Construction, first gold gold pour delayed at Premier as Ascot seeks financing

The first gold pour at Ascot Resources’ (TSX: AOT) Premier gold project in northwestern British Columbia will be delayed by more than one year due to financing issues.

On Thursday, Ascot said it still hasn’t secured financing for the 2022 building season and as a result some aspects of the project have been decelerated or put on hold. First gold at Premier is now expected at the end of 2023 or the start of 2024, instead of the first quarter of 2023.

The past-producing underground gold mine is located 25 km from the town of Stewart in the Golden Triangle region.

“We are disappointed to have to slow down the pace of project construction while we actively pursue alternative financing options for the remaining construction work at [Premier],” said Ascot president and CEO Derek White in a press release. “We have been approached by many interested parties and have progressed to advanced due diligence with various lenders and streaming/royalty companies. Although more time is required to secure this funding, all potential financiers have expressed their continued interest.”

In April, Ascot was unable to satisfy drawdown conditions for the remaining $US60 million of an US$80-million senior credit facility with Sprott Private Resource Lending for construction of Premier. Ascot drew down the initial US$20 million, which remains outstanding and the company is still seeking alternative financing options.

The slowdown of work at Premier was also introduced to preserve the company’s cash balance, which sat at $72 million in unaudited funds as of May 31. 

The historic mill at Ascot Resources’ Premier gold project in British Columbia. Credit: Ascot Resources

While some activities have been paused, the underground mine development work and exploration program will continue as planned and construction, including on the mill building, the new water treatment plant clarifier foundation and the tailings storage facility has been advanced, Ascot said.

Construction is also advancing on the Cascade Creek Diversion Channel, the Big Missouri water discharge pipeline, portal establishment and the initial underground mine development at the Big Missouri deposit. 

The project slowdown will also allow more time for mine planning and sequencing optimization and exploration drilling can further assess the size and high-grade continuity of the emerging Sebakwe Zone at Premier, where an 18,000-metre drill program started in May. 

Assays are pending for the first 12 holes drilled at Sebakwe, though visual inspections revealed coarse, visible gold at a depth of 316 metres. 

According to its 2020 feasibility study, Premier is expected to produce a total of  1.1 million oz. of gold and 3 million oz. of silver over an eight-year mine life, . 

The study outlined a $146.6-million restart plan to feed the Premier mill at 2,500 tonnes per day.

It is anticipated the mine will employ about 140 people at its peak during the construction phase, and once in operation the mine will directly employ around 280 people.

Over the course of production, Premier is expected to generate about $403 million in provincial and federal taxes, and $746 million in after-tax free cash flow based on current spot metal prices.

Shares of Ascot fell 20.1% by 4 p.m. in Toronto following the delay announcement, sitting at 45¢ a piece by the end of the day.