Sterling outcome as Kingsgate sells 85% interest in Bowdens Silver Project for A$20M
Experienced Pacific Rim gold producer, Kingsgate Consolidated Limited (ASX:KCN) is pleased to announce the execution of a Share Purchase Agreement (“SPA”) to sell an effective 85% strategic interest in the Bowdens Silver Project, located near Mudgee in central NSW, to Silver Investment Holdings Australia Limited (“SIHA”).
Kingsgate Chief Executive Officer, Mr Greg Foulis said “This deal is another key part of a strategic portfolio re-alignment for Kingsgate.”
“Following the successful divestment of the Challenger Operation, we believe that the time is right to deal with the Bowdens Silver Project.”
The terms of the transaction are as follows:
- SIHA, subject to completing Due Diligence within the next 30 days, will acquire 100% of the capital of Kingsgate Bowdens Pty Limited;
- On completion of the acquisition, Kingsgate and SIHA will immediately be associated in an unincorporated Joint Venture with Kingsgate retaining an initial 15% Free Carried Interest (to the point that SIHA meets certain criteria including lodgement of an Environmental Impact Statement, exploration expenditure of A$4 million and completion of a Bankable Feasibility Study);
- Kingsgate will receive a total payment of A$20 million cash for the 85% interest in the project of which $200,000 has been received by way of a non- refundable deposit;
- A further A$1.8 million will be paid upon completion of the Due Diligence; and
- The remaining A$18 million will be paid by SIHA at deal completion, which is scheduled to occur by 30 June 2016.
In the current market environment, Kingsgate had to choose between two significant feasibility stage projects and the choice was made to focus on the more advanced Nueva Esperanza Project in Chile.
The A$20 million sale proceeds, which equate to approximately $0.08 per Kingsgate share, will enhance balance sheet flexibility.
Mr Anthony McClure, of SIHA, said “We are thrilled to have been able to execute this transaction with Kingsgate.”
“We’ve been evaluating the project for almost twelve months and have worked closely with Kingsgate to reach this agreement.”
Mr McClure added, “We very much look forward to completing the transaction and working alongside the Kingsgate team in the Joint Venture to realise the value of this unique asset.”
SIHA is a public unlisted company incorporated as a New South Wales specific resources group, with particular emphasis on silver and related minerals. The group delivers considerable expertise across all aspects of exploration, development and financing of resource projects.
The deal is a positive outcome for the Bowdens Silver Project, which will see a re-invigoration of work on both regional exploration and the already well advanced Environmental Impact Statement.
SIHA as the Project lead, with support from Kingsgate, is looking forward to briefing key stakeholders, including community and government, on proposed work programs.
Greg Foulis
Chief Executive Officer
Challenger Gold Mine Sale Agreement Completed
Experienced Pacific Rim gold producer, Kingsgate Consolidated Limited (ASX:KCN) is pleased to announce that the Sale Agreement to sell its 100% owned Challenger Gold Mine in South Australia to a 50/50 Joint Venture between Diversified Minerals Pty Ltd (a 100% owned associate of the PYBAR Group) and WPG Resources Limited has been completed.
The Agreement allows for a management hand over to take place on 15 March 2016.
This is a modest extension to the previously announced hand over date of the end of February 2016, and will allow for an orderly completion of all site activities by Kingsgate, and a smooth transition to the new owners.
Kingsgate Chief Executive Officer, Mr Greg Foulis said “The sale of Challenger is a strategic step and allows Kingsgate to focus on core assets, namely the Chatree Operation in Thailand and the Nueva Esperanza Project in Chile.”
Kingsgate maintains previous guidance for Challenger with attributable production of approximately 10,000 ounces of gold for the March 2016 quarter.
Greg Foulis
Chief Executive Officer
December 2015 Quarterly Report
Highlights
- Group quarterly gold production of 47,307 ounces at a total cash cost of US$832 per ounce generated solid cashflow, delivering a 26% operating margin against an average gold price achieved of US$1,122 per ounce.
- Both Chatree and Challenger operations remain within FY16 production guidance, with a stronger second half expected.
- Chatree quarterly gold production of 28,257 ounces at a total cash cost of US$854 per ounce.
- Challenger quarterly gold production of 19,050 ounces at a total cash cost of US$799 per ounce was a very strong performance despite two separate mill down-times.
- At Nueva Esperanza, the Spring Phase 1 drilling campaign commenced during the quarter delivering exciting gold intersections in the new project area of Carachitas which is within two kilometres of the proposed plant site.
- A total of six holes were drilled on three section lines at 50 metre intervals following up from a single hole drilled previously which also intersected gold mineralisation. All six holes returned significant gold intersections from shallow depths less than 20 metres below the natural surface.
- The best of the new intersections was: 11 metres at 4.90g/t gold from 14 metres in drillhole ECCR-02.
- The FY16 objective remains unchanged with the primary goal to continue to define and drill gold targets on the ~45 square kilometre alteration system with the aim of increasing the 1.9Moz AuEq Nueva Esperanza resource.
- Kingsgate maintains a healthy cash position with cash and bullion/doré totaling A$55.5 million and is confident that its second half year cashflow will support all of its financing and debt activities.
Group Operating Summary
Operation | Production (ounces) |
Total Cash Costs (US$/ounce) |
---|---|---|
Chatree | 28,257 | 854 |
Challenger* | 19,050 | 799 |
Total | 47,307 | 832 |
New Gold discovery at Nueva Esperanza Project, Chile
Kingsgate Consolidated (ASX:KCN) is pleased to announce that preliminary assay results from a recently completed reverse circulation drilling campaign at Nueva Esperanza returned significant gold intersections in the new project area of Carachita, within 2 kilometres of the proposed plant site.
A total of five holes were drilled in three sections at 50 metres intervals following up from a single hole drilled previously that also intersected gold mineralisation. All five holes returned significant gold intersections from shallow depths less than 20 metres below the natural surface.
Best of the new intersections was:
- 11 metres at 4.91g/t gold from 14 metres in hole ECCR-02,
The other four holes were:
- 23 metres at 2.12g/t gold from 13 metres in hole ECCR-03,
- 11 metres at 1.50g/t gold from 20 metres in hole ECCR-04,
- 13 metres at 1.48g/t gold from 19 metres in hole ECCR-01,
- 12 metres at 0.86g/t gold from 26 metres in hole ECCR-05.
These gold intercepts that also include some silver mineralisation are considered significant in an area that was previously tested with only a single hole that returned 9 metres at 2.93g/t gold from 18 metres as part of a regional condemnation drilling program.
The Carachita prospect remains open to the surface, at depth and along strike to the east and west.
Kingsgate CEO, Greg Foulis, said the shallow nature of the gold mineralisation and proximity to the proposed processing plant has potential to add value to the project and support the prospectivity of the Nueva Esperanza property.
“Nueva Esperanza comprises three well-defined silver and gold epithermal deposits: Arqueros, Chimberos and Teterita and numerous prospects within a 45 square kilometre alteration system”, he said.
The present results are part of an initial drilling campaign of 2,000 metres with further drilling planned for the March 2016 Quarter.
Kingsgate will progress technical studies and permitting during 2016 in parallel with exploration.