Ascot secures Premier gold mine funding
North of 60 Mining News - December 12, 2022
Last updated 12/22/2022 at 2:32pm
C$200M financing package provides cash needed to restart operations at Northern BC gold-silver mine.
Having pulled together a C$200 million (US$147 million) financing package, Ascot Resources Ltd. is now positioned to begin commissioning the mill at Premier by this time next year and reach commercial production at the gold-silver mine in Northern British Columbia early in 2024.
The company had originally planned to begin a new era of mining at Premier by now but was unable to negotiate acceptable terms for a financing that would provide the cash required to complete the tailings dam, new water treatment plant, and other projects that need to be finished during the summer in order to begin commissioning.
Ascot previously had an US$80 million financing package with Sprott Private Resource Lending II. After drawing down the first US$20 million, however, Ascot and Sprott could not come to an agreement on the benchmarks that must be met to have access to the remaining Premier mine development funds.
At an impasse with Sprott and time running short on being able to get the requisite summer work completed, Ascot decided to delay its mine start for a year.
"Since the company has not completed alternative financing at this time, the decision was made to delay certain construction activities until the next weather window and focus financial resources on mining development and exploration activities," Ascot Resources President and CEO Derek White said in June.
The new financing package, which includes a C$150 million (US$110 million) gold and silver streaming agreement and a C$45 million (US$33 million) strategic investment from a Peruvian firm, ensures the company has plenty of time to be feeding ore into the upgraded and expanded mill at Premier by the end of next year.
"We are thrilled to have found an attractive financing solution to complete construction at PGP (Premier gold project)," said White.
Premier financing solution
The Premier financing solution includes a US$110 million gold and silver streaming agreement with Sprott Resource Streaming and Royalty Corp. and a C$45 million strategic equity investment by Ccori Apu S.A.C.
In exchange for its US$110 million upfront payment, Sprott Streaming will receive 8.75% of the gold and 100% of the silver produced from the Premier and nearby Red Mountain mines for ongoing payment to Sprott of 10% of prevailing gold and silver prices.
After Sprott receives 150,000 oz of gold under this agreement, the gold and silver streams will be reduced by 50%.
Going into 2025, or roughly a year after operations begin, Ascot will have the right to buy back 50% of the stream from Sprott for US$80 million in cash until the end of 2026.
Ccori Apu's strategic investment involves the participation in an equity financing. A portion of the shares sold will be structured as Canadian Development Expenditures flow-through shares, which allows for the deduction of 30% of expenses of underground development-related activities in Canada. As a result, the C$45 million invested by Ccori Apu is leveraged to C$50 million in gross proceeds to Ascot.
"In combining the new US$110 million stream from Sprott Streaming with the strategic equity investment from Ccori Apu, Ascot is able to advance towards production with minimal debt," said White.
One year to new Premier Mine
Home to a past-producing mine that last operated in the 1990s, Premier has all the major infrastructure – mill, assay lab, crusher, tailings storage area, and underground workings – in place to resume operations.
A feasibility study completed in 2020 envisions four mines – Silver Coin, Big Missouri, Red Mountain, and Premier – providing ore to the existing mill at Premier. With the mill operating at 2,500 metric tons per day, this operation is expected to produce roughly 1.1 million ounces of gold and 3 million oz of silver over the first eight years of mining, or about 137,500 oz of gold and 375,000 oz of silver per year.
This production is based on 3.63 million metric tons of probable reserves averaging 5.45 grams per metric ton (637,000 oz) gold and 19.1 g/t (2.23 million oz) silver within the Silver Coin, Big Missouri, and Premier deposits; plus 2.55 million metric tons of proven and probable reserves averaging 6.52 g/t (534,000 oz) gold and 20.6 g/t (1.69 million oz) silver at the nearby Red Mountain property.
The mine plan detailed in the feasibility study included the upgrade and expansion of existing infrastructure, and new underground mine development at Big Missouri, which will provide the first ore for the upgraded and expanded mill at Premier.
Going into 2022, the work needed to resume production was about 25% complete.
While underground mine development continued at Big Missouri, most of the other activities on the slate were put on hold until adequate funding was secured.
Assuming that the financings with Sprott and Ccori Apu are finalized, Ascot plans to mobilize contractors in January to complete the mill upgrades; mine contractor in April to continue underground development; and an earthworks contractor in May to re-start work on the Cascade Creek diversion channel, tailings facility, and other surface work needed to resume production.
Under this schedule, Ascot anticipates that ore will be delivered to the renewed Premier mill in the fourth quarter and, enabling the start of mill commissioning and first gold pour by about this time next year.