(All figures are in US dollars unless otherwise indicated)
VANCOUVER,
Dec. 12, 2013 /PRNewswire/ - New Gold
Inc. ("New Gold") (TSX:NGD) and (NYSE MKT:NGD) today announces the
results of the Feasibility Study for its Blackwater Gold project
("Blackwater" or the "Project") in British Columbia, Canada.
Feasibility Study Highlights
- Conventional truck and shovel open pit mine with 60,000 tonne
per day ("tpd") whole ore leach processing plant
- 17-year mine life with direct processing for first 14 years and
processing of stockpile thereafter
- Life-of-mine operational strip ratio of 1.88 to 1.00
- Life-of-mine gold and silver recoveries of 87% and 49%
- Life-of-mine gold and silver production of 7 million ounces and
30 million ounces
- Development capital costs of $1,865
million inclusive of a $190
million contingency
- First nine years - average annual gold production of 485,000
ounces at total cash costs(1) of $555 per ounce and all-in sustaining
costs(2) of $685 per
ounce
- Base case economics - at $1,300
per ounce gold, $22.00 per ounce
silver and a 0.95 US$/C$ foreign
exchange rate, Blackwater has a
pre-tax 5% net present value ("NPV") of $991
million, an internal rate of return ("IRR") of 11.3% and a
payback period of 6.2 years
- Alternative case economics - at $1,600 per ounce gold, $26.00 per ounce silver and a parity US$/C$
foreign exchange rate, Blackwater
has a pre-tax 5% NPV of $2,120
million, an IRR of 16.8% and a payback period of 4.5
years
"The completion of the Blackwater Feasibility
Study is an important milestone for our company," stated
Randall Oliphant, Executive Chairman
of New Gold. "The Project has many great attributes including: its
secure jurisdiction, long life, robust production potential, all-in
sustaining costs well below industry average, and continued
exploration potential. However, the combination of gold being down
by over $500 per ounce since we
completed the Preliminary Economic Assessment for Blackwater in September of 2012 and our
Rainy River project having a more
modest capital requirement, results in our primary objective being
the advancement of Rainy
River."
"Importantly, Rainy
River shares all of Blackwater's strong project characteristics,"
Oliphant continued. "An updated feasibility study for Rainy River remains on schedule for completion
in early 2014."
New Gold will continue to move Blackwater through the permitting phase in
2014. The company views the potential of having a fully permitted
project as an important and valuable asset. In the current
environment, where there has been significant commodity price
volatility, New Gold wants to maximize its flexibility in respect
of any future development decisions. The company plans to stage the
development of its projects with the near-term focus being on the
advancement of the lower capital cost Rainy River project. Thereafter, the timing of
Blackwater's development will be
driven by the prevailing market conditions over the coming
years.
Mineral Reserve Estimate
The Blackwater
mineral resource, effective March 31,
2013, is reported within a conceptual pit shell at
gold-equivalent cut-off values ranging from 0.3 to 0.4 grams per
tonne. The deposit contains Measured and Indicated mineral
resources suitable for direct processing of 306 million tonnes at
0.88 grams per tonne gold and 5.8 grams per tonne silver,
representing 8.6 million ounces of gold and 57.5 million ounces of
silver. In addition, the Measured and Indicated mineral resources
suitable for stockpiling and future processing includes 91 million
tonnes at 0.30 grams per tonne gold and 4.3 grams per tonne silver,
representing 0.9 million ounces of gold and 12.6 million ounces of
silver.
This mineral resource estimate is compliant with
CIM (as defined at the conclusion of the release) Definition
Standards prescribed under National Instrument 43-101 and is based
upon a geologic block model that incorporates 286,966 individual
assays from 309,516 metres of core from 1,003 drill holes at a
nominal drill hole spacing ranging from 25 metres to 50 metres.
Assay data density is sufficient to classify the mineral resource
at the Measured and Indicated confidence levels as necessary to
support the estimation of a mineral reserve. The drill hole
database was supported by approximately 80,000 quality
assurance/quality control (QA/QC) check assays.
A proposed mining production schedule was
developed through the design of an ultimate open pit within the
mineral resource model. The Blackwater mineral reserve, which represents
the proportion of the Measured and Indicated mineral resources
included in the production schedule, has been diluted using an
average of 4.7% additional tonnes containing 0.15 grams per tonne
gold and 3.1 grams per tonne silver. The Blackwater mineral reserve is summarized
below.
