325,000 Ounces of Annual Gold Production at Low Costs during
First Nine Years
(All figures are in US dollars unless otherwise indicated)
VANCOUVER,
Jan. 16, 2014 /CNW/ - New Gold Inc.
("New Gold") (TSX:NGD) and (NYSE MKT:NGD) today announces the
results of its Feasibility Study for the Rainy River project
("Rainy River" or the "Project") in Ontario, Canada. The company successfully
completed the acquisition of Rainy River Resources Ltd. ("Rainy
River Resources") on October 16,
2013. Through the second half of 2013, New Gold's
development team worked with third party consultants to complete
its Feasibility Study for the Project. The purpose was to ensure
that the key inputs and assumptions used for Rainy River were consistent with those used
for New Gold's other projects and operations. This Feasibility
Study builds upon the study completed and filed by Rainy River
Resources on May 24, 2013.
Feasibility Study Highlights
- First nine years - average annual gold production of 325,000
ounces at total cash costs(1) of $613 per ounce and all-in sustaining
costs(2) of $736 per
ounce
-
- First nine years - average mill head grade of 1.44 grams per
tonne gold
- Life-of-mine gold and silver production of 3.4 million ounces
and 6.0 million ounces at total cash costs(1) of
$663 per ounce and all-in sustaining
costs(2) of $765 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, Rainy River has a
pre-tax 5% net present value ("NPV") of $438
million, an internal rate of return ("IRR") of 13.1% and a
payback period of 5.4 years
- Alternative case economics - at $1,600 per ounce gold, $26.00 per ounce silver and a parity US$/C$
foreign exchange rate, Rainy River
has a pre-tax 5% NPV of $1.0 billion,
an IRR of 21.1% and a payback period of 3.6 years
- Development capital costs of $885
million inclusive of a $70
million contingency
- Targeted commissioning in late 2016 with first year of full
production in 2017
- 14-year mine life with direct processing of open pit and
underground ore, at a rate of 21,000 tonnes per day ("tpd"), for
first nine years and processing of a combination of stockpile and
underground ore thereafter
"We are very pleased to have completed the
Feasibility Study for our Rainy
River project," stated Randall
Oliphant, Executive Chairman of New Gold. "The results of
the study are entirely consistent with our expectations when we
decided to acquire Rainy River Resources. The Project provides our
company with an asset that meets all of our key criteria including:
solid returns with strong leverage to higher gold prices,
manageable capital costs, a robust, long-lived production base with
continued regional exploration potential, below industry average
costs, and located in a great mining jurisdiction."
"The project team has done a great job advancing
Rainy River to this stage," added
Robert Gallagher, President and
Chief Executive Officer of New Gold. "In parallel with this
Feasibility Study, the Environmental Assessment report has also
been finalized and is scheduled to be released in the coming days
for regulatory agency and stakeholder review. We look forward to
progressing the Project further through 2014."
Mineral Reserve and Resource Estimate
Mineral Resource
The Rainy River mineral resource, effective
November 2, 2013, is reported in
relation to a conceptual open pit shell at a gold cut-off of 0.30
grams per tonne for open pit resources and a gold cut-off value of
2.5 grams per tonne for underground resources. Globally, the
deposit contains Measured and Indicated mineral resources suitable
for direct processing, from mine to mill, of 106 million tonnes at
1.54 grams per tonne gold and 2.88 grams per tonne silver,
representing 5.2 million ounces of gold and 9.8 million ounces of
silver. In addition, the open pit Measured and Indicated mineral
resources suitable for stockpiling and future processing total 71
million tonnes at 0.43 grams per tonne gold and 2.09 grams per
tonne silver, representing 1.0 million ounces of gold and 4.8
million ounces of silver. A table summarizing the mineral resource,
including key assumptions, is included at the conclusion of this
news release in the section entitled Technical
Information.
This mineral resource estimate has been
completed by SRK Consulting (Canada) Inc. ("SRK") in conformity with
generally accepted CIM "Estimation of Mineral Resource and Mineral
Reserves Best Practices" guidelines and is reported in accordance
with Canadian Securities Administrators' NI 43-101 (as defined at
the conclusion of this release). The mineral resource estimate is
based upon a geologic block model that incorporates 382,182
individual assays from over 742,000 metres of core from 1,656 drill
holes. 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. SRK has
conducted a series of routine verifications to ensure the
reliability of the quality assurance/quality control for the drill
assay data supporting the Rainy River mineral resource. Through
SRK's independent review, it has been concluded that the field
samples and assaying procedures meet industry best practices and
that assay grades can be reasonably reproduced, indicating that the
primary assay laboratories are sufficiently reliable for the
resource estimation used in the Feasibility Study.
