The Preliminary Economic Assessment (“PEA”) for the Lagoa Salgada project demonstrates the potential viability of mining the Measured, Indicated and Inferred Mineral Resources of the North Zone only. The study is based upon the Company’s current Mineral Resource Estimate for the North Zone reported in the recently released National Instrument 43-101 Technical Report with an effective date of September 5, 2019.

The PEA outlines a robust and compelling economic assessment for Lagoa Salgada as it assumes a two-stage underground mining development scenario, with single trackless ramp access, transverse sub-level open stoping method with pastefill. Ventilation and secondary escape ways are planned through raise-bored holes to surface. Milling rates of 2,700 tonnes per day in a standard process circuit is anticipated, with primary crushing, grinding, flotation and leaching of tailings to produce concentrates including lead, zinc, copper and tin, as well as gold and silver doré. There is ample opportunity for extensive expansion from future exploration work to define additional resources to extend the mine life or increase the scale of the outlined operation.

Highlights of the key project metrics are provided in the following table on a 100% basis:

PEA Key Highlights

Notes to Table:

1 The project economics have been calculated using consensus prices at the time of the Resource Estimate report in September 2019

The PEA was prepared by AMC Mining Consultants (Canada) Ltd (AMC) with contributions from Resource Development Inc (RDI) for Mineral Processing and Micon International Limited (Micon), who estimated the Mineral Resources.

The PEA is preliminary in nature, as it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the preliminary economic assessment will be realized.


The mine design is based on a single decline access from surface at a 12.6% gradient. Decline access is via a 30-meter deep boxcut. Stopes are accessed from level access drives in the north and the south of the deposit. Interlevel spacing varies between 24 meters and 35 meters. All mineralized material and waste development is mined with a 4.5 meter by 4.5 meter end profile. Ore and waste will be hauled to surface using 30 tonne trucks.

The deposit is planned to be mined using transverse sub-level open stoping with pastefill at a production rate of approximately 1 Mtpa. Crosscuts will access the deposit with drives developed laterally across the mineralization. Drives in mineralization will be placed 12.5 meters apart along strike, with stopes approximately 25 meters to 35 meters high, 12.5 meters wide and 25 meters in length. Stope heights in the Gossan tend to be generally less, approximately 20 meters high. A slot will be cut at the end of the mineralization and consecutive rings blasted in a retreating fashion over the full stope length back to the crosscut. Uphole drill rings from the existing drives in the Massive Sulphide will be drilled to extract the mineralization from the overlying Gossan deposit. Ventilation and escape raises will be raise-bored from surface.

The mine life of 9 years is based on a 2,700 tonne per day mining rate. Mine life is based on average head grades of 2.44% Zn, 2.85% Pb, 0.34% Cu, 0.16% Sn, 0.75 g/t Au, 69.8 g/t Ag. Unplanned dilution due to the extraction of the stope was assumed to be 8% for the Gossan zone and 5% for the Massive Sulphide zone. Mining recovery of 90% was assumed for the Gossan and 93% for the Massive Sulphide.

Wireframe of the North Zone Mineral Resource Deposit Conceptualized Mining Scenario of the North Zone Metal Production by Year

Metallurgy and Processing

The company has completed initial scoping level metallurgical study with Empresa de Perfuração e Desenvolvimento Mineiro, S.A. (EPDM), Portugal, Grinding Solutions Ltd (GSL), UK, and Wardell Armstrong (WAI), UK in 2019. These non-optimized results indicated that conventional polymetallic process flowsheet is capable of recovering copper, lead, zinc, gold and silver. The flotation tailings will be leached for additional gold and silver values. The oxide ore can be leached to recover precious metals. The leach residue can be sulphidized to recover oxide lead. The final tailing has sufficient tin values and can be recovered by flotation.

The projected recoveries and concentrate grades in the table below are estimated for the project based on extensive experience working with polymetallic ores. Additional testing is planned to confirm the concentrate recoveries and grades.

Metallurgy and Processing Table

Off-site charges include transport of concentrates either to a European smelter or to the port of Lisbon. Additional charges have been considered for lead and tin overseas. Life-of-mine concentrate treatment (including penalties) and transport charges were assumed to be $240/dmt for lead, $270/dmt for zinc and $530/dmt for tin, with standard offtake and refining terms for all metals.


