cs

Mine: Zinc, Lead, Silver

Milling/Processing Capacity: 2,300 tpd

Location: Las Vegas, Honduras

Products: Zinc and lead concentrates

Mining Type: Underground

Off-take: 100% - Nyrstar NV (9-year)

Processing Method: Mill and standard flotation concentrator

ZnEq Produced in 2017(lbs)

66M

2018 Operating Cost Guidance ($US/per tonne)

$70-80

2018 Production Guidance(ZnEq lbs)

93-109M

About the Operation

The El Mochito property is located in north-western Honduras, near the town of Las Vegas, approximately 88 km southwest of San Pedro Sula and 220 km northwest of the capital city, Tegucigalpa. Production began in 1948 and has continued for 70 years almost continuously. The property consists of an underground zinc-lead-silver mine and a concentrator producing separate zinc and lead concentrates. Concentrates are trucked daily to Puerto Cortés for storage and then shipped once sufficient material is stockpiled.

Over its long mine life El Mochito has evolved from a residential camp with all the supporting infrastructure and housing. Outside of some senior management and guest housing, the bulk of the original housing has been turned over to the local community and is now part of the town of Las Vegas.

Geology and Mineralization

The economic mineralization at the El Mochito mine occurs as both manto and chimney skarn deposits in Lower Cretaceous limestones. The ore deposits are structurally controlled with the manto deposits are typically flat dipping, following the bedding of the host rock, and are relatively extensive in horizontal dimension, rendering them suitable for room and pillar stoping methods. Chimney deposits are typically steeply dipping and cut across the host rocks over a significant vertical distance. In general, the chimneys are of higher grade than the mantos and are mined principally by longhole stoping methods. The El Mochito property comprises six mining concessions totaling approximately 11,000 ha.

The El Mochito mine is situated at the southwestern end of the Sula Valley (or Sula graben) on the western edge of the Honduras Depression in the Central Cordillera of Honduras. The mine is hosted in an approximately 6000-meter-thick sedimentary basin of Mesozoic sediments which crosses the country in a roughly east-west direction. These sediments are overlain by Tertiary volcanic rocks and underlain by Paleozoic metamorphic rocks. The generalized stratigraphic sequence for the mine is as follows:

Valle de Angles Group Red Beds thickness unknown
Yojoa Group Upper Atima Limestone ~ 750 m thick
Mochito Shales ~ 125 m thick
Lower Atima Limestone ~ 600 m thick
Todos Santos Formation Sandstones thickness unknown

Most of the chimney production comes from the Upper and Lower Atima Limestones while most of the present manto production comes from the contact between the Lower Atima Limestone and the underlying Sandstones.

The zinc-lead-silver mineralization at El Mochito is an example of a high-temperature carbonate replacement deposit (“HT-CRD”). Mineralization at El Mochito occurs mainly as steeply dipping pipes or chimneys, flat lying mantos and as selective replacements within shaley horizons. The chimneys are highly variable in size and cut across the host rocks over significant vertical distances. The mantos and selective replacements bodies tend to form along the contacts of shale and limestone. The dominant sulfides are sphalerite and silver-rich galena with about 5-10% of the total sulfide content of the primary ores consisting of pyrite, chalcopyrite, pyrrhotite, and arsenopyrite.

In general, the chimneys are higher grade than the mantos and are mined mainly by longhole stoping and conventional mining methods while mantos are mined primarily by longhole stoping the cut and fill method.

With few exceptions (dyke-hosted), most of the orebodies are structurally controlled by faults and fracture systems and the intersections of these systems with the primary structural trends being ENE and ESE.

Processing

Reserves and Resources

Ascendant announced an updated Mineral Reserve and Resource estimate on April 10 2018, prepared in accordance with National Instrument 43-101 2018, outlining a life of mine beyond 7 years in Reserves. The Mineral Reserve and Resource estimate is effective January 1, 2018 and was based on 26 contiguous areas of mineralization defined by 2,176 diamond drill holes available up to December 31, 2017, and as shown by Table 1 and 2 using a cutoff grade of 4.7% and 3.1% zinc equivalent for reserves and resources respectively.

Mineral resources are reported inclusive of mineral reserves. The mineral reserve and resource estimates are supported by a National Instruments 43-101 Technical Report that will be filed on www.sedar.com within 45 days of April 10, 2018.

This Mineral Reserve and Resource Estimate marks the first compiled since Ascendant acquired the El Mochito mine in December 2016 and replaces the previous estimates with the effective date of December 31, 2015. The current Mineral Reserve Estimate is based on the completion of a life-of-mine plan that results from 46,100 metres of new exploration and definition drilling that was carried out in 2016 and 2017 as well as the reinterpretation of historical data, including of over 1.2 million metres of drilling.

