Mineral & Fin Regulatory News (MAFL)

MINERAL AND FINANCIAL INVESTMENTS LIMITED

Investment Update: Ascendant / Redcorp Announces Initial Feasibility Study For The Venda Nova Deposit with a Post-Tax Npv@8% of US$147 Million and a 39% IRR

Highlights

· Post-tax NPV8% of US$147 million and 39% IRR at long term metal prices

· Avg. annual payable zinc equivalent ("ZnEq") production of 124 million lbs. per annum over first 5 Yrs.

· Average All-in Sustaining Cost ("AISC") of US$0.59/lb. ZnEq over first 5 years

· Robust Average Free Cash flow of US$56 million per annum over the first 5 years

· Upfront capex requirement of US$164 million (including US$12 million of contingency)

· Inaugural NI 43-101 compliant Proven and Probable Reserves (100% basis) in the North Zone of 7.0 Mt at 9.50% ZnEq and in the South Zone Probable Reserves of 7.6 Mt grading 1.24% CuEq.

· Updated NI 43-101 compliant Mineral Resource (100% basis) of:

§ North Zone: 8.9Mt at 10.52% ZnEq Measured and Indicated and additional Inferred Resources of 0.5Mt at 6.62% ZnEq

§ South Zone: 10.0Mt at 1.22% Copper Equivalent ("CuEq") and additional Inferred resources of 8.1 at 1.16% Cu Eq.

· Fulfilled option requirement to deliver 80% indirect ownership in the Lagoa Salgada Project.

· Metallurgy results confirm strong metal recoveries and saleable concentrates.

· Optimization Programs commenced to enhance NPV, IRR and operational efficiencies targeted for completion by year end.

Camana Bay, Cayman Islands - 26 July 2023 - Mineral and Financial Investments Limited (LSE-AIM: MAFL) ("M&F", M&FI, "MAFL" or the "Company") is pleased to announce results of its initial NI 43-101 Feasibility Study ("FS") for its Lagoa Salgada VMS Project in Portugal based upon an updated Mineral Reserves and Resources Estimate. The completion of the FS completes Ascendant's Option earn-in requirements to move project ownership to 80%, subject to closing documentation with all other conditions having previously been met.

The Feasibility Study was completed by QUADRANTE, a multidisciplinary engineering and consulting company with more than 25 years' experience in Europe, Africa and the Americas. Mine planning, design and engineering was undertaken by IGAN INGENIERÍA, an independent consulting firm specializing in mine planning and engineering for open pit and underground mining projects and operations based in Spain. The DFS is based on the NI 43-101 Mineral Resource estimate completed by MICON International dated May 31, 2023, and Mineral Reserves estimate completed by IGAN dated 16 June 2023. Golder Associates are currently engaged in a comprehensive peer review of the entire report. The final FS report will shortly be posted on Ascendant's site as well as M&F's and SEDAR.com.

Jacques Vaillancourt, President & CEO of M&F Investments stated, "We are very pleased that Ascendant have completed this initial feasibility study for the Venda Nova deposit at Lagoa Salgada. It is the first comprehensive study encompassing all areas of operation required for the commercialization of Lagoa Salgada. It will also result in Ascendant completing the earn-in to secure an 80% interest in what is proving to be a robust project even at this early stage. Lagoa Salgada remains a discovery project with significant further upside potential expected as we optimize these results and continue to expand the resource base. We believe the results of the FS demonstrate a solid, economically robust project for what has always been the initial development phase for the larger potential we see for the Lagoa Salgada property. Given the nature of VMS deposits to occur in clusters, especially in the Iberian Pyrite Belt, we see evidence of potential for several more deposits to be defined in the coming years to enhance the overall value proposition at Lagoa. Furthermore, we expect these results to support our current financing discussions and construction decision in the coming months."

Optimization Opportunities

The completion of FS completes the requirements by Ascendant to Earn an 80% ownership in the project as required under the Option Earn In agreement. The Company believes that with additional time now available, the following near term optimization opportunities exist to further enhance the FS prior to commencing development work over the next six months. The Company's initial focus will be as follows:

· Optimize mine ore sequencing to maximize revenues in the initial years.

