Company Announcements

Mineral and Financial Investments Limited

Lagoa Salgada:  PEA Outlines A Positive and Robust Economic Assessment for a Mine at Lagoa Salgada 

HIGHLIGHTS:

·     The PEA demonstrates compelling economics with a Pre-Tax NPV[1] of $137M[2] and a 37% IRR

·     The PEA outlines a 9 year mine life with production scenario of 2,700 tons per day (TPD)

·     Average annual EBITDA of $54.2 million

·     Four-year payback period of initial Capex of $162.7 million

·     Average operating costs of $49.43/t milled represents low cost production scenario

·     Low avg. annual cash costs of $0.44/lb ZnEq and avg. annual All-In Sustaining Cost (AISC) of $0.66/lb ZnEq

·   PEA on LS North only - Significant upside opportunities remain with near-resource exploration targets identified, multiple deposits remain open laterally and at depth, and broader targets remain untested

George Town, Cayman Island - 14 January 2020 - Mineral & Financial Investments ("M&FI" or the "Company")), the AIM quoted resources investment company, is very pleased to announce exceptional results of a maiden Preliminary Economic Assessment ("PEA") for the Lagoa Salgada VMS project by M&FI's 75% owned investee company Redcorp Empreedimentos Mineiros Lda. (Redcorp). The work completed by Ascendant Resources (Ascendant) and Redcorp, is funded and guided by, as part of Ascendant's previously announced earn-in agreement with M&FI.

The PEA 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, which demonstrates the potential viability of mining the Measured, Indicated and Inferred Mineral Resources of the North Zone only. It 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 second 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 a gold and silver doré. There is ample opportunity for extensive expansion from future exploration work to define additional ore resources to extend the mine life or increase the scale of the outlined operation.

Jacques Vaillancourt, Chairman of Mineral and Financial Investments stated - "We are very pleased that our confidence and investment in the Lagoa Salgada project has been more than justified by the results of this maiden PEA. Over the short period that we have partnered with Ascendant they have advanced the Lagoa Salgada project, we have demonstrated a long-life mine with a modest initial capital and very low operating costs while also having a rapid timeline to production. This study outlines a low cost, high-margin mining operation which the Company intends to improve through continued resource growth and ore quality expected at the project. This study highlights the tremendous intrinsic value created for our shareholders, and our expectation is that there are many further opportunities here to continue building value. We expect this project to increasingly become a major focus and priority for Ascendant over the coming years. Moreover, the remaining Mineral Resources in the South and Central Zones, out of scope for this PEA, offer near-term growth potential with additional exploration work which we view as lower risk. We have also identified additional gravimetric targets on the property that are extremely encouraging and remain untested. We expect the strong correlation between gravimetric testing and subsequent high-grade drilling results in the North Zone to continue in these zones. Follow up drilling is intended to support our objective of identifying additional resources to support future studies."

This maiden PEA provides an initial economic assessment for the Lagoa Salgada project in the North Zone only. Redcorp and Ascendant intends to expand on this with additional exploration work in the North Zone in 2020. While the North Zone currently demonstrates a robust standalone mining scenario, there remains much room for additional resource growth, a potential operational scale increase, as the deposit remains open along strike and at depth. The Central and South Zones, excluded from the PEA, remain a highly prospective source for future resource growth, as very limited drilling has been performed, yet it has already achieved a significant resource-to-drilling ratio with the identification of a high-grade copper-rich massive sulphide mineralization, warranting further follow-up drilling.           

Results from the PEA supports the Redcorp and Ascendant's investment thesis for acquiring the Lagoa Salgada project as it demonstrates a long-term economically viable project with the potential to generate significant increased value with the potential to become a first quartile operation and will be the flagship for Ascendant. With historic exploration work indicating low-risk, near-term growth potential, we are confident in the ability to increase the economics of this initial PEA through resource growth, optimization and economic improvements through improved recoveries with additional metallurgical work. Redcorp and Ascendant will perform additional metallurgical testing in parallel with its future exploration programs.

PEA Summary Table:

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

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, 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.

Mining

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 MS 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 MS zone. Mining recovery of 90% was assumed for the Gossan and 93% for the MS.

http://www.rns-pdf.londonstockexchange.com/rns/7656Z_1-2020-1-14.pdf 

Approximately 55% of tailings (up to 540,000 tpa at a dry bulk density of 1.4) will be placed underground as paste fill to meet an annual demand of 400,000 m³ of void and the remaining tailings placed in the dry stack TSF. The paste plant will have an annual utilisation of just below 50% for the mine the balance being taken up in producing paste for the dry stacked tailings. Paste fill will be transported underground using a combination of pumping and gravity via boreholes and high-pressure pipelines to the stopes.

