New Gold Acquires Cash Flow Stake in New Afton Gold Mine

SEATTLE (Scrap Monster):  Canadian gold miner New Gold Inc. announced that it has completed the strategic partnership with the Ontario Teachers’ Pension Plan (OTPP) in acquiring a 46% free cash flow interest in the New Afton gold mine in western British Columbia. The two parties had entered into a partnership deal towards end-February this year.

The upfront cash payment of $300 million will be used to reduce debt and boost financial flexibility.

According to the partnership deal, New Gold will retain full operational control over the mine, with a buyback option to re-purchase 100% interest in New Afton’s cash flow and cancel the partnership during the agreed period. The company also retains 100% exploration claims that lie outside of the mine’s permit area.

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Also, OTPP will have 46% interest in the mine for a period of four years. Upon completion of this period, it has an option to convert the interest into a 46% joint venture with New Gold Inc. Instead, it could continue to retain a free cash flow interest in the gold mine, but at a reduced rate of 42.5%.

The New Afton mine had produced 69,000 oz of gold in 2019. The ongoing C-zone development at the mine could extend its life to 2030.