New Gold now has about $590 million in total available liquidity, including $390 million in cash and cash equivalents as it seeks to continue to right its Rainy River gold mine in Ontario.

The transaction was positively received by BMO Capital Markets analyst Brian Quast, who upgraded the company's rating outperform with a price target to C$1.50.

"The transaction alleviates the liquidity concerns that have weighed on the stock and provides the company with additional financial flexibility as the new life of mine plans for Rainy River and New Afton are executed," wrote Quast in a research note.

Under the transaction, OTPP obtains a 46% interest in the free cash flows generated by the New Afton mine over the next four years following which it has the option to convert the interest into a 46% joint venture interest or continue with a 42.5% interest in New Afton's free cash flows.

New Gold retains operating control over New Afton and holds a buyback option.

The cash injection removes concerns that New Gold was unable to generate sufficient free cash flow to repay some $400 million of unsecured notes due in 2022. "With this no longer being an immediate concern, the company is able to focus on the execution of its new life of mine plans for the New Afton and Rainy River mines," wrote Quast.

New Gold published an updated life of mine plan for Rainy River in February which cut years off the life and reduced its proven and probable reserves by 1.5 million ounces.

The new life-of-mine plan for Rainy River and New Afton decreased the capital intensity of both operations, to more palatable levels given the company's balance sheet. The Rainy River plan constrained the openpit shell more tightly with a focus on mining medium-to-high grade ounces.

Under the new plan, Rainy River will produce an average of 289,000oz/y at an all-in sustaining cost (AISC) of $967/oz gold-equivalent.

The operation is currently suspended as part of measures to contain the spread of the COVID-19 virus.

The new production profile at New Afton is a less dramatic change and sees life-of-mine sustaining capital reduced to $175 million from $390 million.

Shares in New Gold were trading at C73c Wednesday, valuing the company at $493 million.