Ascendant Resources Inc. (TSX: ASND) ("Ascendant"
or the "Company”) reports financial and operational results for the
first quarter 2020 (“Q1/20”) which includes the last full quarter
of operations at the El Mochito Mine for the Company. On April 27,
2020, the Company announced the completion of the divestiture of
American Pacific Honduras SA de CV (“AMPAC”), which holds 100% of
the El Mochito mine.
The sale of El Mochito was the result of a
strategic decision by the Company to address severe liquidity
pressures which continued to be exacerbated by low commodity prices
in Q1/20, and improve its financial position by eliminating the
financial burden of the El Mochito mine. The sale provided
immediate balance sheet relief and enables the Company to focus its
resources on the high-grade Lagoa Salgada VMS project (the "Lagoa
Salgada project" or “Lagoa Salgada”) located on the prolific
Iberian Pyrite Belt in Portugal. For further details of the sale
transaction, please refer to the Company’s press release dated
April 17, 2020.
President and CEO Chris Buncic stated: “The sale
of El Mochito and our AMPAC subsidiary has allowed us to strengthen
our financial position in preparation for the next phase of the
Company’s growth as we focus on value creation through
aggressive development plans for the Lagoa Salgada project in
Portugal. We have great confidence in the potential of Lagoa
Salgada based on the continued resource growth and economic
potential the project has demonstrated to date. We look forward to
commencing our 2020 exploration program that is focused on
expanding and upgrading the Lagoa Salgada resource base, advancing
the project to feasibility stage, and ultimately unlocking the true
value potential of the project.”
____________1 ZnEq lbs and grades in %
represents zinc metal considered together with the lead and silver
expressed in zinc equivalent terms of zinc using spot metal prices
and production during the period.
The comparative analysis and review for Q1/20
have been reclassified to account for and present AMPAC’s El
Mochito mine as discontinued operations. The financial position
information is neither restated nor remeasured for discontinued
operations. As of April 27, 2020, the Company will no longer
consolidate the results of AMPAC’s El Mochito mine in its
consolidated financial statements.
A summary of key operational and financial
performance for the first quarter 2020 is provided in the tables
below:
|
|
|
|
Three months ended |
Key Operating Information |
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
2019 |
|
Total Tonnes Mined |
|
tonnes |
|
202,287 |
|
|
201,462 |
|
|
|
|
|
|
|
Total Tonnes Milled |
|
tonnes |
|
203,309 |
|
|
192,922 |
|
|
|
|
|
|
|
Average Head Grades |
|
|
|
|
|
Average Zn
grade |
|
% |
|
4.4 |
% |
|
4.2 |
% |
|
Average Pb
grade |
|
% |
|
2.1 |
% |
|
1.8 |
% |
|
Average
Silver grade |
|
g/t |
|
62 |
|
|
62 |
|
|
ZnEq Head grade |
(1 |
) |
% |
|
7.8 |
% |
|
6.7 |
% |
|
|
|
|
|
|
Average Recoveries |
|
|
|
|
|
Zinc |
|
% |
|
83.9 |
% |
|
84.2 |
% |
|
Lead |
|
% |
|
79.6 |
% |
|
79.5 |
% |
|
Silver |
|
% |
|
80.0 |
% |
|
79.0 |
% |
|
|
|
|
|
|
Contained Metal Production |
|
|
|
|
|
Zinc |
|
000's
lbs |
|
16,665 |
|
|
15,162 |
|
|
Lead |
|
000's
lbs |
|
7,368 |
|
|
5,955 |
|
|
Silver |
|
ozs |
|
324,950 |
|
|
293,287 |
|
|
ZnEq |
(1 |
) |
000's
lbs |
|
28,793 |
|
|
23,370 |
|
|
|
|
|
|
|
Payable Production |
|
|
|
|
|
Zinc |
|
|
000's
lbs |
|
14,165 |
|
|
12,888 |
|
|
Lead |
|
|
000's
lbs |
|
7,000 |
|
|
5,657 |
|
|
Silver |
|
|
ozs |
|
227,465 |
|
|
205,301 |
|
|
ZnEq |
(1 |
) |
000's
lbs |
|
24,474 |
|
|
19,865 |
|
|
|
|
|
|
|
Payable Metal Sold |
|
|
|
|
|
Zinc |
|
000's
lbs |
|
16,506 |
|
|
11,776 |
|
|
Lead |
|
000's
lbs |
|
8,781 |
|
|
4,890 |
|
|
Silver |
|
ozs |
|
325,432 |
|
|
221,375 |
|
|
ZnEq |
(1 |
) |
000's
lbs |
|
29,785 |
|
|
18,241 |
|
|
|
|
|
|
|
Average Realized Metal Price |
|
|
|
|
|
Zinc |
|
$/lb |
$ |
0.97 |
|
$ |
1.24 |
|
|
Lead |
|
$/lb |
$ |
0.84 |
|
$ |
0.93 |
|
|
Silver |
|
$/oz |
$ |
16.72 |
|
$ |
15.52 |
|
|
|
|
|
|
|
Cash operating cost per ZnEq payable lb sold |
(2 |
) |
$/ZnEq
lb |
$ |
0.64 |
|
$ |
0.76 |
|
AISC per ZnEq payable lb sold - El Mochito |
(2 |
) |
$/ZnEq
lb |
$ |
1.00 |
|
$ |
1.22 |
|
AISC per ZnEq payable lb sold - Consolidated |
(2 |
) |
$/ZnEq
lb |
$ |
1.03 |
|
$ |
1.30 |
|
Direct operating cost per tonne milled (excl.