Blackwater
Mineral Reserve Estimate - Effective December 2, 2013 |
|
Tonnes
(Mt) |
Gold
(g/t) |
Silver
(g/t) |
Gold
(Moz) |
Silver
(Moz) |
Direct processing material
Proven
Probable
Total direct processing material |
124.5
169.7
294.3 |
0.95
0.68
0.79 |
5.5
4.1
4.7 |
3.79
3.73
7.51 |
22.1
22.3
44.4 |
Stockpile material
Proven
Probable
Total stockpile material |
20.1
30.1
50.2 |
0.50
0.34
0.40 |
3.6
14.6
10.2 |
0.33
0.33
0.65 |
2.3
14.1
16.4 |
Direct processing and stockpile
material
Proven
Probable
Total |
144.6
199.8
344.4 |
0.88
0.63
0.74 |
5.3
5.7
5.5 |
4.11
4.05
8.17 |
24.4
36.4
60.8 |
Notes:
1.Reported within an open pit design based on metal prices of
$1,300/oz gold, $22.00/oz
silver, with variable recoveries by grade and ore type averaging
86.6% for gold and 49.1%
for silver.
2. Contained metal calculated on the basis of Tonnes * Grade /
31.10348 grams per
troy ounce.
3. Direct processing reserves are defined as mineralization
above a lower cut-off grade
that varies by year between 0.26 g/t and 0.38 g/t AuEq and is to
be mined and
processed directly.
4. Reserves noted as stockpiled material consist of ore tonnage
above a 0.32g/t AuEq
cut-off grade that is mined and stockpiled before being sent to
the mill. This stockpiled
tonnage includes ore mined before mill startup, lower grade ore
mined during
preproduction and commercial production, and ore tonnage
misclassified or
misallocated during the mining process. All of the ore tonnage
classified as
reserves and listed here is processed and the total reserves
quoted are equal to
the total mill feed as shown in the life of mine plan. No
stockpiles currently exist
at site.
5. Gold-equivalent grade estimate based on $1,400/oz gold,
$28.00/oz silver, and
average metallurgical recoveries of 88.0% gold and 64.0% silver
for oxide
mineralization, 85.0% gold and 58.0% silver for transitional
oxide / sulphide
mineralization, and 85.0% gold and 44.0% silver for sulphide
mineralization.
6. All costs are based on estimates and vendor quotes effective
third quarter
2013. No escalation has been applied to bring costs forward to
December 2, 2013. |
Mining Operations and Metallurgy
The mining production schedule was developed
using four phases. The schedule incorporates an elevated cut-off
grade strategy during the first 10 years of mining to raise the
mill feed grade. Material below the higher cut-off grade is
stockpiled for processing at the end of the Project's life.
Mining operations would be carried out with an
initial equipment fleet comprising four 200 to 250 millimetre
diesel blast hole drills, two 40 cubic metre hydraulic shovels, one
28 cubic metre front-end loader, and fourteen 290 tonne
trucks. The mining fleet increases during operations with the
addition of four blast hole drills, one electric cable shovel, and
thirteen haul trucks. A 12 metre bench height has been selected for
mining. This large-scale open pit mining would provide process
plant feed at a nominal rate of 60,000 tpd or 21.9 million tonnes
per year. Annual mine production of ore and waste would peak at 92
million tonnes. The operational stripping ratio, excluding waste
stripping during the development phase, is 1.88:1.00.
The metallurgical evaluation was supported by an
extensive metallurgical and grinding test program. The tests were
conducted on samples composited to represent process plant feed in
the mine plan. Composites derived from 324 exploration drill holes
as well as 27 dedicated large bore HQ/PQ core drill holes were used
for testing. Mineralogical and diagnostic leach testing indicated
that the primary areas of investigation required to optimize the
whole ore leach processing were: primary grind size, reagent
addition, and leach retention time. Estimated process plant feed
grade, recoveries and metal production from commercial production
forward are summarized below.
Blackwater
Feasibility Study Production Schedule |
Production
Years |
Mill Feed
(Mt) |
Head
Grade |
Recovery |
Average Annual
Production |
Gold
(g/t) |
Silver
(g/t) |
Gold
(%) |
Silver
(%) |
Gold
(Koz) |
Silver
(Koz) |
1 through 9 |
183.4 |
0.85 |
5.6 |
87.1 |
50.1 |
485 |
1,842 |
1 through 14 |
292.9 |
0.79 |
4.7 |
86.8 |
48.5 |
463 |
1,531 |
15 through 17 |
48.9 |
0.40 |
10.2 |
84.4 |
50.6 |
177 |
2,726 |
Life-of-mine |
341.8 |
0.74 |
5.5 |
86.6 |
49.0 |
413 |
1,742 |
Note: Table excludes 2.65 Mt of material mined and milled in
the
preproduction period. |
Mineral Processing
The 60,000 tpd process plant would use
conventional crushing, grinding, leaching, and carbon-in-pulp
technology to produce gold-silver doré. The overall design utilizes
a simple and conventional flowsheet.
