Ascendant Resources Announces Business Combination With Cerrado Gold

Rhea-AI Summary

Ascendant Resources has announced a business combination with Cerrado Gold through a definitive agreement. Under the arrangement, Cerrado will acquire all Ascendant shares at an exchange ratio of 1 Cerrado share for every 7.8 Ascendant shares, implying a value of C$0.06 per Ascendant share - a 14% premium based on 30-day VWAPs as of January 30, 2025.

The deal includes Cerrado absorbing US$5.1M of Ascendant debt and providing immediate funding of C$0.9M through private placement. Upon completion, existing Cerrado and Ascendant shareholders will own approximately 79% and 21% of the combined company respectively. The transaction provides funding certainty for the Lagoa Salgada Project and exposure to Cerrado's gold production of ~50,000 ounces per year and US$21M cash position.

The arrangement requires 66⅔% approval from Ascendant shareholders and includes standard deal protection clauses with a C$1.2M termination fee. The transaction is expected to close following a shareholder meeting in April 2025.

Positive

• 14% premium offered to Ascendant shareholders based on 30-day VWAP
• Immediate access to US$21M cash position and ~50,000 oz/year gold production
• US$5.1M debt absorption by Cerrado
• C$0.9M immediate funding through private placement
• Reduced equity dilution for shareholders
• Enhanced liquidity and funding certainty for Lagoa Salgada Project

Negative

• Significant dilution of ownership - Ascendant shareholders will only own 21% of combined company
• C$1.2M termination fee if deal fails under certain circumstances

• All share consideration implies value of C$0.06 per Ascendant Share,representing a premium of 14% based on the respective 30-day VWAPs of Cerrado and Ascendant as at January 30, 2025.

• Acquisition provides certitude of funding for the continued advancement of the Lagoa Salgada Project and immediate exposure to a strong cash position of US$21M and cash flows from current gold production of approximately 50,000 ounces per year.

• Cerrado Gold Inc ("Cerrado") absorbs US$5.1M of Ascendant debt.

• Cerrado to provide immediate funding of C$0.9 million Cash through Private Placement, and Sprott Private Resources Streaming and Royalty Corp. to convert up to [C$2.4million] of debt into Shares.

• Proforma company with immediate cashflow, strong diversification of commodity, geographical and asset risk and the balance sheet to continue to advance all projects towards production

• Reduced equity dilution for Ascendant shareholders

• Cerrado Gold Management to host Conference Call to discuss transaction on February 3, 2025, at 10:00 AM EST

TORONTO, ON / ACCESS Newswire / February 3, 2025 / Ascendant Resources Inc. ("Ascendant") (TSX:ASND) is pleased to announce that it has entered into a definitive agreement with Cerrado Gold Inc. ("Cerrado") (CERT) (the "Arrangement Agreement") whereby Cerrado will acquire all of the issued and outstanding shares of Ascendant by way of a plan of arrangement (the "Arrangement") and thereby assume all of Ascendant's outstanding debt obligations. Under the terms of the Arrangement Agreement, all of the issued and outstanding Ascendant common shares (the "Ascendant Shares") will be exchanged on the basis of 1 common share of a Cerrado for every 7.8 Ascendant Shares (the "Exchange Ratio") and US$5.23 million in debt, currently owed by Ascendant to Cerrado, will be absorbed by Cerrado.

The Exchange Ratio implies a consideration of C$0.06 per Ascendant Share, representing a premium of 14% based on the respective 30-day VWAPs as at on January 30, 2025, will be paid.

Upon completion of the Arrangement, existing Cerrado and Ascendant shareholders will own approximately 79% and 21% of Cerrado, respectively, on an undiluted basis. Cerrado will issue approximately 27.7 million shares upon closing of the Arrangement and have issued and outstanding approximately 131.3 million shares. The combined company will continue trading under the name Cerrado Gold Inc. and ticker symbol TSXV:CERT.

