Rainy River Mine Life Extended to 2031
(All amounts are in U.S. dollars unless otherwise
indicated)
TORONTO, March 31,
2022 /CNW/ - New Gold Inc. ("New Gold" or the
"Company") (TSX: NGD) (NYSE American: NGD) reports the
filing of a Technical Report for the Company's Rainy River Mine
(the "Technical Report"). The Technical Report was prepared in
compliance with National Instrument 43-101 ("NI 43-101") and has an
effective date of March 28, 2022. The
Technical Report is available on SEDAR at www.sedar.com and on the
Company's website at www.newgold.com.
The primary objective of the Technical Report is to provide an
update on the open pit and expanded underground mine plans. The
life of mine ("LOM") has extended to 2031 with the conversion of an
additional 569,000 gold ounces in the underground main zones to
Mineral Reserves. The remaining open pit will be mined using an
optimized selective mining approach which, combined with stockpile
movement, leads to both a smoother and sustainable mill grade and
gold production profile, before transitioning to a cost-effective
batch processing underground operation. The updated Technical
Report was prepared using the Mineral Reserves and Mineral
Resources as at December 31, 2021 and
assuming metal prices of $1,400 per
gold ounce and $19.00 per silver
ounce, and a foreign exchange rate of $1.25 Canadian dollars to $1.00 US dollar.
Rainy River Updated Technical
Report Highlights
|
Units
|
2022 NI
43-101
(LOM
2022-2031)
|
Production
Summary
|
Mine Life
|
Years
|
10
|
Open Pit Tonnes Ore
Mined
|
kt
|
43,755
|
Open Pit Gold Grade
Mined
|
g/t
|
0.98
|
Open Pit Strip
Ratio
|
Waste/Ore
|
2.32
|
Underground Ore Tonnes
Mined
|
kt
|
12,657
|
Underground Gold Grade
Mined
|
g/t
|
3.05
|
Tonnes Ore
Processed
|
kt
|
70,220
|
Combined Average Gold
Grade
|
g/t
|
1.24
|
Average Gold
Recovery
|
%
|
89%
|
Total Gold
Production
|
Ounces
|
2,524,612
|
Average
Annual Gold Production – 2022-2027
|
Ounces
|
302,090
|
Average
Annual Gold Production – LOM
|
Ounces
|
252,461
|
Total Gold
Equivalent1 ("gold eq.") Production
|
Ounces
|
2,579,893
|
Average
Annual Gold Eq. Production – 2022-2027
|
Ounces
|
309,265
|
Average
Annual Gold Eq. Production – LOM
|
Ounces
|
257,989
|
Operating and
Capital Costs Summary
|
Open Pit Mining
Costs
|
$/t mined
|
$4.18
|
Underground Mining
Costs
|
$/t mined
|
$52.73
|
Processing
Costs
|
$/t
processed
|
$7.42
|
Site G&A
Costs
|
$/t
processed
|
$3.44
|
Operating Expenses Per
Gold Eq. Ounce
|
$ per ounce
|
$749
|
All-In Sustaining Cost
Per Gold Eq. Ounce2
|
$ per ounce
|
$1,047
|
Total
Capital
|
$M
|
$718
|
Sustaining
Capital2
|
$M
|
$647
|
Growth
Capital2 (Referred to
as project capital in Technical Report)
|
$M
|
$71
|
"The filing of the updated Rainy River Mine Technical Report is
another positive milestone towards delivering sustainable
production", stated Renaud Adams,
President & CEO. "I am confident that our updated approach for
mining the remaining open pit should lead to a smoother, more
consistent grade and production profile. The successful efforts to
convert underground Mineral Resources to Mineral Reserves in 2021,
which added meaningful gold ounces to the life of mine plan, has
also extended the mine life to 2031 with low upfront underground
development capital. Further, all-in sustaining costs continue to
remain attractive and decrease significantly after 2023, providing
for strong margins and free cash flow over the next
decade."
Mining and Processing
Summary
- Open pit mining has historically focused on segregating higher
grade ore and medium grade ore ("direct processing ore") from lower
grade ore ("LGO"), which has allowed for higher grade ore being
milled and the LGO material being stockpiled for future processing.