CAPEX) |
(2 |
) |
$/tonne |
$ |
79.88 |
|
$ |
80.53 |
|
(1 |
) |
Assumes average spot metal prices for the period. |
(2 |
) |
This is a non-IFRS performance measure, see Non-IFRS Performance
Measures section of the MD&A. |
|
|
|
|
|
|
|
|
|
|
Three months ended |
Financial |
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
2019 |
|
|
Total
revenue from discontinued operations |
|
$000's |
|
13,777 |
|
|
17,784 |
|
|
Mine
operating expenses from discontinued operations |
|
$000's |
|
21,891 |
|
|
16,529 |
|
|
Income
(loss) from discontinued mining operations |
|
$000's |
|
(8,114 |
) |
|
1,255 |
|
|
Loss from
discontinued operations |
|
$000's |
|
(9,826 |
) |
|
(714 |
) |
|
Loss from
continuing operations |
|
$000's |
|
(1,312 |
) |
|
(1,696 |
) |
|
Net loss for
the period |
|
$000's |
|
(11,138 |
) |
|
(2,410 |
) |
|
Adjusted
EBITDA |
(2 |
) |
$000's |
|
(9,302 |
) |
|
1,446 |
|
|
Operating
cash flow before movements in working capital from continuing
operations |
(2 |
) |
$000's |
|
(1,231 |
) |
|
(1,347 |
) |
|
Operating
cash flow from continuing operations |
(2 |
) |
$000's |
|
(538 |
) |
|
(778 |
) |
|
Operating
cash flow before movements in working capital from discontinued
operations |
(2 |
) |
$000's |
|
(7,533 |
) |
|
9,388 |
|
|
Operating
cash flow |
|
$000's |
|
10,371 |
|
|
8,223 |
|
|
Cash and
cash equivalents |
|
$000's |
|
47 |
|
|
11,813 |
|
|
Working
capital surplus (deficiency) |
|
$000's |
|
372 |
|
|
(5,023 |
) |
|
Capital Expenditures from discontinued operations |
|
$000's |
|
2,701 |
|
|
4,020 |
|
(1 |
) |
Assumes average spot metal prices for the period. |
(2 |
) |
This is a non-IFRS performance measure, see Non-IFRS Performance
Measures section of the MD&A. |
|
|
|
|
|
|
First Quarter 2020 Operational
Performance
Continuing Operations
As a result of the sale of the El Mochito mine,
Q1/20 is the last full operating quarter for El Mochito to be
included in the results of the Company. As of April 27, 2020, the
Company is solely engaged in the exploration and development of the
Lagoa Salgada VMS project in Portugal.
Discontinued Operations
Contained metal production for Q1/20 was 28.8
million pounds of zinc equivalent (“ZnEq”) metal, comprised of 16.7
million pounds of zinc, 7.4 million pounds of lead and 325 k ounces
of silver. Total contained metal production for the quarter
increased by 23% over the first quarter 2019 (“Q1/19”) production
of 23.4 million pounds of ZnEq metal due to higher zinc and lead
grades and decreased slightly (2%) over fourth quarter 2019
(“Q4/19”) production of 29.4 million pounds of ZnEq metal, due to
slightly lower zinc and lead grades and significantly lower silver
grades.
Milled production in Q1/20 of 203 kt
demonstrated a 5% improvement over 193 kt in Q1/19 and a 9%
improvement over 187 kt milled in Q4/19, predominantly a result of
seasonal holidays.
The average head grade in Q1/20 of 7.8% ZnEq
represents an increase of 16% over Q1/19 average head grades of
6.7% ZnEq resulting from slightly higher zinc (4.4%) and lead
(2.1%) grades and higher silver prices, yet represents a decrease
of 8% over 8.5% ZnEq in Q4/19 as a result of overall lower grades,
especially for silver. The improvement in zinc and lead grades vs
Q1/19 is a result of implemented dilution controls and focus on
conventional mining from various, small high-grade pillars in the
upper historical part of the mine.
Zinc processing recoveries of 83.9% in Q1/20
were marginally lower than 84.2% in Q1/19 and 2% lower than 86.0%
in Q4/19 results. Lead recoveries of 79.6% were inline with Q1/19
(79.5%) and Q4/19 (79.9%). Silver recoveries were 80%, 1% higher
than 79.0% in Q1/19 but 1% lower than 81.1% in
Q4/19.
First Quarter 2020 Financial Performance
Continuing Operations
Continuing operations do not generate revenues
for the Company.
Net loss and basic and diluted loss per share
from continuing operations for the period was $1.31 million and
$0.02 compared to $1.70 million and $0.02 in Q1/19.
Consolidated Operations
Net loss and basic and diluted loss per share
for the period was $11.14 million and $0.14 compared to a net loss
and basic and diluted loss per share of $2.41 million and $0.03 in
Q1/19.
The All-In Sustaining Cost (”AISC”) per ZnEq
payable pound sold in Q1/20 on a consolidated basis including
corporate G&A was $1.03 representing a 21% decrease from $1.30
in Q1/19 and a 2% decrease from $1.05 in Q4/19 due to lower
corporate G&A. Corporate G&A accounts for $0.03 AISC per
ZnEq payable pound sold in Q1/20, $0.08 per ZnEq payable pound sold
in Q1/19 and $0.05 per ZnEq payable pound sold in Q4/19. The
Company expects a material decrease in corporate G&A following
the divestiture of El Mochito.