Run-of-mine ore would be crushed and ground to
80% passing 150 µm in a conventional dual-train semi-autogenous
grinding-ball milling-pebble crushing circuit. Ground ore would be
directed to a leach feed thickener, then to a leaching and
carbon-in-pulp extraction circuit. Extracted gold and silver would
be released from carbon in stripping columns and recovered by
electrowinning before being smelted into gold-silver doré.
Key process equipment would consist of:
- A 1,520 x 2,870 millimetre (60" x 113") gyratory crusher
- A SAG/ball mill/crusher grinding circuit:
-
- Two 11.0 x 6.7 metre diameter (36' x 21.5') 17-Megawatt SAG
mills
- Two 8.2 x 12.8 metre diameter (27' x 42') 17-Megawatt Ball
mills
- Two 1,000-Kilowatt pebble crushers
- Whole ore leaching and carbon-in-pulp circuit:
-
- 24 leach tanks of 18 metre diameter
- Two trains of seven 400 cubic metre capacity carbon-in-pulp
tanks
- Two 80 metre diameter thickeners
- Three cyanide destruction vessels
Project Capital Costs
The Project is located 112 kilometres southwest
of Vanderhoof, a town with a
population of approximately 4,000 people, in central British Columbia. The Project is close to
existing infrastructure with access to low cost hydroelectric power
available, which requires the construction of a 140 kilometre
transmission line from an existing B.C. Hydro substation to the
Blackwater site. B.C. Hydro
completed a System Impact Study, which concluded that the Glenannan
substation was the optimal point of connection to the grid and that
supply of up to 120 Megawatts was feasible. Stakeholders along the
transmission line route have been consulted.
The Blackwater
site is currently accessible via the Kluskus forest service road,
which connects to Provincial Highway 16 near Vanderhoof. As part of the development plan, a
16 kilometre section of new access road would be constructed to
provide a more direct route from the forest service road to the
Project site.
During the development stage, an 880-person
construction camp would be established on site which, together with
the expansion of the existing camp from 250 to 426 persons, would
provide accommodations for contractors and construction management
staff. This construction camp would be removed once development is
complete. An airstrip is planned to be built for use during the
construction phase of the Project in order to increase
accessibility and reduce travel time to the site. The presence of
an airstrip supports New Gold's strategy of being best positioned
to attract top-quality, skilled labour for construction. For
operations, a high-quality modular camp with a capacity of 420
persons would be used.
The total estimated development capital cost for
the Project is $1,865 million
inclusive of a $190 million
contingency. The estimated development capital cost is based on the
third quarter 2013 capital environment. The development capital
cost equates to $266 per recoverable
gold ounce over the current reserve life of the Project. Total
sustaining capital over the life of the Project is estimated to be
$647 million, which is equivalent to
an average of $92 per recoverable
gold ounce.
A detailed breakdown of the key components of
the Project's development capital are shown below.
Breakdown of Feasibility Study
Project Development Capital Costs |
Description |
($ millions) |
|
Direct Costs |
|
Mining equipment and pre-production
development |
272 |
On-site infrastructure (Truck shop, Warehousing,
Earthworks, etc.) |
158 |
Process plant |
600 |
Tailings facilities and water reclaim |
86 |
Off-site infrastructure (Transmission line, Water
supply system, Airstrip, etc.) |
121 |
Access corridor |
11 |
Total Direct Costs |
1,248 |
Owner's Costs and EPCM |
|
Owner's costs |
74 |
Engineering, Procurement and Construction
Management |
108 |
Indirect Costs |
|
Construction services, support and utilities |
97 |
Construction camp and facilities |
78 |
Freight and logistics |
42 |
Other indirect costs |
28 |
Total Indirect Costs |
245 |
Total Owner's Costs, EPCM and Indirect
Costs |
427 |
Subtotal |
1,675 |
Contingency |
190 |
Total Project Development Costs |
1,865 |
Project Operating Costs
The unique combination of Blackwater's proximity to infrastructure,
stripping ratio of 1.88 to 1.00, access to low cost hydroelectric
power and silver by-product revenue, result in the Project's
estimated total cash costs(1) and all-in sustaining
costs(2) being well below today's industry average.
After the start of commercial production, the
Project's mining costs are projected to be C$1.88 per tonne of material and the costs per
tonne milled are summarized below.
Breakdown of Base Case
Feasibility Study Operating Costs |
Description |
(C$ per tonne
milled) |
($ per gold ounce
produced) |
Mining |
5.33 |
247 |
Processing |
7.20 |
333 |
General and administrative |
1.43 |
67 |
Royalties |
0.27 |
12 |
Refining |
0.21 |
10 |
Transport and insurance |
0.05 |
2 |
Cash costs |
14.49 |
671 |
Silver by-product sales at $22.00 per ounce
silver |
(2.01) |
(93) |
Total cash costs(1) |
12.48 |
578 |
Sustaining capital |
1.99 |
92 |
All-in sustaining costs(2) |
14.47 |
670 |
A key driver of the Project's low all-in
sustaining costs(2) is that, at an assumed silver price
of $22.00 per ounce, Blackwater's average annual silver revenue is
expected to offset the Project's annual sustaining capital
requirement.
