(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Feb. 8, 2017 /CNW/ - New Gold Inc. ("New Gold")
(TSX:NGD) (NYSE MKT:NGD) today announces that the company has
entered into a binding letter agreement with Goldcorp Inc.
("Goldcorp") to sell the company's gold stream on the El Morro
project to Goldcorp for $65 million
cash (the "Transaction"). The Transaction will provide New Gold
with additional liquidity as the company advances the construction
of its Rainy River project, which
is scheduled to commence production in September 2017.
"Our interest in El Morro has generated significant value for
our company over the last several years," stated Hannes Portmann, President and Chief Executive
Officer. "The sale of the stream allows us to realize $65 million from an asset that is not a core part
of our portfolio to support our key, near-term growth project at
Rainy River."
The total expenditures on El Morro by New Gold and its
predecessor companies since the asset was first acquired has been
less than $7 million. New Gold is
proud that, including the $65 million
payment for the stream, the company will have generated total
proceeds of $205 million through a
series of transactions related to El Morro over the last seven
years.
Goldcorp has been a great partner to New Gold at El Morro and
the company wishes them continued success as they advance the
property over the coming years.
The Transaction is subject to customary conditions, including
the negotiation of a definitive agreement. All required internal
Goldcorp and New Gold approvals of the Transaction have been
obtained. The Transaction is expected to close in February 2017.
ABOUT NEW GOLD INC.
New Gold is an intermediate gold mining company. The company has
a portfolio of four producing assets and two significant
development projects. The New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in
Australia and the Cerro San Pedro
Mine in Mexico (which transitioned
to residual leaching in 2016), provide the company with its current
production base. In addition, New Gold owns 100% of the Rainy River
and Blackwater projects located in Canada. New Gold's objective is to be the
leading intermediate gold producer, focused on the environment and
social responsibility. For further information on the company,
please visit www.newgold.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this news release, including
any information relating to New Gold's future financial or
operating performance are "forward looking". All statements in this
news 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 and are
generally, but not always, 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 news release
include, among others, statements with respect to targeted timing
for start-up, production and commercial production of the Rainy
River project; and the anticipated benefits of the Transaction,
including the ability of the parties to satisfy the conditions of
and complete the Transaction.
All forward-looking statements in this news 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 news release, New
Gold's annual and quarterly management's discussion and analysis
("MD&A"), its Annual Information Form and its Technical Reports
filed at www.sedar.com. In addition to, and subject to, such
assumptions discussed in more detail elsewhere, the forward-looking
statements in this news release are also subject to the following
assumptions: (1) there being no significant disruptions affecting
New Gold's operations; (2) political and legal developments in
jurisdictions where New Gold operates, or may in the future
operate, being consistent with New Gold's current expectations; (3)
the accuracy of New Gold's current mineral reserve and mineral
resource estimates; (4) the exchange rate between the Canadian
dollar, Australian dollar, Mexican peso and U.S. dollar being
approximately consistent with current levels; (5) prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (6) equipment,
labour and materials costs increasing on a basis consistent with
New Gold's current expectations; (7) arrangements with First
Nations and other Aboriginal groups in respect of the Rainy River
project being consistent with New Gold's current expectations; (8)
all required permits, licenses and authorizations, including the
amendment to Schedule 2 of the Metal Mining Effluent Regulations,
being obtained from the relevant governments and other relevant
stakeholders within the expected timelines; (9) the results of the
feasibility study for the Rainy River project being realized; and
(10) conditions to closing of the Transaction being satisfied in a
timely manner.
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: not realizing the potential benefits of the
Transaction; significant capital requirements and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other commodities; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States, Australia and Mexico; discrepancies between actual and
estimated production, between actual and estimated mineral reserves
and mineral resources and between actual and estimated
metallurgical recoveries; fluctuation in treatment and refining
charges; changes in national and local government legislation in
Canada, the United States, Australia and Mexico or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction in which New
Gold operates, including, but not limited to: in Canada, obtaining the necessary permits for
the Rainy River project; the lack of certainty with respect to
foreign legal systems, which may not be immune from the influence
of political pressure, corruption or other factors that are
inconsistent with the rule of law; the uncertainties inherent to
current and future legal challenges New Gold is or may become a
party to; diminishing quantities or grades of mineral reserves and
mineral resources; competition; inherent uncertainties with cost
estimates and estimated schedule for the construction and
commencement of production at Rainy
River as contemplated; loss of key employees; rising costs
of labour, supplies, fuel and equipment; actual results of current
exploration or reclamation activities; uncertainties inherent to
mining economic studies including the feasibility studies for the
Rainy River project; changes in project parameters as plans
continue to be refined; accidents; labour disputes; defective title
to mineral claims or property or contests over claims to mineral
properties; unexpected delays and costs inherent to consulting and
accommodating rights of indigenous groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements, including those associated with the
amendment to Schedule 2 of the Metal Mining Effluent Regulations
for the Rainy River project. In addition, there are risks and
hazards associated with the business of mineral exploration,
development and mining, including environmental events and hazards,
industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses and risks associated
with the start of production of a mine, such as Rainy River, (and the risk of inadequate
insurance or inability to obtain insurance to cover these risks) as
well as "Risk Factors" included in New Gold's disclosure documents
filed on and available at www.sedar.com. 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 news 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.
SOURCE New Gold Inc.