Discontinued Operations
In Q1/20, revenues from discontinued operations
was of $13.78 million, as a result of the sale of 29.8 million
pounds of ZnEq metal, comprised of 16.5 million pounds of payable
zinc in concentrates, 8.8 million pounds of payable lead in
concentrates and 325,432 ounces of payable silver in concentrates.
Average realized metal prices were $0.97 per pound zinc, $0.84 per
pound lead and $16.72 per ounce silver. Revenues for the quarter
were down from $17.78 million in Q1/19 and $19.97 million in Q4/19
as a result of lower average zinc and lead prices with lower silver
grades offsetting the higher silver price in the quarter.
Provisional pricing adjustments for the quarter amounted to a
negative $12.35 million against the backdrop of a weak market for
base metals.
Net loss and basic and diluted loss per share
from discontinued operations in Q1/20 were $9.83 million and $0.12
respectively compared to $0.71 million and $0.01 in Q1/19. Loss
from mining operations in Q1/20 was $8.11 million versus income
from mining operations in Q1/19 of $1.26 million.
Adjusted EBITDA including discontinued
operations in Q1/20 was a $9.30 million loss compared to adjusted
EBITDA of $1.45 million in Q1/19.
Cash operating cost per ZnEq payable pound sold
for Q1/20 was $0.64, representing a decrease of 16% from $0.76 in
Q1/19 and an increase of 5% from $0.61 in Q4/19. This decrease over
Q1/19 was a result of 16% higher ZnEq grades and the increase over
Q4/19 was primarily a result of 8% lower ZnEq grades.
The AISC per ZnEq payable pound sold in Q1/20 on
a mine site basis was $1.00 representing a decrease of 18% from
$1.22 in Q1/19 and was consistent with $1.00 in Q4/19. The decrease
in mine site AISC over Q1/19 is mainly attributable to the higher
ZnEq grades and significantly lower sustaining capital
expenditures.
Direct operating costs per tonne milled for
Q1/20 at El Mochito were $79.88, in line with Q1/19 direct
operating costs per tonne milled of $80.53, and a 7% decrease
compared to Q4/19 direct operating costs per tonne milled of $85.63
due to the 5% improvement in milled tonnes. Capital expenditures
decreased overall, which totaled $2.7 million in Q1/20 compared to
$4.0 million in Q1/19 and $3.46 million in Q4/19.
Lagoa Salgada Project
On January 14, 2020, the Company announced
results from its maiden Preliminary Economic Assessment (“PEA”) for
the Lagoa Salgada project based on the North Zone only. The
Technical Report entitled, “Technical Report and PEA for the Lagoa
Salgada Property, Setúbal District, Portugal”, supporting the
robust results from the maiden PEA for the North Zone at the Lagoa
Salgada VMS project was prepared in accordance with Canadian
National Instrument 43-101 (“NI 43-101”) with an effective date of
December 19, 2019.
The report outlines a robust and compelling
economic assessment for Lagoa Salgada as it assumes a two-stage
underground mining development scenario, with single trackless ramp
access, transverse sub-level open stoping method with pastefill.
Ventilation and secondary escape ways are planned through
raise-bored holes to surface. Milling rates of 2,700 tonnes per day
in a standard process circuit is anticipated, with primary
crushing, grinding, flotation and leaching of tailings to produce
concentrates including lead, zinc, copper and tin, as well as gold
and silver doré. There is ample opportunity for extensive expansion
from future exploration work to define additional resources to
extend the mine life or increase the scale of the outlined
operation.
Highlights from the PEA for the North Zone include:
- After-tax IRR of 31% and NPV8% of
$106M (C$139M @$1.31CAD/USD)
- Nine-year mine life with production
scenario of 2,700 tpd
- Average annual EBITDA of $54.2
million
- Four-year payback period of initial
Capex of $162.7 million
- Average operating costs of $49.43/t
milled represents low cost production scenario
- Low average annual cash costs of
$0.44/lb ZnEq and average annual All-In Sustaining Cost (AISC) of
$0.66/lb ZnEq
- Significant upside opportunities
remain with near-resource exploration targets identified with
multiple deposits open laterally and at depth, and broader targets
untested
Highlights of the key project metrics are
provided in the following table on a 100% basis:
PEA Key Highlights |
|
|
Project IRR pre-tax |
|
37% |
NPV8% pre-tax |
|
$137 million |
Project IRR after-tax |
|
31% |
NPV8% after-tax |
|
$106 million |
Life of mine pre-tax cash flow |
|
$ 250 million |
Life of mine after-tax cash flow |
|
$ 202 million |
Construction period |
|
2 years |
Payback period |
|
4 years |
Life of mine |
|
9 years |
Average Annual Production |
|
1.0 million tonnes |
Initial Capital Expenditure |
|
$ 162.7 million |
LOM Sustaining Capital Expenditure & Closure |
|
$ 20.2 million |
Average annual operating costs |
|
$ 49.43 /t milled |
Average Annual operating costs (C1) |
|
$0.44 /lb ZnEq |
Average annual All-In Sustaining Costs (AISC) |
|
$0.66 /lb ZnEq |
Metal Price Assumptions1 |
|
|
Zinc |
|
$1.20/lb |
Lead |
|
$1.05/lb |
Copper |
|
$2.70/lb |
Silver |
|
$18/oz |
Gold |
|
$1,400/oz |
Tin |
|
$7.50/lb |
Recovery Assumptions |
|
Massive Sulphide |
Zn |
|
80% |
Pb |
|
65% |
Cu |
|
25% |
Ag |
|
75% |
Au |
|
75% |
Sn |
|
30% |
Recovery Assumptions |
|
Gossan |
Pb |
|
65% |
Sn |
|
40% |
Ag |
|
66% |
Au |
|
86% |
Average Annual Metal Production |
|
|
Zn |
|
12.5kt |
Pb |
|
13.7kt |
Cu |
|
0.2kt |
Ag |
|
1.1Moz |
Au |
|
13koz |
Sn |
|
0.3kt |
Notes to Table:1 The project economics have been
calculated using consensus prices at the time of the Resource
Estimate report in September 2019.