El Mochito Mineral Reserve Statement – Effective 01 January 2018

Category

Tonnes

Grade

Contained Metal

 

(kt)

Zn

(%)

Pb

(%)

Ag

(g/t)

ZnEq.

(%)

Zn

Mlbs

Pb

Mlbs

Ag

Moz

ZnEq.

Mlbs

Proven Reserves

787

4.7

2.0

54

7.2

81

35

1.4

124

Probable Reserves

5,002

4.7

1.6

36

6.5

516

174

5.8

717

Proven & Probable Reserves

5,789

4.7

1.6

38

6.6

597

209

7.2

841

(1) Mineral Resources are stated inclusive of Mineral Reserves, Tonnage, grade and contained metal values have been rounded, totals may vary due to rounding. ZnEq% conversion factors used were: Pb x 0.8175 and Ag x 0.0149

(2) Price assumptions used were US$1.21/lb Zn, US$1.06/lb Pb and US$18/troy oz Ag. Processing recoveries used were 88.9% Zn, 74.3% Pb, and 77.7% Ag 

(3) A cut-off of 4.76% ZnEq was used to estimate Mineral Reserves which includes factors for metal recovery, operating & sustaining costs, royalties, concentrate treatment charges, payables, penalties and transportation/selling costs. Average modifying factors for Mineral Reserves included internal dilution 1.2%, external dilution 14.3% and mining recovery 90.8%.

(4) The Mineral Reserve and Metallurgical technical contents of this presentation were completed by Eugene Puritch, P.Eng. FEC, CET, James Pearson, P.Eng. and D. Grant Feasby, P.Eng. of P&E Mining Consultants Inc., all “Independent Qualified Persons” as defined by NI 43-101. 

El Mochito Mineral Resource Statement – Effective 01 January 2018

Category

Tonnes

Grade

Contained Metal

 

(kt)

Zn

(%)

Pb

(%)

Ag

(g/t)

ZnEq.

(%)

Zn

Mlbs

Pb

Mlbs

Ag

Moz

ZnEq.

Mlbs

Measured Resources

1,100

5.5

2.0

65

8.2

134

48

2.3

198

Indicated Resources

6,452

5.2

1.7

41

7.2

735

241

8.4

1,019

Measured & Indicated Resources

7,553

5.2

1.7

44

7.3

869

289

10.7

1,216

Inferred Resources

4,972

5.1

1.4

33

6.7

556

156

5.4

739

(1) Mineral Resources are stated inclusive of Mineral Reserves, Tonnage, grade and contained metal values have been rounded, totals may vary due to rounding. ZnEq% conversion factors used were: Pb x 0.8175 and Ag x 0.0149

(2) Price assumptions used were US$1.21/lb Zn, US$1.06/lb Pb and US$18/troy oz Ag. Zinc equivalent metal grade (ZnEq. %) was calculated as follows: Zn% +(Pb % x 0.82) +(Ag g/t x 0.0149) = ZnEq%  and is based on 88.9% Zn recovery, 74.3% Pb recovery and 77.7% Ag recovery.

(3) A cut-off of 3.1% ZnEq. was used to estimate Mineral Resources and is based on fourth quarter 2017 marginal direct operating costs.

(4) Results of an interpolated bulk density deposit model have been applied, and contributing 5ft downhole assay composites were capped at 38% Zn, 36% Pb and 2000g/t Ag.

(5) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

(6) The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.

(7) The Mineral Resource content of this presentation was completed by Michael Cullen, P. Geo. of Mercator Geological Services Limited, Mr. Cullen supervised and is responsible for the Mineral Resource Estimate and is an “Independent Qualified Person” as defined by NI 43-101. 

Figure 1: Long W-E Section of El Mochito Mine – Showing Mined Areas in Blue and Mineral Resources in Red

Figure 2: Plan of El Mochito Mine – Showing Mined Areas in Blue and Mineral Resources in Red

The new Technical Report is being prepared in accordance with National Instrument 43-101 (“NI 43-101”) and the CIM Standards by Mercator Geological Services Limited, with contributions which were made by P&E Mining Consultants Inc. with reference to the Mineral Reserve Estimate, mining and metallurgical engineering sections.

Mineral Reserve Estimate

The P&E Mining Consultants Inc. Mineral Reserve Estimate (Table 1) review strategy was based on a review and check for reasonableness of the ZnEq% (percent zinc equivalent) cut-off value. Subsequently, the internal dilution, external dilution, and mine extraction (mining recovery) was scrutinized for each of the four mining methods employed to ensure they fell within acceptable limits for Mineral Reserve Estimate reporting. In addition, the remaining Mineral Resource Estimate not converted to a Mineral Reserve Estimate was reviewed to ensure it balanced with the mine extraction data. The Mineral Reserve Estimate reviews were summarized into overall dilution and mine extraction percentile for a reasonable value comparison analysis. The average values are as follows: Internal Dilution = 1.2%, External Dilution = 14.3% and Mine Extraction = 90.8%.