In 2021, this approach was particularly challenging with
reconciliation issues and with the ability to selectively mine and
recover material from certain peripheral ore zones within the open
pit. As the open pit continues to deepen, mining areas become
narrower and the selective mining approach becomes more difficult
and less efficient, resulting in an impact on productivity, costs
increases, and potentially an inability to recover all ore
material. In order to minimize the challenges from the segregation
approach, the updated mine plan was prepared using the following
approach:
-
- For the open pit mine plan, the direct processing ore cut-off
grade has been lowered providing for an optimized selective mining
approach when direct feed ore material will continue to be mined
separately from the LGO.
- Direct processing ore and LGO to be mined together when
efficient selective mining is no longer possible.
- The updated approach, along with processing of the stockpile
ore material, produces a balanced average mill grade to support a
smoother and sustainable gold eq. production profile. Annual gold
eq. production is expected to average approximately 310,000 ounces
per year during the 2022 to 2027 period.
- The updated mine plan predominately focuses on the remaining
ounces from the main ODM zone, which has historically reconciled
well with the resource model, from the second half of 2022 to 2025.
The previously reported correction factor has been applied on the
ODM East Lobe zone, which is expected to be completed in 2023.
- Production from the Intrepid underground zone has been
accelerated compared to the 2020 technical report. Development of
the main ramp and the first ore panel continues to advance on plan
with initial production commencing in 2022.
- The underground main zones have been incorporated via two
in-pit portals (previously four), as well as the Intrepid
underground zone portal located to the east of the open pit. The
development of the first in-pit portal is expected to be initiated
in the first quarter of 2023 with the second portal planned to be
initiated in the first quarter of 2026. The underground production
profile has extended to 2031 with the conversion of Mineral
Resources to Mineral Reserves in the underground main zones and
their inclusion into the mine plan.
- Mill throughput is planned to average approximately 27,000
tonnes per day during the 2022 to 2027 period, with LGO stockpile
supplementing underground mill feed from 2026 to 2028.
- Beginning in 2029, a cost-effective batch processing approach
is expected to be implemented to mill the underground
material.
- The updated Technical Report utilized an average gold recovery
factor in line with the 2020 technical report of 89%.
- The Company continues to look for and identify opportunities to
further optimize the mine plan and resource model. Underground
stope design optimization will be undertaken with the support of
data collected through delineation drilling already planned and
budgeted within the updated Technical Report.
Operating and Capital Costs
Summary
- LOM sustaining capital2 is estimated to be
$647 million, primarily consisting
of:
-
- $193 million is related to open
pit stripping and mobile maintenance. Approximately 90% of these
costs occur in 2022 and 2023 with sustaining capital significantly
decreasing beginning in 2024.
- $110 million is related to
tailings construction, which is planned to be completed in
2025.
- $326 million is related to
underground mining, primarily for underground ramp development,
ventilation and pumping requirements.
- LOM growth capital2 is estimated to be $71 million, primarily related to complete
pre-production development of the underground Intrepid and main
zones from 2022 to 2024.
- LOM operating expense and all-in sustaining costs2
are expected to be $749 and
$1,047 per gold eq. ounce,
respectively. All-in sustaining costs2 are expected to
significantly decrease beginning in 2024, consistent with the
sustaining capital profile.
Technical Information
The scientific and technical information in the Technical Report
was developed through the combined efforts of the Company's
internal technical team and several independent consultants.
InnovExplo Mining Consultants led the preparation of the
underground portion of the mine plan while AMC Mining Consultants
led the preparation of the open pit portion of the mine plan. A
full list of Qualified Persons for the Technical Report can be
found in that document available on SEDAR at www.sedar.com and on
the Company's website at www.newgold.com. The Qualified Persons for
this news release are set out below under the heading, "Technical
Information and Qualified Persons".
About New Gold
New Gold is a Canadian-focused intermediate mining Company with
a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New
Afton copper-gold mine. The Company also holds a 5% equity stake in
Artemis Gold Inc. and other Canadian-focused investments. New
Gold's vision is to build a leading diversified intermediate gold
company based in Canada that is
committed to the environment and social responsibility. For further
information on the Company, visit www.newgold.com.