The PEA was prepared by AMC Mining Consultants
(Canada) Ltd (AMC) with contributions from Resource Development Inc
(RDI) for Mineral Processing and Micon International Limited
(Micon), who estimated the Mineral Resources.
The PEA is preliminary in nature, as it 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, and
there is no certainty that the preliminary economic assessment will
be realized.
The Technical Report is available for review
under the Company’s profile on SEDAR and on the Company’s
website.
The PEA was based on the updated Mineral
Resource Estimate announced on February 13, 2019, following the
Company’s second successful exploration program at Lagoa Salgada,
since acquisition of an interest in the project mid-2018.
The updated Mineral Resource Estimate was
prepared in accordance with Canadian National Instrument 43-101
with an effective date of September 5, 2019 and was successful in
significantly upgrading the resources at Lagoa Salgada. Results
demonstrated material growth in the North Zone (the main massive
sulphide) with the conversion of significant resources into the
Measured & Indicated category. To date the North Zone has been
delineated by less than a total of 76 holes.
Highlights from the Mineral Resource Estimate are as
follows:
- North Zone: Measured Mineral
Resources increased by 57% to 2.8 Mt at 10.7% ZnEq1.
- North Zone: Measured &
Indicated Mineral Resources increased by 71% to 10.3 Mt at 9.1%
ZnEq:
- 170% increase in the precious metal rich gossan zone to 1.7 Mt
at 4.6g/t AuEq2.
- Global NI 43-101Measured and
Indicated Resources of 12.8 million tonnes and Inferred Resources
of 10.3 million tonnes.
- Drilling in the Central and South
Zones identified Copper rich sulphide mineralization. The new
resources in these zones are reported in Copper equivalent grades.
Future drill programs will focus on expanding and upgrading the
strong potential anticipated in these zones.
1 ZnEq% = ((Zn Grade*25.35)+(Pb
Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62)
)+(Sn Grade*191.75))/25.352 AuEq(g/t) = ((Zn Grade*25.35)+(Pb
Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62)
)+(Sn Grade*191.75))/40.19
A summary of the updated Mineral Resource Estimate is set out in
the table below:
Lagoa Salgada Mineral Resource Estimate -
Effective September 5, 2019
North Zone Mineral Resource Estimate
|
|
|
|
|
|
|
Average Grade |
Contained Metal |
Deposit |
Category |
Min |
Cut-off |
|
Tonnes |
|
Cu |
|
Zn |
|
Pb |
|
Sn |
|
Ag |
|
Au |
|
ZnEq |
|
AuEq |
|
Cu |
|
Zn |
|
Pb |
|
Sn |
|
Ag |
|
Au |
|
|
Zones |
ZnEq% |
|
(kt) |
|
(%) |
|
(%) |
|
(%) |
|
(%) |
|
(g/t) |
|
(g/t) |
|
(%) |
|
(g/t) |
|
(kt) |
|
(kt) |
|
(kt) |
|
(kt) |
|
(koz) |
|
(koz) |
North |
Measured(M) |
GO |
2.5 |
|
234 |
|
0.13 |
|
0.70 |
|
4.32 |
|
0.36 |
|
51 |
|
1.50 |
|
11.38 |
|
7.18 |
|
0.3 |
|
1.6 |
|
10.1 |
|
0.9 |
|
385.2 |
|
11.3 |
|
Indicated(I) |
GO |
2.5 |
|
1,462 |
|
0.08 |
|
0.43 |
|
2.55 |
|
0.26 |
|
37 |
|
0.51 |
|
6.63 |
|
4.18 |
|
1.2 |
|
6.2 |
|
37.3 |
|
3.8 |
|
1,742.1 |
|
23.8 |
|
M &
I |
GO |
2.5 |
|
1,696 |
|
0.09 |
|
0.47 |
|
2.79 |
|
0.27 |
|
39 |
|
0.64 |
|
7.28 |
|
4.60 |
|
1.5 |
|
7.9 |
|
47.4 |
|
4.6 |
|
2,127.2 |
|
35.1 |
|
Inferred |
GO |
2.5 |
|
831 |
|
0.08 |
|
0.48 |
|
2.62 |
|
0.17 |
|
27 |
|
0.37 |
|
5.66 |
|
3.57 |
|
0.7 |
|
4.0 |
|
21.8 |
|
1.4 |
|
727.6 |
|
9.9 |
|
Measured(M) |
MS |
3.0 |
|
2,444 |
|
0.40 |
|
3.12 |
|
2.97 |
|
0.15 |
|
72 |
|
0.74 |
|
10.95 |
|
