The only way for Britain to keep Hong Kong was to keep the New Territories, the only way to keep the New Territories was if Britain owned it instead of merely leasing it for 100 years. There are two PODs for that to happen, the first is when Britain first leased it from China. The second was during the Sino-Japanese War. There was a brief period in 1938 when Britain considered buying the New Territories from Chiang Kai-Shek in return for hard cash that the Chinese government would need to buy supplies. That deal ended up not happening for various reasons, and after Canton fell it all possibility of it ended. If China and Britain did come to a deal, then Britain would own the New Territories outright, and there would not be any need for Thatacher to negotiate with the PRC.