Endnotes
1.
|
Total gold eq. ounces
include silver produced/sold converted to a gold equivalent ratio
based on $1,400 per gold ounce and $19.00 per silver ounce for the
LOM.
|
2.
|
"All-in sustaining
costs", "sustaining capital" and "growth capital" are all non-GAAP
financial performance measures that are used in this news release.
These measures do not have any standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other issuers. For more information about why these measures are
used by the Company, how they provide useful information to
investors, and an explanation of the composition of each measure,
please see the "Non-GAAP Financial Performance Measures" section of
this news release.
|
Non-GAAP Financial Performance
Measures
Total Cash Costs per Gold eq. Ounce
"Total cash costs per gold equivalent ounce" is a non-GAAP
financial performance measure that is a common financial
performance measure in the gold mining industry but does not have
any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other issuers. New Gold
reports total cash costs on a sales basis and not on a production
basis. The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, this measure, along with
sales, is a key indicator of the Company's ability to generate
operating earnings and cash flow from its mining operations. This
measure allows investors to better evaluate corporate performance
and the Company's ability to generate liquidity through operating
cash flow to fund future capital exploration and working capital
needs.
This measure is intended to provide additional information only
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of cash generated from
operations under IFRS or operating costs presented under IFRS.
Total cash cost figures are calculated in accordance with a
standard developed by The Gold Institute, a worldwide association
of suppliers of gold and gold products 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. Total cash costs include mine site operating
costs such as mining, processing and administration costs,
royalties, and production taxes, but are exclusive of amortization,
reclamation, capital and exploration costs. Total cash costs are
then divided by gold equivalent ounces sold to arrive at the total
cash costs per equivalent ounce sold.
In addition to gold, the Company produces copper and silver.
Gold equivalent ounces of copper and silver produced or sold in a
quarter are computed using a consistent ratio of copper and silver
prices to the gold price and multiplying this ratio by the pounds
of copper and silver ounces produced or sold during that
quarter.
Notwithstanding the impact of copper and silver sales, as the
Company is focused on gold production, New Gold aims to assess the
economic results of its operations in relation to gold, which is
the primary driver of New Gold's business. New Gold believes this
metric is of interest to its investors, who invest in the Company
primarily as a gold mining business. To determine the relevant
costs associated with gold equivalent ounces, New Gold believes it
is appropriate to reflect all operating costs incurred in its
operations.
All-In Sustaining Costs per Gold eq. Ounce
"All-in sustaining costs per gold equivalent ounce" is a
non-GAAP financial performance measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other issuers. New Gold calculates
"all-in sustaining costs per gold equivalent ounce" based on
guidance announced by the World Gold Council ("WGC") in
September 2013. The WGC is a
non-profit association of the world's leading gold mining companies
established in 1987 to promote the use of gold to industry,
consumers and investors. The WGC is not a regulatory body and does
not have the authority to develop accounting standards or
disclosure requirements. The WGC has worked with its member
companies to develop a measure that expands on IFRS measures to
provide visibility into the economics of a gold mining company.
Current IFRS measures used in the gold industry, such as operating
expenses, do not capture all of the expenditures incurred to
discover, develop and sustain gold production. New Gold believes
that "all-in sustaining costs per gold equivalent ounce" 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 per gold equivalent ounce" is intended
to provide additional information only and does not have any
standardized meaning under IFRS 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 IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
New Gold defines "all-in sustaining costs per gold equivalent
ounce" as the sum of total cash costs, net capital expenditures
that are sustaining in nature, corporate general and administrative
costs, capitalized and expensed exploration that is sustaining in
nature, lease payments that are sustaining in nature, and
environmental reclamation costs, all divided by the total gold
equivalent ounces sold to arrive at a per ounce figure. The
definition of sustaining versus non-sustaining is similarly applied
to capitalized and expensed exploration costs and lease payments.
Exploration costs and lease payments to develop new operations or
that relate to major projects at existing operations where these
projects are expected to materially increase production are
classified as non-sustaining and are excluded. Gold equivalent
ounces of copper and silver produced or sold in a quarter are
computed using a consistent ratio of copper and silver prices to
the gold price and multiplying this ratio by the pounds of copper
and silver ounces produced or sold during that quarter.
Costs excluded from all-in sustaining costs are non-sustaining
capital expenditures, non-sustaining lease payments and exploration
costs, financing costs, tax expense, and transaction costs
associated with mergers, acquisitions and divestitures, and any
items that are deducted for the purposes of adjusted earnings.