In connection with the Arrangement, Cerrado will subscribe for common shares of Ascendant to raise gross proceeds for Ascendant of approximately CA$900,000 in cash at a price of C$0.0525 per Ascendant Share (the "Cerrado Private Placement"), and the Canadian dollar equivalent of approximately up to US$1,660,172 of accrued and deferred interest owing by Ascendant (the "Deferred Interest") to Sprott Private Resources Streaming and Royalty (Collector), LP ("Sprott") under a secured note (the "Sprott Note") will be satisfied by the issuance of common shares of Ascendant (the "Sprott Private Placement", and together with the Cerrado Private Placement, the "Private Placements"). The common shares of Ascendant to be issued under each of the Private Placements will be at a price of C$0.0525per share. Upon completion of the Cerrado Private Placement, Cerrado would be expected to hold in aggregate approximately 14.5% of the then issued and outstanding Ascendant Shares (on a non-diluted basis). The Sprott Private Placement will be completed in two tranches. Upon the completion of the first tranche, Sprott would be expected to hold in aggregate approximately 19.9% of the then issued and outstanding Ascendant Shares (on a non-diluted basis). Completion of the second tranche will be subject to shareholder approval in accordance with the rules of the TSX. Assuming the requisite shareholder approval is obtained, upon completion of the second tranche Sprott would be expected to hold in aggregate approximately 25.6% of the then issued and outstanding Ascendant Shares (on a non-diluted basis). The Cerrado Private Placement and the first tranche of the Sprott Private Placement are expected to be completed within the next two weeks, subject to satisfying all conditions to closing, including TSX approval. The Arrangement and the Private Placements are together referred to herein as the "Transactions".

Key Benefits of the Transactions

The Transactions are expected to offer a number of significant benefits to Ascendant and its shareholders by creating a company with the potential to generate significant long term cash flows while minimizing shareholder dilution, including:

• the proceeds of the Cerrado Private Placement will enable Ascendant to further advance its ongoing development of the Lagoa Salgada project in Portugal and to fund certain other short term payable obligations and for general corporate purposes, including certain Transaction-related costs, during the interim period of the Arrangement;

• cash flow generated by Cerrado's operations would be in a position to support ongoing development and future construction of Ascendant's Lagoa Salgada project, thus creating a company with wider commodity and geographic diversity with a robust long term production profile and cash generating capacity;

• the combination will provide Ascendant shareholders with immediate exposure to Cerrado's portfolio of gold production in Argentina and its high purity Mont Sorcier iron development asset in Canada;

• increased near-term precious metals and longer-term bulk commodities exposure while also diversifying the geographical and asset risk;

• the transaction immediately addresses Ascendant's short term funding requirements and improves the company's access to capital to fund the Lagoa Salgada project while providing shareholders with improved share liquidity, reducing debt and reducing long term share dilution;

• the Sprott Private Placement will improve Ascendant's current financial situation by enabling it to extinguish a significant portion of short-term payable in respect of the Deferred Interest without deploying any cash resources; and

• common management among the respective corporate teams provides for strong synergies from an operational perspective and high efficiencies across management duties of the combined company from a transitional perspective.

Recommendations

The Transactions have been unanimously approved by the members of the respective Boards of Directors of Cerrado and Ascendant eligible to vote thereon. In the case of Ascendant, the Board of Directors approved each of the Transactions upon receipt of the recommendation of its lead independent director who served and functioned as the special committee (the "Special Committee"). In connection with the recommendation, Stifel Nicolaus Canada Inc. provided a fairness opinion to the Special Committee, stating that, and based upon and subject to the assumptions, limitations, and qualifications set forth therein, the consideration offered pursuant to the Arrangement is fair, from a financial point of view, to the Ascendant shareholders.

Rui Santos, Lead Independent Director and Chair of the Ascendant Special Committee, commented: "Upon careful review and in light of very difficult current market conditions, we believe this transaction is in the best interest of Ascendant shareholders. This transaction is positioned to deliver to shareholders enhanced share liquidity, a strong balance sheet and access to immediate gold production cashflow thereby solving current funding issues while minimizing future dilution. Together with Cerrado, we see the opportunity to bring the Lagoa Salgada project to a construction decision this year and for Lagoa Salgada to become the next producer on the Iberian Pyrite Belt".