Economic Sensitivity Analysis
The summary below, showing a variety of
commodity price and foreign exchange scenarios, holds the following
assumptions constant: an electricity rate of C$0.051 per kilowatt hour and a diesel cost of
C$1.04 per litre. As previously
indicated, the company's primary development focus is on its
Rainy River project, however, for
purposes of comparability, the NPV calculations below are
calculated to the beginning of 2015.
Summary of Feasibility Study
Project Economics |
Gold
Price
($ per ounce) |
Silver
Price
($ per ounce) |
US$/C$
foreign
exchange |
5% NPV
($ millions) |
IRR
(%) |
Payback
Period
(Years) |
Pre-tax |
Pre-tax |
Pre-tax |
1,150 |
20.00 |
0.93 |
402 |
7.8 |
7.5 |
1,300 |
22.00 |
0.95 |
991 |
11.3 |
6.2 |
1,450 |
24.00 |
0.97 |
1,582 |
14.4 |
5.1 |
1,600 |
26.00 |
1.00 |
2,120 |
16.8 |
4.5 |
Using the base case assumptions as the
foundation, other important sensitivities include:
- Every $100 per ounce change in
the life-of-mine gold price, where all other assumptions are held
constant, results in an approximate $442
million change in pre-tax NPV and 2.4% change in pre-tax
IRR
- Every $0.05 change in the US$/C$
foreign exchange rate, where all other assumptions are held
constant, results in an approximate $270
million change in pre-tax NPV and 1.9% change in pre-tax
IRR
- Every $100 million change in
development capital costs, where all other assumptions are held
constant, results in a $98 million
change in pre-tax NPV and 0.9% change in pre-tax IRR
Tax Considerations
A part of New Gold's growth strategy has been to
build upon its business in jurisdictions where it already has an
established presence. One of the benefits of this approach is that
it enables the company to manage its business in a tax-efficient
manner. New Gold is able to realize tax synergies between different
assets by utilizing tax attributes interchangeably amongst its
portfolio of assets, all with the goal of maximizing New Gold's
overall profitability rather than that of any one operation or
project. New Gold has shown pre-tax NPV's for the Project as the
timing of a future development decision would have a meaningful
impact on the tax attributes of Blackwater. Future Canadian corporate
administrative costs, interest costs as well as expenditures at the
New Afton Mine in British Columbia
and, potentially, the Rainy River project in Ontario could all impact the after-tax
economics of Blackwater. Key
provincial and federal tax considerations for Blackwater would include:
- British Columbia mining tax -
2% provincial tax payable immediately upon the start of production,
increasing to 13% after applicable capital cost deductions are
used
- British Columbia provincial
income tax - 11.0%, payable after applicable deductions are
used
- Canadian federal income tax - 15.0%, payable after applicable
deductions are used
- As the mining tax is deductible for income tax purposes, once
Blackwater becomes fully taxable
later in its mine life, the effective tax rate would be
approximately 35% based on today's statutory rates
2012 PEA versus Feasibility Study
As Blackwater
has progressed from the 2012 PEA to the Feasibility Study, the
majority of the project parameters have remained consistent. A
comparison of key metrics, including those that have changed,
between the 2012 PEA and the Feasibility Study is provided
below:
- Project's 60,000 tonne per day scale and whole ore leach
processing circuit remain unchanged
- Weighted average gold grade processed in first nine years of
production unchanged at 0.85 grams per tonne
- Weighted average silver grade processed in first nine years of
production increased to 5.6 grams per tonne from 4.8 grams per
tonne
- Life-of-mine average gold recoveries unchanged
- Life-of-mine average silver recoveries decreased by 4%
- Cumulative gold production in first nine years decreased by
187,000 ounces, or an average of 21,000 ounces per year, primarily
attributable to a more conservative production ramp-up
assumption
- Cumulative silver production in first 9 years increased by
395,000 ounces, or an average of 44,000 ounces per year
- Overall smaller pit design with 149 million tonnes less waste
mined, including pre-production waste, resulting in lower stripping
ratio
- Decrease in total cost per tonne milled, net of silver
by-product credit, to C$12.48 per
tonne from C$13.01 per tonne, despite
using lower silver price assumption
- 0.9 million ounce decrease in life-of-mine gold production,
primarily driven by years 10 and beyond, resulting from the
incorporation of infill drilling, related updates to the geologic
and geostatistical model, inclusion of a 5% mining dilution factor
and resulting revisions to the mine plan
- 2.3 million ounce decrease in life-of-mine silver production,
driven by years 10 and beyond
- In Canadian dollar terms, the estimated development capital has
increased by 8%, which has been offset by a 9% depreciation in the
Canadian dollar from US$/C$1.03 at
the time of the 2012 PEA to US$/C$0.94 today
-
- The 2012 PEA applied a parity exchange rate to the development
cost, whereas the Feasibility Study applies a US$/C$ 0.95 exchange rate
- $110 million increase in
life-of-mine sustaining capital costs of which the majority is
related to ongoing tailings dam expansion in first five years of
mine life
Environment, Permitting and Corporate Social
Responsibility
New Gold has conducted extensive environmental
baseline studies and is preparing comprehensive environmental
management plans for the Project. The environmental management
plans have been integrated into the mining, processing, water, and
waste management designs for Blackwater. There would be no surface water
discharge during operations.
