- Kingsgate Consolidated (KCN) inks a definitive agreement for the sale of its Nueva Esperanza Project in Chile to TDG Gold
- Assuming an AUD-CAD exchange rate of A$1.00 equal to C$0.93, Kingsgate will receive roughly A$69.1 million for the sale of the project
- Should Kingsgate maintain a stake in TDG in excess of 10 per cent, it will have the right to nominate one representative to TDG’s board
- Completion of the sale is expected near the end of November, and is subject to TDG raising C$35 million (A$38.11 million) in financing
- Shares in Kingsgate Consolidated are up 3.57 per cent to $1.67 at 11:44 am AEDT
Following a letter of intent signed in June, Kingsgate Consolidated (KCN) has inked a definitive agreement for the sale of its Nueva Esperanza Project in Chile to TDG Gold.
Upon completion of the sale — expected near the end of November — the TSX Venture Exchange-listed company will pay Kingsgate C$25 million (A$27.22 million) and issue 14 per cent of its outstanding shares on a post-closing basis.
A further C$6.25 million (A$6.81 million) is payable to Kingsgate within three months of the completion of a Definitive Feasibility Study, with either C$5 million (A$5.44 million) or 10 million TDG shares to be issued once a construction decision is reached for Nueva Esperanza.
Another C$5 million (A$5.44 million) or 10 million TDG shares will be issued on the first anniversary of production, and a final payment of C$8.75 million (A$9.53 million) on the second.
For a period of two years after the transaction, Kingsgate will also have the right to participate in future securities offerings in order to maintain or increase its stake in TDG, up to a cap of 19.9 per cent.
As long as Kingsgate holds a stake in excess of 10 per cent, the company will have the right to nominate a representative to TDG’s board, and has elected Peter Hayman — an Australian resident in North America — to fill the position. A graduate in business finance from the Swinburne University of Technology and the Australian Institute of Company Directors, Mr Hayman has more than 40 years’ experience in the mining and resources sector, both as an institutional stockbroker and — for the past 15 years — as an independent consultant.
Completion of the transaction remains subject only to TDG raising C$35 million (A$38.11 million) in financing. Should that extend beyond October 31, 2021, TDG will be required to pay Kingsgate a non-refundable deposit of C$500,000 (A$544,464), which will be deducted from the initial C$25 million (A$27.22 million) payment upon completion.
Assuming an AUD-CAD exchange rate of A$1.00 equal to C$0.93, Kingsgate will receive a total of roughly A$69.1 million for the sale of Nueva Esperanza, which the company said in June would be used strengthen its balance sheet and retain ongoing exposure to the gold and silver markets.
“This may include the use of proceeds from Nueva Esperanza to refurbish and restart the Chatree Gold Mine if a negotiated settlement can be achieved and all licences and permits granted,” the company said.
Located in the northern half of the Maricunga Belt, 140 kilometres northeast of Copiapo, the Nueva Esperanza Project was granted Environmental Impact Assessment (EIA) approval in July last year, allowing the pre-development, construction and operation of the project.
Shares in Kingsgate Consolidated are up 3.57 per cent to $1.67 at 11:44 am AEDT.