Vancouver, B.C. August 8, 2022 — Ascot Resources Ltd.?(TSX: AOT; OTCQX: AOTVF) (“Ascot” or the “Company”) is pleased to announce the Company’s unaudited financial results for the three months ended June 30, 2022 (“Q2 2022”), as well as a summary of recent development highlights at the Company’s Premier Gold Project (“PGP” or the “project”), located on Nisga’a Nation Treaty Lands in the prolific Golden Triangle of northwestern British Columbia. For details of the unaudited condensed interim consolidated financial statements and Management's Discussion and Analysis for the three months ended June 30, 2022, please see the Company’s filings on SEDAR (www.sedar.com).
Derek White, President and CEO, commented,?"We continue to make progress towards arranging alternative financing to fund the remaining construction at PGP, and in the meantime much headway has been made during Q2 2022 on various construction activities. Approximately 95% of the remaining fixed equipment for the project has been ordered, which partially insulates Ascot from continued inflationary pressures in the mining industry.
Underground development, benefitting from excellent ground conditions, has been going very well and to date has progressed approximately 320 metres. Development is now accessing initial ore in the A Zone of the Big Missouri deposit, which will enable direct sampling and confirmatory work on ore grades, geometries, and stope shapes.
On the exploration front, drilling continues to impress at the emerging Sebakwe Zone, with the first batch of assay results from this season yielding coarse, visible gold and high-grade intercepts up to 193 g/t gold. We expect the second batch of assays from the drill program at Sebakwe in the near-term.”
All amounts herein are reported in $000s of Canadian dollars (“C$”) unless otherwise specified.
Q2 2022 AND RECENT HIGHLIGHTS
- On April 4, 2022, the Company provided an update on construction financing and development plans for PGP, including an update on the availability of further drawdowns under the construction finance package of US$105M (see News Release dated?December 10, 2020), where the Company had secured a US$80M senior credit facility (the “Senior Facility”) with Sprott Private Resource Lending II (Collector), LP (“Sprott”). After drawing down the initial US$20M tranche under the Senior Facility, Ascot was required to satisfy various conditions before drawing down the remaining US$60M, which was available until June 30, 2022. However, the Company has been unable to reach an agreement with Sprott on the satisfaction of the drawdown conditions for the remaining US$60M of the Senior Facility. Therefore, the initial US$20M drawdown remains outstanding and Ascot is pursuing alternative financing options to replace the remainder of the Senior Facility.
- In April 2022, Ascot held a Public Information Session in Stewart, B.C. for the surrounding communities. In June 2022, Ascot attended the Nisga’a Business Forum in Gitwinksihlkw and supported the Prince Rupert Salmon Festival hosted by the Nisga’a Gitmaxmak’ay cultural dancers.
- On May 9, 2022, the Company announced the start of the 2022 exploration drilling program, which comprises approximately 18,000 metres and is equally split between exploration and in-fill holes. Exploration drilling is largely concentrated on the Sebakwe and Day Zones and in-fill drilling focuses exclusively on the Big Missouri deposit.
- On May 16, 2022, the Company announced the hiring of Vice President, Operations and General Manager, and the commencement of underground development work at PGP.
- On June 23, 2022, the Company provided an update on the development, financing, and exploration of PGP, noting that construction had been significantly advanced in many key project areas. The Company had been working with a number of potential financing partners including project lenders and streaming/royalty companies in order to secure sufficient financing to complete its project construction. These discussions are ongoing and the Company is confident a financing solution can be achieved in the foreseeable future. Until this funding is secured and in order to preserve Ascot’s current cash balance, the Company began decelerating various construction activities and placing certain work packages on hold. Importantly, the underground mine development work and exploration program remain on track. The deceleration of project construction provided more time for mine plan and sequencing optimization, and enabled exploration drilling to determine the size, extent and high-grade continuity of the emerging Sebakwe Zone at the Premier deposit. Given the delays in construction areas which require seasonal conditions, the target for first gold pour will be delayed from the first quarter of 2023 until between late 2023 and early 2024. Ascot is developing a more detailed construction sequence based on this new timeline and will continue to assess any potential cost implications associated with this delay.