Mineral Reserve
A proposed mining production schedule was
developed through the design of a combined open pit and underground
mine within the mineral resource model. The Rainy River mineral
reserve, which represents the portion of Measured and Indicated
mineral resources included in the production schedule, has been
diluted using an average of 4.0% additional tonnes containing 0.21
grams per tonne gold and 1.19 grams per tonne silver for the open
pit and an average of 11.7% for the underground stoping, which
includes dilution from both overbreak and backfill dilution.
Including the development ore, the total underground dilution
averages 8.3%. The open pit mineral reserve estimate has been
completed by BBA Inc. and the underground mineral reserve estimate
has been completed by AMC Mining Consultants (Canada) Ltd. The Rainy River mineral reserve
is summarized in the following table.
Rainy
River Mineral Reserve Estimate - Effective November 2,
2013 |
|
Tonnes
(Kt) |
Gold
(g/t) |
Silver
(g/t) |
Gold
(Koz) |
Silver
(Koz) |
Direct processing material
Open Pit
Proven
Probable
Underground
Proven
Probable
Total direct processing material |
15,839
46,866
--
4,187
66,892 |
1.47
1.26
--
4.96
1.54 |
2.04
3.05
--
10.31
3.26 |
746
1,896
--
668
3,311 |
1,038
4,594
--
1,388
7,021 |
Stockpile material
Open Pit
Proven
Probable
Total stockpile material |
6,843
30,541
37,384 |
0.38
0.39
0.38 |
1.51
2.10
1.99 |
84
378
462 |
332
2,058
2,390 |
Direct processing and stockpile material
Open Pit
Proven
Probable
Total
Underground
Proven
Probable
Total |
22,681
77,407
100,088
--
4,187
4,187 |
1.14
0.91
0.96
--
4.96
4.96 |
1.88
2.67
2.49
--
10.31
10.31 |
830
2,275
3,105
--
668
668 |
1,370
6,652
8,022
--
1,388
1,388 |
Total Combined
Proven
Probable
Total |
22,681
81,594
104,275 |
1.14
1.12
1.13 |
1.88
3.06
2.81 |
830
2,943
3,773 |
1,370
8,040
9,410 |
Notes: |
1. Open pit mineral reserves have been estimated using an
optimized pit shell based on metal prices of $800 per ounce gold
and $25 per ounce silver,
a foreign exchange rate of CAD $1.05 to USD $1.00, gold recovery
of 89.9% (non-CAP Zone) and 74.3% (CAP Zone) and a silver recovery
of 67.1%
(non-CAP Zone) and 69.5% (CAP Zone). The cut-off grade is based
on a gold price of $1,200. Underground reserves have been estimated
from mining
shapes generated using a cut-off grade of 3.5 g/t
gold-equivalent. Development material from stope access drives
above a cut-off grade of 1.5 g/t
gold-equivalent is also assumed to be sent to the mill for
processing. Underground breakeven cut-off grade is calculated at
2.75 g/t gold-equivalent based
on metal prices of $1,300 per ounce gold and $22 per ounce
silver, a foreign exchange rate of CAD $1.05 to USD $1.00, gold
recovery of 95% and a
silver recovery of 75%.
2. Open pit reserves have been estimated using a dilution of 4%
at 0.21 g/t Au and 1.19 g/t Ag, and Underground reserves have been
estimated using an
overall dilution of 8.3%, inclusive of both rock and backfill
dilution. Open pit and underground reserves have been estimated
using a mining recovery of
95% and 96.5%, respectively.
3. Open pit direct processing material is defined as
mineralization likely to be mined and processed directly and above
a variable cut-off grade ranging
from 0.3-0.7 Au g/t.
4. Stockpile material includes all material within designed open
pit between variable cut-offs described above in Note 3, as well as
material within the
CAP zone (code 500) that is suitable for stockpiling and future
processing.
