Risk Factors

An investment in the securities of Ascendant is speculative and involves significant risks which should be carefully considered by prospective investors before purchasing such securities. Ascendant is an exploration and development company with no proven ore body and there can be no assurance the Ascendant will be able to bring its mineral projects into commercial production, or, if brought into production, that the projects will be profitable for Ascendant.

In addition to the other information set forth elsewhere in this prospectus, prospective investors should carefully review the following risk factors:

Exploration Programs

At this time, Ascendant has completed no independent drilling on  the Junin property, although a significant amount of mapping, sampling, and drilling has previously been done by other companies with the majority of the original data and interpretation of this work being available to Ascendant. While initial exploration activities performed in the project areas indicate positive mineralization, further and more extensive exploration activities may establish that this area does  not contain economically viable deposits. Presently the Junin property is classified as an inferred mineral resource which does not provide information regarding the economics of the property until further study has been concluded. For this reason, potential investors should be aware that a significant amount of additional exploration is required to determine Ascendant’s ability to successfully mine the Junin property and generate positive cash flow. The Chaucha property is presently classified as a geologic mineral property and exploration will be required to determine the possibility of this project’s economic viability.

Development and Mining Operations

Until such time as significantly more exploration work is conducted on each the Junin and Chaucha properties, including the completion, if deemed appropriate, of a feasibility study that demonstrates the commercial viability of the project, no mining activities will be undertaken. Should, at some future date, mining operations be commenced, these will involve a high degree of risk normally encountered in the development and production of base metals, including, but not limited to, unanticipated variations in resource grade and other geological problems, water conditions, surface or underground conditions, metallurgical and other processing problems, mechanical equipment performance problems, the unavailability of materials and equipment, accidents, labour force and transportation disruptions, unanticipated transportation costs, damage to life or property, environmental damage and possible legal liability.

Challenges to Title to the Junin Property

Ascendant believes that it has good title to both the Junin and Chaucha properties. Ascendant takes all title challenges to its concessions seriously and has expended much time and effort in continually reviewing its title, especially as it pertains to the Junin concessions.

Certain government officials within the Cotacachi Canton, in which the Junin property is located, have twice challenged the legality of the Junin title. In May 2003, Cotacachi Canton authorities requested that an administrative act issued on December 20, 2002 by which the Ministry of Energy and Mines through the Mining Regional Director of Pichincha granted the Golden 1 and Golden 2 concessions (the “Golden Administrative Act”) be declared unconstitutional. The authorities asserted that the administrative act violated the rights contained in Article 88 of the Constitution of Ecuador as well as Article 11 of the Mining Law. The action was forwarded to the Constitutional Court. In December 2003, this court rejected the action filed by the Cotacachi Canton. This ruling does not need to be clarified or supplemented because it resolved the entire matter concerning the claim.

Although the decision of the Constitutional Court in December 2003 appeared determinative with respect to the validity of the Golden Administrative Act granting the Golden 1 and Golden 2 concessions, in May 2005 the Mayor of Cotacachi Canton filed an extraordinary administrative claim (recurso de revisión) before the Ministry of Energy and Mines requesting the Minister to declare the nullity of the Golden Administrative Act. On July 12, 2005, the Minister of Energy and Mines answered the claim refraining from resolving the special request for review filed by the Mayor and Attorney of the Municipality of Cotacachi, because the Minister considered that he does not have jurisdiction in the matter. Should, however, any challenge of title ultimately prevail, development of the Junin property could be delayed or all further development activities could be halted.

Uncertainties Relating to Inferred Mineral Resources

Inferred mineral resources that are not mineral reserves do not have demonstrated economic viability. Ascendant’s preliminary assessment of the Junin project is based on inferred mineral resources. Due to the uncertainty which may attach to inferred mineral resources, there is no assurance that the inferred mineral resources will be upgraded to measured and indicated mineral resources or proven and probable mineral reserves as a result of continued exploration. The assessments and analyses contained in this prospectus are preliminary in nature and include inferred mineral resources that are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves. There is no certainty that these assessments and analyses will be realized.

