PERTH (miningweekly.com) – ASX-listed Kingsgate Consolidated has struck a deal with TSX-listed TDG Gold Corporation to divest of its Nueva Esperanza project, in Chile.
The definitive agreement followed the signing of a letter of intent in June this year.
Under the terms of the transaction, 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, and if completion extends beyond the end of October 2021, TDG will pay Kingsgate a non-refundable deposit of C$500 000. This deposit will be deducted from the initial C$25-million cash payment on final completion.
The acquisition is also subject to TSX-V review and approval.
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.