Ascot finds $65M to reboot Premier gold mine

Ascot Resources (TSX: AOT; USOTC: AOTVF) has lined up a financing of up to $65 million to get its delayed Premier gold project in British Columbia restarted in July.

On Thursday, the company entered an agreement with a syndicate of agents co-led by Desjardins Capital Markets and BMO Capital Markets to sell units of the company priced at 11.5¢ each on a “best-efforts” basis to raise a minimum of $60 million and a maximum of $65 million.

Each unit being offered comprises one common share of Ascot and one warrant to purchase shares at 15.5¢ per share. The stock closed at 14¢ on Thursday in Toronto, giving the B.C.-based miner a market capitalization of $139 million.

On top of the financing, Ascot has also arranged for Sprott Private Resource to release the US$7.5 million second stream deposit from escrow. Sprott is one of the main creditors who has been funding mine development activities at Premier, and last year provided a US$30 million package in return for a 3.1% royalty.

In Thursday’s news release, Ascot said the proceeds of the offering, plus the release of the deposit by Sprott, would enable management to execute its development plans. However, it also warned that “there is no certainty that sufficient capital will be raised.”

Project delay

The financing follows Ascot’s announcement earlier this month that it will delay the restart of the Premier gold project following a review by its new management team, citing a shortage of trained labour to advance the underground mine.

The project, located 25 km from the town of Stewart, B.C. is home to what was once the largest gold mine in North America. Between 1918 and 1952, it produced a total of 2 million oz. from four deposits: Silver Coin, Big Missouri, Premier and Red Mountain.

Ascot has been working to return the historic site to production and successfully poured its first gold last April. However, operations were put on hold after just five months due to insufficient underground development.

The company initially aimed to resume gold production again in this year’s second quarter.