Ascendant Has No History of Profitable Operations

From the date of incorporation in British Columbia, Ascendant has had no history of positive income from operations. Moreover, because Ascendant is still in the exploratory phase it is expected that Ascendant will generate net losses for the foreseeable future. There is no guarantee that Ascendant will ever be able to generate a positive net income. Opposition by Environmental and Other Non-Governmental Groups Environmental groups and other non-governmental organizations, have opposed exploration, development and mining of the Junin property in the past and continue to oppose Ascendant’s proposed operations. Their oppositional activities could lead to delays in exploring and developing the Junin property. See “Description of Business - Environmental and Community Response to the Junin Project”, for more discussion.

Environmental Concerns

General

Ascendant operates in an industry that is subject to the application of numerous laws and regulations, as well as internal and external conditions and community expectations that are designed to protect the environment. Such regulatory provisions and expectations are established to protect the quality of land, water, and air, and to provide for cleanup and reclamation of lands that may be impacted by exploration and mining activities. Environmental legislation also provides for restrictions and prohibitions on spills, releases or emissions of various substances from operations. Mismanagement of the environment or failure to comply with environmental regulations could result in a cessation of operations and potential liabilities. Ascendant’s current or future operations, including development activities, are subject to these environmental regulations which may make operations not economically viable or prohibit them altogether. Ascendant is subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products that could occur as a result of its mineral exploration, development and production.

Concerns Specific to Ascendant's Projects in Ecuador

Mining in protected areas and in archaeological sites is prohibited by the federal government of Ecuador. It is the responsibility of local and national governments to oversee responsible mining practices, including exploration. Ascendant has an internal policy of not exploring or mining in areas occupied by primary virgin forests or in national or state protected forests. These practices are in accordance with international environmental standards, in the interest of the local inhabitants, and to protect the environment to the highest possible degree.

Concern regarding exploration and potential development of a large mining operation in the Junin area stems from the proximity of the deposit to the Cotacachi-Cayapas Ecological Reserve (the “Reserve”), which is often referred to as a bio-diversified hotspot. The Reserve lies on the northern slope and on the opposite side of the Toisan mountain range from the Junin concessions. In defining the boundary of its northernmost concession, Ascendant exercised care in locating it so as to provide a buffer zone to assist in protecting the Reserve from the impact of its potential mining activities. The identified Junin deposit itself is located over 6 kilometres from the nearest point of the Reserve and down the southern (opposite) side of the top of Toisan Range which marks its boundary.

In 1996 the Japan International Cooperation Agency (JICA) and Bishi Metals (see “Junin Property” – “History”), as part of its work program, prepared the 1996 Environmental Report on the Junin property. Although JICA and Bishi Metals did not submit this report to the proper governmental agencies for review, it was submitted by Ascendant in October 2004 to the Ministry of Energy and Mines. The Ministry, by a letter dated October 22, 2004, found that the 1996 Report did not comply with all of the required elements for an environmental impact assessment. The 1996 Environmental Report does contain information that would be useful as part of the baseline information in the preparation of future environmental studies; however, the 1996 Environmental Report is nine years out of date and will need to be updated to reflect the current circumstances.

Although out-of-date, various environmental groups have relied upon certain conclusions contained in the 1996 Environmental Report to support their objective of delaying development of the Junin property. Some of the findings of the 1996 Environmental Report are as follows:

• The 1996 Environmental Report estimated that four communities and over 100 families would need to be relocated. While potential mining activities may require the relocation of some people, Ascendant believes it is unlikely any relocation will involve the number of families suggested by the 1996 Environmental Report. The extent of any such relocation is currently speculative as Ascendant’s immediate plans in the Junin area involve the exploration for ore and not mine development.
• The 1996 Environmental Report suggests that the general area in which the concessions are located is rich in fauna; however, big mammals are scarce and disappearing due to continuing farming and hunting activities. Similarly, there are few fish in the area due to existing poor water quality influenced by natural oxidation of existing mineralization. The 1996 Environmental Report also suggests that fauna in the area will be further impacted due to massive deforestation and noise resulting from mining operations. Ascendant questions the validity of this conclusion in relation to its particular plans in the Junin area as no known mineralization within the Junin concessions is nearer than 6 kilometres to the Cotacachi-Cayapas Reserve, and the northernmost concession boundary has been reconfigured so that it maintains separation of at least one kilometre at all points.
• The 1996 Environmental Report noted that massive deforestation will occur as result of mining within the Junin concessions. Ascendant questions the validity of this conclusion as much of the concession area is overlain by surface rights and has been subject to years of human activity including logging. Upon completion of the Offering, Ascendant intends to use some of the available funds to initiate a reforestation program on parts of the surface land owned by it, particularly on that surface land owned by Ascendant within the adjoining Chontal forest that has been impacted by logging. Ascendant’s objective is to reforest a minimum of two hectares for every one hectare that is disturbed as a result of exploration and mining on the Junin concessions. The 1996 Environmental Report also concluded that such massive deforestation would cause desertification of the surrounding area. Ascendant also questions the validity of this conclusion. At this time Ascendant has limited data on which to base an informed decision regarding these matters, but these matters will be addressed in detail in future environmental impact studies completed on the Junin property.
• The 1996 Environmental Report noted that several archaeological ruins have been discovered along the Intag River with these ruins identified as associated with the Imbara Civilization which existed between 1500 B.C. and 500 A.D. The Intag River lays outside the boundaries of the Junin concessions with the nearest point being over one kilometre from the southeastern-most point of Ascendant’s southern concession (Magdalena 1) and over nine kilometres from the known mineralization on the Junin concessions. If similar archaeological ruins or remains are identified within the concession areas, Ascendant’s development plans would have to be altered as mining in archaeological sites is prohibited by the federal government of Ecuador.
• The 1996 Environmental Report suggests that dozens of mammals and reptiles would be impacted by mining in the Junin area, including more that a dozen species of mammals and birds threatened with extinction. At this time, Ascendant has no other information or documentation regarding the diversity of fauna in the area but as part of its proposed environmental studies additional informationwill be collected regarding all species of fauna and flora on the concessions.

Commodity Price Fluctuations

The price of commodities varies on a daily basis but long term averages are the best method of estimating future prices. However, price volatility could have dramatic effects on future cash flows, profitability and the ability of Ascendant to execute it business plan.

Currency Fluctuations and Foreign Exchange

Ascendant raises its equity in Canadian dollars and maintains the majority of its accounts in Canadian dollars. Ascendant’s current exploration and property acquisition commitments are denominated primarily in United States dollars as are the majority of general and administrative expenses. In 2000, Ecuador converted as its base currency from the sucre to the United States dollar. In addition to risks associated with the Canadian dollar/United States dollar exchange rate, there is no guarantee that Ecuador will continue to use the United States dollar as its base currency.

Grade Fluctuations

The quantity of a given mineral tends to vary in all types of deposits. Due to the nature of drilling and building reserves, small variances both positive and negative must be anticipated. Inferred resources are estimated and must account for large sections of ore bodies that are believed to contain what the average overall results demonstrate.

Operating Cost Fluctuations

Although Ascendant believes it has consistently adopted conservative assumptions in its estimations, no assurances can be given that such assumptions will prove to be accurate, and, therefore, the operating costs of Ascendant may prove to be higher or lower than those estimated.

Competition

With the enactment of the Mining Law in 2000 and establishment of more favourable general business conditions in Ecuador, numerous companies are returning to the country to participate in the exploration and development of mineral properties. Many of these companies have substantially greater technical and financial resources than Ascendant. As a result, Ascendant is faced with heightened competition in the acquisition of properties with the potential for the commercial recovery of base and precious metals in Ecuador.