- After completion of the portal preparation work in April 2022, underground mine development work and installation of surface infrastructure commenced in May 2022. To date, surface facilities including ventilation, water supply and handling, ventilation, gensets, compressor, material handling and stockpiles, offices, and satellite communications have all been established. Underground, approximately 320 metres have been developed in all headings, including muck bays, sumps, ore access drift, and the main ramp. Ground conditions have been excellent and heading advance and productivity have been going well. Development is now accessing initial ore in the A Zone of the Big Missouri deposit.
- As of June 30, 2022, the Company progressed detailed engineering to approximately 95% completion and overall construction to approximately 33% completion. Ascot has ordered approximately 95% of the remaining fixed equipment for the project. Key orders remaining in the plant relate mostly to piping, instrumentation, and bulk consumables.
- On July 14, 2022, the Company announced the first batch of assay results from the 2022 exploration drill program at PGP. These results were from surface exploration drilling at the emerging Sebakwe Zone near the Premier mill, and with assays of up to 193 g/t gold, they continue to highlight the high-grade tenor of the Sebakwe Zone. The second batch of drill results from Sebakwe is anticipated in the near term, and a corresponding update news release is planned in the upcoming weeks. The drill rig has been moved close to the S1 pit at Big Missouri, drill testing the early stopes in the area north of the S1 pit. Initial observations include quartz breccia with sulfide mineralization at or very near the expected location where high-grade mineralization has been wireframed from earlier drill holes. Assay results from the Big Missouri drill holes are pending. An assay lab is being set up in Stewart and it is anticipated to be operational in the first half of August coinciding with first access to ore in the underground development at Big Missouri. Ascot has signed a priority service contract with this new assay lab, and once it is in service, turnaround times are anticipated to be a fraction of what was experienced previously.
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2022
The Company reported a net loss of $1,054 for Q2 2022 compared to $3,751 for Q2 2021. The decrease in net loss is attributable to a combination of factors including an increase in the gain on valuation of the Company’s derivative liabilities and an increase in flow-through premium recognition, partially offset by an increase in foreign exchange loss due to the strengthening U.S. dollar and senior debt deferred financing costs expensed in Q2 2022.
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2022, the Company had working capital of $37,825 and cash & cash equivalents balance of $60,212. In the first half of 2022, the Company issued 59,271,000 common shares, 13,710,500 warrants, 3,732,284 stock options, 176,312 deferred share units, 721,432 Restricted Share Units (“RSU”) and 162,162 performance share units. Also, 906,750 stock options expired and 17,902 RSUs were exercised during the first half of 2022.
MANAGEMENT’S OUTLOOK FOR 2022
As noted in the Company’s press release of April 4, 2022, the Company is undergoing a process to refinance its Senior Facility with Sprott. As a result, the Company made the decision to slow down certain work packages and the general project construction until the refinancing has been completed. Consequently, certain critical construction activities such as the construction of the tailings dam and the new water treatment plant will be deferred until the spring of 2023. The Company is now targeting the start of production between late 2023 and early 2024.
Management is planning a number of activities for the remainder of 2022, which include:
- Completion of an optimized life of mine plan
- Completion of refinancing of the Senior Facility
- Advancement of underground ramp development with target delivery of ore for pre commissioning by Q4 2023
- Completion of a site preservation plan for a construction restart in Spring 2023
- Surface exploration drilling with a focus on the Day and Sebakwe zones
- Stope definition drilling at Big Missouri both from surface and underground
- Underground diamond drilling to probe additional historical openings
- Health and safety initiatives related to health screening and construction protocols
- Permit amendments due to slow down of certain construction activities
Figure 1 – S1 Portal at the Big Missouri deposit at PGP, looking south
Figure 2 – Underground development into the A Zone at Big Missouri
Figure 3 – Tailings thickener and CN destruct tanks
Figure 4 – Big Missouri water pipeline installation
Figure 5 – New water treatment plant clarifier foundation pedestals and lime silo foundations
Figure 6 – South tailings dam lift earthworks
Figure 7 – Overview of tailings management facility south dam
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.
