New Gold (TSX: NGD) is spending big money in an effort to consolidate its ownership of the New Afton Mine, found in British Columbia. The company has reached an agreement with the Ontario Teachers’ Pension Plan to acquire their 19.9% interest in the mine, which will bring New Gold’s ownership to the 100% level.
The transaction will see New Gold pay $300 million in cash to secure whole ownership of the mine. The purchase is expected to be funded with a mix of cash on hand, funding from an existing revolving credit facility, and a new gold prepayment financing.
Details on the gold prepayment financing are slim, with New Gold indicating that the financing will raise an estimated $100 million for the company. It is unclear who will be financing the facility, or if terms have even been met with any party on the matter. The facility is expected to be in place for a 12 month term, which would see roughly 8% of annual production committed to it.
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The transaction is expected to close in early May 2025.
The arrangement with the Ontario Teachers Pension Plan originated back in 2020, when the Plan acquired a 46% free cash flow interest in the mine from New Gold. Under a 2024 arrangement, that interest was reduced to 19.9% before the changes announced today. New Afton last year produced 72,600 ounces of gold and 54.0 million pounds of copper, with those gold ounces produced at cost of $(289) an ounce on a by-product basis.
New Gold last traded at $4.27 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
