Cerrado Gold to Acquire Remaining Shares of Ascendant Resources, Securing Majority Stake in Lagoa Salgada Project

Cerrado Gold announced on Monday its plan to acquire all outstanding shares of Ascendant Resources, giving it an 80% interest in the Lagoa Salgada project in Portugal. Under the terms of the deal, Cerrado will issue one common share for every 7.8 Ascendant shares acquired, totaling approximately 27.7 million shares in exchange for 131.3 million Ascendant shares. Upon completion, Ascendant shareholders will own around 21% of Cerrado.

Lagoa Salgada is a zinc-lead-copper volcanogenic massive sulphide (VMS) project located in the northwestern Iberian Pyrite Belt, known for hosting some of the world’s largest VMS mines, including Neves-Corvo. The deposit was first discovered by the Portuguese Geological Survey in 1992 and has been explored by several parties, including Rio Tinto. Ascendant acquired the majority interest in 2018.

The project covers approximately 72 sq. km, with total reserves of 14.6 million tonnes grading 0.36% copper, 1.55% lead, and 1.84% zinc. In 2023, Ascendant completed an NI 43-101 feasibility study outlining an after-tax net present value of $147 million and an internal rate of return of 39%. The project is expected to generate approximately $55.1 million (C$75 million) in free cash flow annually over the first five years, with annual payable zinc equivalent production of 124 million pounds.

Cerrado CEO Mark Brennan described the acquisition as an opportunity to add a low-cost asset with strong cash flow potential, supporting the company’s long-term development plans without compromising financial stability. He emphasized the existing value and exploration potential at Lagoa Salgada, noting that management is well-acquainted with the project.

Lagoa Salgada has received “Project of National Interest” status from the Portuguese government, and approval of the submitted environmental impact assessment is anticipated in the coming months. Ascendant is advancing an optimized feasibility study expected to further improve project economics, with a construction decision anticipated by year-end. The study is due by late summer.

Cerrado Gold shares fell 10% and Ascendant Resources shares dropped 8% in late afternoon trading on Monday. Their market capitalizations stand at $33.1 million (C$45 million) and $7.6 million (C$10.3 million), respectively.