5. Mineral Reserves for the open pit are derived from the
resource model effective November 2, 2013. Models for the
underground reserves were
derived from the August 2013 and September 2013 models for the
main ODM zone and Intrepid Zone, respectively. Models were prepared
by Dorota
El-Rassi, P.Eng. (APEO #100012348) and Glen Cole, P.Geo. (APGO
#1416), of SRK, both independent "Qualified Persons" as that term
is defined in
Canadian National Instrument 43-101. Rainy River's exploration
program in Richardson Township is being supervised by Mark A.
Petersen, (AIPG
Certified Professional Geologist #10563), Vice President,
Exploration for New Gold and a "Qualified Person" as defined in
Canadian National Instrument
43-101. New Gold continues to implement a rigorous QA/QC program
to ensure best practices in drill core sampling, analysis and data
management.
6. Qualified persons - The open pit portion of the mineral
reserve statement was prepared under the supervision of Patrice
Live (OIQ #38991) of BBA,
and the underground portion of the mineral reserve statement was
prepared by Colm Keogh, P.Eng. (APEGBC #37433) of AMC Mining
Consultants
(Canada) Ltd., both independent "Qualified Persons" as that term
is defined in Canadian National Instrument 43-101.
7. The mineral reserve estimate may be materially affected by
environmental, permitting, legal, title, taxation, sociopolitical,
marketing, and other relevant issues. |
Mining Operations and Metallurgy
Conventional open pit mining has been chosen as
the primary method to mine the Rainy River deposit given the
proximity of mineralization to the surface. Deeper, higher grade
portions of the deposit will be mined from underground. The open
pit mining production schedule incorporates an elevated cut-off
grade strategy during the first nine years of mining to increase
the mill feed grade. Material below the elevated cut-off grade will
be stockpiled for processing during the later years of the Project
life. In addition, upon the start of production from the open pit,
the development of the underground mine would commence with initial
production from underground expected in 2018. The targeted mill
throughput of 21,000 tpd will initially be sourced exclusively from
the open pit and then, once in full production, the underground
mine will contribute 1,500 tpd of ore, with the balance of the
19,500 tpd coming from the open pit.
Open Pit Operations
At full capacity, open pit mining operations
would be carried out with an equipment fleet comprising: three 216
millimetre blast hole drills, one 29 cubic metre and two 26 cubic
metre hydraulic shovels, one 18 cubic metre wheel loader and 22 -
220 tonne haul trucks. A 10 metre bench height has been selected
for mining. The open pit mine would provide process plant feed
starting at a nominal rate of 21,000 tpd, or 7.7 million tonnes per
year, declining to 19,500 tpd, or 7.1 million tonnes per year, once
the underground mine reaches its full production. Total annual
mining of ore, waste and overburden would peak at 69 million
tonnes. The operational stripping ratio, excluding waste and
overburden stripping during the development phase, is 3.5:1.0.
Underground Operations
The underground mine will be accessed via a four
kilometre decline from a surface portal located to the east of the
open pit. The underground design supports the ultimate extraction
of 1,500 tpd of ore by longitudinal longhole open stoping. The
underground mineralization occurs in sub-vertical horizons varying
in width from approximately three metres to 20 metres, with the
weighted average width across the various zones being approximately
eight metres. The various areas of underground mineralization
provide for flexibility in the production schedule to recover
higher grade material earlier in the mine life. Longitudinal
longhole open stoping in each zone will proceed in a retreating
pattern from the strike extent of ore to a common access point on
all levels. Mining is scheduled to proceed upwards from the lowest
level of the zone, or from an adopted sill elevation, with backfill
providing the working platform for each successive lift. On
average, stopes eight metres in width, 20 metres in length and 20
metres in height have been used for mine planning. At full
capacity, ore handling from underground workings to surface will be
accomplished through a fleet of four 7 cubic metre loaders and six
45 tonne haul trucks.
Metallurgy
The metallurgical evaluation was supported by an
extensive grinding and extraction test program. Comminution tests
were conducted on drill hole composites selected via
geometallurgical methodology to ensure representative process plant
feed, from both the open pit and underground, as well as to
investigate the impact of variability in hardness on the crushing
and grinding circuit design. The composites were derived from over
170 exploration drill holes and 13 dedicated large bore HQ/PQ drill
holes. Mineralogical and diagnostic leach tests were conducted on
approximately 120 composite samples. The test work determined the
base flowsheet as well as the optimum leaching parameters. An
additional 275 variability leach tests were then conducted on
specific geometallurgically selected drill core composite samples
to investigate the impact of the selected leaching parameters on
the various ore zones throughout the deposit. Estimated process
plant feed grade, recoveries and metal production from commercial
production forward are summarized below.