6.91 |
|
9.7 |
|
76.3 |
|
72.5 |
|
3.7 |
|
5,623.9 |
|
58.4 |
|
Indicated(I) |
MS |
3.0 |
|
5,457 |
|
0.45 |
|
2.35 |
|
2.30 |
|
0.13 |
|
75 |
|
0.67 |
|
9.55 |
|
6.03 |
|
24.5 |
|
128.1 |
|
125.6 |
|
7.3 |
|
13,221.5 |
|
116.9 |
|
M &
I |
MS |
3.0 |
|
7,902 |
|
0.43 |
|
2.59 |
|
2.51 |
|
0.14 |
|
74 |
|
0.69 |
|
9.98 |
|
6.30 |
|
34.2 |
|
204.4 |
|
198.1 |
|
10.9 |
|
18,845.5 |
|
175.2 |
|
Inferred |
MS |
3.0 |
|
1,529 |
|
0.23 |
|
1.96 |
|
1.32 |
|
0.09 |
|
45 |
|
0.49 |
|
6.36 |
|
4.01 |
|
3.6 |
|
30.0 |
|
20.2 |
|
1.4 |
|
2,219.7 |
|
24.0 |
|
Measured(M) |
Str |
2.5 |
|
94 |
|
0.37 |
|
0.88 |
|
0.28 |
|
0.05 |
|
17 |
|
0.12 |
|
3.08 |
|
1.94 |
|
0.3 |
|
0.8 |
|
0.3 |
|
0.0 |
|
51.0 |
|
0.4 |
|
Indicated(I) |
Str |
2.5 |
|
643 |
|
0.34 |
|
0.90 |
|
0.23 |
|
0.09 |
|
17 |
|
0.06 |
|
3.23 |
|
2.04 |
|
2.2 |
|
5.8 |
|
1.5 |
|
0.6 |
|
354.0 |
|
1.3 |
|
M & I |
Str |
2.5 |
|
737 |
|
0.34 |
|
0.90 |
|
0.24 |
|
0.09 |
|
17 |
|
0.07 |
|
3.21 |
|
2.03 |
|
2.5 |
|
6.6 |
|
1.7 |
|
0.6 |
|
405.0 |
|
1.7 |
|
Inferred |
Str |
2.5 |
|
142 |
|
0.24 |
|
1.12 |
|
0.39 |
|
0.04 |
|
17 |
|
0.09 |
|
2.95 |
|
1.86 |
|
0.3 |
|
1.6 |
|
0.6 |
|
0.1 |
|
75.6 |
|
0.4 |
North |
M &
I |
All
zones |
2.9 |
|
10,334 |
|
0.37 |
|
2.12 |
|
2.39 |
|
0.16 |
|
64 |
|
0.64 |
|
9.06 |
|
5.72 |
|
38.2 |
|
219.0 |
|
247.2 |
|
16.2 |
|
21,377.7 |
|
212.0 |
North |
Inferred |
All zones |
2.8 |
|
2,502 |
|
0.18 |
|
1.42 |
|
1.70 |
|
0.12 |
|
38 |
|
0.43 |
|
5.93 |
|
3.74 |
|
4.6 |
|
35.6 |
|
42.6 |
|
2.9 |
|
3,022.8 |
|
34.3 |
Central and South Zones Mineral Resource Estimate |
|
|
|
|
|
|
|
Average Grade |
Contained Metal |
Deposit |
Category |
Min |
Cut-off |
|
Tonnes |
|
Cu |
|
Zn |
|
Pb |
|
Sn |
|
Ag |
|
Au |
|
CuEq |
|
Cu |
|
Zn |
|
Pb |
|
Sn |
|
Ag |
|
Au |
|
|
Zones |
CuEq% |
|
(kt) |
|
(%) |
|
(%) |
|
(%) |
|
(%) |
|
(g/t) |
|
(g/t) |
|
(%) |
|
(kt) |
|
(kt) |
|
(kt) |
|
(kt) |
|
(koz) |
|
(koz) |
Central |
Inferred |
Str |
0.9 |
|
1,707 |
|
0.15 |
|
0.16 |
|
0.06 |
|
0 |
|
12 |
|
2.22 |
|
1.66 |
|
2.5 |
|
2.7 |
|
1.0 |
|
- |
|
635.2 |
|
121.9 |
South |
Measured(M) |
Str/Fr |
0.9 |
|
0 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Indicated(I) |
Str/Fr |
0.9 |
|
2,473 |
|
0.47 |
|
1.53 |
|
0.83 |
|
0.00 |
|
19 |
|
0.06 |
|
1.54 |
|
11.5 |
|
37.9 |
|
20.6 |
|
0.0 |
|
1,484.7 |
|
4.7 |
South |
M &
I |
Str/Fr |
0.9 |
|
2,473 |
|
0.47 |
|
1.53 |
|
0.83 |
|
0.00 |
|
19 |
|
0.06 |
|
1.54 |
|
11.5 |
|
37.9 |
|
20.6 |
|
0.0 |
|
1,484.7 |
|
4.7 |
South |
Inferred |
Str/Fr |
0.9 |
|
6,085 |
|
0.40 |
|
1.34 |
|
0.80 |
|
0.00 |
|
17 |
|
0.05 |
|
1.37 |
|
24.6 |
|
81.6 |
|
48.7 |
|
0.0 |
|
3,285.2 |
|
10.0 |
Notes to tables:(1) Min(eralized) Zones: GO=Gossan, MS=Massive
Sulphide, Str=Stringer, Str/Fr=Stockwork(2) ZnEq% = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag
Grade*0.62)+(Sn Grade*191.75))/25.35(3) CuEq% = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au
Grade*40.19)+(Ag Grade*0.62))/67.24(4) AuEq(g/t) = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au
Grade*40.19)+(Ag Grade*0.62) )+(Sn Grade * 191.75))/40.19(5) Metal
Prices: Cu $6,724/t, Zn $2,535/t, Pb $2,315/t, Au $1,250/oz, Ag
$19.40/oz, Sn $19,175/t(6) Densities: GO=3.12, MS=4.76, Str=2.88,
Str/Fr=2.88
Outlook
Q1 2020 represents the last full operating
quarter, as the Company completed the sale of the El Mochito mine
on April 27, 2020. For further details of the sale transaction,
please refer to the Company’s press release dated April 17,
2020.
