New Gold Inc. (NYSE MKT:NGD) just announced that has entered into a binding letter agreement with Goldcorp Inc. (NYSE:GG) to sell the company’s gold stream on the El Morro project to Goldcorp for $65 million 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.
Hannes Portmann, President and Chief Executive Officer, commented:
Our interest in El Morro has generated significant value for our company over the last several years. 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.
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.