Rainy River 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 |
68.9 |
1.44 |
3.1 |
91.9 |
63.7 |
325 |
480 |
Life-of-mine |
103.9 |
1.12 |
2.8 |
90.6 |
64.1 |
243 |
429 |
Note: Table excludes 0.4 Mt of material milled in the
preproduction period.
Mineral Processing
The 21,000 tpd process plant would use
conventional crushing, grinding, leaching, carbon-in-pulp ("CIP")
and gold recovery technology to produce gold-silver doré. The
overall design utilizes a simple and conventional flowsheet.
Run-of-mine material will be crushed to 165
millimetres in the gyratory crusher and subsequently conveyed and
ground in the SAG mill in closed circuit with a scalping screen and
a pebble crusher. Undersize from the scalping screen will be
combined with the ball mill discharge and pumped to a cyclone
cluster. The underflow from the cyclone cluster will feed the ball
mill. A portion of the ball mill discharge will be treated by a
gravity circuit. The cyclone overflow will be thickened in a
pre-leach thickener and pumped to the cyanide leaching circuit,
which is designed for approximately 30 hours retention time. The
discharge from the leach circuit will flow by gravity to a CIP
circuit where the leached gold will be adsorbed onto carbon. Loaded
carbon will be sent to the carbon stripping circuit where the gold
and silver will be recovered as sludge in electrowinning cells then
filtered, dried and smelted into doré bars.
The tailings from the CIP circuit will be sent
to the cyanide destruction circuit and then discharged into the
tailings storage facility.
Key process equipment would consist of:
- A 1,371 x 1,950 millimetre (54" x 75") gyratory crusher
- A SAG/ball mill/crusher grinding circuit:
-
- One 11.0 x 6.1 metre diameter (36' x 20') 15-Megawatt SAG
mill
- One 7.9 x 12.3 metre diameter (26' x 40.5') 15-Megawatt Ball
mill
- One 448-Kilowatt pebble crusher
- One 45 metre diameter pre-leach thickener
- Whole ore leaching and CIP circuit:
-
- Eight leach tanks of 18 metre diameter
- Seven 360 cubic metre capacity CIP tanks
- One 45 metre diameter pre-detox thickener
Project Capital Costs
The Project is located 50 kilometres northwest
of Fort Frances, a town with a
population of approximately 8,000 people, in northwestern
Ontario. The Project benefits from
its proximity to existing infrastructure. Hydroelectric power will
be sourced through the construction of a new 17 kilometre
transmission line that will connect the Project to a pre-existing
230 kV line that currently links Fort
Frances and Kenora,
Ontario, a small city with a population of approximately
15,000 people, located to the north of the Project.
The Rainy River project site is easily
accessible by a network of all-weather roads that branch off the
well-maintained Trans-Canada Highways 11 and 71. Access roads are
serviced, allowing year-round access. The Canadian National Railway
is located 21 km to the south of the Project and runs
east-west.
During the initial development stage, the direct
on-site personnel requirement peaks at approximately 450 people. As
a result of the Project's proximity to various towns, no camp
facilities are envisioned during the construction or operational
phase. The underground mine is scheduled to be developed once the
open pit begins production. Development capital costs related to
the underground mine are included in the sustaining capital
estimate.
The total estimated development capital cost for
the Project is $885 million inclusive
of a $70 million contingency. The
estimated development capital cost is based on the fourth quarter
2013 capital environment. The development capital cost equates to
$260 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 $348 million, which includes $105 million related to the development of the
underground mine. In total, the sustaining capital, including the
development of the underground, is equivalent to an annual average
of $102 per recoverable gold ounce
over the current life of the Project.
