Toronto-listed New Gold will gain full free cash flow ownership of its New Afton copper/gold mine in British Columbia, following a $300-million transaction with Ontario Teachers’ Pension Plan.
The agreement sees New Gold acquire the remaining 19.9% free cash flow interest in New Afton, consolidating 100% of the operation’s life-of-mine cash flow.
New Gold said it would fund the transaction through a combination of cash on hand, borrowings from its revolving credit facility, and a $100-million gold prepayment financing.
“This is an excellent transaction allowing New Gold to fully consolidate the free cash flow exposure to one of Canada's highest quality gold/copper assets which we already own and operate,” said president and CEO Patrick Godin.
“This transaction allows us to grow in an exceptional location with no diligence or integration risk, and with no equity dilution to our shareholders.”
Godin added that with the ramp-up of the C-Zone progressing well, New Afton was “on the verge of exceptional production growth and cost improvement” that should lead to significant free cash flow generation.
“Our goal is to maximise this free cash flow generation at the mine, while continuing our exploration programme to extend mine life and create further value for our shareholders and stakeholders. We would also like to thank Ontario Teachers' for their support and partnership over the last five years."
The company highlighted the transaction’s benefits to shareholders, including increased exposure to free cash flow from one of Canada’s most attractive mines and the opportunity to build on the company’s existing block caving expertise and stakeholder relationships.
New Gold is allocating $17-million towards exploration in 2025, with a strong focus on the K-Zone, where drill results announced in September 2024 demonstrated significant potential to extend mine life and enhance the production profile.
The gold prepayment financing will see the company deliver a set number of gold ounces over a 12-month term in exchange for the upfront cash. Based on current pricing, this would represent about 8% of New Gold’s expected consolidated gold production during the period.
As part of the transaction, all agreements with Ontario Teachers’ regarding the free cash flow interest will be terminated, including its right to a $20-million change-of-control payment, had an acquisition of New Gold been announced before January 31, 2026.
The transaction is subject to customary conditions and is expected to close in early May. No shareholder approval is required.
