Ascendant Resources to Sell El Mochito Mine

Ascendant Resources to Sell El Mochito Mine

Company to focus on the highly prospective Lagoa Salgada VMS project in Portugal
Sale to provide cash injection and immediate strengthening of financial positionUpside exposure to El Mochito and zinc prices maintained through royaltyTORONTO, April 17, 2020 (GLOBE NEWSWIRE) — Ascendant Resources Inc. (TSX: ASND) (“Ascendant” or the “Company”) announces it has entered into a share purchase agreement (the “Agreement”) with Kirungu Corporation (“Kirungu”), a Panamanian company, to sell all of the issued and outstanding shares of the Company’s wholly-owned Honduran subsidiary American Pacific Honduras S.A. de C.V (“AMPAC”) which owns 100% of the producing El Mochito zinc, lead and silver mine (the “El Mochito mine” or “El Mochito”) in west-central Honduras (the “Transaction”). Neil Ringdahl, who has been Ascendant’s Chief Operating Officer since March 2017 and is an officer of Kirungu, will resign from Ascendant effective at the close of the Transaction in order to continue to oversee and manage the operations of El Mochito.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. Irrespective of the strong operating turnaround, the mine has not met the Company’s profitability objectives and continues to require additional financial investment. The sale will substantially reduce or eliminate the Company’s direct AMPAC expenses, liabilities and obligations, and provide an immediate strengthening of the Company’s financial position. This will allow Ascendant to focus on its highly attractive, high-grade Lagoa Salgada VMS project (the “Lagoa Salgada project”) located on the prolific Iberian Pyrite Belt in Portugal.Transaction OverviewPursuant to the Agreement, Ascendant will receive cash consideration of US$1.0 million and an additional US$100,000 in working capital adjustments, as well as a royalty on zinc sales from the El Mochito mine. Pursuant to the royalty between the closing date of the Transaction and December 31, 2029, Ascendant will receive US$0.0125 on every payable pound of zinc sold by AMPAC at a price greater than US$1.15/lb.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. 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 approximately US$20-25 million. Closing is subject to a number of conditions, including the final approval of the Toronto Stock Exchange (“TSX”). Post-closing, the parties will seek the receipt of approval from the Honduran anti-trust authorities.Rationale for the Transaction and Ascendant Strategy
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