· Optimization of the mining and processing rate to optimize NPV and IRR.

· Undertake further metallurgical test work to enhance metal recoveries above those already achieved in tests to date.

Project Overview

The Lagoa Salgada Project is located within the north-western section of the prolific Iberian Pyrite Belt ("IBP") in Portugal, approximately 80km southeast of Lisbon, accessible by national highways and existing roads. The Project is comprised of a single exploration permit covering an area of approximately 7,209 hectares. The Project represents a high-grade, polymetallic zinc-lead-copper development and exploration opportunity in a low risk, established and prolific jurisdiction where the project has been accorded a Project of National Interest ("PIN") status.

Figure 1. Project Location

Updated Minerals Reserves and Resources Estimate

Table 1. below outlines the initial NI 43-101 Proven and Probable Mineral Reserves Estimate prepared by Micon International Limited ("Micon") upon which the FS was based, and Table 2 provides the updated total Mineral Resource Estimate currently identified for the Lagoa Salgada project to date. Infill drilling in 2022 focused on upgrading sufficient high-grade mineralization in the North Zone and part of the mineralization in South Zone to the Measured and Indicated categories to support the completion of the FS as required by the Earn In agreement.

Future drilling is expected to add additional Resources as the project moves forward to extend the overall mine life and it should be noted both the North and South zones remain open to future expansion along strike and at depth for future exploration. In addition, several regional exploration targets have been identified for future exploration work aiming to further increase the known mineral resources on the property, which should extend the overall mine life and/or potentially support a future expansion.

Proven and Probable Reserves are estimated at 14.6Mt with 7.0Mt at a grade of 9.50% ZnEq in the North Zone and 7.6Mt at a grade of 1.24% CuEq in the South Zone, sufficient to support an initial mine life of 14+ years based upon a throughput rate of 1.2Mtpa through the plant as outlined in the FS. Reserves were defined using an NSR calculation based upon current metallurgical recoveries, payability and treatment charges and mining methods.

The project has converted 77% of its Measured and Indicated resources into reserves, additionally there are 0.5Mt at a grade of 6.62% ZnEq in the North Zone and 8.13Mt at a grade of 1.16% CuEq in the South Zone of Inferred Resource. Additional drilling is required to upgrade these additional resources to the Measured and Indicated categories. 

Gross Attributable Mineral Reserves

Note: the operator is Ascendant Resources Limited

Table 1: Mineral Reserves (100%)

Table 2-A: Mineral Resources (Inclusive of Reserves - 100%)

Notes to Table 2-A

1. Mineral resources unlike mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

2. The mineral resources have been estimated in accordance with the CIM Best Practice Guidelines (2019) and the CIM Definition Standards (2014). Coherent and contiguous mining shapes backing reasonable prospect for economic extraction were considered.

3. Mineralized Zones: Gos=Gossan, tMS= transition massive sulphides pMS= primary massive sulphides, Str=Stringer, FR= -Fissural Remobilizations

4. ZnEq% = ((Zn Grade*26.46)+(Pb Grade*22.05)+(Cu Grade * 77.16)+(Au Grade*54.66)+(Ag Grade*0.71)+(Sn Grade * 164.55))/26.46.

5. Metal Prices: Cu $7,716/t, Zn $2,646/t, Pb $2,205/t, Au $1,700/oz, Ag $22.00/oz, Sn $26,455/t.

a. Gos= ((Sn%*0.40)*Sn$)+((Pb%*0.20)*Pb$)+((Au ppm*0.91)*Au$)+((Ag ppm*0.89)* Ag$)

b. tMS= ((Sn%*0.40)*Sn$)+((Pb%*0.50)*Pb$)+((Ag ppm*0.65)* Ag$)+((Zn% *0.5)*Zn$)

c. pMS= ((Sn%*0.40)*Sn$)+((Pb%*0.60)*Pb$)+((Ag ppm*0.45)* Ag$)+((Zn%*0.70)*Zn$)

d. str= ((Cu%*0.60)*Cu$)+((Pb%*0.5)*Pb$)+((Ag ppm*0.4)* Ag$)+((Zn%*0.70)*Zn$)