The mine design includes a robust closure plan
with simplified water management requirements resulting from the
compact project layout and integrated waste management strategy.
The closure plan employs proven practices and is not dependent on
long-term active treatment and monitoring. All Project components
would be decommissioned and reclaimed according to best industry
practices and provincial and federal regulations. Proposed end land
use objectives for mine closure are wildlife habitat and return of
the land for traditional use by First Nations.
New Gold has designed and would operate the
Project in accordance with the International Cyanide Management
Code.
Approval to develop and operate major mines in
British Columbia is granted after
the completion of environmental reviews by both the Government of
British Columbia and the
Government of Canada under the
B.C. Environmental Assessment Act and Canadian Environmental
Assessment Act, respectively. These reviews involve approval of the
mine concept and lead to project certification under the B.C.
process and approval from the federal Minister of Environment under
the federal process. A subsequent process leads to project
permitting by provincial and federal regulatory agencies, and
involves specific design and technical approvals related to mine
construction activities and operations.
The provincial review is administered by the
B.C. Environmental Assessment Office and the federal review by the
Canadian Environmental Assessment Agency. Both the federal and
provincial governments have legislated timelines for completion of
their respective reviews. While the processes and timelines are not
legally linked, they are coordinated through the Canada-B.C. Environmental Cooperation
Agreement.
New Gold has initiated the federal and
provincial review processes and remains on track to submit the
Project's Environmental Assessment report in early 2014.
The company is consulting with First Nations,
government, and other stakeholders regarding the Project. The
intent of the consultations is to increase the mutual awareness and
understanding of the Project.
Forestry, agriculture, and, to a lesser extent,
tourism, are the primary industries driving the economy of the
region, with mining targeted as an emerging sector. The area's
economy has historically been driven by forestry, but the Mountain
Pine Beetle epidemic, the downturn in the forest industry, and the
closures of certain sawmills in the area, have led to economic
decline in the region.
Blackwater
would create approximately 595 permanent jobs. The construction
work force would be roughly 1,200 on average, peaking at 1,500. New
Gold is committed to maximizing local employment and contracting
opportunities. The company plans to work collaboratively with
community partners to prepare local workers, and establish programs
for specific training where necessary.
About New Gold Inc.
New Gold is an intermediate gold mining company.
The company has a portfolio of four producing assets and three
significant development projects. The New Afton Mine in
Canada, the Cerro San Pedro Mine
in Mexico, the Mesquite Mine in
the United States and the Peak
Mines in Australia provide the
company with its current production base. In addition, New Gold
owns 100% of the Blackwater and
Rainy River projects, both in
Canada, as well as 30% of the El
Morro project located in Chile.
New Gold's objective is to continue to establish itself as a
leading intermediate gold producer, focused on the environment and
sustainability. For further information on the company, please
visit www.newgold.com.
Cautionary Note Regarding Forward-Looking
Statements
Certain information contained in this news
release, including any information relating to New Gold's future
financial or operating performance as well as information
respecting the Blackwater project
or the Rainy River project may be deemed "forward looking". All
statements in this news release, other than statements of
historical fact, that address events or developments that New Gold
expects to occur are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the use of forward-looking
terminology such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates",
"projects", "potential", "believes" or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "should", "might" or "will be taken",
"occur" or "be achieved" or the negative connotation.
Forward-looking statements in this news release primarily relate to
the results of the Blackwater Feasibility Study, and include, among
others, statements with respect to: expected capital costs,
sustaining capital costs, production, cash costs and all-in
sustaining costs; the expected mine life, scale, mining methods and
plan, processing methods and rate, grades, recovery rates,
stripping ratio, production and other attributes of the
Blackwater project; the expected
NPV, IRR, and payback period associated with the Blackwater project; the estimation of mineral
reserves and resources; the timing for submission of the Blackwater
Environmental Assessment report and receipt of permits; the
potential development of Blackwater in the future; New Gold's plans to
advance Rainy River and its
project characteristics and capital cost; and the timing to
complete the Rainy River updated feasibility study.