Sustaining Capital and Sustaining Leases
"Sustaining capital" and "sustaining lease" are non-GAAP
financial performance measures that do not have any standardized
meaning under IFRS and therefore may not be comparable to similar
measures presented by other issuers. New Gold defines "sustaining
capital" as net capital expenditures that are intended to maintain
operation of its gold producing assets. Similarly, a "sustaining
lease" is a lease payment that is sustaining in nature. To
determine "sustaining capital" expenditures, New Gold uses cash
flow related to mining interests from its statement of cash flows
and deducts any expenditures that are capital expenditures to
develop new operations or capital expenditures related to major
projects at existing operations where these projects will
materially increase production. Management uses "sustaining
capital" and "sustaining lease", to understand the aggregate net
result of the drivers of all-in sustaining costs other than total
cash costs. These measures are intended to provide additional
information only and should not be considered in isolation or as
substitutes for measures of performance prepared in accordance with
IFRS.
Growth Capital
"Growth capital" is a non-GAAP financial performance measure
that does not have any standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other issuers. New Gold considers non-sustaining capital costs to
be "growth capital", which are capital expenditures to develop new
operations or capital expenditures related to major projects at
existing operations where these projects will materially increase
production. To determine "growth capital" expenditures, New Gold
uses cash flow related to mining interests from its statement of
cash flows and deducts any expenditures that are capital
expenditures that are intended to maintain operation of its gold
producing assets. Management uses "growth capital" to understand
the cost to develop new operations or related to major projects at
existing operations where these projects will materially increase
production. This measure is intended to provide additional
information only and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
For additional information with respect to the non-GAAP measures
used by the Company, refer to the detailed "Non-GAAP Financial
Performance Measure" section disclosure starting on page 33 of the
Company's Management's Discussion and Analysis for the year ended
December 31, 2021filed on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
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 are "forward-looking". All statements in this
news release, other than statements of historical fact, which
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", "targeted", "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
include, among others, statements with respect to: the Company's
expectations regarding production, costs, capital investments,
expenses, margins and free cash flow for the LOM, and the factors
and timing contributing to those expected results; the anticipated
LOM of Rainy River extending to
2031 and the intended mining approach during such period;
statements under the heading "Rainy River Updated Mine Plan Key
Highlights"; planned mining operations and development and
exploration activities and the associated timing and costs thereof;
expectations regarding production timing; the Company's predictions
regarding gold grade, gold production profile and gold recovery;
the Company's estimates regarding Mineral Reserves and Mineral
Resources; the Company's anticipated approach to milling and the
associated timing and throughput rates; and plans to further
optimize the mine plan and resource model and undertake underground
stope design optimization.
All forward-looking statements in this news release are based on
the opinions and estimates of management that, while considered
reasonable as at the date of this news release in light of
management's experience and perception of current conditions and
expected developments, are inherently subject to important risk
factors and uncertainties, many of which are beyond New Gold's
ability to control or predict. Certain material assumptions
regarding such forward-looking statements are discussed in this
news release, New Gold's latest annual management's discussion and
analysis ("MD&A"), its most recent annual information form and
technical reports on the Rainy River Mine filed on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. In addition to, and
subject to, such assumptions discussed in more detail elsewhere,
the forward-looking statements in this news release are also
subject to the following assumptions: (1) there being no
significant disruptions affecting New Gold's operations other than
as set out herein; (2) political and legal developments in
jurisdictions where New Gold operates, or may in the future
operate, being consistent with New Gold's current expectations; (3)
the accuracy of New Gold's current mineral reserve and mineral
resource estimates and the grade of gold, silver and copper
expected to be mined and the grade of gold, copper and silver
expected to be mined; (4) the exchange rate between the Canadian
dollar and U.S. dollar, and to a lesser extent, the Mexican Peso,
and commodity prices being approximately consistent with current
levels and expectations for the purposes of 2022 guidance and
otherwise; (5) prices for diesel, natural gas, fuel oil,
electricity and other key supplies being approximately consistent
with current levels; (6) equipment, labour and materials costs
increasing on a basis consistent with New Gold's current
expectations; (7) arrangements with First Nations and other
Aboriginal groups in respect of the Rainy River Mine being
consistent with New Gold's current expectations; (8) all required
permits, licenses and authorizations being obtained from the
relevant governments and other relevant stakeholders within the
expected timelines and the absence of material negative comments or
obstacles during any applicable regulatory processes; (9)
there being no significant disruptions to the Company's
workforce at the Rainy River Mine due to cases of COVID-19
(including any required self-isolation requirements due to
cross-border travel to the United
States or any other country or any other reason) or
otherwise; (10) the responses of the relevant governments to the
COVID-19 outbreak being sufficient to contain the impact of the
COVID-19 outbreak; (11) there being no material disruption to the
Company's supply chains and workforce that would interfere with the
Company's anticipated course of action at the Rainy River Mine; and
(12) the long-term economic effects of the COVID-19 outbreak not
having a material adverse impact on the Company's operations or
liquidity position.