6. NSR-MRE cut-off: Gos= $48.24, tMS= $46.54, pMS= $41.06, str= $37.83

Table 2-B: Mineral Resources (Inclusive of Reserves - 100%)

Notes to Table 2-B

1. Mineral resources unlike mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

2. The mineral resources have been estimated in accordance with the CIM Best Practice Guidelines (2019) and the CIM Definition Standards (2014). Coherent and contiguous mining shapes backing reasonable prospect for economic extraction were considered.

3. Mineralized Zones: Gos=Gossan, tMS= transition massive sulphides pMS= primary massive sulphides, Str=Stringer, FR= -Fissural Remobilizations.

4. CuEq% = ((Zn Grade*26.46)+(Pb Grade*22.05)+(Cu Grade * 77.16)+(Au Grade*54.66)+(Ag Grade*0.71)+(Sn Grade * 164.55))/77.16.

5. Metal Prices: Cu $7,716/t, Zn $2,646/t, Pb $2,205/t, Au $1,700/oz, Ag $22.00/oz, Sn $26,455/t.

6. NSR-MRE: South Deposit= ((Cu%*0.65)*Cu$)+((Zn%*0.75)*Zn$)+((Pb%*0.65)*Pb$)+((Au ppm*0.05)*Au$)+((Ag ppm*0.80)*Ag$)

7. NSR-MRE cut-off: South Deposit= $37.83

Net Attributable Mineral Reserves

Note: the operator is Ascendant Resources Limited

MAFL hold between 5% and 20% interest in the Lagoa Salgada project as previously disclosed, due to ongoing contractual negotiations. The details of this are set out the end of this announcement.

Mining

In line with previous studies, the mine is designed using a single access ramp from surface and will target the extraction of ore from the North and South Zones at a rate of 1.2 million tonnes per annum ("Mtpa").

Mining will be undertaken by targeting the various sub domains within the ore deposit to maximize metallurgical recovery. As with most VMS type deposits, the sub domains reflect a precious metal rich gossan layer above a Massive Sulphide layer (further divided into a Transition and Primary layer) and a layer of stockwork mineralization each with its own metallurgical characteristics. The mining methods defined are a combination of transverse sublevel stoping and cut & fill. Paste backfill is to be used for both mining methods to maximize ore recovery and productivity while minimizing surface tailing disposition. The initial years will focus on mining the higher-grade gossan and massive sulphide zones in the North Zone, followed by the South Zone as underground access is developed in the early years of the operation to the South zone. Mining will be conducted using an owner operated electric fleet which will reduce operating costs.

Figure 2. Underground Mine Design

(In blue the main ramps and accesses and in green and violet the ore blocks to be mined)

Metallurgy

Metallurgical testwork was completed by Grinding Solutions ("GSL") in Cornwall, UK. Confirmatory testwork was developed by Maelgwyn Mineral Services Africa to confirm metal recoveries and saleable concentrates have been achieved. Further testing is expected improve on current results as fully optimized reagents requirements are developed. The Company notes that its consultants have indicated that the actual performance of operating mines in the region have typically seen an improvement in mined head grade and/or recoveries once an industrial scale operation is in production as compared to lab testing.

The approach to flowsheet development was to prepare representative master composites for each ore type, then proceed through open circuit to identify and optimize flowsheet conditions and reagent schemes. Locked cycle tests were then conducted on master composites to demonstrate the anticipated overall metallurgical performance within a continuous circuit.

Tests were completed on blends of Primary Massive Sulphide (PMS), Stockwork (STW), Gossan (GO), Transition Massive Sulphide (TMS) and Stringer (STR) ores to allow comparison with individual composite results and to assess the viability of co‐processing the ore types.

