |
Project Development Capital Expenditures |
$32.8 million |
LOM Sustaining Capital Expenditure (excluding closure) |
$129.7 million |
Average annual operating costs after construction |
$61.85/t processed |
Average annual operating costs after construction |
$0.58/lb ZnEq payable |
Average annual AISC after construction |
$0.97/lb ZnEq payable |
Notes: Some figures represent a minor,
non-material variability from the figures announced in the press
release dated October 22, 2018. AISC (All in Sustaining Cost) is a
non-GAAP measure that includes mine direct operating production
costs (mining, processing, administration and other mine related
costs incurred such as variation in inventory) plus smelter
treatment and refining charges, freight costs, royalties, and
sustaining capital costs. The measure does not include
depreciation, depletion, amortization and reclamation expenses.
1 See note on Technical Disclosure.
Technical Disclosure
This PEA is preliminary in nature and includes
Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves. The
quantity and grade of reported Inferred Mineral Resources in this
PEA are uncertain in nature and there has been insufficient
exploration to define these Inferred Mineral Resources as an
Indicated or Measured Mineral Resource and it is uncertain if
further exploration will allow conversion to the Measured and
Indicated categories. There is no certainty that this PEA will be
realized. Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability.
Discussion of Results
The PEA outlines a substantial Internal Rate of
Return with a payback period of just under two years. The PEA
further presents a robust and compelling opportunity for the
Company to position El Mochito as a long-term profitable operation.
The PEA assumes a mine life of 10 years inclusive of current
Inferred Mineral Resources. Current Mineral Resources do not
include results of the Company’s ongoing, 30,000 metre 2018 core
drilling program. The expansion project mine plan is based upon the
Company’s current Mineral Resource Estimate, which has an effective
date of January 1, 2018.
The PEA considers increasing mining and
processing capacity to approximately 2,800 tonnes per day (one
million tonnes per year) from 2,200 tpd (750,000 tonnes per year)
without significantly interfering with ongoing operations. In
addition to increased revenues, the major benefit of the program is
an expected reduction in operating costs to $61.85/t processed over
the LOM, materially below the Company’s reported operating costs
and $17.76/t processed lower than the projected LOM cost without
the anticipated infrastructure. Contained annual zinc equivalent
(“ZnEq”) metal production would average 120 million lbs over the
LOM. Capital costs to complete the development program have been
estimated at $32.8 million with a construction period of
approximately two years and an expected payback of two years.
This project presents a significant opportunity
to bring the All-In Sustaining Costs at El Mochito down to less
than $0.97 per payable ZnEq pound produced two years after the
commencement of construction. This cost level would support the
longevity of the operation and sustain robust positive free cash
flow even if a sustained depressed metals price environment were to
occur.
The three principal areas of development
considered by the PEA are:
- Installation of a new 442-metre-deep, rock-only hoisting,
subvertical (or internal vertical) shaft, which results in
shortening the average underground truck hauling distances by 26%,
increasing hoisting capacity, ventilation, services access and
mining capacities. Shorter distances translate into additional
trucking capacity and under-utilized drilling and blasting
equipment would be able to increase production by 26% without the
need for additional mining equipment.
- Upgrading the underground pumping and water management system,
reducing overhead costs by changing and reducing the number of
pumps, rationalizing pumping lines and installing an effective
water clarification system to pump clean water.
- Upgrading the crushing circuit, process plant, and tailings
handling capacity to meet the increased production from the
mine.
Qualified Persons
The PEA was prepared for Ascendant by InnovExplo
Inc. under the supervision of Mr. Neil Ringdahl, Chief Operating
Officer of Ascendant along with the Ascendant Resources’ technical
team and included contributions from engineering and scientific
professionals at InnovExplo Inc, P&E Mining Consultants Inc.
and Mercator Geological Services Limited, all Qualified Persons
(“QP”) under National Instrument 43-101. The scientific and
technical information in this press release has been reviewed by
the following QPs as described below:
- The Mining engineering content of this press release has been
reviewed and approved by Eric Vinet, P.Eng., of InnovExplo Inc.,
who is an “Independent Qualified Person” as defined by National
Instrument 43-101.
