Canada-based Ascendant Resources has agreed to sell its wholly-owned subsidiary American Pacific Honduras (AMPAC), which owns the El Mochito zinc, lead and silver mine in west-central Honduras to Kirungu, a Panama-based company.

The sale comes in the wake of the COVID-19 pandemic and accompanying zinc commodity price weakness that has resulted in significant challenges for Ascendant to continue funding the El Mochito operations.

The transaction is expected to reduce its direct AMPAC expenses, liabilities and obligations, and would immediately strengthen its financial position.

Under the terms of the agreement, Kirungu will assume all of Ascendant’s material liabilities with respect to AMPAC, the value of which is nearly $20-25m.

Ascendant executive chairman Mark Brennan said: “We are very proud of the operational success we have achieved at El Mochito since Ascendant’s acquisition of the mine in December 2016. The team has done a superb job of rehabilitating the mine, providing twelve consecutive quarters of metal production growth.

“We are pleased to have reached an agreement with Kirungu, and to maintain the sales royalty. On behalf of Ascendant, I would like to thank the team at El Mochito for their tremendous contributions and wish them continued success operating the mine.”

Ascendant  acquired El Mochito mine in 2016

Ascendant is a Toronto-based mining company that operates its 100% owned El Mochito zinc, lead and silver mine located in Honduras and its Lagoa Salgada VMS project located in the Iberian Pyrite Belt in Portugal.

The company had acquired the El Mochito mine, has been producing since 1948, in December 2016, and has executed a optimisation program for two years, to restore the historic potential of El Mochito.

The sale of El Mochito is expected to enable the company to focus on its highly attractive, high-grade the Lagoa Salgada project.