New Gold Telling Teachers to Hit the Road Summary Transaction Terms
- Ontario Teachers’ will initially acquire a 46.0% free cash flow interest in the New Afton mining claim area with a four-year term (“Interim Interest”) for $300 million in upfront proceeds and New Gold will retain 100% ownership of New Afton.
- After four years, Ontario Teachers’ has an option (“JV Interest Option”) to convert the Interim Interest into a 46.0% partnership interest in New Afton (“JV Interest”) with New Gold holding the remaining 54.0% partnership interest in a limited partnership New Gold and Ontario Teachers’ will form at the time of conversion.
- If Ontario Teachers’ does not exercise the JV Interest Option, Ontario Teachers’ will continue to hold a free cash flow interest in New Afton, but at a reduced rate of 42.5% (“Reduced Interest”).
- New Gold will hold (i) an overriding buyback option to re-purchase and cancel the Interim Interest (the “Buyback Option”) during the JV Interest Option exercise period and (ii) a right of first offer for the life of the agreements.
Presently, conditions are good for the buyback, should they stay that way NGD should shine by end of Q3. IMO