Despite the operational successes achieved at El
Mochito since the acquisition of mine in December 2016, the
Company’s financial performance continued to be affected by the
turbulent metals market putting downward pressure on zinc and lead
prices, high-treatment and refining charges, continued costs
pressures and additional required capital investment at the mine
site. Furthermore, the global pandemic surrounding COVID-19 has had
a significant impact on the global economy including zinc and lead
prices which declined significantly in March 2020. With the mine
not meeting the Company’s profitability objectives and the
recognition of the significant funding required to continue
operations in addition to the investment needed for long-term
optimization, the Company made the prudent and strategic decision
to sell the mine.
The sale of the mine provided immediate
strengthening of the Company’s financial position with the receipt
of a cash consideration of $1.0 million plus an additional $0.1
million in working capital adjustments. More importantly, the sale
eliminated the Company’s direct AMPAC expenses, liabilities and
obligations, including a working capital deficiency from
discontinued operations of $26.56 million (see Note 4 to the
consolidated financial statements). The Company also maintains
upside exposure to zinc through a royalty on zinc sales from the El
Mochito mine subject to the future price of zinc, wherein Ascendant
will receive US$0.0125 per lb of zinc for all sales through
December 31, 2029 when the price of zinc is in excess of US$1.15
per lb.
The divestiture of El Mochito now enables
Ascendant to focus on its highly attractive, high-grade Lagoa
Salgada VMS project located on the prolific Iberian Pyrite Belt in
Portugal and devote the desired resources to a project that the
Company believes will be a significant driver of growth and
value.
The planned exploration program this year at
Lagoa Salgada will include downhole IP and drilling aimed at
expanding and upgrading the copper-rich resource in the Central and
South Zones with additional drilling of the southern extension of
the high-grade massive sulphide mineralization of the North Zone
expected to expand the Indicated Mineral Resources. The program
also includes four metallurgical drill holes for further
metallurgical testing. All zones remain open along strike and at
depth and from the extensive ongoing gravimetric work conducted on
the LS West region, there is strong indication mineralization
extends in all directions providing confidence in the potential
growth potential. Please refer to the Company’s April 23, 2020
press release for further details on the 2020 planned exploration
program.
Based on results from the 2020 drill program at
Lagoa Salgada, the Company plans to complete an updated Mineral
Resource Estimate in the latter half of the year which will be used
as a basis for a Feasibility Study to begin thereafter.
The results of the PEA for Lagoa Salgada,
announced on January 14, 2020, highlight the robust potential of
the project, and outlines a compelling case for the future growth
potential of the project. Management expects Lagoa Salgada to be an
important value driver for the Company going forward as we seek to
rapidly develop the Project towards its mineable potential. The
Company is actively engaged with potential strategic and financial
partners for funding the advancement and development of the Lagoa
Salgada property.
Following the quarter, on April 6, 2020, the
Company appointed Mr. Joao Barros to the position of President,
Ascendant Portugal. Mr. Barros is currently President of Redcorp –
Empreendimentos Mineiros, Lda., the joint venture company in which
Ascendant has its investment and is earning an 80% interest in
Lagoa Salgada. Mr. Barros has been instrumental in the advancement
of the Lagoa Salgada project over the past twelve years, and most
recently under Ascendant’s direction. Mr. Barros has a strong
technical background having significant senior mining management
experience with the exploration and development of numerous
polymetallic VMS, gold and tungsten operations in Portugal. His
depth of experience and history with the project provide a great
deal of confidence in our continued success under his direction in
country.
Also strengthening our position in Portugal, on
May 6, 2020, the Company announced Mr. Rui Botica Santos has joined
the Company’s Board of Directors. He has also joined as a member of
the Audit Committee. Mr. Santos is a lawyer based in Portugal who
is widely regarded as a leading authority in the mining sector in
Portugal. Mr. Santos has spent over 20 years representing/assisting
domestic and international corporations in negotiations and
disputes with the State regarding land acquisitions, exploration,
extraction and environmental licenses, for both the mining and oil
and gas industries in Portugal, Angola, Brazil and East Timor. Most
notably, he was the legal advisor for major privatization
transaction regarding the acquisition of Somincor by EuroZinc,
which is now Lundin Mining’s Portuguese subsidiary operating the
large-scale Neves-Corvo mine in Portugal. Mr. Santos is a Partner
of CRA - Coelho Ribeiro e Associados – Portuguese Law Firm, where
he leads the firm’s Arbitration and Mining practices.