Mineralogical assessments were undertaken to provide information to refine the comminution/beneficiation process during optimization, and to provide reasonable expectations for metallurgical performance versus mineral liberation and association within each ore type. Samples from various open and locked cycle test products were used to characterize final concentrates and tailings.

The developed metallurgical models were applied to mine production schedules as part of the financial modelling process. The resulting average recoveries over the life of the mine (LOM) are presented in the table below:

Table 3. Achieved Recoveries by Metal and Domain

Table 4 below highlights the concentrate grade profile as determined by the various metallurgical testwork. These results are largely in line with other regional producers. The Project will produce four concentrates, namely Zinc, Lead, Copper, and a Tin concentrate.

Table 4. Concentrate Technical Specifications

Processing

The mineral treatment plant is based on industry standard methods for mineral concentrating, comprising of crushing, grinding, and flotation processes to produce various concentrates of copper, lead, zinc, tin and Au/Ag dore bars. The process areas are tailored to the specific mineral domains being processed.

The mined material goes through a grizzly feeder and primary jaw crusher, and then onto to a grinding circuit which consists of a SAG mill, ball mill, and vertical mill in closed circuit with hydrocyclones. The material is discharged onto a vibrating screen, with rejected pebbles recirculated to a pebble crusher.

The copper and lead flotation circuit includes aeration and conditioning tanks, rougher cells, regrinding mill, and cleaning stages. The circuit can produce bulk or separate Cu and Pb concentrates depending on the mineral domain. The zinc flotation circuit consists of conditioning tanks, rougher cells, regrinding mill, and cleaning stages. Except for Fresh Massive Sulphide, only the rougher and cleaner circuit is used.

The sulphide flotation circuit removes sulphides before concentrating tin minerals. It includes conditioning tanks, rougher cells, and cleaner stages. Rougher tailings flow to the next area, while the concentrate is pumped to the tailings management area. The flotation circuit combines flotation and gravimetric concentration technologies. It includes conditioner and aeration tanks, rougher and cleaner stages. The intermediate tin concentrate is further processed using multi-gravity separators to increase tin content. A summary Flowsheet is provided below.

Figure 3. Simplified Process Flow Diagram

Infrastructure

The Lagoa Salgada Project will be developed on a greenfield site located in close proximity to Grândola municipality in the Setúbal district, which benefits from well-established infrastructure including road and rail transport, power, and water supply services. Transportation of supplies will be facilitated by trucks from Portugal or Spanish locations, while concentrate products will initially be shipped to the Sines port by road and subsequently by ship to final destinations.

Figure 4 Site Layout

The project site will have a compact layout that incorporates essential components such as the tailings storage facility, ore and waste dumps, water treatment infrastructure, and various buildings including administration, warehouse, laboratory, gatehouse, and mobile equipment workshop. The processing facilities will consist of a primary crusher building, ore stockpiles on the ROM pad, a mill building, and a paste plant building.

The mine will be accessed via a portal and the ore will be brought to the surface and stored as stockpiles, while waste stockpiles will be utilized for constructing the embankments of the Tailings Storage Facility.

The mine plan outlines the processing of 14.8 Mt of ore and the generation of 1.9 Mt of waste rock. After accounting for concentrate and underground backfill, a total of 11.3 Mt of tailings, along with 1.0 Mt of development rock, will be deposited in the TSF.

Capital Costs

Upfront capital costs are estimated at US$164 million inclusive of US$12 million in contingency or approximately 10%. A further US$102.9 million of sustaining capital is planned over the 14.5-year mine life, including closure costs. Pay back is in the order of 2 years with an after-tax IRR of 39%.

Table 5. Capital Costs

Operating Costs

Operating costs are summarized in Table 6 below. All costs are based on a mining rate of 1.2Mtpa and relied on recent quotes from various vendors and are similar to other mines in the region. On a zinc equivalent per pound basis, Life of Mine C1 Cash Costs are estimated at US$0.67/lb and US$0.71/lb on an all-in sustaining cost basis over the life of mine.

