04:43 PM EDT, 05/13/2024 (MT Newswires) -- New Gold ( NGD ) was at last look down 4.3% in after-hours New York trade after the miner said it will acquire the bulk of the Ontario Teachers' Pension Plan's stake in the New Afton mine for US$225 million, paying for the transaction with with a combination of cash, debt and proceeds from a US$150-million bought-deal share offering.

The company said the purchase will raise its stake in the British Columbia mine to 80.1%, with the Ontario Teachers' interest falling to 19.9% from 46%..

New Gold ( NGD ) said the purchase increases its share of free cash flow from the copper/gold mine, describing it as an "accretive and disciplined" investment in an "existing high-quality operation", with "Increased upside exposure".

"This is an excellent transaction where we are able to increase our free cash flow exposure in a copper and gold asset which we already own and operate. This transaction is expected to allow us to grow accretively with no diligence risk and increase our free cash flow interest at New Afton," chief executive Patrick Godin said in a release. "With key C-Zone milestones set for completion later this year, New Afton is on the verge of attractive production growth and cost improvement that we believe will lead to increased free cash flow generation. Our goal is not only to maximize this free cash flow generation at the mine, but to also maximize benefits for our shareholders."

To pay, in part, for the purchase of the stake, New Gold ( NGD ) entered into an agreement with a syndicate of underwriters to sell 87.3- million shares at a price of US$1.72 each on a bought-deal basis, for gross proceeds of approximately US$150 million.

The company has granted the underwriters an over-allotment option of up to an additional 15% of shares, should demand warrant.

New Gold ( NGD ) shares were last seen down US$0.13 to US$1.73 after hours. They closed down C$0.12 to C$2.55 on the Toronto Stock Exchange.