New Gold has entered into a binding agreement with Aurelia Metals Ltd. to sell the Peak Mines, located in Cobar, New South Wales, Australia, for $58 million.

“Peak has generated significant value for New Gold and predecessor companies over its 25 years of operation,” said Hannes Portmann, president and CEO, New Gold. “Peak’s robust history of replacing and growing its mineral resources has been key to its successful contribution to New Gold’s portfolio of assets.”

The sale will offer Aurelia the opportunity to grow its asset base in the Cobar region, Portmann said. “Today’s transaction is another step to enhance New Gold’s liquidity and will further enable the company to focus on its Americas-centric portfolio of operating mines and development projects,” he added.

Aurelia intends to fund the transaction through a combination of a A$45 million debt facility provided by the Investec Group and an equity placement in the order of A$70 million. Aurelia’s largest shareholder, Pacific Road Capital Management Pty Ltd., has committed to Aurelia to subscribe for up to A$35 million in the equity raising and increase their interest in Aurelia to 36.7% from 33.6%, subject to shareholder approval. Aurelia will pay at least a $3 million deposit, which will be retained by New Gold in certain circumstances if the transaction is not completed.

The deal is subject to customary closing conditions, including Aurelia shareholder approval of a portion of the equity financing and consent from the New South Wales minister responsible for the Mining Act 1992 for the transfer of control of certain exploration licenses. It is expected to close in the first quarter of 2018.

Macquarie Capital acted as financial advisor to New Gold and Corrs Chambers Westgarth acted as New Gold’s legal advisor.