SOURCE: Ascendant Copper Corporation

November 14, 2006 09:00 ET

Ascendant Copper Corporation Announces Agreement in Ecuador With Antofagasta for Chaucha Project

VANCOUVER, BC -- (MARKET WIRE) -- November 14, 2006 --Ascendant Copper Corporation (TSX: ACX) (BERLIN: A0HMLE) ("Ascendant" or the "Company") announced today that it has signed an agreement with an effective date of September 1, 2006 (the "Agreement") with Antofagasta PLC ("Antofagasta") for the exploration and advancement of the Company's Chaucha project, a copper-molybdenum property located in southern Ecuador (the "Project").

Under the terms of the Agreement, Antofagasta has the right to earn, over a six-year period commencing with the effective date of the Agreement, up to an undivided 60% interest in the Project through earning an equity interest in the Company's special purpose subsidiary, Compañia Minera DosRios S.A. (or other company that the parties might agree to form to hold DosRios) (referred to as "DosRios"), which holds (or will hold) all of the concessions and applications for concession associated with the Project. To earn this interest, Antofagasta must fund DosRios with at least US$40 million, primarily for in-the-ground exploration expenditures on the Project, but which will include the preparation of a feasibility study completed in such detail as is normally provided to international lending institutions by a major mining company in connection with an application for project financing (a "Feasibility Study").

Antofagasta will earn this 60% interest in increments upon completion of four distinct phases of qualifying expenditures. In Phase I, upon funding DosRios with an initial US$5 million of qualifying expenditures for the Project within the first two years from the effective date of the Agreement, Antofagasta will earn 15% interest in DosRios. As part of this initial US$5 million (but subject to Ascendant obtaining title to two additional concessions as further discussed below), Antofagasta will reimburse Ascendant for expenses related to the Project totaling approximately US$450,000, which Ascendant incurred during the period between the effective date and November 1, 2006. In Phase II, Antofagasta may earn an additional 20% interest (35% in aggregate) in DosRios by funding DosRios with at least US$10 million in qualifying expenditures for the Project over a second two-year period.

As part of Phase III, Antofagasta must fund DosRios to complete a Feasibility Study on the Project to earn an additional 15% interest (50% in aggregate) in DosRios. If the Feasibility Study costs less than US$10 million, Antofagasta must pay DosRios, in cash, the difference between the actual cost of the Feasibility Study and US$10 million. This phase of funding must be completed by Antofagasta by the sixth anniversary of the effective date of the Agreement, but may be extended for a period of time that is reasonably necessary to complete the Feasibility Study.

For Phase IV, to earn its final 10% interest (60% in aggregate) in DosRios, Antofagasta must pay Ascendant US$15 million in cash within 30 days of completing Phase III or that may be extended for a period of time that is reasonably necessary to complete the Feasibility Study.

All programs and budgets for exploration work to be conducted under the phases will be approved by a technical committee comprised of two persons from each company. Throughout Phase I, Ascendant will be the operator (manager) and thereafter Antofagasta will be the operator. In all exploration phases, except as discussed below, Antofagasta will have the casting vote if the companies fail to agree on the programs and budgets.

Antofagasta has the right to terminate the Agreement at any time after the first twelve months of Phase 1 provided it has funded DosRios with at least US$1 million for qualifying expenditures on the Project. If, however, Antofagasta terminates its participation before earning the initial 15% interest, it will forfeit any and all ownership rights with no reimbursement of any sunk costs. If, after the completion of Phase I and prior to completing Phase IV, Antofagasta elects not to proceed to any subsequent phase, the Company will have the first right to repurchase the interest earned by Antofagasta for a sum equal to two times Antofagasta's funding of qualifying expenditures. Except for this right, if either of the parties decides to sell its interest in DosRios to a third party, the other party will have the first right of refusal to purchase this interest.

The Project, as defined in the Agreement, is comprised of eight separate mineral concession areas. The Company currently has title to the core area, being the 2,544 hectare Janeth 1 concession, and has applications (the "Applications") pending with the appropriate government entities for the other seven concessions. Antofagasta believes that two of these seven areas could be important to the future development of the Project (the "New Concessions") and, as such, has required in the Agreement that the Company obtain title to at least these two New Concessions. While these applications are in process, Antofagasta will proceed with the funding of exploration expenditures under Phase I. If Ascendant is unable, for whatever reason, to obtain title to the two New Concessions within eight months from November 1, 2006, Antofagasta will have the right to terminate the Agreement or, at its discretion, elect to go forward under the terms of the Agreement without the New Concessions. If Antofagasta terminates its participation because Ascendant is not able to obtain title to the New Concessions, the Company has agreed to reimburse Antofagasta for all expenditures it has funded on the Project to that date and Antofagasta will be relieved of its obligation to reimburse Ascendant for its previously incurred expenses related to the Project. If the Company is successful in acquiring title to the New Concessions, Antofagasta will be obligated to proceed with the Project as specified in the Agreement. Until the Company acquires title to the New Concessions, Ascendant will have the casting vote in the technical committee in decisions regarding the programs and budgets. The Company expects to receive title to the mining concessions that are subject to the applications within 4 to 5 months.

In signing the Agreement, Mr. Davis, the President and CEO of the Company, commented that, "The Company is excited to be partnered with one of the largest copper producing companies in South America. We appreciate the confidence that Antofagasta has shown in us and look forward to a long term relationship with them. I believe this partnership should serve as a clear signal to the rest of the mining world that Ecuador is emerging as a country of significance regarding mineral development."

Ascendant Copper Corporation

"Gerald E. (Gary) Davis"
President and CEO
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Company contact:
    Gary E. Davis
    (303) 824-0271

    10920 West Alameda Avenue, Suite 201
    Lakewood, CO 80226
    Tel: (303) 824-0271
    Fax: (720) 962-4648
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