Table 6. Operating Costs

Production and Operating Cost Profile

The chart below highlights the expected production and AISC profile at Venda Nova as per the FS. Production and cash flows are expected to be stronger in the early years as the processing of the higher-grade massive sulphide and gossan material is undertaken.

Production over the mine life is expected to average 77 million lbs. of Zinc equivalent production per year but averages approximately 124 million lbs. of Zinc equivalent production over the first five years. Similarly, AISC will average US$0.71/lb. per year and US$0.59/lb. over the first five years on a ZnEq basis.

Figure 5. Production and AISC

Overall Project Economics

The Venda Nova project at Lagoa Salgada shows strong robust economics with a Post-Tax after tax NPV at 8% discount rate of US$147 million and IRR of 39% for a payback period of 2 years at long term consensus metal price assumptions. Project economics are based on the current Proven and Probable Reserves only for a mine life of 14.5 years and does not factor in the upgrading of additional resources or potential future exploration success.

Table 7 Economic Summary

The mine is expected to benefit from regional tax incentives in Portugal. Contractual fiscal incentives for productive investment in Portugal offers a validity period of up to 10 years for investment projects with relevant expenditures amounting to €3,000,000 or more. The fiscal benefit corresponds to 10% of the project's relevant expenditures, and this rate can be increased based on factors like the location of the project and the creation of jobs. The benefit takes the form of a tax credit deducted from the corporate income tax liability. Additionally, there are provisions for exemptions or reductions in municipal property tax, property transfer tax, and stamp duty.

These contractual fiscal incentives aim to attract productive investments, boost economic growth, create employment opportunities, and support strategic sectors in Portugal. The incentives provide companies with tax benefits, such as tax credits, deductions, and exemptions, encouraging investment in various sectors and regions.

In the case of Lagoa Salgada, the maximum tax benefit is determined by considering the lower value between €24.75 million (Maximum regional aid intensity applicable) or 15% of the initial investment. The application method for this incentive involves a 50% reduction in income tax (equivalent to 21% of the taxable income) until the maximum amount of tax benefit is attained.

The chart below demonstrates the robust free cash flow generation expected, especially in the first five years of operation. Cash flows during the first five years of production are estimated to average US$56 million per annum.

Figure 6. Free Cash Flow

The chart below highlights the NPV sensitivity to changes in capital costs, various input costs and Zinc price assumptions.

Figure 7. NPV Sensitivity

Optimization Opportunities

The completion of Feasibility study completes the requirements by Ascendant to Earn an 80% ownership in the project as required under the Option Earn-In agreement. The Company believes that with additional time now available, the following near term optimization opportunities exist to further enhance the FS prior to commencing development work over the next six months. The Company's initial focus will be as follows:

· Optimize mine ore sequencing to maximize revenues in the initial years.

· Optimization of the mining and processing rate to optimize NPV and IRR;

· Undertake further metallurgical testwork on available material to enhance metal recoveries above those already achieved in tests to date

On a longer-term basis, the company has identified additional areas to further increase the value of the Lagao Salgada project such as;

· Subject to new fresh drill core being available additional metallurgical testwork could be undertaken to continue to enhance recoveries

· Increase mineral reserves and resources to enhance the mine life or support a larger scale operation via upgrading additional known resources to the Proven and Probable categories and through new exploration to define additional resources on the numerous follow up targets known on the property.

Venda Nova Initial Feasibility Study for Ascendant and Redcorp - Qualified Persons

An NI 43-101 Technical Report supporting the DFS is being prepared by Quadrante under the guidance of Mr. João Horta (M.Sc., MIMMM), who serves as Project Director at QUADRANTE and is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Although the Qualified Person was not responsible for the completion of some of the sections of the DFS, such as Geology, Mineral Processing and Metallurgical, Mineral Resource, Reserve, Mining Methods, Recovery Methods, TSF, Paste Fill, and Hydrogeological Study, the Qualified Person at Quadrante has relied on the Qualified Persons listed below who are the specialists in these fields for completion of their respective portions of the DFS.