Additional Transaction Details

The Arrangement

The transaction resulting in the proposed business combination between Cerrado and Ascendant will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The Arrangement will require approval by 66⅔% of the votes cast by the shareholders of Ascendant at a special meeting of Ascendant shareholders (the "Ascendant Special Meeting") to be held following receipt of an interim order of the Ontario Superior Court of Justice. Holders representing in aggregate 14.5% of the issued and outstanding Ascendant Shares as of the date of the Arrangement Agreement, including each of Ascendant's directors and officers and Sprott, as well as other shareholders, have entered into voting support agreements, pursuant to which they have agreed to vote their common shares held in favor of the Arrangement, subject to certain conditions. In addition, shareholders with an aggregate of 14.5% of the Ascendant Shares have provided written non-binding indications of support for the Arrangement, and Cerrado currently owns approximately 8.8% of the Ascendant Shares which it will be entitled to vote in respect of the Arrangement. Following the closing of the Private Placements (to the extent described below), the total number of shares held by shareholders that have signed voting support agreements or provided written non-binding indications of support together with the Ascendant Shares issued under the Private Placements that are entitled to vote, and Ascendant Shares held by Cerrado would represent, in aggregate, approximately 53.4% of the then issued and outstanding Ascendant Shares (on non-diluted basis), all of which are expected to vote for the Arrangement at the Ascendant Special Meeting.

In connection with its approval of the Arrangement, the Board of Directors has approved certain amendments to the terms of the Ascendant Options pursuant to its security-based incentive plan that will permit the conditional exercise of all outstanding options by holders in accordance with the terms of such plan (such exercise be conditional upon the consummation of the Arrangement) and accelerate the expiration date of such options that are "out-of-the-money" and have not been conditionally exercised prior to the effective date of the Arrangement, such that any such options will expire as immediately prior to the Arrangement. It is expected that holders of options that are outstanding at the effective time of the Arrangement will receive replacement options of Cerrado that will be exercisable for Cerrado shares as adjusted by the Exchange Ratio. Holders of warrants of Ascendant will receive replacement warrants of Cerrado that will be exercisable for Cerrado shares as adjusted by the Exchange Ratio.

The Arrangement Agreement includes customary representations, warranties, covenants and conditions and certain other provisions including non-solicitation provisions and other deal protection clauses, subject to the right of Ascendant to accept a superior proposal in certain circumstances, with Cerrado having a 5 business day right to match any such superior proposal. The Arrangement Agreement also provides for a termination fee payable to Cerrado in the amount of C$1.2 million if the Arrangement Agreement is terminated in certain specified circumstances, and for Ascendant to be entitled to a payment of C$400,000 in respect of reimbursement of expenses if the Arrangement Agreement is terminated in certain specified circumstances. Also, in connection with the Arrangement, Ascendant and Cerrado have agreed to amend the terms of outstanding loans owed by Ascendant to Cerrado pursuant to certain promissory notes and a shared services agreement between the parties. As amended, each of the loans will mature on demand by Cerrado on a date no earlier than the earlier of: (i) the date that is 366 days from the date of notice of repayment and (ii) if applicable, the date upon which a change of control (as defined in such notes) of Ascendant occurs.

In addition to the required shareholder and court approvals described above, the Arrangement is subject to the acceptance by the TSX (the "Exchange") in respect of Ascendant and the TSX Venture Exchange in respect of Cerrado. The Private Placements are also subject to acceptance by the Exchange. Each of the Transactions are also subject to the satisfaction of certain other closing conditions customary in transactions of this nature.

