Ascot Resources Ltd. (
TSX: AOT; OTCQX:
AOTVF) (“
Ascot” or the
“
Company”) is pleased to announce the Company has
entered into non-binding letters of intent for a total of
approximately C$200 million in project financing for construction
of the Premier Gold Project (“
PGP” or the
“
project”), located on Nisga’a Nation Treaty Lands
in the prolific Golden Triangle of northwestern British Columbia.
The proposed finance package will consist of a US$110 million gold
and silver streaming agreement (the “
Stream”) with
Sprott Resource Streaming and Royalty Corp. and/or its affiliates
(“
Sprott Streaming” or “
SRSR”)
and a strategic equity investment (the “
Strategic
Investment”) by Ccori Apu S.A.C (“
Ccori
Apu”) of C$45 million, a portion of which will be
structured as Canadian Development Expenditures flow through shares
(“
CDE flow through”), such that the total gross
proceeds to the Company is C$50 million. Ccori Apu’s shareholders
are the majority shareholders of Compañía Minera Poderosa S.A.
(“
Poderosa”), which owns and operates a high-grade
gold mine in northern Peru and produces approximately 300,000
ounces of gold per year. Ascot is also pleased to provide an update
on the construction plans for PGP and the path towards production,
which is anticipated in early 2024.
Proposed finance package
highlights
- Ascot will be funded with
approximately C$200 million in project finance for construction of
PGP, to repay the outstanding principal and accrued interest of the
senior credit facility and production payment agreement from Sprott
Private Resource Lending II (Collector), LP
(“SRL”) in order to enter into production with
minimal debt.
- Ascot maintains its previously
announced targeted project timeline, with plant pre-commissioning
to start in Q4 2023 and first gold pour anticipated to occur in
early 2024.
- Gold and silver stream with Sprott
Streaming: US$110 million for delivery of 8.75% and 100% of gold
and silver production, respectively, from PGP and RMP for ongoing
payment of 10% of prevailing gold and silver prices.
- Existing 10% gold streaming
agreement with SRSR on the Red Mountain Project
(“RMP”) to be altered, such that it will be part
of the Stream described above.
- Strategic Investment by Ccori Apu
of C$45 million, a portion of which will be structured as CDE flow
through, such that the total gross proceeds to Ascot is C$50
million, resulting in Ccori Apu having a 19.9% pro forma ownership
of Ascot common shares upon closing and the right to nominate up to
two people to Ascot’s Board of Directors.
- The US$10 million convertible
facility from Beedie Investments Ltd. (“Beedie”)
remains outstanding and Beedie will enter into an intercreditor
agreement with SRSR. The Company has sent a cancellation notice to
Beedie to cancel the undrawn convertible facility of US$15 million
effective on December 12, 2022.
- The completion of the Stream and
the Strategic Investment are each conditional on the other being
completed.
Derek White, President and CEO of Ascot
commented, “We are thrilled to have found an attractive financing
solution to complete construction at PGP. In combining the new
US$110 million stream from Sprott Streaming with the strategic
equity investment from Ccori Apu, Ascot is able to advance towards
production with minimal debt.
We are delighted to see Ccori Apu’s interest in
our project and welcome their involvement and experience as
successful operators in high-grade, underground gold mining as we
advance PGP. The Company considers Ccori Apu’s investment as a
strong vote of confidence from an experienced underground gold
mining company.”
GOLD AND SILVER STREAM – SPROTT
STREAMING
Ascot has entered into a non-binding letter of
intent with Sprott Streaming covering the PGP and RMP properties.