Breakdown of
Feasibility Study Project Development Capital Costs |
Description |
($ millions) |
Direct Costs |
|
Process facilities |
297 |
Site development (Truck shop, Warehousing,
Earthworks, etc.) |
111 |
Open pit mine equipment |
81 |
Overburden and waste stripping |
80 |
Tailings and water management |
48 |
Power line and roads |
21 |
Total Direct Costs |
638 |
Owner's Costs and EPCM |
|
Owner's costs |
76 |
Engineering, Procurement and Construction
Management |
48 |
Other Indirect Costs |
|
Freight and logistics |
13 |
Construction facilities and services |
10 |
Spare parts and equipment |
10 |
Other indirect costs |
20 |
Total Indirect Costs |
53 |
Total Owner's Costs, EPCM and Indirect
Costs |
177 |
Subtotal |
815 |
Contingency |
70 |
Total Project Development Capital
Costs |
885 |
Breakdown of
Feasibility Study Sustaining Capital Costs |
Description |
($ millions) |
Open pit sustaining capital |
111 |
Underground development capital (equipment,
infrastructure, development) |
105 |
Underground sustaining capital |
132 |
Total Sustaining Capital Costs |
348 |
Project Operating Costs
Rainy River's
combined open pit and underground operation delivers strong gold
head grades which, when combined with the Project's proximity to
infrastructure and silver by-product revenue, results in
Rainy River'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$2.04 per tonne of material for the open pit and
C$90.10 per tonne of material for the
underground. Costs per tonne milled over the life-of-mine are
summarized below.
Breakdown of Base
Case Feasibility Study Operating Costs |
Description |
(C$ per tonne
milled) |
($ per gold ounce
produced) |
Open pit mining (overburden, waste, direct
processing ore and stockpile) |
9.22 |
373 |
Underground mining |
3.63 |
Processing |
9.25 |
268 |
General and administrative |
1.54 |
45 |
Royalties |
0.41 |
12 |
Refining and transport |
0.14 |
4 |
Cash costs |
24.19 |
702 |
Silver by-product sales at $22.00 per ounce
silver |
(1.34) |
(39) |
Total cash costs(1) |
22.85 |
663 |
Sustaining capital |
3.53 |
102 |
All-in sustaining costs(2) |
26.38 |
765 |
The above base case cost estimates assume an
electricity rate of C$0.065 per
kilowatt hour and a diesel cost of C$0.95 per litre.
Economic Sensitivity Analysis
The summary below, showing a range of commodity
price and foreign exchange scenarios, holds the above-noted
electricity rate and diesel cost constant. The NPV figures are
calculated to the beginning of 2015 when, assuming the receipt of
necessary permits and approvals within expected timelines,
construction would begin. For purposes of the calculations, any
2014 development expenditures are treated as undiscounted
costs.
Summary of
Feasibility Study Project Economics (Pre-tax) |
Gold Price
($ per ounce) |
Silver Price
($ per ounce) |
US$/C$
exchange |
5% NPV
($ millions) |
IRR
(%) |
Payback
Period
(Years) |
1,150 |
20.00 |
0.93 |
138 |
7.8 |
6.8 |
1,300 |
22.00 |
0.95 |
438 |
13.1 |
5.4 |
1,450 |
24.00 |
0.97 |
738 |
17.6 |
4.3 |
1,600 |
26.00 |
1.00 |
1,009 |
21.1 |
3.6 |
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 $232
million change in pre-tax NPV and 3.7% 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 $141
million change in pre-tax NPV and 2.8% change in pre-tax
IRR
- Every $50 million change in
development capital costs, where all other assumptions are held
constant, results in a $46 million
change in pre-tax NPV and 1.3% change in pre-tax IRR
Tax Considerations
Part of New Gold's growth strategy, including
the successful acquisition of Rainy River Resources in 2013, has
been to build its business in jurisdictions where it already has an
established presence. One of the many benefits of this approach is
that it enables the company to manage its business in a
tax-efficient manner. In the case of Rainy River, New Gold plans to implement tax
planning strategies that would allow it to realize tax synergies by
utilizing a portion of the tax attributes that have been, and will
continue to be, generated in the corporate entity holding the
company's portfolio of Canadian assets. Currently, the company's
primary objective is to maximize the cash flow generation of its
New Afton Mine in Kamloops, British
Columbia, with any remaining tax attributes planned to be
used to maximize Rainy River's
future after-tax cash flow. As New Gold's focus in such
allocation will be maximizing the company's overall profitability
rather than that of any one operation or project, this will remain
a dynamic process.
At the end of 2012, on a combined basis, the New
Gold corporate entity had over $900
million in Canadian Exploration Expenditures, Canadian
Development Expenditures and Class 41 capital cost allowance as
well as over $100 million in net
operating losses. These totals exclude those attributes
specifically related to the Blackwater project. In addition, the
company's annual corporate administration expenses are
approximately $30 million and its
annual interest expenses are $52
million, both of which can be combined with the above noted
attributes to shelter taxable profits from one or both of New Afton
and Rainy River going forward. New
Gold intends to implement tax planning strategies that would allow
it the flexibility to access the existing tax attributes of Rainy
River Resources and utilize them in a manner which would maximize
New Gold's overall profitability.