All forward-looking statements in this news
release are based on the opinions and estimates of management as of
the date such statements are made and are subject to important risk
factors and uncertainties, many of which are beyond New Gold's
ability to control or predict. Material assumptions regarding our
forward looking statements, including without limitation, the key
assumptions underlying the Blackwater Feasibility Study, are
discussed in this news release, the annual MD&A, the AIF and
our Technical Report which will be filed on SEDAR within 45 days of
the release of this news release. Forward-looking statements are
necessarily based on estimates and assumptions that are inherently
subject to known and unknown risks, uncertainties and other factors
that may cause actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking statements. Such factors include,
without limitation: significant capital requirements; price
volatility in the spot and forward markets for commodities;
fluctuations in the international currency markets and in the rates
of exchange of the currencies of Canada and the
United States; discrepancies between actual and estimated
production, between actual and estimated reserves and resources and
between actual and estimated metallurgical recoveries; changes in
national and local government legislation in Canada; taxation; controls, regulations and
political or economic developments in Canada; the speculative nature of mineral
exploration and development, including the risks of obtaining and
maintaining the validity and enforceability of the necessary
licenses and permits and complying with the permitting
requirements, including, but not limited to: obtaining the
necessary permits for the Blackwater and the Rainy River projects; the
uncertainties inherent to current and future legal challenges New
Gold is or may become a party to; diminishing quantities or grades
of reserves and resources; competition; loss of key employees;
additional funding requirements; rising costs of labour, supplies,
fuel and equipment; actual results of current exploration
activities; uncertainties inherent to mining economic studies
including the Feasibility Study for Blackwater and the Feasibility Study for
Rainy River; changes in project
parameters as plans continue to be refined; accidents; labour
disputes; defective title to mineral claims or property or contests
over claims to mineral properties; unexpected delays and costs
inherent to consulting and accommodating rights of First Nations;
and uncertainties with respect to obtaining all necessary surface
rights for the Rainy River project. In addition, there are risks
and hazards associated with the business of mineral exploration,
development and mining, including environmental events and hazards,
industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses (and the risk of
inadequate insurance or inability to obtain insurance to cover
these risks) as well as "Risk Factors" included in New Gold's (and,
in respect to information related to the Rainy River project, in
Rainy River's) disclosure
documents filed on and available at www.sedar.com. Forward-looking
statements are not guarantees of future performance, and actual
results and future events could materially differ from those
anticipated in such statements. All of the forward-looking
statements contained in this news release are qualified by these
cautionary statements. New Gold expressly disclaims any intention
or obligation to update or revise any forward-looking statements
whether as a result of new information, events or otherwise, except
in accordance with applicable securities laws.
Cautionary Note to U.S. Readers Concerning
Estimates of Measured, Indicated and Inferred Mineral
Resources
Information concerning the properties and
operations of New Gold has been prepared in accordance with
Canadian standards under applicable Canadian securities laws, and
may not be comparable to similar information for United States companies. The terms "Mineral
Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" used in this news release
are Canadian mining terms as defined in accordance with National
Instrument 43-101 ("NI 43-101") under guidelines set out in the
Canadian Institute of Mining, Metallurgy and Petroleum ("CIM")
Definition Standards for Mineral Resources and Mineral Reserves
adopted by the CIM Council on November 27,
2010. While the terms "Mineral Resource", "Measured Mineral
Resource", "Indicated Mineral Resource" and "Inferred Mineral
Resource" are recognized and required by Canadian securities
regulations, they are not defined terms under standards of the
United States Securities and Exchange Commission. Under
United States standards,
mineralization may not be classified as a "Reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
Reserve calculation is made. As such, certain information contained
in this news release concerning descriptions of mineralization and
resources under Canadian standards is not comparable to similar
information made public by United
States companies subject to the reporting and disclosure
requirements of the United States Securities and Exchange
Commission. An "Inferred Mineral Resource" has a great amount of
uncertainty as to its existence and as to its economic and legal
feasibility. It cannot be assumed that all or any part of an
"Inferred Mineral Resource" will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies. Readers are cautioned not to assume that all or any part
of Measured or Indicated Resources will ever be converted into
Mineral Reserves. Readers are also cautioned not to assume that all
or any part of an "Inferred Mineral Resource" exists, or is
economically or legally mineable. In addition, the definitions of
"Proven Mineral Reserves" and "Probable Mineral Reserves" under CIM
Definition Standards differ in certain respects from the standards
of the United States Securities and Exchange Commission.