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.

http://www.rns-pdf.londonstockexchange.com/rns/7656Z_1-2020-1-14.pdf 

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.

Infrastructure

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.

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.

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 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 NPV_8% increase of 23% to $130 million. Similarly, a 15% increase to the lead price results in a post-tax NPV_8% increase of 20% to $127.7 million.

http://www.rns-pdf.londonstockexchange.com/rns/7656Z_1-2020-1-14.pdf

Sensitivities

The Lagoa Salgada project is most levered to the zinc price and other metals prices.  A 15% increase in the zinc price results in an after-tax NPV8% of $129M, an increase of $24M or 23% over the base case PEA scenario.

http://www.rns-pdf.londonstockexchange.com/rns/7656Z_1-2020-1-14.pdf

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).

Mineral Resource Estimate

A summary of the Mineral Resource Estimate is set out in Table 1 below. The PEA was based only upon the Mineral Resource Estimate for the North Zone.

LAGOA SALGADA UPDATED MINERAL RESOURCE ESTIMATE

Prepared in accordance with the CIM Standards for mineral disclosure and the National Instrument 43-101 ("NI 43-101") by Micon.

LS NORTH ZONE: summary of the Mineral Resource Estimate for is set out in below:

(Using Cut-offs: Zn-Eq ≥ 2.90% (M&I), ≥ 2.80% (Inferred) Effective September 5, 2019

Lagoa Salgada Updated Mineral Resource Estimate - North Zone: Total (100%)

(Table 1-A)

Lagoa Salgada Updated Mineral Resource Estimate - North Zone: Net to MAFL (75%)

(Table 1-B)

Source: The Mineral Resource Estimate was prepared by Micon International Limited

(1) Mineralized Zones: GO=Gossan, MS=Massive Sulphide, Str=Stringer, Str/Fr=Stockwork

(2) ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*191.75))/25.35

(3) CuEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62))/67.24

(4) AuEq(g/t) = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62) )+(Sn Grade * 191.75))/40.19

(5) Metal Prices: Cu $6,724/t, Zn $2,535/t, Pb $2,315/t, Au $1,250/oz, Ag $19.40/oz, Sn $19,175/t

(6) Densities: GO=3.12, MS=4.76, Str=2.88, Str/Fr=2.88

* Subject to Final Approval by Portuguese Secretary of State of EDM's sale of 15% of Lagoa Salgada to Redcorp;

**Current Redcorp Ownership: TH Crestgate 75%, Ascendant 25%; Operator: Ascendant Resources

*** Contained Metal Calculation: Tonnes x Grade

CENTRAL AND SOUTH ZONES:

Summary of the Mineral Resource Estimate for the is set out in below:

(Using a Cut-off: Cu-Eq ≥ 0.90%) Effective September 5, 2019

Lagoa Salgada Central and South Zones: Updated Mineral Resource Estimate - Total (100%)**

(Table 2-A)

Lagoa Salgada Central and South Zones Updated Mineral Resource Estimate- Net to MAFL (75%)*

 (Table 2-B)

Source: The Mineral Resource Estimate was prepared by Micon International Limited

(1) Mineralized Zones: GO=Gossan, MS=Massive Sulphide, Str=Stringer, Str/Fr=Stockwork

(2) ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*191.75))/25.35

(3) CuEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62))/67.24

(4) AuEq(g/t) = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62) )+(Sn Grade * 191.75))/40.19

(5) Metal Prices: Cu $6,724/t, Zn $2,535/t, Pb $2,315/t, Au $1,250/oz, Ag $19.40/oz, Sn $19,175/t

(6) Densities: GO=3.12, MS=4.76, Str=2.88, Str/Fr=2.88

* Subject to Final Approval by Portuguese Secretary of State of EDM's sale of 15% of Lagoa Salgada to Redcorp;

**Current Redcorp Ownership: TH Crestgate 75%, Ascendant 25%; Operator: Ascendant Resources

*** Contained Metal Calculation: Tonnes x Grade

The effective date of this Mineral Resource estimate is September 5, 2019, and it is based on 3 contiguous areas (North, Central and South Zones within the LS West region) of VMS style mineralization defined by 76 diamond drill holes up to August 31, 2019. Leapfrog Geo 4.5.2 software was used to construct three dimensional ("3D") solid models of massive sulphide, gossan, stringer and stockwork mineralization reflecting a minimum grade of 3% ZnEq, 2.5% ZnEq, 2.5% ZnEq and 0.9% CuEq, respectively and to assign block grades for copper (%), zinc (%), lead (%), tin (%), silver (g/t), gold (g/t) and density (g/cm3) for Measured, Indicated and Inferred Mineral Resources using Ordinary Kriging interpolation methodology and capped 2 m hole assay composites. Two interpolation passes were applied using progressively increasing ellipsoid ranges to cover the range of 3D solid model sizes present. Block size is 5 m across strike (x) by 10 m along strike (y) by 5 m vertically (z). Mineral Resource categorization was applied using geometric criteria, i.e. spacing between drill holes/assay composites.

