TDG Gold (TSX-V:TDG) expects to close the sale of a 51% Aurora West stake to Freeport-McMoRan (NYSE:FCX) following a December reorganisation.
The company has signed a binding joint venture (JV) implementation and purchase agreement with Freeport-McMoRan Mineral Properties Canada and its wholly owned subsidiary, TDG BC Assets.
Under the terms, Freeport will pay C$110 million ($113 million) in cash at closing for the stake in the Aurora West Project in the Toodoggone mining district of British Columbia, Canada.
TDG will retain its Shasta Gold-Silver Project and Baker Complex, which are excluded from the transaction.
CEO Fletcher Morgan says the sale supports the company’s strategy of exploring methodically, monetising assets, and recycling capital.
“On closing, the C$110 million cash payment strengthens our treasury on a non-dilutive basis and [improves] our ability to advance [the] Shasta [Project],” Morgan says.
“Our retained interest in the Aurora West property through the joint venture also gives our shareholders continued exposure to its upside potential.
“Our agreement provides a framework to advance Aurora West and cooperate more broadly with Freeport, while surfacing operational synergies from its proximity to our flagship Shasta Project.”
Deal structure
TDG will first assign its Aurora West rights to two new BC corporations — ClaimsCo, which holds two specified mineral claims, and Aurora West JVCo, which holds the balance of the project. Freeport will then buy 51% of the shares in each, while TDG keeps 49%.
The parties will also enter a shareholders agreement covering governance and funding, alongside a road use agreement giving both companies access over roads on TDG’s retained mineral rights.
Under an earn-in option, Freeport can lift its stake in Aurora West JVCo by 24% to 75%, and in ClaimsCo by 49% to 100%. To do so, it must sole-fund a further C$80 million of exploration expenditure on the Aurora West JVCo properties and pay TDG C$40 million for the remaining ClaimsCo shares.
Freeport will commit to funding C$30 million of that expenditure within three years of closing, including at least C$15 million in the first two years. TDG will not make any contribution during the earn-in period.
If Freeport exercises the option, TDG will hold 25% of Aurora West JVCo and a 2% net smelter return (NSR) royalty over the two ClaimsCo claims.
If Freeport stops sole-funding after the committed amount, or the option period expires, it will keep its 51% interest and pay any unfunded portion of the committed amount. The parties will then fund each JV company pro rata, subject to customary dilution provisions.
Based on the deal arrangement, a shareholder diluted to 10% or less will surrender its shares for a 2% NSR royalty, subject to certain deductions. Freeport can then repurchase half of that royalty for C$30 million.
The arm’s-length transaction needs TSX Venture Exchange approval and other customary conditions.
TDG expects to complete the reorganisation in December 2026, with closing anticipated five business days after the conditions are satisfied or waived. The company says it does not expect to need shareholder approval.
TDG Gold is a mineral explorer focused on advancing its gold, silver, and copper projects in British Columbia.
Write to Paula Fabe at Mining.com.au