The Private Placements

The Arrangement Agreement contemplates the completion of the Private Placements prior to the consummation of the Arrangement. The entering into of the definitive agreements related to the Private Placements are inter-conditional on the entering into of the Arrangement Agreement, and completion of the Cerrado Private Placement is a condition (for Ascendant's benefit) to the completion of the Arrangement. Ascendant expects that the Private Placements will effectively raise aggregate gross proceeds for Ascendant in the amount of C$3,292,972, which is expected to be realized through a combination of cash to Ascendant and the satisfaction of accrued interest owing by Ascendant, in exchange for the issuance of approximately 62,723,274 Ascendant Shares to be issued at C$0.0525 per Ascendant Share. Each of the definitive agreements related to the Private Placements contain representations, warranties, covenants and conditions customary for transactions of a similar nature. The common shares to be issued pursuant to the Private Placements will be subject to a statutory four-month hold period from the date of issuance in accordance with applicable Canadian securities legislation.

The Cerrado Private Placement

Cerrado has entered into a subscription agreement with Ascendant to subscribe for 17,142,857 Ascendant Shares for gross proceeds of C$900,000. Cerrado currently holds a total of 16,417,625 Ascendant Shares, which represents approximately 8.78% of the issued and outstanding Ascendant Shares (on a non-diluted basis). Upon completion of the Cerrado Private Placement (which is contemplated to occur contemporaneously with the completion of the first tranche of the Sprott Private Placement) (as described below)), Cerrado would be expected to hold in aggregate 33,560,482 Ascendant Shares representing approximately 14.5% of the then issued and outstanding Ascendant Shares (on a non-diluted basis and considering the concurrent issuance of the Tranche 1 Deferred Interest Shares (as defined below) under the Sprott Private Placement).

The proceeds of the Cerrado Private Placement are expected to enable Ascendant to further advance its ongoing development of the Lagoa Salgada project in Portugal and to fund certain other short term payable obligations and for general corporate purposes, including certain Transaction-related costs, during the interim period of the Arrangement.

The Sprott Private Placement

Sprott has agreed to convert the total amount of Deferred Interest under the Sprott Note into Ascendant Shares C$0.0525 per Ascendant Share. As of the date hereof, the Deferred Interest amounts to approximately US$1,660,172 which is equal to approximately C$2,392,972 at an exchange rate of C$1.4414:US$1.00.

The conversion of the Deferred Interest at C$0.0525 per Ascendant Share will result in the issuance of approximately 45,580,417 Ascendant Shares (the "Deferred Interest Shares") to Sprott in full satisfaction of the outstanding Deferred Interest. Sprott currently owns and controls 18,482,411 Ascendant Shares, which represents approximately 9.9% of the issued and outstanding Ascendant Shares (on a non-diluted basis). Accordingly, it is anticipated that upon issuance of the Deferred Interest Shares Sprott would acquire in aggregate ownership and control of a total of 64,062,828 Ascendant Shares which is expected to represent approximately 25.65%. Accordingly, the Sprott Private Placement will be completed in two tranches, pursuant to which a portion of the Deferred Interest would be converted into Deferred Interest Shares (the "Tranche 1 Deferred Interest Shares") that would result in Sprott acquiring ownership and control of approximately 19.9% of the issued and outstanding Ascendant Shares immediately following that first tranche closing and the contemporaneous closing of the Cerrado Private Placement. The conversion of the remaining Deferred Interest into Deferred Interest Shares that would result in Sprott acquiring ownership and control over 20% or more of the outstanding Ascendant Shares would be subject to shareholder approval, in accordance with TSX rules, which would be sought at the Ascendant Special Meeting. In accordance with TSX rules, the following common shares of Ascendant will be excluded from voting on the resolution to approve the remaining Deferred Interest Shares that would result in Sprott acquiring ownership and control over 20% or more of the outstanding Ascendant Shares: the 17,142,857 Ascendant Shares that will be acquired by Cerrado under the Cerrado Private Placement; the 18,482,411 Ascendant Shares currently owned by Sprott; and the 27,904,762 Ascendant Shares that will be acquired by Sprott under the first tranche of the Sprott Private Placement. The completion of the second tranche of the Sprott Private Placement is not a condition of closing the Arrangement.

The Sprott Private Placement will improve ascendant's current financial situation by enabling it to extinguish a significant portion of short-term payable in respect of the Deferred Interest without deploying any cash resources.