The Technical Report to disclose the Mineral Resource Estimate was prepared in accordance with National Instrument 43-101 ("NI 43-101") and the CIM Standards for mineral disclosure by Micon. The Technical Report is available on the Company's website and SEDAR.

Quality Assurance and Quality Control

Analytical work was carried out by ALS Laboratories. Drill core samples were prepared in the ALS Lab, in Seville, Spain. Pulp samples were then sent to their analytical Laboratory in Ireland for analysis. The core samples are analyzed for gold (ppm) by fire assay (Au‐AA25), and for the other elements by multi element analysis of base metal ores and mill products by optical emission spectrometry using the Varian Vista inductively coupled plasma spectrometer (ME-ICPORE). Samples from the Main Resource, LS_MS_DH ID, are also assayed for Tin (Sn) by ICP-AES after Sodium Peroxide Fusion (Sn-ICP81x).

ALS Laboratories has routine quality control procedures which ensure that every batch of samples includes three sample repeats, two commercial standards and blanks. ALS Laboratories is independent from Ascendant. Ascendant used standard QA/QC procedures when inserting reference standards and blanks for the drilling program.

Technical Disclosure

The reader is advised that the PEA summarized in this press release is intended to provide only an initial, high-level review of the project potential and design options. The PEA mine plan and economic model include numerous assumptions and the use of Inferred Mineral Resources. Inferred Mineral Resources are considered to be too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrators' National Instrument 43-101 in PEA studies. There is no guarantee that Inferred Mineral Resources can be converted to Indicated or Measured Mineral Resources, and as such, there is no guarantee the project economics described herein will be achieved. 

Ascendant will file with regulatory authorities within 45 days a Technical Report prepared in accordance with NI 43-101 that documents the PEA study and supports the current disclosure.

Qualified Persons

This PEA was prepared for Ascendant Resources Ltd by AMC and other industry consultants, all Qualified Persons ("QP") under National Instrument 43-101. The scientific and technical information in this press release has been reviewed by the following QPs as described below:

·     The Mineral Resource estimate contents of this press release have been reviewed and approved by Charley Murahwi, M.Sc., P.Geo., Pr. Sci. Nat., FAusIMM, Senior Geologist, Micon International Limited.

·     The Mining Engineering content of this press release has been reviewed and approved by Gary Methven P.Eng. of AMC Mining Consultants (Canada) Ltd. who is an "Independent Qualified Person" as defined by National Instrument 43-101.

·     The Infrastructure content of this press release has been reviewed and approved by George Zazzi P.Eng. of AMC Mining Consultants (Canada) Ltd. who is an "Independent Qualified Person" as defined by National Instrument 43-101.

·     The Metallurgical and Process Plant technical contents of this press release have been reviewed and approved by Deepak Malhotra as President of Pro Solv Consulting who is an "Independent Qualified Person" as defined by National Instrument 43-101.

Review of Technical Information

The scientific and technical information in this press release has been reviewed and approved by References in this announcement to exploration results and resource updates have been approved for release by Joao Barros, BSc (Engineering), MSc (Geology), who has more than 16 years of relevant experience in the field of activity concerned. Mr. Barros is a Member of the Portuguese Engineers Association. Mr. Barros is employed by Redcorp Empreedimentos Mineiros, Lda., a 75% owned subsidiary of M&FI, and has consented to the inclusion of the material in the form and context in which it appears.

FOR MORE INFORMATION:

James Lesser, Mineral & Financial Investments Ltd.                       +44 777 957 7216

Katy Mitchell, WH Ireland Group Limited                                       +44 161 832 2174

Jon Belliss, Novum Securities Limited                                             +44 207 399 9400

About Mineral and Financial Investments Limited.:

Mineral and Financial Investments Limited is a Cayman Island based investment company quoted on AIM, a market of the London Stock Exchange. M&FI has 20 investments in the natural resource sector with the majority in the metals and minerals sector and has about 29% of its investment portfolio in precious metal investments. M&FI's Net Asset Value per share (NAVPS)is 15.15p, as of September 30, 2019. M&FI's NAVPS has risen at a Compound Annual Growth Rate (CAGR) of 34.1% over the past 5 years.