Market Conditions

Copper is considered a semi-liquid asset with a vast international multi-billion dollar market. The international market for copper sales is dependent on the spot copper price which fluctuates on a daily basis. Ascendant’s future production of base and precious metals will have to be sold in the international market place at prevailing prices. To sustain profitability, Ascendant needs to produce metals at a lower operating cost than that of international market prices for the commodity.

Management

It is expected that operations will grow rapidly in the future. Ascendant will be recruiting further management to oversee the anticipated growth of operations, and the inability to source capable management could negatively affect operations. In addition, Ascendant currently has a small executive management group, which is deemed sufficient for Ascendant’s present stage of development. Ascendant’s development and growth will continue to depend on efforts of this executive management group and the loss of members of this group could have an adverse effect on Ascendant, its business, and its ability to advance its projects.

Additional Capital Needs

There is no guarantee that Ascendant will be able to raise future capital, source capital in adequate amounts, or secure capital on satisfactory terms to fulfil the exploratory program designed by Ascendant’s management.

Market for the Common Shares

There is no existing market for the Common Shares of Ascendant and no assurance can be given that a market will develop for the Common Shares or, if such markets develop, that they will continue. Accordingly, investors may be unable to realize their investment in the Common Shares.

Dependence on Key Personnel

Ascendant’s success depends upon the continued efforts of its senior management team and its technical personnel. Such employees may voluntarily terminate their employment with Ascendant at any time. Should this occur, Ascendant may be negatively affected.

Enforcement of Certain Civil Liabilities

All of the directors of Ascendant and substantially all of their assets and those of Ascendant are located outside of Canada. It may not be possible for purchasers of securities being qualified for distribution under this prospectus to effect service of process within Canada upon directors who reside outside of Canada and there may also be difficulty in enforcing against such persons, or against Ascendant’s assets, judgments obtained in Canadian courts predicated upon the provisions of applicable Canadian provincial securities legislation.

Political and Economic Risks

Ascendant’s main assets and operations are in Ecuador and are therefore subject to political, economic, and other uncertainties, including the risks of war, expropriation, nationalization, renegotiation or nullification of existing agreements, changes in taxation policies, currency availability, and changing political conditions. There remains the possibility that future political actions may adversely affect Ascendant. Among other things, significant changes in the Mining Law of Ecuador or any other national legal body of regulations could negatively affect Ascendant’s short and long-term operations.

Ecuador has recently been experiencing political unrest since President Gutiérrez and his congressional allies dismissed 27 of the Supreme Court’s 31 justices in December 2004, and replaced them with their own political allies. Facing mounting protests, on April 15, 2005, Gutiérrez fired the entire Supreme Court and declared a state of emergency. Ecuador’s Congress subsequently voted by a majority of 60 of its 100 members to dismiss President Gutiérrez from office and Vice President, Alfredo Palacio, was sworn in as interim president. Because of President Palacio’s stated pro-investment, pro-development stand, Ascendant does not anticipate any significant impact on its activities in the country.

Regulatory Concerns

Ascendant and its operation are and will be subject to a number of Ecuadorian statutory and regulatory standards and required and desirable approvals, including those in relation to environmental and mining laws. Some of the permits and approvals to be required for mining purposes have not yet been obtained, and some of them may not be obtainable until the commencement of actual mining or related activities. Delay in receipt of or failure to obtain these permits or approvals or to satisfy any of these conditions could negatively affect Ascendant’s operations. In addition, the adoption of new laws, policies and regulations, which modify the present regulatory environment could negatively affect Ascendant’s operations.

Potential Legal Disputes

Neither Ascendant nor any of its subsidiaries is the subject of pending legal claims or involved in any legal actions or claims. However, the mining industry often involves the division of ownership interests attached to a certain parcel of land. Mining rights are sometimes held separately from surface rights, and the diverse ownership of the distinctive rights may be held by parties with adverse interests. For this reason, potential investors should view the possibility of litigation costs to be a risk associated with an investment in Ascendant (see “Risk Factors - Challenges to Title to the Junin Property”) .