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Ascendant Resources Receives US$35 Million Indicative Term Sheet for Project Loan Financing for the Expansion of the El Mochito Mine in Honduras

 

 

 

 

 

Ascendant Resources Inc. (TSX: ASND) (OTCQX: ASDRF) is pleased to announce that it has received a non-binding term sheet from Overseas Private Investment Corporation, for a project loan of US$35 million to American Pacific Honduras S.A. de C.V., the Company’s operating subsidiary in Honduras, to finance the expansion of the El Mochito mine in Honduras as detailed in the Company’s Technical Report “Preliminary Economic Assessment for the Expansion” of the El Mochito Mine, dated December 6, 2018.

 

Highlights of the terms include:

 

  • US$35 million loan facility to finance the expansion of the El Mochito mine in Honduras
  • Proposed 7-year term
  • Funds to cover total financing requirements for the expansion program at El Mochito including mine development expansion, a new underground shaft, underground water pumping upgrades and mill upgrades

 

We are very pleased to have received a non-binding term sheet from OPIC for the financing of the expansion program at El Mochito. OPIC has a history of financing large and important international infrastructure projects that make a significant contribution to the local communities in which they provide funding. We look forward to the opportunity to work together to expand the operations at El Mochito for the benefit of our employees, the local community, our stakeholders and our shareholders“, stated Chris Buncic, President and CEO.

 

He continued, “This non-dilutive financing represents a significant step for the Company, as once the expansion program has been completed, it will structurally reduce the all-in cost base for the El Mochito mine that should enable profitability in almost any reasonable commodity price environment. We are also very pleased that the OPIC financing is structured to provide all necessary funds for the expansion project, while not encumbering the Company with a significant financial burden over the short term.”

 

The OPIC project loan has been designed to provide the necessary capital to complete the full expansion of the El Mochito mine as detailed in the Company’s Technical Report titled Preliminary Economic Assessment for the Expansion of the El Mochito Mine, dated December 6, 2018, eliminating further project financing needs.

 

The Term Sheet is non-binding and bares no legal obligation by any of the parties until definitive agreements have been made. The loan is subject to the completion of OPIC’s due diligence, additional documentation, internal approvals and certain other conditions.

 

About the Expansion Project at El Mochito

 

On December 6, the Company filed a Preliminary Economic Assessment (“PEA”) for the expansion and optimization of operations at its El Mochito mine. The PEA outlines a substantial project Internal Rate of Return of 58% 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 as it foresees a reduction in average all-in sustaining costs to $0.97 per payable zinc equivalent pound produced, and a significant increase in average annual contained zinc equivalent production to 120 million pounds. The PEA assumes a mine life of 10 years inclusive of Inferred Mineral Resources and is based upon the Company’s current Mineral Resource Estimate, not including any of the 30,000-metre drill program carried out in 2018.

 

All key highlights 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

 

For additional and full details please see the Company’s Technical Report which can be found on the Company’s website or SEDAR.

 

About Overseas Private Investment Corporation

 

The Overseas Private Investment Corporation is a self-sustaining U.S. Government agency that helps American businesses invest in emerging markets. Established in 1971, OPIC provides businesses with the tools to manage the risks associated with foreign direct investment, fosters economic development in emerging market countries, and advances U.S. foreign policy and national security priorities. OPIC helps American businesses gain footholds in new markets, catalyzes new revenues and contributes to jobs and growth opportunities both at home and abroad. OPIC fulfills its mission by providing businesses with financing, political risk insurance, advocacy and by partnering with private equity fund managers.

 

OPIC services are available to new and expanding businesses planning to invest in more than 160 countries worldwide. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers. All OPIC projects must adhere to best international practices and cannot cause job loss in the United States.

 

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.

 

 

Posted February 7, 2019

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