Lagoa Salgada is situated in southern Portugal about 100km south west of Lisbon, in close proximity to the town of Grândola, and is currently accessed via paved roads to Cilha do Pascoal, followed by 4 km of gravel roads to the mine site. Some improvement to the gravel road to the mine site may be required to accommodate heavy construction traffic.

The site will require an office, changeroom, shop and warehouse as well as storage for fuel, laydown areas, site fencing, and security building. An allowance for a total of 2,600 m2 of building space has been included in the PEA.

Total power requirement for the mine and mill is estimated to be 15 MW. There is ample opportunity to connect to the national grid with both 400 kV and 30 kV transmission lines operating within 7 km of the project site. However, for this study, a conservative allowance has been made to run a 30 kV, 20 MVA transmission line from the existing sub-station at Grândola.

Tailings and waste rock will be disposed of through the use of a dry-stack facility. Total tailings for life of mine are estimated at 7.5 Mt with a further 0.7 Mt of waste rock. Approximately 55% of tailings will be disposed of in the mined-out stopes via the pastefill system. The remaining 4.1 Mt of tailings and waste must be accommodated in the dry stack facility. The base of the facility will be lined, and a low perimeter berm and ditch will capture any precipitation run off during the life of mine. Run off will be collected in a settling pond for use by the mine as service water.

Regional precipitation averages 700 mm per year, and it is anticipated that the site will have a net neutral water balance once the initial dewatering of the mine is complete. All water from the mill will be reused.

Total annual water gain through precipitation and mine dewatering is estimated to be approximately 325,000 m3. Loss to the tailings is estimated at 250,000 m3 per year with evaporation accounting for the remaining loss. A complete climate and water balance study is required.

It is anticipated that any make-up water that may be required will be obtained via local wells on site. Should this not be adequate, water can be obtained from the Sado River approximately 5 km from the project site.

A settling pond with capacity of 100,000 m3 will be established to hold precipitation run-off during the rainy season as well as mine and mill water discharge.

AMC has assumed ground water inflow of 5 L/s. Water will be discharged via a staged pump system with pumps located on 3 levels staging to surface.

Operating Costs

The LOM unit operating costs are estimated to be $49.43/t milled. Costs are based on benchmark data from other local operations and local labour costs. Mining is estimated to be $16.84/t milled, Processing $29.17/t milled and General and Administration $3.42/t milled.

Average LOM Unit Costs:

Capital Costs

The total capital cost estimate is $183 million, or $25.23/t milled. Initial Capex of $162.7 million with a four-year payback period and $20.2 million ($3.03/t milled) in sustaining capital.

Total Capital Expenditure Breakdown:

Capital CostsTable

Project Economics

The project shows robust economic results with a pre-tax NPV at 8% of $137 million and an IRR of 37%, and an after tax NPV at 8% of $106 million and IRR of 31%.

Project economics are based on a 9-year mine life with a 4-year payback period, with positive after-tax cash flow commencing in Year 3.

Annual After-Tax Cash Flow


Project economics are most leveraged to the zinc price yet also highly leveraged to the lead price. A 15% increase to the zinc price results in a post-tax NPV8% increase of 23% to $130 million. Similarly, a 15% increase to the lead price results in a post-tax NPV8% increase of 20% to $127.7 million.

The project economics have been calculated using consensus prices at the time of the Resource Estimate report in September 2019.  Based on January 13, 2020 spot prices of $1.08/lb Zn, $0.86/lb Pb, $2.78/lb Cu, $18/oz Ag, $1,560/oz Au and $7.68/ln Sn, the project economics remain robust with an After-tax IRR of 24% and NPV8% of $73M (C$96M @$1.31CAD/USD).

Economic Sensitivity Analysis - After-Tax NPV @ 8.0%

Environmental & Permitting

In terms of Environmental Licensing, an Environmental Scoping Proposal (PDA) has already been prepared and submitted to the Environmental authorities for the start of the Environmental Impact Assessment (EIA), in accordance with Portuguese regulations, which has already been approved by the Environmental Impact Assessment Authority (APA).

Within 45 days of Ascendant’s press release dated January 14, 2020, reporting the results of the PEA, the Company will file with regulatory authorities a Technical Report prepared in accordance with NI 43-101 that documents the PEA study and supports the current disclosure.