- The Metallurgical and Process Plant technical contents of this
press release have been reviewed and approved by D. Grant Feasby,
P.Eng., of P&E Mining Consultants Inc., who is an “Independent
Qualified Person” as defined by National Instrument 43-101.
- The Mineral Resource Estimate content of this press release has
been reviewed and approved by Michael Cullen, P.Geo., of Mercator
Geological Services Limited, who is an “Independent Qualified
Person” as defined by National Instrument 43-101.
- Other “Relevant Information” contents of this press release
have been reviewed and approved by Patrick E. Toth, P.Geo., of
Ascendant Resources., who is a “Qualified Person” as defined by
National Instrument 43-101.
About Ascendant Resources
Inc.
Ascendant is a Toronto-based mining company
focused on its 100%-owned producing El Mochito zinc, lead and
silver mine in west-central Honduras and its high-grade
polymetallic Lagoa Salgada VMS Project located in the prolific
Iberian Pyrite Belt in Portugal.
After acquiring the El Mochito mine in December
2016, Ascendant spent 2017 implementing a rigorous and successful
optimization program restoring the historic potential of El
Mochito, a mine in production since 1948, to deliver record levels
of production with profitability restored. The Company now remains
focused on cost reduction and further operational improvements to
drive robust profitability in 2018 and beyond. With a significant
land package of approximately 11,000 hectares in Honduras and an
abundance of historical data, there are several near-mine and
regional targets providing longer term exploration upside which
could lead to further Mineral Resource growth.
Ascendant holds an interest in the high-grade
polymetallic Lagoa Salgada VMS Project located in the prolific
Iberian Pyrite Belt in Portugal. The Company is engaged in
exploration of the Project with the goal of expanding the
already-substantial defined Mineral Resources and testing
additional known targets. The Company’s acquisition of its interest
in the Lagoa Salgada Project offers a low-cost entry point to a
potentially significant exploration and development opportunity.
The Company holds an additional option to increase its interest in
the Project upon completion of certain milestones.
Ascendant Resources is engaged in the ongoing
evaluation of producing and development stage mineral resource
opportunities, on an ongoing basis. The Company's common shares are
principally listed on the Toronto Stock Exchange under the symbol
"ASND". For more information on Ascendant Resources, please visit
our website at www.ascendantresources.com.
Neither the Toronto Stock Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX) accepts responsibility for the adequacy or
accuracy of this release. For further information please
contact:Katherine PrydeDirector, Communications & Investor
RelationsTel: 888-723-7413info@ascendantresources.com
Cautionary Notes to US
Investors
The information concerning the Company’s Mineral
properties has been prepared in accordance with National Instrument
43-101 (“NI-43-101”) adopted by the Canadian Securities
Administrators. In accordance with NI-43-101, the terms “Mineral
Reserves”, “Proven Mineral Reserve”, “Probable Mineral Reserve”,
“Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral
Resource” and “Inferred Mineral Resource” are defined in the
Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”)
Definition Standards for Mineral Resources and Mineral Reserves
adopted by the CIM Council on May 10, 2014. While the terms
“Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral
Resource” and “Inferred Mineral Resource” are recognized and
required by NI 43-101, the U.S. Securities Exchange Commission
(“SEC”) does not recognize them. The reader is cautioned that,
except for that portion of Mineral Resources classified as Mineral
Reserves, Mineral Resources do not have demonstrated economic
value. Inferred Mineral Resources have a high degree of uncertainty
as to their existence and as to whether they can be economically or
legally mined. It cannot be assumed that all or any part of any
Inferred Mineral Resource will ever be upgraded to a higher
category. Therefore, the reader is cautioned not to assume that all
or any part of an Inferred Mineral Resource exists, that it can be
economically or legally mined, or that it will ever be upgraded to
a higher classification. Likewise, you are cautioned not to assume
that all or any part of a Measured or Indicated Mineral Resource
will ever be upgraded into Mineral Reserves.