Timing

The Cerrado Private Placement and the Tranche 1 Deferred Interest Shares to be issued under the Sprott Private Placement are expected to be completed on or about February 11, 2025, and in any event as promptly as possible following receipt of the conditional approval of the Exchange.

Further information regarding the Transactions will be included in the information circular that Ascendant will prepare, file and mail in due course to its shareholders in connection with the Special Meeting, which is expected to be mailed in March 2025. It is anticipated that the special meeting of shareholders of Ascendant will take place in April 2025, with closing of the Arrangement to follow thereafter subject to the satisfaction of all necessary conditions and receipt of all required approvals.

The Arrangement Agreement will be filed on SEDAR+ profiles of Ascendant and Cerrado on the SEDAR+ website at www.sedarplus.ca.

Advisors and Counsel

WeirFoulds LLP is legal counsel to Cerrado. Stifel Nicolaus Canada Inc. acted as financial advisor to the Special Committee and Sotos LLP is legal counsel to Ascendant.

Conference Call Details

Cerrado Gold Management will host a conference call on February 3, 2025, at 10:00 AM to discuss the details of the proposed transaction and take stakeholder questions. The presentation for the call can be found on Cerrado Gold's website at cerradogold.com. Call details are as follows:

Pre-Registration for Conference Call

Participants can preregister for the conference by navigating to: https://dpregister.com/sreg/10196598/fe6ceab5c0 and will receive dial-in numbers to connect directly upon registration completion.

Those without internet access or unable to pre-register may dial in by calling:

PARTICIPANT DIAL IN (TOLL FREE): 1-844-763-8274
PARTICIPANT INTERNATIONAL DIAL IN: 1-647-484-8814

Review of Technical Information

The scientific and technical information from Lagoa Salgada in this press release has been reviewed and approved by Cid Bonfim, P. Geo., Senior Geologist Ascendant Resources, who is a Qualified Person as defined in National Instrument 43-101.

About Cerrado

Cerrado Gold is a Toronto-based gold production, development, and exploration company focused on gold projects in South America. The Company is the 100% owner of both the producing Minera Don Nicolás and Las Calandrias mine in Santa Cruz province, Argentina. In Canada, Cerrado Gold is developing it's 100% owned Mont Sorcier Iron Ore and Vanadium project located outside of Chibougamou, Quebec.

In Argentina, Cerrado is maximizing asset value at its Minera Don Nicolas operation through continued operational optimization and is growing production through its operations at the Las Calandrias Heap Leach project. An extensive campaign of exploration is ongoing to further unlock potential resources in our highly prospective land package in the heart of the Deseado Masiff.

In Canada, Cerrado holds a 100% interest in the Mont Sorcier Iron Ore and Vanadium project, which has the potential to produce a premium iron ore concentrate over a long mine life at low operating costs and low capital intensity. Furthermore, its high grade and high purity product facilitates the migration of steel producers from blast furnaces to electric arc furnaces, contributing to the decarbonization of the industry and the achievement of SDG goals.

For more information about Cerrado please visit our website at: www.cerradogold.com.

About Ascendant

Ascendant Resources is a Toronto-based mining company focused on the exploration and development of the highly prospective Lagoa Salgada VMS project located on the prolific Iberian Pyrite Belt in Portugal. The Lagoa Salgada project is a high-grade polymetallic project, demonstrating a typical mineralization endowment of zinc, copper, lead, tin, silver, and gold. Extensive exploration upside potential lies both near deposit and at prospective step-out targets across the large 7,209-hectare property concession.

Located just 80km from Lisbon and surrounded by exceptional infrastructure, Lagoa Salgada offers a low-cost entry to a significant exploration and development opportunity, already showing its mineable scale and cashflow generation potential.

Ascendant currently holds an 80% interest in the Lagoa Salgada project through its position in Redcorp - Empreendimentos Mineiros, Lda, ("Redcorp"). The Company's common shares are principally listed on the Toronto Stock Exchange under the symbol "ASND". For more information on Ascendant, please visit our website at http://www.ascendantresources.com/.

Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca.

