New Gold Inc. (TSX: NGD) (NYSE American: NGD) is pleased to announce that it has entered into an agreement with Ontario Teachers’ Pension Plan to acquire the remaining 19.9% free cash flow interest in the Company’s New Afton Mine. Following the transaction, the Company will have fully consolidated its free cash flow interest in New Afton to 100%.

On closing of the Transaction, Ontario Teachers’ free cash flow interest in New Afton will be fully eliminated in exchange for a cash payment of $300 million from New Gold. New Gold plans to fund the cash payment with cash on hand, borrowings from its existing revolving credit facility and a gold prepayment financing.

Benefits to New Gold Shareholders

• Fully consolidates free cash flow from one of Canada’s most attractive mines – New Afton is entering into a period of expected significant free cash flow growth driven by increasing production and improved costs.
• Investment in an existing high-quality operation – New Gold has developed extensive block caving expertise and social partnerships in an exceptional location.
• Accretive and disciplined transaction – Fully consolidates ownership, gaining exposure to 100% of New Afton’s life-of-mine cash flow with no equity dilution to New Gold’s shareholders. New Gold will finance the Transaction by utilizing its strong balance sheet and significant near-term free cash flow, while maintaining financial discipline and flexibility.
• Increased upside exposure – New Gold’s focus on near-mine exploration activities, highlighted by exceptional drill results released in September 2024, provides New Afton with the potential to add substantial value by improving the production profile and extending mine life. The Company is committing $17 million towards exploration in 2025, with a strong focus on K-Zone.

“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. This transaction allows us to grow in an exceptional location with no diligence or integration risk, and with no equity dilution to our shareholders”, stated Patrick Godin, President and CEO. “With the C-Zone ramp up progressing well, New Afton is on the verge of exceptional production growth and cost improvement that should lead to increased free cash flow generation. Our goal is to maximize this free cash flow generation at the mine, while continuing our exploration program 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.”

Gold Prepayment Financing

New Gold plans to fund a portion of the cash payment with approximately $100 million from a gold prepayment financing. Under the Gold Prepayment, the Company would have the obligation to deliver a set number of gold ounces over a twelve-month term in exchange for $100 million in cash up front. Based on current pricing, the total ounces expected to be delivered represents approximately 8% of the Company’s expected consolidated gold production in that period.

Other Terms of the Transaction

At closing, the parties will terminate all existing agreements with respect to Ontario Teachers’ free cash flow interest in New Afton, including the previously disclosed Ontario Teachers’ right to a one-time cash payment of $20 million on a change of control of New Gold if it is announced prior to January 31, 2026.

Closing of the Transaction is subject to customary conditions and is expected to close at the beginning of May. The Transaction does not require shareholder approval.

About New Gold

New Gold is an intermediate gold mining company committed to responsible mining with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. New Gold’s vision is to build a leading diversified intermediate gold company based in Canada that is committed to the environment and social responsibility.