For purposes of calculating the base case
Rainy River after-tax economics,
the company has assumed the Ontario Provincial and Federal taxes
noted below as well as the distribution of the above-noted tax
attributes as between Rainy River,
New Afton and New Gold's other operations in a manner that first
maximizes New Afton's life-of-mine cash flow generation based on
the current New Afton mine plan.
- 10% Ontario provincial income
tax on taxable income
-
- 10% Ontario mining taxes on
mining income
- 2.7% Ontario corporate minimum
tax
- 15% federal income taxes on taxable income
These assumptions result in the below after-tax
economics for the Project.
Summary of
Feasibility Study Project Economics (After-tax) |
Gold Price
($ per ounce) |
Silver Price
($ per ounce) |
US$/C$
exchange |
5% NPV
($ millions) |
IRR
(%) |
Payback
Period
(Years) |
1,150 |
20.00 |
0.93 |
100 |
7.1 |
6.8 |
1,300 |
22.00 |
0.95 |
314 |
11.3 |
5.5 |
1,450 |
24.00 |
0.97 |
520 |
14.9 |
4.4 |
1,600 |
26.00 |
1.00 |
706 |
17.8 |
3.8 |
2014 Feasibility Study Key Parameters
The results of the 2014 Rainy River Feasibility
Study, including life-of-mine capital costs, average annual
production and costs and project economics, are all consistent with
those developed by New Gold in connection with its acquisition of
Rainy River Resources in 2013. Additional detail on the key Project
parameters, including changes in certain assumptions since Rainy
River Resources' May 2013 study, is
provided below:
Life-of-mine capital costs
- Increase in development capital costs primarily attributable to
New Gold's plan to purchase, rather than lease, equipment and more
conservative assumptions on labour productivity and rates
- Decrease in sustaining capital costs primarily attributable to
above-noted plan to purchase equipment and reclassification of
certain overburden and waste stripping costs from sustaining
capital to operating costs
- In Canadian dollar terms, the total life-of-mine capital costs,
including development and sustaining capital for both the open pit
and underground, have increased by 8% when compared to the
May 2013 study, which has been offset
by an 8% depreciation in the Canadian dollar from US$/C$0.99 at the time of the 2013 study results
announcement to US$/C$0.91 today
Production
- Increased underground mineral reserves, from inclusion of
Intrepid zone, and updated mine planning has resulted in
contribution from higher grade underground now reaching 1,500 tpd
rate
- Life-of-mine total underground gold production increased by
148,000 ounces
- Life-of-mine total open pit gold production decreased by
391,000 ounces due to more conservative approach of using 10 x 10 x
10 metre blocks for modelling rather than the 5 x 5 x 5 metre
blocks used previously
Operating Costs
- Minimal 5% increase in open pit mining cost per tonne mined,
despite above-noted overburden and waste stripping costs being
reclassified as mine operating costs
- Increase in underground mining cost per tonne resulting from
updated mine planning and more conservative assumptions on
productivity and rates
- Increase in processing costs due to increased electricity rate
assumption of C$0.065 per kilowatt
hour
- Lower all-in sustaining costs(2) during the first
nine years as a result of the decrease in sustaining capital more
than offsetting the increase in operating costs
Environment, Permitting and Corporate Social
Responsibility
New Gold is an active member of the local
community with offices in both Emo
and Thunder Bay, Ontario that
offer residents easily accessible locations to learn about the
Rainy River project. The company has engaged the local communities,
as well as local First Nations and Métis community members in its
Project planning activities.
Environmental aspects have figured prominently
in the development of the layouts and designs for the Rainy River
project. Among other aspects, this includes consideration of the
implications of design alternatives from an environmental
management perspective, with a particular focus on mineral waste
management, as well as the siting and location of facilities and
infrastructure. From an environmental perspective, the Rainy River
project is unique in that there are no lakes located within, or
adjacent to, the Project. Based on multiple years of aquatics
baseline investigations, with the exception of some limited
baitfish harvesting, the area streams do not support a significant
commercial or recreational fishery. There is considerable
environmental baseline information currently available regarding
the site and the surrounding area, compiled through extensive field
investigations conducted over a four-year period. This information
is being augmented as appropriate to support the progressing
engineering design.
