New Gold has entered into a binding letter agreement with Goldcorp to sell the company's gold stream on the El Morro project to Goldcorp for $65m cash.
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.