New Gold Buying More New Gold Announces 14.9% Investment in Harte Gold
March 19, 2021-- New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE American: NGD) announced today that it has agreed to purchase 154,940,153 common shares of Harte Gold Corp. (TSX: HRT / OTC: HRTFF / Frankfurt: H4O) (“Harte Gold”) pursuant to a private placement at a price of $0.16 per share for total consideration of approximately $24.8 million (the “Private Placement”) providing New Gold with a 14.9% strategic interest in Harte Gold’s pro forma issued and outstanding common shares. Closing of the transaction is expected to occur on or about March 24, 2021 and is subject to certain conditions.
In connection with the closing of the transaction, New Gold and Harte Gold will enter into an investor rights agreement (the “Investor Rights Agreement”) pursuant to which New Gold will, as long as New Gold holds not less than 10% of the issued and outstanding common shares of Harte Gold, have the right to: (i) participate in certain equity financings by Harte Gold in order to maintain its 14.9% interest in Harte Gold; and (ii) commencing at Harte Gold’s 2022 annual meeting of shareholders, nominate one person (and in the case of an increase in the size of the board of directors of Harte Gold to 9 or more directors, two persons) to the board of directors of Harte Gold. Under the Investor Rights Agreement, New Gold will be subject to an 18-month standstill which will prohibit New Gold from taking certain actions, including acquiring more than 14.9% of the issued and outstanding common shares of Harte Gold, subject to certain exceptions.
In exchange for waiving the (i) right to receive up to 35% of the net proceeds of the Private Placement for debt repayment under the August 28, 2020 facility agreement (“Appian Facility”) between Harte Gold and AHG (Jersey) Limited; and (ii) participation right under the November 23, 2016 subscription agreement between Harte Gold and ANR Investments B.V. (“Appian”), Harte Gold will grant to Appian a deferred participation warrant that will allow Appian to acquire up to 55,802,812 common shares of Harte Gold at $0.18 per common share for a period of 15 months following the closing of the Private Placement (the “Appian Deferred Participation Warrant”). The Appian Deferred Participation Warrant is not exercisable by Appian, subject to certain exceptions, for a period of 12 months following the closing of the Private Placement. New Gold will also be granted a warrant which provides New Gold with the right, subject to Appian exercising the Appian Deferred Participation Warrant, to acquire up to 8,314,619 additional Common Shares at $0.18 per common share in order to maintain its pro rata interest in the Company.
New Gold is acquiring the common shares for investment purposes. Depending on market conditions and other factors, New Gold may, from time to time, acquire additional common shares or other securities of Harte Gold or dispose of some or all of the common shares or other securities of Harte Gold that it owns at such time.
An early warning report will be filed by New Gold in accordance with applicable securities laws.
About New Gold Inc.
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. The Company also holds an 8% gold stream on the Artemis Gold Blackwater project located in British Columbia and a 6% equity stake in Artemis. The Company also operates the Cerro San Pedro Mine in Mexico (in reclamation). New Gold’s vision is to build a leading diversified intermediate gold Company based in Canada that is committed to environment and social responsibility. For further information on the Company, visit www.newgold.com.
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