Sept 3 (Reuters) - Britain's Hochschild Mining

said on Wednesday it had signed a letter of intent to sell its

Chile-based Volcan gold project operator Tiernan Gold Corp to

Canada's Railtown Capital ( RLTWF ).

Hochschild has been facing hurdles in production in its Mara

Rosa mine in Brazil, which has significantly affected its

production and led to a slash in its annual production forecast.

The deal will be structured as a reverse takeover, with

Hochschild set to own about 87% of the combined company, which

will be listed on the Toronto Venture Exchange.

Shares of the precious metals miner were up 9.3% at 335.8

pence after the announcement, highest since February 2013.

The company had said in August 2023 it was exploring

strategic options for the project.