Ascot mulls funding options for B.C. gold project

Ascot Resources Ltd. [AOT-TSXV, OTVF-OTCQX] has hit a stumbling block in its bid to fund its Premier gold project in the prolific Golden Triangle area of northwestern British Columbia.

Back in December, 2020, as part of a total construction finance package of US$105 million, the company secured a US$80 million senior credit facility with Sprott Private Resource Lending 11. After drawing down the initial US$20 million tranche under the senior facility, Ascot was required to satisfy various conditions before drawing down the remaining US$60 million.

However, on Monday, the company said it has been unable to reach an agreement with Sprott on the satisfaction of the drawdown conditions for the remaining US$60 million of the senior facility. Therefore, the initial US$20 million drawdown will remain outstanding, and Ascot will pursue alternative financing options to replace the remainder of the senior facility.

One key condition requires Ascot to have a significant portion of its 12-month ore inventory classified as proven. Currently all reserves at PGP [the Premier Gold Project] are classified as Probable. Ascot said it cannot guarantee the reclassification of reserves can be achieved in the required time frame.

Ascot shares sank on the news, tumbling 15.2% or 17 cents to 95 cents on volume of 1.96 million. The shares are currently trading in a 52-week range of $1.41 and 84 cents.

The Premier-Dilworth project is located 25 kilometres north of Stewart in the Golden Triangle area. The project is separated into two separate properties, including the northern Dilworth area and the southern Premier area, which contains what was once the largest gold mine in North America. The Premier underground mine closed in 1952 after producing 2.0 million ounces of gold and 45 million ounces of silver.

The Premier gold project covers a land position of 8,133 hectares with three key deposits and a number of exploration targets. The key deposits are Premier, Silver Coin and Big Missouri, which all had historical mining activities and underground access. Two smaller resource areas area known as Martha Ellen and Dilworth.

Total inferred resources currently stand at 1.18 million ounces of gold, 4.7 million ounces of silver or 1.2 million ounces of gold equivalent (AuEq). Total indicated resources stand at 1.06 million ounces of gold, 4.7 million ounces of silver or 1.09 million ounces of AuEq.

“Since the original senior facility agreement was signed in December 2020, we at Ascot have worked tirelessly to continue de-risking and advancing PGP” said Ascot President and CEO Derek White.

“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 a $145 million equity financing,” he said.

“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 been pursuing alternative financing options.”

Meanwhile, he said the company will use its current cash balances of approximately $90 million to continue advancing PGP, including commencement of underground development and other critical construction areas.