(All figures are in US dollars unless otherwise indicated)
VANCOUVER, June 27, 2012 /PRNewswire/ - New Gold Inc. ("New Gold") (TSX and NYSE MKT:NGD) today announces that the Ontario Superior Court of Justice (the "Court") has rendered its decision regarding the ownership interests in the El Morro project in Chile. The Court's decision confirms that New Gold and Goldcorp Inc. ("Goldcorp") will continue as partners in the El Morro project. The Court dismissed Barrick Gold Corporation's ("Barrick") attempt to claim it should have been New Gold's partner. Based on the decision, the El Morro transaction between New Gold and Goldcorp, which closed on February 16, 2010, will stand. New Gold holds a fully carried 30 percent interest in the El Morro project and Goldcorp, the project developer and operator, holds the remaining 70 percent.
The Court's decision relates to the Statement of Claim (the "Claim") that was originally filed in January 2010 by Barrick against the company and Goldcorp as well as affiliated subsidiaries, and which was subsequently amended to include Xstrata Plc ("Xstrata") and affiliated subsidiaries as defendants. Barrick made the Claim after New Gold exercised its right of first refusal to acquire its previous partner, Xstrata's 70 percent interest in the project, where the right of first refusal was triggered when Barrick made an offer to purchase Xstrata's share of the El Morro project. After exercising its right of first refusal, in early 2010, New Gold completed a transaction that resulted in Goldcorp becoming its 70 percent partner in the El Morro project. The Court has dismissed Barrick's claim.
"We are pleased that the Court's decision affirms our position that we validly exercised our right of first refusal," stated Randall Oliphant, Executive Chairman. "El Morro's significant gold and copper mineral resources, continued exploration potential and strategic location make it one of the best undeveloped projects in our industry. As it was our company that originally discovered El Morro, we believe we are in a great position with a significant, fully funded interest in this world class project."Certain of the key terms under the El Morro shareholders agreement include:
- Goldcorp carries New Gold's full 30 percent share of the project's capital costs. The development capital costs, on a 100 percent basis, were most recently estimated at the end of 2011 at $3.9 billion.
- After the start of production, New Gold retains 20 percent of its 30 percent of cash flow with the remaining 80 percent going towards the carried funding and accumulated interest
- The interest rate on the carried funding has been fixed at 4.58%
- Goldcorp is obligated to pay New Gold a penalty payment of $1.5 million per month should Goldcorp not start construction within 60 days of the receipt of requisite permits and approvals