Mineral Resource Estimate

The Mineral Resource Estimate, as set out in Table 2, was prepared by Mercator Geological Services Limited. The effective date of this Mineral Resource Estimate is January 1, 2018, and it is based on 26 contiguous areas of “manto” and/or “chimney” style skarn mineralization defined by 2,176 diamond drill holes up to December 31, 2017. 3D solid models of skarn mineralization reflecting a minimum grade of 3% ZnEq. were depleted for previously mined areas to constrain resource volumes. GEOVIA Surpac® 6.8.1 software was used to assign block grades for zinc (%), lead (%), silver (g/t) and density (g/cm3) for Measured, Indicated and Inferred Mineral Resources using inverse distance squared (ID2) interpolation methodology and capped 5 foot down hole assay composites. Up to four interpolation passes were applied using progressively increasing ellipsoid ranges to cover the range of 3D solid model sizes present. Block size is 10 feet (x) by 10 feet (y) by 10 feet (z) with two levels of sub-blocking allowed to a minimum block size of 2.5 feet (x) by 2.5 feet (y) by 2.5 feet (z). Resource categorization was applied using discrete solid models developed from contributing drill hole and assay composite parameters.

Qualified Persons

The Mineral Reserve and Metallurgical technical contents of this press release have been reviewed and approved by Eugene Puritch, P.Eng. FEC, CET, James Pearson, P.Eng. and D. Grant Feasby, P.Eng. of P&E Mining Consultants Inc., all “Independent Qualified Persons” as defined by NI 43-101.

The Mineral Resource content of this press release has been reviewed and approved by Michael Cullen, P. Geo. of Mercator Geological Services Limited, Mr. Cullen supervised and is responsible for the Mineral Resource Estimate and is an “Independent Qualified Person” as defined by NI 43-101.

Technical information relating to the El Mochito mine contained on this website has been reviewed and approved by Patrick E. Toth, P.Geo., Director of Exploration for Ascendant and a Qualified Person as defined by National Instrument 43-101.

For further details on the El Mochito reserve and resource estimate effective January 01, 2018, please refer to the Company’s press release dated April 10, 2018 available on the Company’s website and www.sedar.com.   

2018 Production Guidance

The Company issued its 2018 production and cost guidance on January 11, 2018 and is provided in the table below.

Operating Data
Contained Metals:
Zinc Equivalent Metal 93 – 109 million lbs
Zinc 65 – 73 million lbs
Lead 24 – 28 million lbs
Silver 900,000 – 1,200,000 million ozs
Other Operating Assumptions
Direct Operating Costs $70 – 80 / tonne
Capital Expenditure $16 – 18 million
Financial Assumptions
Adjusted EBITDA1 $32 – 40 million
Free Cash Flow $14 – 20 million
All figures in the above table are based on the following metal price assumptions; $1.50/lb zinc, $1.10/lb lead and $18/oz silver.
1Adjusted EBITDA is a Non-IFRS measure and is calculated by considering the Company's earnings before interest payments, tax, depreciation and amortization, share-based payments, adjusted for net foreign exchange expenses.
2Free Cash Flow is a Non-IFRS measure and is calculated by considering the Company's cash flows from operations, less the cash used in investing activities.

Exploration

2018 Exploration Activities

Ascendant has a 40,000 metre drill program planned for 2018. This program is focused equally on definition drilling for the purpose of resource conversion to further enhance the new resource base supporting a long operating life and exploration drilling to define additional material near mine and regional exploration targets.

2018 exploration initiatives will include a soil geochem survey of the entire El Mochito concession, the review and prioritization of near-mine targets (Manzanal, Big Fuzzy, Porvenir, Caliche) as well as other concessions within Honduras. Specifically at El Mochito, follow up work on known “chimney” type ore bodies with historic grades in excess of 17% zinc equivalent is underway. With a plethora of historical data available, the Company will also seek to review historical mining areas in the upper levels of the mines, mined by previous operators as many of these areas still contain a number of high-grade targets.

The known ore deposits at El Mochito are structurally controlled along known fault lines providing clear exploration targets to expand total resources at site, albeit at greater distances from the shaft locations. The mine has a long and successful track record of finding new manto and chimney deposits along the prominent fault and mineralized trend systems, suggesting that the geological model should continue to serve as a guide for finding future resources. These trends, along with long surface drill holes, have provided good exploration targets to find addition mineralization. In addition to exploration near mine, the El Mochito property comprises six mining concessions totaling approximately 11,000 ha, much of which has not undergone significant exploration in recent years and several historical targets are available to follow up.

2017 Exploration Program

Partial results to date from the 2017 exploration program include 78 diamond drill holes; 13,617m of 33,200m exploration and definition drilling program:

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