Ascendant sells Honduran mine to focus on Portugal project

21st April 2020

By: Donna Slater

Creamer Media Chief Photographer and Senior Contributing Editor


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TSX-listed base metals miner Ascendant Resources has entered into a share purchase agreement with Panama-based Kirungu to sell all the issued and outstanding shares of its wholly-owned Honduran subsidiary American Pacific Honduras (Ampac), which owns the producing El Mochito zinc, lead and silver mine.

Since its acquisition in late 2016, Ascendant has dedicated significant capital and resources to the operations at El Mochito. The mine has seen continual growth and record production quarter over quarter.

However, irrespective of the strong operating turnaround, Ascendant says the mine has not met its profitability objectives and continues to require additional financial investment.

In addition, the Covid-19 pandemic and accompanying zinc commodity price weakness has resulted in significant challenges for Ascendant to continue funding the operations of El Mochito.

The sale will substantially reduce or eliminate Ascendant’s direct Ampac expenses, liabilities and obligations, and provide an immediate strengthening of its financial position. This will enable Ascendant to focus on its highly attractive, high-grade Lagoa Salgada VMS project, located on the prolific Iberian Pyrite Belt, in Portugal.

As part of the transaction, Ascendant COO Neil Ringdahl, who has been and is an officer of Kirungu, will resign from Ascendant effective at the close of the transaction to continue to oversee and manage the operations of El Mochito.

As part of the terms of the transaction, Ascendant will receive a cash consideration of $1-million and an additional $100 000 in working capital adjustments, as well as a royalty on zinc sales from the El Mochito mine.

In addition to the royalty between the closing date of the transaction and December 31, 2029, Ascendant will receive $0.0125 on every payable pound of zinc sold by Ampac at a price greater than $1.15/lb.

In connection with the purchase of Ampac, Kirungu will assume all of Ascendant’s material liabilities with respect to Ampac, the value of which is about $20-million to $25-million.

Ascendant president and CEO Chris Buncic says the transaction provides immediate relief to the company’s working capital position. “The sale of El Mochito provides a modest cash injection, but most importantly, results in a substantial improvement in the company’s balance sheet.”

He adds that it also provides Ascendant with the opportunity to focus on the advancement and development of the Lagoa Salgada project. “We believe Lagoa Salgada will be a great driver of future value and growth for the company based on the continued resource growth and economic potential the project has demonstrated to date.”

Buncic notes that planned exploration work will continue this year at Lagoa Salgada, thereby expanding the resource base and advancing the project towards feasibility stage.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online


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