Ascent Resources Regulatory News (AST)

18 January 2022

Ascent Resources plc

("Ascent" or the "Company")

ESG Strategy Update, Operational Update and £0.6m Placing

Ascent Resources Plc (LON: AST), the onshore Caribbean, Hispanic American and European focused natural resources company, is pleased to announce an update on its ESG Metals strategy, introducing Peru as its primary target geography alongside the signature of a Joint Venture agreement with Peru-based Blanco Safi SAC to collaborate on the identification and subsequent development of precious and base metal rich tailing and processing operations. The Company also announces it has raised gross proceeds of £0.6m by way of an issue of 18,181,818 new ordinary shares ('Placing Shares') at 3.3 pence per Placing Share ("Placing Price").

Highlights:

- Peru introduced as primary target geography for new ESG Metals strategy

- Joint Venture collaboration agreement with Blanco Safi SAC, focused on originating ESG Precious Metals processing transactions in Peru

- Slovenia non-recourse funding for Slovenia ECT and BIT damages claim expected to close shortly

- Placing of £0.6m at a Placing Price of 3.3p (nil discount to closing bid price)

ESG Metals Strategy Update and new Peruvian Joint Venture

In the Company's announcement of 11 February 2021 the Company set out its ESG Metals strategy, which focuses on secondary mining and recovery opportunities consistent with global Environmental, Social and Governance ('ESG') principles. The company expects that these opportunities will typically involve the reclassification, through highly efficient recovery techniques, of surface stockpiled mining waste (previously viewed as a liability for mining companies) as a valuable asset for processing/reprocessing ahead of commercial sale to off-takers and/or other third-party buyers.

Whilst the Company continues to evaluate a number of ESG Metal transactions across Latin and Hispanic America, it has now identified Peru as its primary target geography. Peru is widely recognised as one of the largest and most diversified mineral producers with some of the most extensive reserves in the world with mining the most important sector in the Peruvian economy (some 10% of national GDP). Peru is currently the world's second largest Copper and Silver producer and Latin America's largest Gold, Zinc, Tin and Lead producer.

Peru's Long-Term Credit Rating is rated as BBB by most agencies, which is amongst the strongest in the region. The country also benefits from a long history of mining, a robust mining legal framework and a significant pool of local expertise. Most recently, the Country enacted a new law that extends the process of formalisation of artisanal miners to 31 December 2024 alongside a law that establishes a national policy for small-scale and artisanal mining.

The Company sees significant opportunity for attractive entry points in mining following the global pandemic which has triggered international capital flight and significant capital constraints for small-scale miners. The Company therefore initially expects to focus its attention on small-scale operations (up to 350 tpd), which the Company considers affordable, of an efficient operational scale and which have multiple local tax and permitting benefits.

To accelerate its entry into Peru, the Company has today signed a Joint Venture agreement with Blanco Safi SAC ("Blanco"), based in Lima. Blanco was founded in 2010 and is a Peruvian registered professional investment manager which arranges and invests discretionary fund and third party investment monies in a variety of Peruvian businesses, where it currently manages over $150 M in assets, including specifically a number of direct investments in Peru's small-scale mining sector. The Blanco team has over 30 years experience in the banking, finance, mine and resource sectors and is present across offices in five regions throughout Peru, consequently Blanco have access to a number of high quality precious metal small-scale mineral processing operations throughout Peru.

The Joint Venture will focus its attention initially on the identification, screening and then subsequent negotiation and potential acquisition of small-scale yet sustainable ESG metals processing businesses in Peru, ideally adjacent to surface stockpiled materials for processing. Blanco and the Company already have a number of attractive prospective leads, as well as an active network in the small and medium scale miner sector of Peru. Further announcements will be made as appropriate.

Slovenia Dispute and Damages Claim

The Company anticipates that the completion of the conditions to the binding damages-based agreement appointing Enyo Law LLP to represent it in its dispute with the Republic of Slovenia, as announced 8 November 2021, will take place shortly. Following completion, the Company and its legal advisor will immediately progress to compile and execute the required materials and officially submit the arbitration claim pursuant to the protections afforded to the Company and its operating subsidiary under the Energy Charter Treaty and UK-Slovenia Bilateral Investment Treaty.

