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Mining News February 26, 2020 10:30:12 AM

New Gold Inc. Enters into Partnership Deal for New Afton Gold Mine

Paul Ploumis
ScrapMonster Author
The deal is expected to close by end-March this year, subject to approval under the company’s credit facility.

New Gold Inc. Enters into Partnership Deal for New Afton Gold Mine

SEATTLE (Scrap Monster): Canadian gold producer New Gold Inc. announced that it has entered into partnership with the Ontario Teachers' Pension Plan on the New Afton gold mine in western British Columbia.

Accordingly, Pension Plan will acquire 46% cash flow stake in the gold mine against cash payment of $300 million, which the gold miner will use to reduce its debt. Incidentally, the Toronto-based miner had reported long-term debts of $714.5 million as of 31st December, 2019.

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According to the partnership deal, the Ontario Teachers' Pension Plan has an option to enter into a 46% joint venture in the mine after a period of four years, or have the cash flow interest reduced to 42.5%. During this period of exercising the option, New Gold Inc. has an overriding buyback option to repurchase all of the Pension Plan’s interest in the mine.

Renaud Adams, President and CEO, New Gold expressed pleasure in partnering with Ontario Teachers’. The transformational deal provides the company with up-front cash, which in turn will be used to cut its debts and restructure its balance sheet, he said. Further, it also offers an opportunity to re-acquire 100% stake in New Afton at a later stage, Adams added.

The deal is expected to close by end-March this year, subject to approval under the company’s credit facility.

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