New Gold to Divest Blackwater to Artemis Gold for C$190 Million in Cash & Retained Exposure via an 8% Gold Stream & Equity ...
June 09 2020 - 7:00AM
Business Wire
June 9, 2020 – New Gold Inc. (“New Gold” or the “Company”)
(TSX and NYSE American: NGD) is pleased to announce that it has
entered into a definitive agreement (the “Agreement”) with Artemis
Gold Inc. (“Artemis”) to divest its Blackwater Project
(“Blackwater”) located in British Columbia, Canada (the
“Transaction”).
Under the terms of the Agreement, New Gold will receive
consideration comprised of the following:
- C$190 million in cash comprised of C$140 million in cash upon
closing of the Transaction and C$50 million in cash payable twelve
months following closing of the Transaction (the “Second
Instalment”);
- A gold stream on 8% gold produced from Blackwater, reducing to
4% of gold production once approximately 280,000 ounces of gold
have been delivered to New Gold. The stream is subject to a
transfer price equal to 35% of the spot gold price;
- In the event that agreed upon production targets at Blackwater
are not achieved by the 7th, 8th, or 9th anniversary of closing of
the Transaction, New Gold will be entitled to receive additional
cash payments of C$28 million on each of those dates; and
- C$20 million in Artemis shares upon closing of the Transaction,
subject to New Gold not acquiring more than 9.9% of Artemis’ issued
and outstanding common shares, in which case the difference between
C$20 million and the value of the shares issued to New Gold shall
be added to the Second Instalment.
“This transaction marks another milestone for New Gold as we
continue to reposition the Company and advance our vision of
becoming a leading Canadian-focused, diversified intermediate gold
producer. With this transaction we have further strengthened our
balance sheet with an upfront cash payment that is supported by our
improved operational performance and our recently updated life of
mine plans that are focused on profitability and free cash flow
generation beginning in 2021,” stated Renaud Adams, CEO. “We
believe that surfacing value for Blackwater today, while retaining
exposure to the project through a retained gold stream and an
equity position in Artemis, allows the Company to transition to the
next phase of our growth plan as we continue to reposition the
Company for shareholder value creation. Artemis has clearly
expressed its commitment to building and operating Blackwater that
is supported by its management team’s strong track record in the
industry. We are confident that they are the best positioned team
to advance the project for the benefit of both Artemis and all New
Gold stakeholders, including our host communities and
partners.”
The Transaction is subject to customary closing conditions,
including Artemis shareholder approval and required regulatory
approvals. Artemis intends to fund the initial cash payment through
a combination of cash on hand and an equity financing. Insiders of
Artemis have agreed to provide a backstop commitment of up to C$120
million. As such, the Transaction is not subject to a financing
condition. The Transaction is expected to close in the third
quarter of 2020.
BMO Capital Markets acted as financial advisor to New Gold, and
Davies Ward Phillips & Vineberg LLP and Lawson Lundell LLP
acted as New Gold’s legal advisors.
About New Gold Inc.
New Gold is a Canadian-focused intermediate gold mining company
with a portfolio of two core producing assets in Canada, the Rainy
River and New Afton Mines as well as the 100% owned Blackwater
development project. 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this press release, including
any information relating to New Gold’s future financial or
operating performance are “forward-looking”. All statements in this
press release, other than statements of historical fact, which
address events, results, outcomes or developments that New Gold
expects to occur are “forward-looking statements”. Forward-looking
statements are statements that are not historical facts. Often, but
not always, forward-looking statements can be identified by the use
of forward-looking terminology such as “plans”, “expects”, “is
expected”, “budget”, “scheduled”, “targeted”, “estimates”
“forecasts”, “intends”, “anticipates”, “projects”, “potential”,
“believes” or variations of such words and phrases or statements
that certain actions, events or results “may”, “could”, “would”,
“should”, “might” or “will be taken”, “occur” or “be achieved” or
the negative connotation of such terms. Forward-looking statements
in this press release include, among others, the potential timing
for the closing of the Transaction and the proceeds of the
Transaction to be received by New Gold, the resultant strengthening
of New Gold’s balance sheet, and New Gold’s focus on free cash flow
generation beginning in 2021.
All forward-looking statements in this press release are based
on the opinions and estimates of management as of the date such
statements are made and are subject to important risk factors and
uncertainties, many of which are beyond New Gold’s ability to
control or predict. Certain material assumptions regarding such
forward-looking statements are discussed in this press release, New
Gold’s latest annual and quarterly management's discussion and
analysis (“MD&A”), Annual Information Form and Technical
Reports filed at www.sedar.com and on EDGAR at www.sec.gov.
Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to known and unknown
risks, uncertainties and other factors that may cause actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, without
limitation: the risk that all consents and approvals required to
give effect to the Transaction will not be obtained in a timely
fashion or at all; and the “Risk Factors” included in New Gold's
Annual Information Form, MD&A and other disclosure documents
filed on and available at www.sedar.com and on EDGAR at
www.sec.gov. Forward-looking statements are not guarantees of
future performance, and actual results and future events could
materially differ from those anticipated in such statements. All of
the forward-looking statements contained in this press release are
qualified by these cautionary statements. New Gold expressly
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
events or otherwise, except in accordance with applicable
securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20200609005296/en/
For further information:
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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