Readers should be aware that the Company’s
financial statements (and information derived therefrom) have been
prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board and are subject to Canadian auditing and auditor
independence standards. IFRS differs in some respects from United
States generally accepted accounting principles and thus the
Company’s financial statements (and information derived therefrom)
may not be comparable to those of United States companies.
Forward Looking Information
This news release contains "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable Canadian securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as "plans", "expects",
"budget", "guidance", "scheduled", "estimates", "forecasts",
"strategy", "target", "intends", "objective", "goal",
"understands", "anticipates" and "believes" (and variations of
these or similar words) and statements that certain actions, events
or results "may", "could", "would", "should", "might" "occur" or
"be achieved" or "will be taken" (and variations of these or
similar expressions). Forward-looking information is also
identifiable in statements of currently occurring matters which may
continue in the future, such as "providing the Company with", "is
currently", "allows/allowing for", "will advance" or "continues to"
or other statements that may be stated in the present tense with
future implications. All of the forward-looking information in this
news release is qualified by this cautionary note.
Forward-looking information in this news release
includes, but is not limited to, statements regarding the ability
to fully fund planned development, exploration expenditures and the
undertaking of various long-term optimization programs, the ability
to expand operations at the El Mochito mine and commence
development in Q1 of 2019, the ability to continue to deliver free
cash-flow; the ability to provide non diluting means to fund the
Expansion Project; the ability to reduce sustaining capital and
cost and improve productivity and the ability to increase metal
production. Forward-looking information is not, and cannot be, a
guarantee of future results or events. Forward-looking information
is based on, among other things, opinions, assumptions, estimates
and analyses that, while considered reasonable by Ascendant at the
date the forward-looking information is provided, inherently are
subject to significant risks, uncertainties, contingencies and
other factors that may cause actual results and events to be
materially different from those expressed or implied by the
forward-looking information. The material factors or assumptions
that Ascendant identified and were applied by Ascendant in drawing
conclusions or making forecasts or projections set out in the
forward-looking information include, but are not limited to, the
ability of the Company to fully fund planned development,
exploration expenditures and the undertaking of various long-term
optimization programs, the ability to expand operations at el
Mochito mine and commence development in Q1 of 2019, the ability to
continue to deliver free cash-flow; the ability to provide non
diluting means to fund the Expansion Project; the ability to reduce
sustaining capital and cost and improve productivity and the
ability to increase metal production and other events that may
affect Ascendant's ability to develop its project; and no
significant and continuing adverse changes in general economic
conditions or conditions in the financial markets.
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, risks generally associated
with the mining industry, such as economic factors (including
future commodity prices, currency fluctuations, energy prices and
general cost escalation), uncertainties related to the development
and operation of Ascendant's projects, dependence on key personnel
and employee and union relations, risks related to political or
social unrest or change, rights and title claims, operational risks
and hazards, including unanticipated environmental, industrial and
geological events and developments and the inability to insure
against all risks, failure of plant, equipment, processes,
transportation and other infrastructure to operate as anticipated,
compliance with government and environmental regulations, including
permitting requirements and anti-bribery legislation, volatile
financial markets that may affect Ascendant's ability to obtain
additional financing on acceptable terms, the failure to provide
non diluting means to fund the Expansion Project, the failure to
carry out the Expansion Project as planned with the consequent
failure to reduce cost and sustaining capital; the failure to
obtain required approvals or clearances from government authorities
on a timely basis, uncertainties related to the geology,
continuity, grade and estimates of Mineral Reserves and Mineral
Resources, and the potential for variations in grade and recovery
rates, uncertain costs of reclamation activities, tax refunds,
hedging transactions, as well as the risks discussed in Ascendant's
most recent Annual Information Form on file with the Canadian
provincial securities regulatory authorities and available at
www.sedar.com.
Should one or more risk, uncertainty,
contingency, or other factor materialize, or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, the reader should not place undue reliance on
forward-looking information. Ascendant does not assume any
obligation to update or revise any forward-looking information
after the date of this news release or to explain any material
difference between subsequent actual events and any forward-looking
information, except as required by applicable law.
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