New Gold plans to operate the Project in
accordance with the International Cyanide Management Code.
The Rainy River project is being reviewed
through a coordinated Federal Environmental Assessment ("EA") -
Provincial Individual EA process. During the second and third
quarters of 2013, the draft EA report was reviewed by local First
Nations and Métis groups, Federal and Provincial regulatory
agencies and other stakeholders. All comments received were
addressed and a final EA report was submitted on December 3, 2013 for Federal conformity review.
On December 12, 2013, the company was
informed that the final EA report had successfully passed the
Federal conformity review step. This milestone enables the company
to move forward with the next step in the review process as
planned. Consistent with the Project schedule, the final EA report
is being issued to the Federal and Provincial agencies, the local
First Nations and Métis groups and other stakeholders in the coming
days to complete the second consultation engagement.
The objective of final reclamation for the Rainy
River project is to return the site to a productive condition on
completion of mining activities. A conceptual closure plan
consistent with regulatory requirements was part of the draft EA
report issued for review in 2013 and is also included in the final
EA report. Consistent with the Ontario Mining Act requirements, the
formal Mine Closure Plan document will be submitted later in 2014
for proposed filing concurrent with the decision on the Provincial
Individual EA. As much as possible, reclamation will be completed
progressively during operations, consistent with industry best
practices.
Once in full operation, Rainy River is expected to create
approximately 600 permanent jobs. The construction work force would
be approximately 450 people. 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 Rainy River's expected future performance is
"forward looking". All statements in this news release, other than
statements of historical fact, that address events, results,
outcomes 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 of such terms.
Forward-looking statements in this news release primarily relate to
the results of the Rainy River Feasibility Study, and include,
among others, statements with respect to: the economic and
feasibility parameters of the Rainy River project, the cost and
timing of development of the Project, 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 Rainy River
project; the estimation of mineral reserves and resources; the
timing for submission of the Rainy River Environmental Assessment
report and receipt of permits; the timing of development of
Rainy River in the future; and the
expected pre- and after-tax NPV, IRR and payback period associated
with the Rainy River project as well as the company's plans with
respect to tax planning and allocation of tax attributes.
All forward-looking statements in this news
release are based on the opinions and estimates made as of the date
such statements and 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
forward looking statements are discussed in this news release,
where applicable, and will also be discussed in our Technical
Report, which will be filed on SEDAR within 45 days of this news
release. In addition to, and subject to, such specific assumptions,
the forward-looking statements in this new release are subject to
the following assumptions: (1) there being no signification
disruptions affecting the development and operation of the project;
(2) the exchange rate between the Canadian dollar and U.S. dollar
being approximately consistent with current levels; (3) the
availability of certain consumables and services and the prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (4) labour and
materials costs increasing on a basis consistent with current
expectations; (5) permitting and arrangements with First Nations
and other Aboriginal groups being consistent with current
expectations; (6) that all environmental approvals, required
permits, licenses and authorizations will be obtained from the
relevant governments and other relevant stakeholders within the
expected timelines; (7) certain tax rates, including the allocation
of certain tax attributes to the project; (8) the availability of
financing for New Gold's development activities; (9) the timelines
for exploration and development activities on the project; and (10)
assumptions made in mineral resource and reserve estimates,
including geological interpretation grade, recovery rates, gold
price assumption, and operational costs; and general business and
economic conditions. 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, performance or achievements to be materially
different from those expressed or implied by such forward-looking
statements. Such risks, uncertainties and factors include, without
limitation: significant capital requirements and availability of
capital resources to fund such 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;
changes to New Afton's mine plan or profitability or to New Gold's
asset profile that might alter the allocation of tax attributes to
Rainy River; controls, regulations
and political or economic developments in Canada; the speculative nature of mineral
exploration and development; risks associated with obtaining and
maintaining the necessary licenses and permits and complying with
permitting requirements, including, without limitation approval of
the EA and receipt of all related permits, authorizations or other
rights, including under the Endangered Species Act and Public
Lands Act; 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 such as the Feasibility Study for Rainy River, including the risk that the
assumptions underlying the Feasibility Study and its economic
parameters will not be realized; 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; delays and costs inherent to consulting and
accommodating rights of First Nations and other Aboriginal Groups;
and uncertainties with respect to obtaining all necessary surface
rights, land use rights and other tenure from the Crown and private
landowners required 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. Accordingly,
readers should not place undue reliance on forward-looking
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 Rainy River 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:
- Colin Hardie, P. Eng., BBA
Inc.
