New Gold has entered into a definitive agreement with Artemis Gold to divest its Blackwater Project located in British Columbia, Canada. Under the terms of the agreement, New Gold will receive C$190 million in cash, comprised of C$140 million in cash upon closing and C$50 million in cash payable 12 months following closing (second installment).
New Gold will also receive a gold stream of 8% gold produced from Blackwater, reducing to 4% production once approximately 280,000 ounces (oz) of gold have been delivered to New Gold. The stream is subject to a transfer price equal to 35% of the spot gold price. If agreed-upon production targets at Blackwater are not achieved by the seventh, eighth or ninth anniversary of closing, New Gold will be entitled to receive additional payments of C$28 million on each of those dates.
New Gold will also acquire C$20 million in Artemis shares upon closing, subject to New Gold not acquiring more than 9.9% of Artemis’ 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 installment.
“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 [New Gold] to transition to the next phase of our growth plan as we continue to reposition the company for shareholder value creation,” New Gold CEO Renaud Adams said. “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.”
The Blackwater Project has gold and silver reserves of 8.2 million oz and 60.8 million oz, respectively. The project is in the development phase, having successfully achieved all necessary environmental assessment approvals. When the mine site is constructed, it will include an open pit, ore processing facilities, a tailings storage facility, waste rock dumps, water management facilities, offices, accommodation camps, warehouses and a truck shop. A 140-km transmission line will connect the mine site with an existing substation south of Endako, British Columbia.
The transaction is subject to customary closing conditions, including Artemis shareholder approval and required regulatory approvals.