New Gold Inc.
New Gold Provides 2021 Operational Estimates for the Rainy River Mine and Updated Mineral Reserves and Mineral Resources
TORONTO--(BUSINESS WIRE)-- February 10, 2021 – New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE American: NGD) provides annual operational outlook for the Rainy River Mine and updated Mineral Reserves and Mineral Resources as of December 31, 2020. Annual operational estimates for the New Afton Mine will be released at a later date. All amounts are in U.S. dollars unless otherwise indicated.
Following the tragic underground mud-rush event at the New Afton Mine that occurred on February 2, 2021, the release of annual operational estimates for the New Afton Mine will be slightly delayed allowing the Company sufficient time to advance a more fulsome analysis and consider the potential impact on our 2021 production plan as additional information from our investigation becomes available. As noted in the press release dated February 8, 2021, the mine has restarted some underground activities and is currently operating at approximately 3,000 to 5,000 tonnes per day. The mill is currently processing ore from the live pile, which contains approximately 100,000 tonnes at 0.65-0.75% copper and 0.40-0.50 grams per tonne gold. The intermediate-grade surface stockpile contains approximately 1.4 million tonnes at 0.35-0.45% copper and 0.20-0.30 grams per tonne gold.
“We will continue to prioritize the health, safety and well-being of our workforce as we continue to safely and sequentially ramp-up underground operations at the New Afton Mine. As we consider the impact on the 2021 mine plan, we have flexibility to adjust the 2021 mine plan, including the optionality of supplementing mill feed for a period of time from our surface stockpiles,” stated Renaud Adams, President and CEO. “At the Rainy River Mine, the Company will continue to focus on optimizing our operational and cost performance with the objective of outperforming the 2021 technical report estimates as we build on the many accomplishments achieved over the past two years. We will also evaluate the potential expansion of the underground mine beyond the current life of mine, focusing on organic growth opportunities and advancing the exploration program.”
Sustainability and ESG
At Rainy River we continue to engage with our Indigenous partners on our environmental and social impacts. We take a collaborative approach to environmental monitoring through the development of our Environmental Monitoring Board, which is made up of Community members and members of the Rainy River team. We understand our approach to the environment is important to surrounding communities and we incorporate traditional knowledge into our monitoring as much as possible to ensure we respect the shared knowledge of our partners. During the year we will be focusing on increasing local procurement by working with local partners to provide business opportunities to more Indigenous companies. Economic development for the surrounding area continues to be the priority and we know that through business development opportunities and increased local employment we can have a long-term positive impact for our partners, creating more resilient communities.
2021 Rainy River Mine Operational Outlook
The operational outlook for the Rainy River Mine assumes that our operations will continue without any significant COVID-19-related interruptions. New Gold continues to maintain preventative measures at all our sites to protect our workforce and communities, and to mitigate the effects of COVID-19 on our operations. Any reduction or suspension of our operations due to COVID-19, could impact our ability to achieve the Rainy River’s 2021 outlook. Please see the Cautionary Note Regarding Forward-Looking Statements at the end of this news release.
During 2021, the Rainy River Mine will build on the transformational success that has been achieved, which supports expected production growth and a decrease in operating and capital costs over the prior year. The focus in 2021 is to drive further operational, cost and Mineral Reserves optimization.
Rainy River Operational Estimates
In 2021, the Company will continue to report production on a gold eq. basis as well as on a per-metal basis. Cash costsand AISCwill be reported on a per gold eq. ounce basis. Guidance has been prepared assuming $1,800 per gold ounce, $3.50 per pound of copper and $25 per silver ounce and a foreign exchange rate of 1.28 Canadian dollars to the US dollar (“Guidance Assumptions”).
The Company announces its 2021 operational outlook for the Rainy River Mine with an approximately 22% increase in production. Cash costs and All-in Sustaining Costs (“AISC”)1 are expected to decrease over the prior year, primarily due to lower cash costs and sustaining capital requirements as all deferred construction capital programs were completed in 2020. Growth capital is expected to increase over the prior year, primarily related to development of the underground Intrepid Zone.
- Gold eq. production is expected to increase over the prior year due to an increase in higher grade tonnes mined and processed as compared to 2020, which included the impact related to a voluntary two-week suspension due to COVID-19.
- Cash costs per gold eq. ounce are expected to decrease over the prior year as production increases and operational cost performance continues to improve. Operating expense per gold eq. ounce is expected to be between $715 and $795.
- Sustaining capital is expected to decrease over the prior year as planned.
- AISC are expected to decrease, primarily due to higher production, lower cash costs and lower sustaining capital requirements as compared to the prior year.
- Growth capital is expected to increase over the prior year, primarily relating to the development of the underground Intrepid Zone.
- The initial phase of an exploration drilling program focused on the North East Trend, located approximately 18 kilometers northeast of the Rainy River Mine was launched in late 2020. This first phase of exploration drilling will be completed during the first half of the year and could be expanded based on results.
During the year, operational and cost performance from the Rainy River Mine is expected to be in-line with the 2021 estimates provided in the NI 43-101 Technical Report for the Rainy River Mine dated March 12, 2020 (the “Rainy River Technical Report”), which estimate production of approximately 284,000 gold eq. ounces at AISC of approximately $1,200 per ounce (including equipment leasing), assuming Guidance Assumptions.
The Rainy River Mine begins 2021 with both the open pit mine and mill operating at productivity levels that are in-line with the estimates in the Rainy River Technical Report and with the objective of potentially outperforming those estimates.