For further information, contact:

Mark Brennan
Executive Chairman, Founder

Mike McAllister
Vice President, Investor Relations
Tel: +1-647-805-5662
mmcallister@ascendantresources.com

Cautionary Note Regarding Forward-Looking Statements:

This release contains "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian and United States securities legislation, respectively. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements include, but are not limited to, statements or information related to: the expected benefits of the Arrangement and Private Placement and the details related to the expected completion of each of these transactions.

Forward-looking statements are based on the reasonable assumptions, estimates, analyses and opinions of management of Ascendant, made in light of itsexperience and perception of trends, current conditions and expected developments, as well as other factors that Ascendant believesto be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Ascendant's management believesthat the assumptions and expectations reflected in such forward-looking statements are reasonable. Assumptions have been made regarding, among other things: obtaining shareholder, regulatory and court approvals, and the timing therefor; Cerrado's and Ascendant's abilities to carry on exploration and development activities, including construction; the timely receipt of required approvals; the price of gold, copper, zinc, iron ore and other precious and base metals; prices for key mining supplies, including labor costs and consumables, remaining consistent with the two companies' current expectations; production at Minera Don Nicolas meeting expectations; the Mont Sorcier Iron Ore and Vanadium and Lagoa Salgada projects being developed as anticipated; plant, equipment and processes operating as anticipated; there being no material variations in the current tax and regulatory environment; Cerrado's and Ascendant's abilities to operate in a safe, efficient and effective manner; the exchange rates among the Canadian dollar, United States dollar and Argentine peso remaining consistent with current levels; and the combined company's ability to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include but are not limited to: the fluctuation of the price of gold, iron ore and other precious and base metals; changes in national and local government legislation, taxation and controls or regulations and political or economic instability; the availability of additional funding as and when required; the speculative nature of mineral exploration and development; the timing and ability to maintain and, where necessary, obtain necessary permits and licenses; the uncertainty in the estimation of mineral resources and mineral reserves; the uncertainty in geologic, hydrological, metallurgical and geotechnical studies and opinions; infrastructure risks, including access to water and power; the impact of inflation; changes in the administration of governmental regulation, policies and practices; environmental risks and hazards; insurance and uninsured risks; land title risks; risks associated with competition; risks associated with currency fluctuations; contractor, labor and employment risks; dependence on key management personnel and executives; the timing and possible outcome of pending or threatened litigation; the risk of unanticipated litigation; risks associated with Cerrado's repatriation of earnings; risks associated with negative operating cash flow; risks associated with dilution; and risks associated with effecting service of process and enforcing judgments, as well and those risks set out in Ascendant's respective public disclosure records on SEDAR+ (www.sedarplus.ca), which investors are encouraged to review prior to any transaction involving the securities of the Company.

Although management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There is no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except as, and to the extent required by, applicable securities laws. Forward-looking information contained herein is provided as of the date of this news release and the Company disclaims any obligation, other than as required by law, to update any forward-looking information for any reason. There can be no assurance that forward-looking information will prove to be accurate or that such events will occur in the disclosed time frames or at all and the reader is cautioned not to place undue reliance on such forward-looking information.

SOURCE: Ascendant Resources, Inc.

View the original press release on ACCESS Newswire

FAQ

What is the exchange ratio in the Ascendant Resources (ASDRF) merger with Cerrado Gold?

The exchange ratio is 1 Cerrado share for every 7.8 Ascendant shares, implying a value of C$0.06 per Ascendant share.

What premium does the Cerrado merger offer to ASDRF shareholders?

The merger offers a 14% premium based on the respective 30-day VWAPs as of January 30, 2025.

How much debt will Cerrado absorb from ASDRF in the merger?

Cerrado will absorb US$5.1M of Ascendant's debt as part of the merger agreement.

What percentage will ASDRF shareholders own of the combined company?

Ascendant shareholders will own approximately 21% of the combined company upon completion of the merger.

When is the expected closing date for the ASDRF-Cerrado merger?

The merger is expected to close following a shareholder meeting in April 2025, subject to approvals.