Sprott Streaming will provide to Ascot an upfront payment (the
“Deposit”) of US$110 million in return for
delivery of 8.75% and 100% of gold and silver production,
respectively, from PGP and RMP for ongoing payment to Sprott
Streaming of 10% of prevailing gold and silver prices (the
“Stream”). The existing 10% gold streaming agreement with Sprott
Streaming on the RMP will be altered, such that it will be part of
the Stream described above. This will reduce the RMP stream from
10% to 8.75% of gold production, add 100% of silver production to
the stream, and reduce the ongoing payments from US$1,000/oz gold
produced to 10% of spot price. Once 150,000 ounces of gold have
been delivered (“Delivery Threshold”) to SRSR, the
stream deliveries for gold and silver shall be reduced by 50% to
4.375% and 50%, respectively. After Jan 1, 2025, Ascot has the
right to buyback 50% of the stream from Sprott Streaming for US$80
million in cash on or before December 31, 2026 (the
“Buyback”). The Delivery Threshold and the Buyback
shall apply to both PGP and RMP as one streaming agreement. The
Stream will be granted first-ranking security, which security will
be subordinated to any operating loan on the earlier the Buyback
being exercised or the Deposit being reduced to zero. The Stream is
expected to close in mid January, 2023 and is subject to
satisfactory completion of financial and legal due diligence, final
and complete Definitive Documentation.
STRATEGIC EQUITY INVESTMENT – CCORI
APU
Ccori Apu’s shareholders are the majority
shareholders of Poderosa, a publicly traded gold mining company
listed on the Lima Stock Exchange. Poderosa owns and operates a
high-grade, underground gold mine in northern Peru. The mine
produces approximately 300,000 ounces of gold annually by feeding
the Marañón and Santa María process plants with high-grade gold ore
averaging 17 grams per tonne from the surrounding underground gold
deposits. Ccori Apu will invest a total of C$45 million in the
Strategic Investment. A portion of the common shares sold will be
structured as CDE flow through, such that the total gross proceeds
to Ascot is C$50 million. Ccori Apu’s pro forma ownership of Ascot
will be 19.9% upon closing and it will receive participation rights
to maintain its pro rata ownership in subsequent equity issuances.
Ccori Apu will have the right to nominate up to two people to
Ascot’s Board of Directors as long as its ownership remains above
10% of Ascot common shares outstanding. If Ccori Apu’s ownership
fall below 10%, it will have the right to nominate one person to
Ascot’s Board of Directors, and if its ownership falls below 5%
then it will not have the right to nominate anyone to Ascot’s Board
of Directors.
The Strategic Investment will consist of
48,500,000 Common Shares of the Company at a price of C$0.41 per
Common Share for gross proceeds of C$19,885,000 and 60,000,000
Common Shares of the Company that qualify as “flow through shares”,
as defined in the Income Tax Act (Canada) (the “CDE Common
Shares”) that may be donated to a registered charity at a
price of C$0.50 per CDE Common Share for gross proceeds of
C$30,000,000. The Common Shares and CDE Common Shares will be
offered by way of private placement pursuant to applicable
prospectus exemptions and will be subject to hold periods in
accordance with applicable securities laws.
The net proceeds from the sale of the Common
Shares will be used for capital costs at the Premier Gold Project
and for general corporate purposes. The gross proceeds of the sale
of CDE Common Shares will be used to incur capital expenditures
(the “Qualifying Expenditures”) at the Premier
Gold Project.
An amount equal to the gross proceeds from the
issuance of the CDE Common Shares will be used to incur “Canadian
development expenses” as defined in the Income Tax Act (Canada).
The Qualifying Expenditures will be incurred on or before June 30,
2024 and will be renounced by the Company to the subscribers with
an effective date no later than June 30, 2024 to the initial
purchasers of the CDE Common Shares in an aggregate amount not less
than the gross proceeds raised from the issue of the CDE Common
Shares.
The Strategic Investment is expected to close in
mid January, 2023 and is subject to the satisfaction of certain
conditions including due diligence, negotiation and execution of
definitive agreements and the Company receiving all necessary
regulatory approvals, including the approval of the Toronto Stock
Exchange (“TSX”).
The Company has not made formal application to
the TSX for the transactions described in this release and the
Strategic Investment remains subject to TSX review and
approval.
