11:09 AM EDT, 04/07/2025 (MT Newswires) -- (Adds comment and updates shares.

New Gold ( NGD ) said Monday it agreed to pay $300 million to consolidate free cash flow interest in the New Afton mine in British Columbia.

The company said it signed an agreement with Ontario Teachers' Pension Plan to acquire the remaining 19.9% free cash flow interest in the mine that it does not already own.

"This transaction allows us to grow in an exceptional location with no diligence or integration risk, and with no equity dilution to our shareholders," said chief executive Patrick Godin.

New Gold ( NGD ) said it plans to fund the cash payment with cash on hand, borrowings from its existing revolving credit facility and a gold prepayment financing.

For 2025, New Gold ( NGD ) said it is committing $17 million towards exploration, focusing on the mine's K-Zone.

"Our goal is to maximize this free cash flow generation at the mine, while continuing our exploration program to extend mine life and create further value for our shareholders and stakeholders," Godin said.

The transaction is expected to close in early May.

National Bank of Canada maintained its outperform rating and $6.50 price target following New Gold's ( NGD ) decision.

According to New Gold ( NGD ), the transaction may hinder the company's ability to pursue further M&A transactions in the very near term. Although it is likely to improve the company's free cash flow generation and future balance sheet strength.

"We continue to believe NGD will look for a third producing asset to add to its portfolio to aid production growth which we expect to peak in 2026," the bank said.

New Gold ( NGD ) shares were last seen up $0.12 to $4.39 on the Toronto Stock Exchange.

Price: 4.42, Change: +0.15, Percent Change: +3.51