Ontario Teachers’ Pension Plan has signed a $300-million investment deal with New Gold Inc., and a subsequent major cash infusion into the New Afton mine near Kamloops.

Under the agreement, the pension fund will acquire a 46 per cent free cash flow interest in the New Afton gold-and-copper mine.

Ontario Teachers’ have an option to convert the interest into a 46 per cent joint venture interest after four years or have their investment remain as a free cash flow interest at a reduced rate of 42.5 per cent.

New Gold says the money will be used to improve its financial flexibility and to reduce debt.

“This transaction provides New Gold with an attractive cost of capital, further strengthens our financial position, allows us to benefit from the full exploration potential elsewhere on the New Afton land package and provides the opportunity to re-acquire 100 per cent of New Afton,” said Renaud Adams, the President and CEO of New Gold.

New Gold will still retain full operating control over New Afton during the development of the C-Zone as the mine looks to expand its operating life.

 – With files from The Canadian Press