- David Runnels, Eng., BBA Inc.
- Patrice Live, Eng., BBA Inc.
- Sheila Daniel, M. Sc., P. Geo,
AMEC
- David G. Ritchie, P. Eng.,
AMEC
- Adam Coulson, PhD., P. Eng.,
AMEC
- Glen Cole, P. Geo., SRK
Consulting (Canada) Inc.
- Dorota El-Rassi, P. Eng., SRK
Consulting (Canada) Inc.
- Colm Keogh, P. Eng., AMC
Consultants, Ltd.
- Mo Molavi, P. Eng., AMC
Consultants, Ltd.
Mineral Resources
Rainy River Mineral Resource Estimate - Effective November 2,
2013 |
|
Tonnes
(Kt) |
Gold
(g/t) |
Silver
(g/t) |
Gold
(Koz) |
Silver
(Koz) |
Direct processing material
Open Pit
Measured
Indicated
Measured and Indicated
Inferred
Underground
Measured
Indicated
Measured and Indicated
Inferred |
20,282
80,411
100,693
9,388
89
5,469
5,558
2,641 |
1.45
1.35
1.37
0.97
4.95
4.53
4.53
4.46 |
1.93
2.55
2.42
2.28
2.75
11.34
11.20
8.30 |
947
3,486
4,433
292
14
796
810
379 |
1,261
6,584
7,846
687
8
1,994
2,002
707 |
Stockpile material
Open Pit
Measured
Indicated
Measured and Indicated
Inferred |
6,294
64,816
71,110
8,626 |
0.37
0.44
0.43
0.37 |
1.29
2.17
2.09
1.16 |
74
919
993
102 |
262
4,526
4,788
323 |
Total Combined
Measured
Indicated
Measured and Indicated
Inferred |
26,665
150,696
177,361
20,655 |
1.21
1.07
1.09
1.16 |
1.79
2.70
2.57
2.58 |
1,035
5,202
6,236
773 |
1,531
13,104
14,635
1,717 |
Notes: |
1. Mineral resources are reported in relation to conceptual
pit shells and are inclusive of the Intrepid zone. Vertical limit
of -150m msl.
2. Open pit mineral resources are reported at a cut-off grade of
0.30 gpt gold, underground mineral resources are reported at a
cut-off
grade of 2.5 gpt gold based on a gold price of $1,400 per ounce,
a silver price of $24.00 per ounce, a foreign exchange rate of
C$1.10
to US$1.00, gold recovery of 88% for open pit resources and 90%
for underground resources with silver recovery at 75%.
3. Direct processing material is defined as mineralization above
a cut-off of 0.45 g/t gold and likely to be mined and processed
directly.
4. Stockpile material includes all material within conceptual
pit shells in the gold grade range 0.30 - 0.45 gpt as well as all
material within
the CAP zone that is suitable for stockpiling and future
processing based on average metallurgical recoveries of 88% gold
and 75% silver.
5. Qualified Persons - The mineral resource statement was
prepared by Dorota El-Rassi, P. Eng. (APEO #100012348) and Glen
Cole
(APGO #1416) from SRK, both independent "Qualified Persons" as
that term is defined in National Instrument 43-101.
6. Mineral resources are inclusive of mineral reserves.
Mineral resources that are not mineral reserves do not have
demonstrated
economic viability.
7. The mineral resource estimate may be materially affected by
environmental, permitting, legal, title, taxation, sociopolitical,
marketing
and other relevant issues. |
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, a worldwide association
of suppliers of gold and gold products and included leading North
American gold producers that ceased operations in 2002. 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-GAAP
measure. Total cash costs presented do not have a standardized
meaning under GAAP 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 GAAP and is not necessarily indicative of operating
costs presented under GAAP.
(2) ALL-IN SUSTAINING COSTS
Consistent with guidance announced 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" per ounce 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, all divided by the ounces sold to arrive at a
per ounce figure. 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 the Rainy River project's expected operating
performance, ability to generate free cash flow and its overall
value. This data is furnished to provide additional information and
is a non-GAAP measure. All-in sustaining costs presented do not
have a standardized meaning under GAAP and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP and is not necessarily
indicative of operating costs presented under GAAP.
SOURCE New Gold Inc.