Kingsgate sells Bowdens in NSW to focus on more advanced Chile project

PERTH (miningweekly.com) – Gold miner Kingsgate Consolidated has inked a share purchase agreement with Silver Investment Holdings Australia (SIHA) to divest of an 85% interest in its Bowdens silver project, in New South Wales, for A$20-million.

The project had a resource of some 182-million ounces of silver equivalent and was located on some 610 ha within the Lachlan Fold belt.

Kingsgate CEO Greg Foulis said that given the current market environment, the company had to choose between two significant feasibility stage projects, and the decision was taken to focus on the more advanced Nueva Esperanza silver and gold project, in Chile.

“Following the successful divestment of the Challenger operation, we believe that the time is right to deal with the Bowdens silver project,” he added.

Kingsgate in October last year announced the sale of its Challenger gold mine, in South Australia, to a 50:50 joint venture (JV) between ASX-listed WPG Resources and Diversified Minerals. The transaction was wrapped up this week, with Challenger set to be under new management from March 15.

In return for Challenger, Kingsgate received A$1-million, to be paid in equal quarterly instalments from the start of mill operations by the JV partners, as well as a A$25/oz royalty on the Challenger south south west zone, which would take effect after the first 30 000 oz of production.

Under the terms of the Bowdens transaction, SIHA would complete a due diligence on the project within the next 30 days, and on the completion of the transaction, the two companies would form a JV with Kingsgate retaining a 15% free carried interest in the project, to the point that SIHA met a number of criteria, including the lodgment of an environmental-impact statement, a A$4-million exploration target and the completion of a bankable feasibility study.

Foulis noted that the A$20-million sale proceeds raised would enhance the company’s balance sheet flexibility.