Ascendant Resources (TSXV:ASND) is pleased to announce that it has significantly improved mine performance since its acquisition of the El Mochito Mine in Honduras in December 2016, with daily milled tonnes (tpd) increasing by 17% from 1,482 in January 2017 to 1,733 tpd in March. This improvement comes in spite of various legacy challenges and setbacks at the mine, including a five-day work disruption. The Company believes that workforce concerns have been resolved and, for the remainder of 2017, management expects and has budgeted for continued operating performance improvements to position the mine for strong free cash flow.
The table below outlines both Q1/17 operational results and provides operational guidance for the remainder of 2017:
|Total Tonnes Milled||tonnes||131,115||160,950||182,000||189,200||663,475|
|Average Tonnes Per Day||tpd||1,619||1,850||2,000||2,200||1,923|
|Average Zn grade||%||3.43||%||3.3||%||3.7||%||3.7||%||3.5||%|
|Average Pb grade||%||1.33||%||1.5||%||1.5||%||1.5||%||1.5||%|
|Average Silver grade||g/t||52.1||42||49||49||48|
|ZnEq Head grade*||%||5.55||%||5.42||%||5.90||%||5.94||%||5.73||%|
|Contained Metal Production|
|Mine Site Cost/tonne||US$/t||$||90.55||$||69.00||$||65.00||$||63.00||$||70.00|
|*||Assumes metal prices of US$2,744/t Zinc, US$2,289/t Lead and US$17.50/oz Silver|
The Company expects to gradually increase zinc equivalent (ZnEq) production through the year by ramping up mining operations. Achieving these anticipated and sustainable higher mining rates is dependent on the staged arrival of additional new and refurbished underground mining equipment. A third truck has now been ordered, which adds to the new fleet and ancillary equipment previously ordered and described in the Company’s March 23, 2017 press release. The arrival of the bulk of the new mining equipment is forecasted in Q2/Q3, with commensurate increased production expected in the latter part of the year.
Some of the production upside will be offset by an expected decrease in metal processing recoveries as the mine moves through an ore zone with high iron content, which has the effect of depressing recoveries. Efforts are being made to improve this potential negative impact through blending strategies. Metal playabilities are in line with industry norms with 85% for zinc, 95% for lead and 85% for silver (derived from both zinc and lead concentrates). Despite these challenges, the increased mining activity should see El Mochito exit the year with annualized production rates of just under 80 million lbs of contained ZnEq production, with further improvement expected as the Company continues to reposition El Mochito for the future.
Planned capital expenditures in 2017 of US$16 million is anticipated, to be used in recapitalizing and redeveloping of the asset. Included in this capex is the raising of the Soledad tailing dam to its final height (US$2.8 million), the recent purchase of new mining equipment (US$3.0 million) and a planned acceleration of exploration expenditures over the course of the year (US$2.1 million). Due to the necessity for the Soledad tailing dam construction to take place in the H1/17 dry season in Honduras, forecasted capital expenditures are higher than those expected for H2/17. Construction will be continued in 2018 to ensure sufficient capacity at the Soledad tailings storage facility until 2020, while the new Douglas dam is fully designed, permitted, and constructed. Longer term sustaining capital needs are expected to decline going forward closer to US$10-12 million per annum.
Efforts to improve ventilation and thus underground working conditions for people and equipment remains ongoing, with various improvements having been implemented. In addition, several new areas of air losses have been identified and, as improvements are made, additional ventilation improvement is expected over the course of the year. Work continues to close off unused stopes, correct equipment placement and complete vertical raises to further improve the conditions for workers and equipment, which should ultimately contribute to higher productivity levels.
Ascendant is also pleased to report that the Company and representatives from the applicable union are in the final stages of negotiations of a new collective bargaining agreement. Management has been pleased with the co-operative approach taken between the parties to resolve long standing issues, which the Company believes should result in better alignment between workers’ and the Company’s interests going forward.
President and CEO Chris Buncic commented: “Following a thorough review of the mine plan and financial budget at El Mochito, we are pleased to have provided above the Company’s first production and cost guidance for the remainder of the year that highlights the impact of our fully-funded optimization efforts on the path forward over the next several quarters. With a sustained focus on increases in mine throughput and with the investment in new equipment, we remain confident that we can achieve our production goal of greater than 2,200tpd at an all-in sustaining cost of lower than US$1.00 per ZnEq pound by year end. I am exceedingly pleased by the level of partnership we are experiencing at the mine with the union members and the local community as we re-establish El Mochito as a profitable business in Honduras.”
Restricted Share Unit Plan
The Company announces today that it has granted 5,790,000 Restricted Share Units (“RSUs”), subject to regulatory approval, to certain eligible participants under the Company’s Restricted Share Unit Plan, including certain officers, directors, and employees. The full text of the Restricted Share Unit Plan is available on SEDAR at www.sedar.com. Of the RSUs granted, 4,990,000 will vest in accordance with the following schedule: (i) 33 1/3% immediately; (ii) 33 1/3% one year from the date of the grant and (iii) 33 1/3% two years from the date of the grant. The remaining 750,000 RSUs will vest in accordance with the following schedule: (i) 33 1/3% one year following the date of the grant; (ii) 33 1/3% two years from the date of the grant and (iii) 33 1/3% three years after the date of the grant.
About Ascendant Resources
Ascendant Resources Inc. (formerly known as Morumbi Resources Inc.) is a mining issuer focused on its flagship operating asset, the producing El Mochito zinc, silver and lead mine in west-central Honduras in which the Company has a 100% interest. El Mochito has been in almost continuous production since 1948. More broadly, the Company evaluates producing and advanced development stage mineral resource acquisition opportunities in North, South and Central America, on an ongoing basis. The Company’s common shares are listed on the TSX Venture Exchange under the symbol “ASND”. For more information on Ascendant Resources, please visit our website at www.ascendantresources.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
This press release includes certain “forward-looking information” within the meaning of applicable Canadian securities legislation.
Forward-looking information is based on reasonable assumptions that have been made by Ascendant as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Ascendant to be materially different from those expressed or implied by such forward-looking information, including but not limited to: : production statistics; ore grades; tonnes milled; recovery rates; operating costs; the timing and amount of estimated future production; capital expenditures; the impact of general business and economic conditions; the successful negotiation of a CBA; the ability of the Company to increase production; the arrival of new equipment; problems inherent to the marketability of base and precious metals; industry conditions, including fluctuations in the price of base and precious metals, fluctuations in interest rates; government entities interpreting existing tax legislation or enacting new tax legislation in a way which adversely affects Ascendant; stock market volatility; competition; and such other factors described or referred to elsewhere herein, including unanticipated and/or unusual events. Many such factors are beyond Ascendant’s ability to control or predict.
Although Ascendant has attempted to identify important factors that could cause actual outcomes to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate as actual outcomes and future events could differ materially from those reliant on forward-looking information.
All of the forward-looking information given in this press release is qualified by these cautionary statements and readers are cautioned not to put undue reliance on forward-looking information due to its inherent uncertainty. Ascendant disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by law. This forward-looking information should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.