Slovenia Operations

Whilst production from PG-10 and PG-11A continues to decline as expected, the production is sold to local industrial buyers at Central European Gas Hub daily spot prices. The Company and its JV partners continue to discuss historic disputes, as previously announced on 10 March and 11 October 2021, as well as the Company challenging to renegotiate the monthly fixed cost fee requested by a service provider (a related party to the Company's JV partner) which were agreed in 2013 when the project contemplated initial production levels which were significantly higher than the current production levels (which have been stifled due to the inability to mechanically re-stimulate the wells, and which forms a part of the Company's dispute with the Republic of Slovenia).

The JV partner, who is the Concession License holder for the Petisovci field, has filed the required materials, ahead of the required deadline, to be granted an automatic 18-month concession extension pursuant to Article 11 of the Act on Intervention Measures implemented in Slovenia to assist the economy in mitigating the consequences of the COVID-19 pandemic. Accordingly, the concession expiry date will now be 28 November 2023. The Company and its JV partner are continuing their workstreams to progress the formal long-term extension of the concession which is now expected to be finalised early next year.

New Funding & Issue of Equity

The Company is pleased to announce that it has raised gross proceeds of £0.6m to fund its continued working capital requirements and wider business development activities as it continues to execute on its ESG Metals growth strategy.

The Company has today raised total gross new equity proceeds of £0.6m by way of issue of 18,181,818 Placing Shares each with a nominal value of 0.5 pence per share, to new and existing shareholders, at a Placing Price of 3.3 pence, representing a nil discount to the closing bid price. The subscribers for the new equity shall each receive one new equity warrant for each Placing Shares subscribed for, with each warrant being exercisable into one new ordinary share at any time over the next two years by paying a warrant exercise price of 5 pence per new warrant share. The Company is also issuing 818,182 Fee Warrants in connection with costs of the fund raising. The Company has also agreed to satisfy a £10,000 Consultant Invoice with the issue of £10,000 worth of new equity on the same terms as the Placing. The Company has therefore agreed to issue a further 303,030 Consultancy Shares.

Align Research Limited, who are a substantial shareholder of Ascent, have subscribed for £50,000 of the new equity issue and this transaction constitutes a related party transaction pursuant to the AIM Rules for Companies. The independent directors (being all of the directors), having consulted with WH Ireland Limited, consider the transaction to be fair and reasonable insofar as the Company's shareholders are concerned.

Following the placing and pursuant to the terms of the 3,600,000 Warrants issued to RiverFort in December 2021, RiverFort have agreed to waive the right to have the exercise price reset to the Placing Price and the Company has instead agreed with RiverFort for their December 2021 Warrants to be reset to the placing warrant price of 5 pence per warrant share and in compensation for this agreement the Company has agreed to issue RiverFort with 1,000,000 Warrants on the same term as the placing warrants.

Admission and Total Voting Rights

Application has been made to the London Stock Exchange for the Placing Shares and Consultancy Shares to be admitted to trading on AIM ("Admission") and it is expected that such Admission will occur at 8.00 a.m. on  27 January 2022 . The Placing and Consultancy Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after the admission of the Placing and Consultancy Shares, respectively and will otherwise be identical to and rank on Admission pari passu in all respects with the existing Ordinary Shares. The Placing and Consultancy Shares are not being made available to the public and are not being offered or sold into any jurisdiction where it would be unlawful to do so.

Following Admission of the Placing Shares and Consultancy Shares, the Company will have 127,861,652 Ordinary Shares in issue, none of which will be held in treasury. Accordingly, the total number of voting rights in the Company will be 127,861,652 and shareholders may use this figure as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.  

Andrew Dennan, CEO, comments; "I am delighted to announce our joint venture with Blanco Safi. Peru offers huge potential for our ESG metals strategy and our relationship with our partner will provide us with both market insight and local access to transformative precious metals processing opportunities. In addition, today's fundraising reinforces our financial platform as we look to build the business materially this year."

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