Ascot faces cash shortage, delays Premier restart

Ascot Resources (TSX: AOT, OTCQX: AOTVF) said on Wednesday that it will delay the restart of milling operations at its Premier gold project in British Columbia, which would place the company into deeper financial stress. Its stock sank to a new 52-week low.

The decision follows an initial review by the Ascot management team led by newly appointed president and CEO Jim Currie. The inspection found that underground development at the Premier project is advancing slower than anticipated due to a shortage of trained labour.

By mid-Wednesday, shares of Ascot Resources dropped 22% to 14¢ apiece, its lowest since 2008. Its market capitalization is estimated at about $139 million.

Ascot had been aiming to restart gold production at Premier in this year’s second quarter. The project already faced a major setback last year, having been placed on care and maintenance just five months after its first pour.

July target

The delay means that the previous timeline for restart is no longer achievable, and the company is now projecting ore milling to begin in July.

The project, located 25 km from the town of Stewart, is home to a former underground gold mine that opened in 1918 and included four deposits – Silver Coin, Big Missouri, Premier and Red Mountain.

While in operation, it was the largest gold mine in North America until its surface buildings burned down, leading to its closure in 1952. By then, the Premier mine had produced over 2 million oz. gold and 45 million oz. silver.

First new pour

Last April, Ascot poured gold at the Premier project and was targeting commercial production in the third quarter. However, operations were put on hold in September due to insufficient ore feeds from the Northern Lights and Big Missouri deposits, and the project would require further underground development.

Despite the delay in restart, the mill and deposit are both expected to perform in line with prior guidance, according to Currie. However, he added that the company is facing a working capital shortfall because of this delay.

“As such, we are actively engaged in discussions with our major shareholders, debt providers, and bankers to address the funding gap,” he said.

In November, Ascot secured an $52 million funding package to get the Premier project back on track. At the time, the gold miner was already under financial stress, with roughly $27 million owed to its vendors.