The scientific and technical information contained in this release relating to the Geology and Mineral Resource Estimate has been approved and verified by Mr. Charley Murahwi (Msc, P.Geo., FAusIMM), Senior Economic Geologist with Micon International Limited, who is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Sampling, analytical, and test data underlying the Mineral Resource Estimate was also approved and verified by Mr. Charley Murahwi.

The Mineral Reserve calculation and the Mining Methods section was completed by IGAN Ingenieria under the supervision of Mr. Pablo Gancedo Mínguez (CEng, MIMMM), who is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

The Tailings Storage Facility (TSF) study was completed by SLR under the supervision of Mr. David Ritchie (P.Eng, Principal Geotechnical Engineer at SLR), who is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Scientific and technical information contained in this release in relation to metallurgical test work and the Recovery Methods section has been approved and verified by Mr. David Castro López (MIMMM), who serves as Process Engineer at Minepro Solutions and is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

The Hydrogeological Study was completed by Dr. Rafael Fernández Rubio (PhD, Specialist), which is a Special Consultant at FRASA and is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

The Paste Fill study was completed by Mr. Frank Palkovits (P.Eng, B.Eng), Pastefill Specialist at RMS and a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Review of Technical Information

The scientific and technical information in this press release has been reviewed and approved by Joao Barros, BSc (Engineering), MSc (Geology), who has more than 17 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 50% owned subsidiary of M&FI, and has consented to the inclusion of the material in the form and context in which it appears.

Summary of ownership of Redcorp and Lagoa Salgada Project

With the formal delivery of this Feasibility Study Ascendant will have satisfied its obligation under the Earn-In Agreement to increase its ownership to 80% of Redcorp, subject to closing documentation, all other conditions being met. Redcorp currently owns 85% of the Lagoa Salgada project. In June 2017, Redcorp, then owned 100% by M&F, entered into an agreement with Empresa Desenvolvimento Mineiro SA (EDM), a Portuguese state-owned company to purchase the remaining 15%, which would have resulted in Redcorp owning 100% interest in the project ("2017 Agreement"). However, as previously announced, the 2017 Agreement was subject to Portuguese Secretary of State approval, which has not been received. Redcorp and M&FI continue to pursue the completion of this acquisition, with no certainty of success.

As part of the agreements with Ascendant, M&F has granted call options to Ascendant for nil consideration over 12% of the ordinary shares in Redcorp held by M&F ("Call Options") so that in the event that Redcorp/M&F is unsuccessful in obtaining the completion of the 2017 Agreement, Ascendant will be assured of a net 80% interest in the Lagoa Salgada Project. However, if Redcorp/M&FI can secure 100% ownership of Lagoa Salgada then the Call Options are cancelled. The Call Options can be exercised on the date being 6 months after the date on which Ascendant increases its ownership of Redcorp to 80% or immediately if EDM elect to participate in the Project. If the other conditions set out in this announcement are satisfied, and if the call option was exercised, M&FI's carried interest in Lagoa Salgada would decrease from 20% to 5%.

As part of this arrangement, M&FI and Ascendant have also amended the terms of the shareholders agreement made between (1) Ascendant; (ii) M&FI; and (iii) Redcorp in relation to the Project, to provide the following:

a) M&FI shall have the right and option, but not the obligation, to exercise an option within 6 months (plus 10 business days) of the Stage Two Option Exercise Date (being the date when Ascendant has earned 80% of Redcorp and being no later than June 22, 2023 - Amended to no later than August 3, 2023) to require Ascendant to purchase all, but not less than all, of the shares in Redcorp at a defined price. 

b) The price would be an amount in US dollars, payable in cash, equal to 5% of the post-tax net present value of the Project provided in the feasibility study completed prior to the date of exercise using a 10.5% discount rate (the "Put Option").

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

FOR MORE INFORMATION:

Jacques Vaillancourt, Mineral & Financial Investments Ltd. +44 780 226 8247

Katy Mitchell and Sarah Mather, WH Ireland Limited +44 207 220 1666

Jon Belliss, Novum Securities Limited +44 207 382 8300