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New Gold Increases Exposure in New Afton Copper/Gold Mine to 80% and Launches US$150 Million Bought Deal Financing
New GoldNew Gold(US:NGD) Newsfilterยท2024-05-13 20:14

Core Viewpoint - New Gold Inc. has entered into a strategic partnership agreement with Ontario Teachers' Pension Plan to increase its effective free cash flow interest in the New Afton Mine to 80.1% through a cash payment of $255 million, funded by cash on hand, borrowings, and equity financing [1][2]. Group 1: Transaction Details - Upon closing, Ontario Teachers' free cash flow interest in New Afton will decrease from 46.0% to 19.9% [2]. - New Gold will fund the cash payment through existing resources and a bought deal equity financing of approximately $150 million [2][5]. - The closing of the transaction is expected by the end of May 2024, following the completion of the equity offering [13]. Group 2: Anticipated Benefits - The transaction is expected to enhance New Gold's free cash flow exposure in a copper and gold asset already owned and operated by the company [4]. - New Afton is projected to experience significant production growth and cost improvements, leading to increased free cash flow generation [4][9]. - The transaction is described as accretive and disciplined, aiming to deliver a meaningful increase in attributable life-of-mine cash flow while maintaining financial strength [9]. Group 3: Equity Financing - New Gold has agreed to sell 87,300,000 Common Shares at a price of $1.72 per share, generating gross proceeds of approximately $150 million [5]. - An over-allotment option has been granted to underwriters to purchase an additional 15% of the shares issued [6]. - The net proceeds from the offering will be used to fund part of the cash payment for the transaction [6]. Group 4: Operational Insights - The C-Zone project at New Afton is on track to achieve commercial production in the second half of 2024, contributing to free cash flow growth [9]. - New Gold has developed extensive technical and operational expertise at New Afton, allowing for growth without increasing general and administrative expenses [9]. - The renewed focus on exploration activities is expected to enhance the production profile and extend the mine's life [9][14].