New Gold Inc T.NGD

New Gold Telling Teachers to Hit the Road

[psych01]

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

[psych01]

The fine print: At closing, the parties will enter into an amended free cash flow royalty agreement with an affiliate of Ontario Teachers’ to reflect the reduction in Ontario Teachers’ free cash flow interest to 19.9%. The amended agreement will, among other things, also remove the advisory committee, and reduce certain of Ontario Teachers’ governance rights with respect to the operating and