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Despite challenges, Ascot pushes toward first gold in Q1 2023 North of 60 Mining News – January 28, 2022
The SAG (left) and ball (right) mills installed at Ascot Resources' Premier gold mine project near Stewart, British Columbia.
With the work scheduled to begin in April, Ascot is on pace to pour the first gold at Premier during the first quarter of 2023.
Despite project delays and cost overruns, Ascot Resources Ltd. is set to make the final push toward reestablishing a mine at its Premier gold project in British Columbia's famed Golden Triangle.
Home to a past-producing mine that last operated in the 1990s, Premier has all the major infrastructure – mill, assay lab, crusher, tailings storage area, and underground workings – in place to resume operations.
A feasibility study completed in 2020 envisions four mines – Silver Coin, Big Missouri, Red Mountain, and Premier – providing ore to the existing mill at Premier. With the mill operating at 2,500 metric tons per day, this operation is expected to produce roughly 1.1 million ounces of gold and 3 million oz of silver over the first eight years of mining.
Ascot had originally intended to begin development in earnest during the second half of 2021. The company, however, decided to postpone most of its outdoor activities until spring due to some of the ordered components shipped from China being lost at sea and unusually large snowfall accumulations during late 2021 storm events in western BC.
With full-scale construction slated to get underway in April, Ascot now expects to pour the first gold at the new era Premier Mine in about a year and reach commercial production early in the second half of 2023.
"Despite facing various challenges last year, including the loss of key equipment at sea due to weather events, the Ascot team stepped up in meaningful ways and adapted to stay the course towards production, positioning us to execute on the project in 2022," said Ascot Resources President and CEO Derek White. "We are excited to get the Premier mill restarted with first gold pour anticipated around this time next year."
Ascot estimates that the construction of the Premier gold project was roughly 23% complete at the onset of 2022.
Major areas of focus this year will be underground development and early access to initial mining areas, delivery and installation of a new water treatment plant, completion of a diversion channel for Cascade Creek, tailings facility earthworks, and completion of the process plant circuit. Ascot says these activities all lead toward the start of mill commissioning later in 2022 and then the company's first gold pour at Premier.
The same factors that led to Ascot's decision to delay the start of full-scale development at Premier are also contributing to higher development costs.
The company now estimates the capital cost for Premier Mine development to be C$224 million, which is about 27% higher than the C$176 million announced in March of last year.
Scheduling delays, weather impacts, lower-than-expected labor productivity, inflation, supply chain pressures, and COVID-19 protocols are all contributing to the cost overruns.
The single largest increase is a C$30 million jump in indirect and owner costs. Ascot says this is largely attributable to a rise in costs related to camp and construction facilities due to delays in the project schedule requiring the temporary construction camp to be on site for longer than initially planned. Higher food costs, COVID-19 protocols, and snow clearing also contributed to the increase. Road maintenance and site services costs across the Premier site are higher than estimated. Freight and logistics costs are also higher due to the global supply chain crisis.
Going into 2022, Ascot had already invested C$60 million of the total development costs, leaving a balance of roughly C$164 million. This includes a roughly C$15 million contingency.
Ascot has a higher degree of confidence in the updated capital estimate, as it is based on real-world inputs from the work carried out thus far, and most of the remaining key equipment and materials to complete the project have already been ordered. The only items yet to be ordered are process plant piping, control systems, and limited amounts of steelworks – all of which have been assigned higher levels of contingency.
Ascot entered 2022 with approximately C$59 million in cash and roughly C$94 million that remains undrawn on the project finance facility, which adds up to approximately C$153 million in cash and credit.
With this coming in less than what is needed to finish development, not to mention other costs not directly related to Premier Mine development, Ascot says it will be pursuing additional funding options in the near future to address capital requirements arising from the project delays.
"The Golden Triangle of northwestern B.C. has been a focal point for Canadian mining mergers and acquisitions in recent years, and Ascot has one of only three mills in the entire region," said White. "Notwithstanding project delays and cost pressures, we are confident in our ability to execute on the remainder of project construction during 2022, on the path to becoming Canada's next gold producer."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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