Technical Information
The scientific and technical information in this
news release has been reviewed and approved by Mark Petersen, an AIPG Certified Professional
Geologist under National Instrument 43-101 and officer of New Gold.
A Technical Report to be prepared in accordance with Form 43-101F1
will be filed on SEDAR within 45 days of this news release. For
further information with respect to the key assumptions, parameters
and risks associated with the results of the Feasibility Study, the
mineral reserve estimate and other technical information with
respect to the Blackwater project,
please refer to the Technical Report to be made available at
www.sedar.com. The following qualified persons, as that term is
defined in NI 43-101, have prepared or supervised the preparation
of their relevant portions of the technical information in this
news release and the related Technical Report to be filed:
- Mark Petersen, AIPG Certified
Professional Geologist (New Gold Inc.)
- Ronald G. Simpson, P Geo (GeoSim
Services Inc.)
- Jay Horton, P. Eng (Norwest
Corporation)
- Bruno Borntraeger, P. Eng
(Knight Piesold Ltd.)
- Gary Christie, P. Eng
(AMEC)
- Ignacy (Tony) Lipiec, P. Eng
(AMEC)
Mineral Resources
Blackwater
Mineral Resource Estimate - Effective March 31, 2013 |
|
Tonnes
(000s) |
Au (g/t) |
Ag (g/t) |
Au (Moz) |
Ag
(Moz) |
Measured & Indicated Resources
Direct processing material
Measured
Indicated
M&I (direct processing)
Stockpile material
Measured
Indicated
M&I (stockpile)
Total M&I |
116,955
189,044
305,999
26,521
64,382
90,904
396,903 |
1.04
0.78
0.88
0.30
0.30
0.30
0.74 |
5.6
6.0
5.8
4.1
4.4
4.3
5.5 |
3.90
4.73
8.62
0.26
0.62
0.87
9.50 |
21.06
36.47
57.52
3.50
9.11
12.60
70.13 |
Inferred Resources
Inferred (direct processing)
Inferred (stockpile)
Total Inferred |
13,815
3,785
17,600 |
0.76
0.31
0.66 |
4.1
3.6
4.0 |
0.34
0.04
0.38 |
1.82
0.44
2.26 |
Notes:
1. Reported within a conceptual open pit shell based on metal
prices of $1,400/oz gold,
$28.00/oz silver, and average
metallurgical recoveries of 88.0% gold and 64.0% silver for oxide
mineralization, 85.0% gold and 58.0% silver for transitional oxide
/ sulphide mineralization, and 85.0% gold and 44.0% silver for
sulphide mineralization.
2. Total contained metal calculated on the basis of Tonnes *
Grade / 31.10348 grams per troy ounce.
3. Gold-equivalent grade estimate based on $1,400/oz gold, $28.00/oz silver, and differential metallurgical
recoveries described in Note 1 above.
4. Direct processing material defined as mineralization above a
0.4 g/t AuEq cutoff and likely to be mined and processed
directly.
5. Stockpile material defined as mineralization above a 0.3 g/t
AuEq and below a 0.4 g/t AuEq cutoff that is suitable for
stockpiling and future processing based on average metallurgical
recoveries of 79.0% gold and 37.0% silver. The 0.3 g/t AuEq
lower cutoff grade is considered adequate to cover mining,
processing, and additional handling costs.
Mineral Reserve
1. Reported within an open pit design based on
metal prices of $1,300/oz gold,
$22.00/oz silver, with variable
recoveries by grade and ore type averaging 86.6% for gold and 49.1%
for silver.
2. Contained metal calculated on the basis of
Tonnes * Grade / 31.10348 grams per troy ounce.
3. Direct processing reserves are defined as
mineralization above a lower cut-off grade that varies by year
between 0.26 g/t and 0.38 g/t AuEq and is to be mined and processed
directly.
4. Reserves noted as stockpiled material consist
of ore tonnage above a 0.32g/t AuEq cut-off grade that is mined and
stockpiled before being sent to the mill. This stockpiled
tonnage includes ore mined before mill startup, lower grade ore
mined during preproduction and commercial production, and ore
tonnage misclassified or misallocated during the mining process.
All of the ore tonnage classified as reserves and listed here is
processed and the total reserves quoted are equal to the total mill
feed as shown in the life of mine plan. No stockpiles
currently exist at site.
5. Gold-equivalent grade estimate based on
$1,400/oz gold, $28.00/oz silver, and average metallurgical
recoveries of 88.0% gold and 64.0% silver for oxide mineralization,
85.0% gold and 58.0% silver for transitional oxide / sulphide
mineralization, and 85.0% gold and 44.0% silver for sulphide
mineralization.
6. All costs are based on estimates and vendor
quotes effective third quarter 2013. No escalation has been applied
to bring costs forward to December 2,
2013.
