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Canadian miner New Gold Inc is exploring a sale as it grapples with ballooning development costs and operating challenges at its new mine, people familiar with the situation told Reuters.

New Gold, which is working with investment bank BMO Capital Markets to help find a buyer and evaluate other options, has held talks with interested parties, the sources said this week. There were no assurances the talks would result in a deal, they added, declining to be identified as the discussions are private.

The company could divest specific mines if an outright sale does not materialize, one of the people said, noting its New Afton mine in British Columbia and Mesquite mine in California may be appealing on a standalone basis.

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“New Gold’s corporate policy is not to comment on market rumors,” said spokeswoman Julie Taylor. BMO declined to comment.

Toronto-based New Gold has struggled to hit production targets at its flagship Rainy River mine, its biggest, in Ontario and faces debt pressure. At the end of 2017, its debt-to-equity ratio was 47.1 per cent, higher than the industry average, according to Thomson Reuters data.

On Wednesday, the company named a new, permanent chief executive officer.

The stock, already up, jumped 32 per cent after the Reuters report on Wednesday to touch a session high of $1.36. The shares closed at $1.26, up 22 per cent in the early afternoon, and the company’s shares were among the most heavily traded in Toronto.

Rainy River makes it harder to pull off a sale, the people said, as any buyer must be comfortable with the mine’s operational problems as well as company debt.

Acquired in a acquisition of Rainy River Resources in 2013 worth about $310 million, the project’s construction costs have soared 80 per cent since 2014 to $1.59 billion.

Over the past year, the company has sold assets, replaced senior executives and reshuffled its board as it tried to resolve problems at Rainy River.

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Spot gold prices are skirting 19-month lows on a strengthening U.S. dollar as a trade war between Washington and Beijing drives investors to seek safety in the greenback, rather than gold.

Year to date, New Gold shares have dropped about 68 per cent, clipping the company’s market valuation to $758 million. In that period, the S&P/TSX Global Gold Index declined 22 per cent.

Global mergers and acquisitions of gold miners has dropped so far in 2018 to 204 deals, valued at $4.6 billion, from 259 transactions, worth $5.06 billion, in the same period last year, according to Thomson Reuters data.

In late July, New Gold reported a second-quarter net loss of $302 million, compared with a $23 million net profit in the same period last year.

The company cut its forecast for annual output by more than 20 per cent and increased production cost estimates by about 25 per cent, largely due to ramp-up issues at Rainy River alongside lower-than-expected grades and recovery rates.

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