- Kingsgate Consolidated (KCN) signs non-binding letter of intent to sell gold-silver exploration and development project Nueva Esperanza for $69.1 million
- TSXV-listed TDG Gold is set to acquire the project, which is located in the Maricunga Belt of the Atacama Region of Northern Chile
- Payment is made up of cash and equity, and is subject to board approval, due diligence and TDG completing at least $37.5 million in financing
- KCN says a successful transaction would ensure its financial security while still giving exposure to the gold and silver markets through holdings in TDG
- Shares last traded 1.2 per cent higher at 87 cents each
Kingsgate (KCN) has signed a non-binding letter of intent to sell its gold-silver exploration and development project Nueva Esperanza for $69 million.
TSXV-listed TDG Gold is set to acquire the project, which is located in the Maricunga Belt of the Atacama Region of Northern Chile, subject to the parties entering into a legally binding agreement, as well as certain conditions being met.
The conditions include board approval, due diligence and TDG completing financing of at least C$35 million (A$37.5 million).
While TDG claims to be in the process of completing this financing, there is no guarantee the transaction will proceed.
Further, the agreement will be cancelled by either party if a binding definitive agreement hasn’t been signed off by July 16.
The deal — made up of a combination of cash and equity — is valued at $69.1 million.
Specifically, the deal includes a $26.8 million cash payment to Kingsgate upon completion of the transaction, $6.7 million within three months of completion of
a definitive feasibility study, $5.3 million or 10 million TDG shares issued at the point of a construction decision, plus two more payments at the one- and two-year production anniversaries.
Additionally, under the terms of the proposed transaction TDG will acquire all of the shares in Kingsgate’s Chilean subsidiary, Laguna Resources Chile Limitada, and Kingsgate will have a representative on the TDG board.
KCN believes if the deal goes ahead, it will ensure its financial security going forward, while still giving exposure to the gold and silver markets through its holdings in TDG.
The company also sees an opportunity to use the proceeds from the project towards refurbishing and restarting the Chatree Gold Mine in Thailand, operated by subsidiary Akara Resources, which was shutdown in 2016 due to allegations around potential corruption.
Kingsgate said a boosted balance sheet would provide an “excellent optionality” around ongoing negotiations with the Thai Government to achieve a negotiated settlement under the Thailand-Australia Free Trade Agreement (TAFTA).
Shares last traded 1.2 per cent higher at 87 cents each.