7. Cutoff grade values are based on a gold price
of $1,300/oz. The plant direct feed
cut-off grade is AuEq 0.26 g/t, and the ore stockpile cut-off grade
is AuEq 0.32 g/t. The cut-off grade calculation includes the
following costs:
|
|
a. |
minimum profit |
|
|
|
|
|
|
b. |
operating cost (ore mining, hauling
cost, processing, G&A) |
|
|
|
|
|
|
c. |
sustaining capital cost for mining,
tailings storage facility and the mill |
|
|
|
|
|
|
d. |
royalty and refining cost |
|
|
|
|
|
|
e. |
reduced recovery for stockpiled ore
(79%) |
The costs for determining cut-off grade are
based on the 2012 PEA updated by New Gold. Cut-off grades as
determined using the feasibility study costs and recoveries update
the cut-off grade from 0.26 g/t to 0.28 g/t for direct feed and
0.32 g/t to 0.33 g/t for stockpiled ore. This difference is within
the accuracy expected of a feasibility level study. An elevated
cut-off grade strategy has been selected to minimize the Project
payback period and maximize the NPV. During the first 10
years of the Project, where a surplus of ore will be mined, the
highest-grade ore will be sent to the mill and the rest stockpiled
for processing at the end of the mine life.
8. There are two primary dilution and loss
scenarios. The first scenario sees a surplus of ore being mined and
being sent to both the mill and the low-grade stockpile. In the
second scenario, all ore mined is sent to the mill with no surplus
sent to the low-grade stockpile. Dilution and losses vary for these
two scenarios due to the different cut-off grades used, resulting
in different ore / waste contact block configurations. As
such, the resulting average dilution for periods where both the
mill and the stockpile are fed is 5% at a grade of 0.16 g/t Au and
3.19 g/t Ag. For periods where all ore is sent to the mill
directly, dilution is 4% at a grade of 0.12 g/t Au and 2.90 g/t Ag.
In addition, all isolated ore blocks—ore blocks with waste on all
four adjacent sides—will be mined as waste and all isolated waste
blocks—waste blocks with ore on all four adjacent sides—will be
mined as ore.
Beyond the dilution factor noted above, a
misallocation factor is also applied when calculating the ore
tonnes. This factor accounts for ore that is intended for the
plant, based on grade, but is sent to the stockpile, or vice versa.
A factor of 15% of the total material sent to the stockpile was
applied to determine the misallocated quantities. The misallocated
stockpile ore is made up with the average mill feed ore for the
period. This misallocated material would average about 700kt per
year, or just under 4% of the total mill feed.
Non-GAAP Measures
(1) TOTAL CASH COSTS
"Total cash costs" per ounce figures are
non-GAAP measures which are calculated in accordance with a
standard developed by The Gold Institute, which was a worldwide
association of suppliers of gold and gold products and included
leading North American gold producers. The Gold Institute ceased
operations in 2002, but the standard is widely accepted as the
standard of reporting cash costs of production in North America. Adoption of the standard is
voluntary and the cost measures presented may not be comparable to
other similarly titled measures of other companies. New Gold
reports total cash costs on a sales basis. Total cash costs include
mine site operating costs such as mining, processing,
administration, royalties and production taxes, but are exclusive
of amortization, reclamation, capital and exploration costs. Total
cash costs are reduced by any by-product revenue and is then
divided by ounces sold to arrive at the total by-product cash cost
of sales. The measure, along with sales, is considered to be a key
indicator of a company's ability to generate operating earnings and
cash flow from its mining operations. This data is furnished to
provide additional information and is a non-IFRS measure. Total
cash costs presented do not have a standardized meaning under IFRS
and may not be comparable to similar measures presented by other
mining companies. It should not be considered in isolation as a
substitute for measures of performance prepared in accordance with
IFRS and is not necessarily indicative of operating costs presented
under IFRS.
(2) ALL-IN SUSTAINING COSTS
Consistent with the guidance announced earlier
in 2013 from the World Gold Council, an association of various gold
mining companies from around the world of which New Gold is a
member, New Gold defines "all-in sustaining costs" as the sum of
total cash costs, sustaining capital expenditures, corporate
general & administrative costs, capitalized and expensed
exploration that is sustaining in nature and environmental
reclamation costs. New Gold believes this non-GAAP measure provides
further transparency into costs associated with producing gold and
will assist analysts, investors and other stakeholders of the
company in assessing its operating performance, its ability to
generate free cash flow from current operations and its overall
value. All-in sustaining costs constitute a non-GAAP measure and
are intended to provide additional information only and do not have
any standardized meaning under IFRS. They should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. Other companies may calculate
these measures differently.
SOURCE New Gold Inc.