PERTH (miningweekly.com) – ASX-listed Kingsgate Consolidated will allow TSX-V listed TDG Gold Corporation to extend the completion of its financing to fund the acquisition of the Nueva Esperanza project, in Chile.

The two companies in October signed a definitive agreement under which Kingsgate will be paid C$25-million on the completion of the transaction, and the company will be issued 14% of TDG’s outstanding common shares, calculated on a post-closing basis.

A further C$6.25-million is payable to Kingsgate within three months of completion of a definitive feasibility study, and a payment of C$5-million or 10-million TDG shares would be due to Kingsgate on a construction decision.

Furthermore, the company would be paid either C$5-million or 10-million in TDG shares at the one year production anniversary, and a further payment of C$8.75-million at the two year production anniversary.

Kingsgate will also have a representative on the TDG board so long as Kingsgate owns 10% or more of the issued and outstanding shares, and for 24 months following closing of the agreement, Kingsgate will have the right to participate in the issuance of securities offerings to maintain its percentage interest and/or to increase its percentage ownership interest up to 19.9% of the outstanding shares of TDG.

The transaction is subject to completion by TDG of raising finance of at least C$35-million.

Kingsgate on Tuesday told shareholders that TDG Gold has requested an extension to the end of January next year to complete its financing for the acquisition.

In consideration for this, TDG has agreed to increase the non-refundable deposit by C$1-million, to C$1.5-million, and has agreed to make an initial payment of C$500 000 by November 5, with the balance due by the end of November.

TDG will also reimburse Kingsgate for holding costs incurred at Nueva Esperanza as a result of the extension at the time of the first C$25-million payment under the agreement. The costs are estimated to be some $500 000.

The Nueva Esperanza project is some 140 km northeast of the city of Copiapo, which is a regional mining centre. It encompasses three mining areas with permits for development and comes with associated water rights. Kingsgate in 2016 published a prefeasibility study which found that the project could produce some 91 000 oz/y of gold equivalent over a mine life of 11.6 years, based on an ore reserve of 1.1-million ounces.