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Ascot Resources Ltd
Symbol AOT
Shares Issued 435,622,128
Close 2022-04-04 C$ 1.02
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Ascot Resources seeks alternative financing for Premier

2022-04-04 11:21 ET - News Release

Mr. Derek White reports

ASCOT PROVIDES UPDATE ON PREMIER GOLD PROJECT FINANCING AND DEVELOPMENT PLANS

Ascot Resources Ltd. has provided an update on construction financing and development plans for its Premier gold project located on Nisga'a Nation treaty lands in the prolific Golden Triangle of northwestern British Columbia. In December, 2020, as part of a total construction finance package of $105-million (U.S.) (see news release dated Dec. 10, 2020), the company secured an $80-million (U.S.) senior credit facility with Sprott Private Resource Lending II (Collector) LP. After drawing down the initial $20-million (U.S.) tranche under the senior facility, Ascot was required to satisfy various conditions before drawing down the remaining $60-million (U.S.). However, the company has been unable to reach an agreement with Sprott on the satisfaction of the drawdown conditions for the remaining $60-million (U.S.) of the senior facility. Therefore, the initial $20-million (U.S.) drawdown will remain outstanding and Ascot will pursue alternative financing options to replace the remainder of the senior facility.

Until alternative financing can be secured Ascot will continue advancing the project with available liquidity. The company anticipates that commencement of underground development and advancement of other key construction areas will continue as previously planned. However, certain work packages may be placed on hold until the company is able to secure alternative financing. While the resulting implications to the project are uncertain at this time, it is possible that there will be a delay to the initial production target of Q1 2023.

Derek White, president and chief executive officer, commented: "Since the original senior facility agreement was signed in December, 2020, we at Ascot have worked tirelessly to continue derisking and advancing PGP. We made significant progress on the early works program last year. We obtained the Mines Act permit and the Environmental Management Act permit amendments in December, 2021, and January, 2022, respectively, and successfully completed $145-million in equity financing. However, we have not been able to come to an agreement with Sprott on the satisfaction of the drawdown conditions for the remaining tranches of the senior facility, and therefore have prudently begun pursuing alternative financing options.

"The Premier gold project remains one of the most advanced gold development projects in Canada. Given the significant derisking that has been achieved so far, we believe the project presents an attractive financing opportunity for alternative funding. In the meantime, we will use our current cash balance of approximately $90-million to continue advancing PGP, including the commencement of underground development and other critical construction areas. As we pursue alternative funding options and progress construction concurrently, we will update the market in due course with respect to any impacts to project schedule and cost if applicable."

Background on the senior facility

Upon closing of the senior facility agreement in December, 2020, Ascot drew an initial tranche of $20-million (U.S.). The remaining $60-million (U.S.) was to be drawn upon meeting various conditions, including receipt of the Mines Act permit and the Environmental Management Act permit amendments, obtaining additional financing necessary to reach project completion and Sprott's approval of the detailed mine plan.

In a recent review of the detailed mine plan, Sprott proposed certain technical conditions to be achieved. In particular, one condition requires Ascot to have a significant portion of its 12-month ore inventory classified in the proven reserve category. Currently, all reserves at PGP are classified as probable. The company cannot guarantee the reclassification of reserves can be achieved in the required time frame. Therefore, the company considers it prudent to seek alternative financing options.

Current financial position and next steps forward

The company currently has an unaudited cash balance of approximately $90-million which will enable the progression of certain critical areas of project construction in 2022. In order to commit to the entire outstanding project scope, Ascot will pursue alternative financing options to make up for the unfinanced balance. The company will also be exploring various royalty and/or stream options at PGP as an additional source of financing.

The commencement of underground development into the Big Missouri deposit starting at the S1 portal remains on track for late April, 2022, and will continue unabated for the time being. The progression of other key construction areas will also continue this year. Certain work packages may be put on hold until the company is able to secure an alternative finance package.

The delay of any work packages may result in delays to the overall project and the start-up of production beyond the previous target of Q1 2023. The impact of delays, however, could potentially be partially offset by the ramp-up from initial production to commercial and full-scale production, which the company anticipates will be accelerated as underground development continues on schedule.

Qualified person

John Kiernan, PEng, chief operating officer of the company, is the company's qualified person as defined by National Instrument 43-101 and has reviewed and approved the technical contents of this news release.

About Ascot Resources Ltd.

Ascot is a Canadian junior exploration and development company focused on restarting 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 Toronto Stock Exchange 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.

We seek Safe Harbor.

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