The information provided within this release
should be read in conjunction with Ascendant’s unaudited condensed
consolidated interim financial statements and management's
discussion and analysis for the three months ended March 31, 2020
and 2019, which are available on Ascendant’s website and on
SEDAR.
Technical Disclosure/Qualified
Person
All technical information contained herein has
been reviewed and approved by Robert A. Campbell, M.Sc, P.Geo, an
officer and director of the Company. Mr. Campbell is a "qualified
person" within the meaning of NI 43-101 – Standards of Disclosure
for Mineral Projects (“NI 43-101”).
About Ascendant Resources
Inc.
Ascendant Resources Inc. is a Toronto-based
mining company focused on the exploration and development of the
highly prospective Lagoa Salgada VMS project located on the
prolific Iberian Pyrite Belt in Portugal. Through focused
exploration and aggressive development plans, the Company aims to
unlock the inherent potential of the project, maximizing value
creation for shareholders.
Lagoa Salgada contains over 12.8 million tonnes
of M&I Resources and over 10.3 million tonnes in Inferred
Resources and demonstrates typical mineralization characteristics
of Iberian Pyrite Belt VMS deposits containing zinc, copper, lead,
tin, silver and gold, and demonstrates. Extensive exploration
upside potential lies both near deposit and at prospective step-out
targets across the large 10,700ha property concession. The project
also demonstrates compelling economics with scalability for future
resource growth in the results of the Preliminary Economic
Assessment completed in 2020. Located just 80km from Lisbon, Lagoa
Salgada is easily accessible by road and surrounded by exceptional
Infrastructure. Ascendant holds a 21.25% interest in the Lagoa
Salgada project through its 25% position in Redcorp -
Empreendimentos Mineiros, Lda, (“Redcorp”) and has an earn-in
opportunity to increase its interest in the project to 80%. Mineral
& Financial Investments Limited owns the additional 75% of
Redcorp. The remaining 15% of the project is held by Empresa de
Desenvolvimento Mineiro, S.A. (EDM), a Portuguese Government owned
company supporting the strategic development of the country’s
mining sector. The Company’s interest in the Lagoa Salgada project
offers a low-cost entry to a potentially significant exploration
and development opportunity, already demonstrating its mineable
scale.
Ascendant Resources is also engaged in
the ongoing evaluation of producing and development stage mineral
resource opportunities. The Corporation'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 PrydeCommunications & Investor
RelationsTel: 888-723-7413info@ascendantresources.com
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 exploration
and capital expenditures at the Lagoa Salgada project, expanding
and upgrading the resource base at Lagoa Salgada and the ability to
bring the Lagoa Salgada project to a feasibility stage.
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
reduce costs, exploration and capital expenditures, maintain robust
adjusted EBITDA and free cash flow 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
financing on acceptable terms, 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 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.
NON-IFRS PERFORMANCE
MEASURES
The non-IFRS performance measures presented do
not have any standardized meaning prescribed by IFRS and are
therefore unlikely to be directly comparable to similar measures
presented by other issuers.
Non-IFRS reconciliation of Adjusted
EBITDA
EBITDA is a non-IFRS measure that represents an
indication of the Company’s continuing capacity to generate
earnings from operations before taking into account management’s
financing decisions and costs of consuming capital assets, and
management’s estimate of their useful life. EBITDA comprises
revenue less operating expenses before interest expense (income),
property, plant and equipment amortization and depletion, and
income taxes. Adjusted EBITDA has been included in this document.
Under IFRS, entities must reflect in compensation expense the cost
of share-based payments. In the Company’s circumstances,
share-based payments involve a significant accrual of amounts that
will not be settled in cash but are settled by the issuance of
shares in exchange for cash. EBITDA and Adjusted EBITDA do not have
any standardized meaning prescribed by IFRS and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA and Adjusted
EBITDA exclude the impact of cash costs of financing activities and
taxes, and the effects of changes in operating working capital
balances, and therefore are not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. Other
companies may calculate EBITDA and Adjusted EBITDA differently. As
such, the Company has made an entity specific adjustment to EBITDA
for these expenses. The Company has also made an entity-specific
adjustment to the foreign currency exchange (gain)/loss.
The following table provides a reconciliation of
net income (loss) to Adjusted EBITDA:
|
|
|
|
Three months ended |
Adjusted EBITDA |
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
Net income (loss) |
|
$000's |
|
(11,138 |
) |
|
(2,410 |
) |
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
|
Impairment
loss |
|
$000's |
|
404 |
|
|
- |
|
|
Advances to
joint venture |
|
$000's |
|
40 |
|
|
189 |
|
|
Depletion
and depreciation from discontinued operations |
|
$000's |
|
50 |
|
|
1,610 |
|
|
Finance
expenses |
|
$000's |
|
722 |
|
|
397 |
|
|
Accretion expense on rehabilitation liabilities from discontinued
operations |
$000's |
|
50 |
|
|
67 |
|
|
Charge on
termination obligations from discontinued operations |
|
$000's |
|
392 |
|
|
1,119 |
|
|
Share-based
payments |
|
$000's |
|
15 |
|
|
133 |
|
|
Foreign
currency exchange gain/loss |
|
$000's |
|
21 |
|
|
70 |
|
|
Income taxes from discontinued operations |
|
$000's |
|
142 |
|
|
271 |
|
Adjusted EBITDA |
|
$000's |
|
(9,302 |
) |
|
1,446 |
|
|
|
|
|
|
|
Direct operating cost per tonne milled
The Company uses the non-IFRS measure of direct
operating cost per tonne milled to manage and evaluate operating
performance. The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate the Company’s performance and ability
to generate cash flows. Accordingly, it is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The Company considers cost of sales per tonne milled to
be the most comparable IFRS measure to direct operating cost per
tonne milled and has included calculations of this metric in the
reconciliations within the applicable tables to follow.
