The Kingsgate Consolidated Limited (ASX: KCN) share price has sunk more than 5% in early trade. Shares in the company have taken a dive after Kingsgate announced the potential sale of its Nueva Esperanza project earlier today.
Let's take a closer look at the company's announcement and how this could influence the Kingsgate share price.
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Kingsgate announces potential sale of Nueva Esperanza
Earlier today, Kingsgate announced that the company signed a non-binding Letter of Intent (LOI) for the acquisition of its Nueva Esperanza development project.
The LOI for and with TDG Gold Corp outlined terms for the acquisition of the gold-silver development project located in Northern Chile.
In exchange for 100% ownership of the project, TDG will pay C$25 million in cash upon completion of the transaction. In addition, Kingsgate will be issued 14% of TDG's outstanding common shares. C$6.25 million is also payable to Kingsgate within 3 months of completion of a Definitive Feasibility Study.
Kingsgate noted that the total value of the deal is approximately A$69.1 million that will allow the company to strengthen its balance sheet. In addition, the company will retain ongoing exposure to the gold and silver markets via its holdings in TDG.
Kingsgate noted that the transaction is subject to the parties entering into a legally binding agreement. In addition, both company's must meet certain conditions such as board approval, due diligence and completion of financing
More on Kingsgate
Kingsgate is an Australian listed gold exploration, development and mining company. In addition to its Nueva Esperanza development project, Kingsgate also owns the Chatree Gold Mine in central Thailand.
The company's Nueva Esperanza project has three mining areas with permits for development and associated water rights. In July 2020, the Nueva Esperanza project was granted Environmental Impact Assessment approval allowing the pre-development, construction and operation of the project.
Kingsgate noted that proceeds from the project could go towards refurbishing and restarting its Chatree Gold Mine in Thailand.
At the time of writing, the Kingsgate share price has recovered slightly and is trading around 2.5% lower for the day at around 85 cents per share.