PROJECT CONSTRUCTION, TIMELINE, AND
FUNDING
Assuming completion of this new funding package
totalling approximately C$200 million, the Company anticipates
delivering the project in-line with the most recently guided
timeframe, with first gold pour expected in early 2024.
Construction contractors will be mobilized in January 2023 to
progress activities in the mill building for the remainder of the
winter season. In April 2023, the underground mining contractor
will be re-mobilized to resume underground development work. In May
2023, the earthworks contractor will be mobilized to re-start work
on the Cascade Creek Diversion Channel (“CCDC”)
and tailings facility, which is anticipated to be completed by
October 2023. Mining will progress throughout 2023 and delivery of
ore will commence in the fourth quarter of 2023, enabling the start
of mill commissioning and first gold pour.
By the end of 2022, Ascot anticipates to have
invested a total of approximately C$153 million in construction of
PGP. Due primarily to delays associated with the deceleration of
project construction and the inflation experienced in 2022 the
expected remaining capital to achieve first gold production is
approximately C$147 million. The remainder of the funds from the
financing package will be used to extinguish the existing senior
debt and for working capital and general corporate purposes.
ADVISORS
Morrison Park Advisers Inc. is acting as
exclusive financial advisor to Ascot in connection with the
Strategic Investment by Ccori Apu and Auramet International LLC is
acting as financial advisor to Ascot in connection with the Stream.
Blake, Cassels & Graydon LLP is acting as Ascot’s legal
advisor.
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
Communications dstewart@ascotgold.com 778-725-1060 ext.
1024
About Ascot Resources Ltd.
Ascot is a Canadian junior exploration and
development company focused on re-starting the past producing
Premier gold mine, located on Nisga’a Nation Treaty Lands, 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
All statements and other information contained
in this press release about anticipated future events 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",
"targeted", "outlook", "on track" and "intend" and statements that
an event or result "may", "will", "should", "could" or "might"
occur or be achieved and other similar expressions. All statements,
other than statements of historical fact, included herein are
forward-looking statements, including statements in respect of the
structure and completion of the Strategic Investment and the
Stream, the proposed use of proceeds, the advancement and
development of the PGP and the timing related thereto, the
exploration of the Company’s properties and management’s outlook
for the remainder of 2022 and beyond. 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 risks
associated with the business of Ascot; risks related to exploration
and potential development of Ascot's projects; business and
economic conditions in the mining industry generally; fluctuations
in commodity prices and currency exchange rates; uncertainties
relating to interpretation of drill results and the geology,
continuity and grade of mineral deposits; the need for cooperation
of government agencies and indigenous groups in the exploration and
development of properties and the issuance of required permits; the
need to obtain additional financing to develop properties and
uncertainty as to the availability and terms of future financing;
the possibility of delay in exploration or development programs and
uncertainty of meeting anticipated program milestones; uncertainty
as to timely availability of permits and other governmental
approvals; risks associated with COVID-19 including adverse impacts
on the world economy, construction timing and the availability of
personnel; the possibility that the transactions described herein
are not completed; and other risk factors as detailed from time to
time in Ascot's filings with Canadian securities regulators,
available on Ascot's profile on SEDAR at www.sedar.com including
the Annual Information Form of the Company dated March 21, 2022 in
the section entitled "Risk Factors". Forward-looking statements are
based on assumptions made with regard to: the structure of the
Strategic Investment and the Stream, the completion of the
Strategic Investment and the Stream on the terms described herein,
the estimated costs associated with construction of the Project;
the timing of the anticipated start of production at the Project;
the ability to maintain throughput and production levels at the
Premier Mill; the tax rate applicable to the Company; future
commodity prices; the grade of Resources and Reserves; the ability
of the Company to convert inferred resources to other categories;
the ability of the Company to reduce mining dilution; the ability
to reduce capital costs; and exploration plans. Forward-looking
statements are based on estimates and opinions of management at the
date the statements are made. 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. Ascot does not
undertake any obligation to update forward-looking statements. The
forward-looking information contained in this news release is
expressly qualified by this cautionary statement.
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