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Ascot Resources Ltd
Symbol AOT
Shares Issued 435,640,030
Close 2022-08-08 C$ 0.45
Recent Sedar Documents

Ascot has June 30 cash position of $60.21-million

2022-08-08 17:18 ET - News Release

Mr. Derek White reports

ASCOT REPORTS SECOND QUARTER 2022 RESULTS

Ascot Resources Ltd. has released the company's unaudited financial results for the three months ended June 30, 2022, as well as a summary of recent development highlights at the company's Premier gold 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.

Derek White, president and chief executive officer, 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 [second quarter] 2022 on various construction activities. Approximately 95 per cent 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, benefiting from excellent ground conditions, has been going very well and, to date, has progressed approximately 320 metres. Development is now reaching 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 grams per tonne gold. We expect the second batch of assays from the drill program at Sebakwe in the near term."

All amounts herein are reported in thousands of dollars 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 $105-million (U.S.) (see news release dated Dec. 10, 2020), where the company had 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.), 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 $60-million (U.S.) of the senior facility. Therefore, the initial $20-million (U.S.) drawdown remains outstanding, and Ascot is pursuing alternative financing options to replace the rest 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 infill holes. Exploration drilling is largely concentrated on the Sebakwe and Day zones, and infill 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, to secure sufficient financing to complete its project construction. These discussions are continuing, and the company is confident a financing solution can be achieved in the foreseeable future. Until this financing is secured and 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 reaching initial ore in the A zone of the Big Missouri deposit.
  • As of June 30, 2022, the company progressed detailed engineering to approximately 95-per-cent completion and overall construction to approximately 33-per-cent completion. Ascot has ordered approximately 95 per cent 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 for the coming 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 sulphide mineralization at or very near the expected location where high-grade mineralization has been wire framed 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 second quarter 2022 compared with $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 a cash and cash equivalent 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 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 rest 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 precommissioning by fourth quarter 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 slowdown of certain construction activities.

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 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 its benefit agreement.

We seek Safe Harbor.

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