Direct operating cost per tonne milled includes
mine direct operating production costs such as mining, processing,
administration, indirect charges as surface maintenance and camp
expenses, and inventory sales adjustments but does not include,
smelting, refining and freight costs, royalties, depreciation,
depletion, amortization, reclamation, and capital costs.
The following table provides a reconciliation of
direct operating costs to cost of sales, as reported in the
Company’s financial statements for the 3 months ended March 31,
2020:
|
|
|
|
Three months ended |
Direct operating cost per tonne milled |
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
2019 |
|
|
Mine operating expenses (from consolidated financial
statements) |
|
$000's |
|
21,891 |
|
|
16,529 |
|
|
Add:
Termination Liability Payments |
|
$000's |
|
(45 |
) |
|
10 |
|
|
Deduct
(Add): Variation in Finished Inventory |
|
$000's |
|
(2,854 |
) |
|
1,589 |
|
|
Deduct: Depreciation in production |
|
$000's |
|
(2,079 |
) |
|
(1,583 |
) |
Total cash costs (including royalties) |
|
$000's |
|
16,913 |
|
|
16,545 |
|
|
Deduct: Government taxes and royalties |
|
$000's |
|
(673 |
) |
|
(1,009 |
) |
Direct operating costs |
|
$000's |
|
16,240 |
|
|
15,536 |
|
|
Tonnes Milled |
|
tonnes |
|
203,309 |
|
|
192,922 |
|
Direct operating cost per tonne milled |
|
$/tonne |
$ |
79.88 |
|
$ |
80.53 |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
AISC per ZnEq payable pound sold |
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
ZnEq payable pounds sold |
|
000's
lbs |
|
29,785 |
|
|
18,241 |
|
|
|
|
|
|
|
Cash Operating Costs Reconciliation |
|
|
|
|
|
Direct
operating costs |
|
$000's |
|
16,240 |
|
|
15,536 |
|
|
Add (deduct): Variation in Finished Inventory |
|
$000's |
|
2,854 |
|
|
(1,589 |
) |
Cash operating costs |
|
$000's |
|
19,094 |
|
|
13,947 |
|
Cash operating cost per ZnEq payable pound
sold |
|
$/ZnEq lb |
$ |
0.64 |
|
$ |
0.76 |
|
|
|
|
|
|
|
All-in Sustaining Costs (AISC) Reconciliation |
|
|
|
|
|
Total cash
operating costs |
|
$000's |
|
19,094 |
|
|
13,947 |
|
|
Add:
Government taxes and royalties |
|
$000's |
|
673 |
|
|
1,009 |
|
|
Add: TC
& RCs |
|
$000's |
|
7,303 |
|
|
3,497 |
|
|
Add:
G&A, excluding depreciation and amortization |
|
$000's |
|
955 |
|
|
1,412 |
|
|
Add:
Accretion expense on rehabilitation liabilities |
|
$000's |
|
50 |
|
|
67 |
|
|
Add: Sustaining capital expenditure |
|
$000's |
|
2,701 |
|
|
3,778 |
|
Total All-in sustaining costs - Consolidated |
|
$000's |
|
30,776 |
|
|
23,710 |
|
|
Deduct: G&A, excluding depreciation and amortization |
|
$000's |
|
(955 |
) |
|
(1,412 |
) |
Total All-in sustaining costs - El Mochito |
|
$000's |
|
29,821 |
|
|
22,298 |
|
AISC per ZnEq payable pound sold -
Consolidated |
|
$/ZnEq lb |
$ |
1.03 |
|
$ |
1.30 |
|
AISC per ZnEq payable pound sold - El Mochito |
|
$/ZnEq lb |
$ |
1.00 |
|
$ |
1.22 |
|
Additional non-IFRS
measures
The Company uses other financial measures, the
presentation of which is not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following other financial measures are used:
- Operating cash flows before
movements in working capital - excludes the movement from
period-to-period in working capital items including trade and other
receivables, prepaid expenses, deposits, inventories, trade and
other payables and the effects of foreign exchange rates on these
items.
The terms described above do not have a
standardized meaning prescribed by IFRS, and therefore the
Company’s definitions are unlikely to be comparable to similar
measures presented by other companies. The Company’s management
believes that their presentation provides useful information to
investors because cash flows generated from operations before
changes in working capital excludes the movement in working capital
items. This, in management’s view, provides useful information of
the Company’s cash flows from operations and are considered to be
meaningful in evaluating the Company’s past financial performance
or its future prospects. The most comparable IFRS measure is cash
flows from operating activities.
Ascendant Resources (TSX:ASND)
Historical Stock Chart
From Apr 2024 to May 2024
Ascendant Resources (TSX:ASND)
Historical Stock Chart
From May 2023 to May 2024