During the first half of the year, grades are expected to be lower as the mine plan focuses on Phase 3 waste mining to bring pit walls to the final pit limit of Phase 3 south. Mining efforts are expected to return to Phase 2 mining in the second half of the year, with higher grades expected from the HS, 433 and ODM zones. Accordingly, the strip ratio is expected to be higher during the first half of the year and then decline in the second half as waste stripping activities are completed. The final Phase 4 overburden stripping is expected to continue to advance in the fourth quarter and into 2022. The plan considers a sustained average mining rate of approximately 151,000 tonnes per day. Cash costs and AISC are expected to be higher in the first half of the year and decrease in the second half of the year as grades improve and the strip ratio decreases.
Sustaining capital is expected to be relatively consistent during the year and is primarily related to waste stripping in the first half of the year, a Stage 3 dam raise in the second half with capital parts and components replacement programs throughout the year.
Growth capital includes the development of the decline towards the Intrepid underground ore zone that will continue during the year, with the operation expected to access the first ore level during the first quarter. The focus in 2021 will be on the refinement of the long-hole mining methodology and block model and to consider the potential to bring forward production from the Intrepid Zone from 2023 to early 2022.
The Company has also released its updated 2020 Mineral Reserve and Mineral Resources statements, which incorporates the conversion of approximately 123,000 ounces of Measured and Indicated Resources (M&I) contained in the Intrepid Zone to Mineral Reserves, using a higher reserve gold price assumption of $1,400 per ounce. (Details regarding the Company’s 2020 Mineral Reserves and Mineral Resources are provided below). As a result, the majority of the ounces contained within the Intrepid Zone can now be considered for inclusion in the underground mine plan and because the Intrepid Zone is independent of the open pit, there is an opportunity to advance the mining of the Intrepid zone as described above.
The 2019 Mineral Resources included a significant number of underground resources that were recategorized from Mineral Reserves to M&I Resources. With the higher gold price of $1,400 per ounce used for the 2020 Mineral Reserve estimates, the opportunity exists for a potential recategorization of a portion of the current M&I Resources as Mineral Reserves that could potentially expand the underground mine life beyond 2028. During the year, the Company is expected to complete an economic study of a potential standalone underground operation scenario beyond 2028, once all remaining surface stockpiles are depleted. The study will also consider a reduced throughput milling scenario that better accommodates the underground scenario. Based on the results of the study, which would include the already converted Mineral Reserve ounces from the Intrepid Zone as well as any further optimizations that may be achieved in 2021, the Company may consider releasing an enhanced NI 43-101 Technical Report in late 2021 or early 2022.
2021 Financial Outlook
Following key transactions completed in 2020, as well as improving operational and cost performance, the Company focused on debt reduction and improved liquidity that supported the transition to free cash flow. The Company is fully exposed to the stronger gold price following the expiration of gold option contracts at the end of 2020. The Company purchased low cost copper put options with a floor of $3.10 per pound to de-risk the execution of the 2021 C-Zone capital program while remaining fully exposed to higher copper prices.
The Company’s cash position will be positively impacted by the receipt of a second C$50 million payment from Artemis Gold Inc. (“Artemis”) in August 2021, related to the sale of the Blackwater Project (for more information refer to the Company’s June 9 and August 24, 2020 news releases). The Company also holds an 8% gold stream on the Blackwater Project and a 6% equity stake in Artemis.
During the year, depreciation and depletion is expected to average between $460 and $540 per gold eq. ounce for the Rainy River Mine.
As of December 31, 2020, the Company had a cash position of $185 million and a strong liquidity position of approximately $490 million.
About New Gold Inc.
New Gold is a Canadian-focused intermediate gold mining company with a portfolio of two core producing assets in Canada, the Rainy River and New Afton Mines. The Company also holds an 8% gold stream on the Artemis Gold Blackwater Project located in British Columbia and a 6% equity stake in Artemis. The Company also operates the Cerro San Pedro Mine in Mexico (in reclamation). New Gold's vision is to build a leading diversified intermediate gold company based in Canada that is committed to environment and social responsibility. For further information on the Company, visit www.newgold.com.
Source: https://www.newgold.com/investors/news-releases/news-details/2021/New-Gold-Provides-2021-Operational-Estimates-for-the-Rainy-River-Mine-and-Updated-Mineral-Reserves-and-Mineral-Resources/default.aspx
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Project Buyer (Temp)
As an integral part of New Gold’s Project Procurement team, the Project Buyer will provide support to the Capital Projects group.
Major Materials Warehouse Technician - 7/7 Rotation
The role of the Major Material Warehouse Technician is responsible for the managing of all the major materials (fuel, oils, mill reagents, tires, drilling materials etc.) to support the mine operations.
Senior Inventory Management Analyst - Relocation Required
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Warehouse Technician - 7/7 Rotation - No Camp - Relocation Required
The role of Warehouse Technician is to ensure the efficient operation of all warehouse activities.
Lead Environment Technician - Relocation Required
As a member of the New Gold Rainy River team, the Lead Environmental Technician demonstrates commitment and compliance with company Health & Safety, Environment and Social Responsibility policies and procedures.
Mine Superintendent - 14/14 Rotation - Camp & Travel
The role of Mine operations Superintendent is to oversee the safe and efficient extraction of ore through the supervision and control of mining department activities such as budgeting, planning staffing and cost control.
Senior Underground Mine Engineer - Relocation Required
The Senior Mine Engineer will provide clarity and focus for the engineering group to achieve and surpass the mine’s safety and production targets and to add value to the operation.
Construction & Engineering Superintendent
The Engineering & Construction Superintendent is expected to be a safety leader on site and thus will be required to demonstrate experience in executing work with a safety focus and an emphasis on human performance.
Senior Hydrogeologist/Water Resource Engineer
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Red Seal Millwrights
Red Seal Industrial Mechanic (Millwright) provides skilled expertise, executing world class maintenance practices and lubrication techniques.