NEW YORK, July 8, 2021 / PRNewswire / – Argus Research, an independent investment research firm, has kicked off coverage for the Ascendant Resources Inc. (TSX: ASND) stock report.

Click here to see the whole Argus equity report.

Excerpts and highlights from the report provided by Argus Analyst Steve silver, to pursue:

ACTIVITY DESCRITION:
Situated at Toronto, Ascendant Resources is focused on the exploration and development of the Lagoa Salgada VMS (Volcanogenic Massive Sulphide) project located on the Iberian Pyrite Belt (IBP) in Portugal. IBP represents the largest concentration of massive sulphide deposits in the world, covering sections of Portugal and Spain, and has a long history of large-scale mineral discovery (producing over 1.75 billion tonnes of massive sulphide ore and 2.5 billion tonnes of mineralized stockwork over the past hundred years).

Ascendant currently holds a 25% stake in the Lagoa Salgada project through an option position in operating company Redcorp, and has a earning opportunity to increase its stake in the project to 80%. The company plans to increase its stake to 50% by the end of 2021 and to 80% by the end of 2022, this by reaching certain investment and inground payment thresholds, including the completion of a new banking feasibility study. (BFS) on the site.

The historical study on the project site focused on a deposit located in the North Zone. A PEA completed in 2020 demonstrated compelling economy and, most importantly, scalability for future resource growth. Due to the small size of the confirmed area, the economic projections in the PEA – namely a NPV of $ 106 million, and the capital expenditure of $ 160 million over a short mine life of nine years – were considered to have an unfavorable risk profile.

As a result of the initial PEA, the decision was made to improve drilling to expand and enhance copper-rich resources in the central and southern zones (now merged into a single southern zone). The move could provide a significant expansion to the current resource and inform a new PEA that includes both regions. Ascendant expects this new PEA to deliver longer mine life and increased throughputs, as well as a significant increase in the economic potential offered to Lagoa Salgada. The new PEA should be completed by August 2021.

As soon as the new PEA is published, Ascendant Resources plans to initiate a feasibility study and expects its completion towards the end of 2022. The company will also carry out economic impact studies on the site. In our opinion, these initiatives represent key steps towards increasing Ascendant’s participation in the Lagoa Salgada project up to the 80% threshold.

COMPETITIVE ADVANTAGE:
In our view, Ascendant Resources is well positioned to take advantage of an upward trajectory in copper prices, which we attribute to increased demand and lower inventories. Due to its superior conductivity, demand for copper has widened for use in the production of electric vehicles and other “green economy” initiatives. Copper inventories recently hit their lowest level in 15 years, and prices are expected to reflect these demand dynamics.

Copper prices have been volatile in recent months. They reached historic highs in May 2021, driven by accelerations in manufacturing and industrial production in China. But they have since pulled out over concerns over a Beijing– led the crackdown on speculators.

We see the infrastructure of the Lagoa Salgada site as another competitive advantage for Ascendant. The project is located along a section of the Iberian pyrite belt at Portugal accessible by highways and national roads. In addition, the site has access to from Portugal ports, electricity, waterways and dams.

We expect the project to move forward quickly, given the strong support from the local community and local government. The latter, Empresa de Desenvolvimento Mineiro, SA (EDM), a Portuguese public company that supports the strategic development of the country’s mining sector, has a 15% stake in the project. The project also consists of a single exploration permit for the entire site.

A key factor of value in Ascendant’s investment thesis is its use of advanced scientific and geophysical tools, which have been instrumental in the identification of the extended resource and the development of the resource to the Indicated status. (from Inferred). The company was able to discover the presence of resources located under 130 meters of tertiary cover, which makes it difficult to detect for previous explorers of the site. Scientific work, through induced polarization and gravity surveys, has provided indications of a high probability of metal involvement, which is currently being confirmed. In addition, the resource indicated so far has not had many penalties or deleterious elements, with less arsenic, cadmium or mercury than other neighboring mines. This allows you to concentrate better during recovery.

ANALYST’S COMMENT EARNINGS (Click here to see the whole Argus Equity Report):
In our opinion, Ascendant’s profits are less important to investors than its progress in developing the resources of Lagoa Salgada and maintaining adequate funding to move the project forward. For the full year 2020, the company reported a net loss of $ 3.0 million, or $ 0.02 per share, excluding the impact of discontinued operations.

We attribute the modest 23 million Canadian dollars Market capitalization to the early stage nature of the Lagoa Salgada project, with fewer and shallower drilling to date compared to many of its peers. The market is also likely to refresh the company’s assets until it completes a new PEA and moves towards a feasibility study. We also believe that Ascendant’s decision to sell its zinc mine in Honduras and the return to a more advanced stage of development has contributed to an increased risk profile among investors.

We are awaiting the results of the new PEA, which the company plans to publish in August 2021, to show more solid economic advantages compared to the initial PEA in 2020 (which suggested a solid internal rate of return and a positive net present value after tax, but involving too much risk compared to its investment needs and a duration of relatively short mine life). We expect the new PEA to project a higher after-tax NPV, higher internal rate of return, lower capex requirements, and a mine life of at least 15 years. Combined with the potential for the site to expand over time, we expect these results will restore Ascendant Resources’ valuation and begin to close the gap between its market capitalization and that of its peers.

About Ascendant Resources Inc. (TSX: ASND) www.ascendantresources.com
Ascendant Resources Inc., a mining company, explores and develops mineral properties. The company explores zinc, copper, lead, tin, silver, gold and other metals. It owns a stake in the volcanogenic massive sulphide project of Lagoa Salgada, which covers an area of ​​10,700 hectares located on the Iberian pyrite belt in Portugal. Ascendant Resources Inc. was incorporated in 2006 and is headquartered in Toronto, Canada.

About Argus Research Corp. Based in New York, Argus Research (www.argusresearch.com) is a leading independent equity research firm (founded 1934) ̶ providing fundamental and quantitative research coverage on over 1,600 companies across the 11 sectors of the S&P 500, as well as macroeconomic and stock market forecasts, thematic research, model portfolios and pre-IPO research. In addition, Argus now offers sponsored research solutions for small and mid caps looking for coverage. Our Institutional Asset Management, Bank Trust, sell-side advisors and independent investors appreciate Argus’ proprietary equity research methodology, analysis and commentary. Argus stock research and earnings estimates are available on major earnings research / estimate aggregation platforms including Bloomberg, Thomson Reuters, Factset, and S&P Global.

Argus Research Co. has received a lump sum from the company mentioned in this report as part of a sponsored research agreement between Argus and the company. No part of Argus Research’s compensation is directly or indirectly linked to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and disclaimer for full information.

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