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: price volatility in the spot and forward markets for
metals and other commodities; discrepancies between actual and
estimated production, between actual and estimated costs, between
actual and estimated Mineral Reserves and Mineral Resources and
between actual and estimated metallurgical recoveries; equipment
malfunction, failure or unavailability; accidents; risks related to
early production at the Rainy River Mine, including failure of
equipment, machinery, the process circuit or other processes to
perform as designed or intended; 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
of each jurisdiction in which New Gold operates, including, but not
limited to: obtaining the necessary permits for the New Afton
C-Zone; uncertainties and unanticipated delays associated with
obtaining and maintaining necessary licenses, permits and
authorizations and complying with permitting requirements,
including those associated with the C-Zone permitting process;
changes in project parameters as plans continue to be refined;
changing costs, timelines and development schedules as it relates
to construction; the Company not being able to complete its
construction projects at the Rainy River Mine or the New Afton Mine
on the anticipated timeline or at all; volatility in the
market price of the Company's securities; changes in national and
local government legislation in the countries in which New Gold
does or may in the future carry on business; controls, regulations
and political or economic developments in the countries in which
New Gold does or may in the future carry on business; the Company's
dependence on the Rainy River Mine and New Afton Mine; the Company
not being able to complete its exploration drilling programs on the
anticipated timeline or at all; disruptions to the Company's
workforce at either the Rainy River Mine or the New Afton Mine, or
both, due to cases of COVID-19 or any required self-isolation (due
to cross-border travel, exposure to a case of COVID-19 or
otherwise); the responses of the relevant governments to the
COVID-19 outbreak not being sufficient to contain the impact of the
COVID-19 outbreak; disruptions to the Company's supply chain and
workforce due to the COVID-19 outbreak; an economic recession or
downturn as a result of the COVID-19 outbreak that materially
adversely affects the Company's operations or liquidity position;
there being further shutdowns at the Rainy River Mine or New Afton
Mine; significant capital requirements and the availability
and management of capital resources; additional funding
requirements; diminishing quantities or grades of Mineral Reserves
and Mineral Resources; actual results of current exploration or
reclamation activities; uncertainties inherent to mining economic
studies including the Technical Reports for the Rainy River Mine
and New Afton Mine; impairment; unexpected delays and costs
inherent to consulting and accommodating rights of First Nations
and other indigenous groups; climate change, environmental risks
and hazards and the Company's response thereto; tailings dam and
structure failures; actual results of current exploration or
reclamation activities; fluctuations in the international currency
markets and in the rates of exchange of the currencies of
Canada, the United States and, to a lesser extent,
Mexico; global economic and
financial conditions and any global or local natural events that
may impede the economy or New Gold's ability to carry on business
in the normal course; compliance with debt obligations and
maintaining sufficient liquidity; taxation; fluctuation in
treatment and refining charges; transportation and processing of
unrefined products; rising costs or availability of labour,
supplies, fuel and equipment; adequate infrastructure;
relationships with communities, governments and other stakeholders;
geotechnical instability and conditions; labour disputes; the
uncertainties inherent in current and future legal challenges to
which New Gold is or may become a party; defective title to mineral
claims or property or contests over claims to mineral properties;
competition; loss of, or inability to attract, key employees;
use of derivative products and hedging transactions; counterparty
risk and the performance of third party service providers;
investment risks and uncertainty relating to the value of equity
investments in public companies held by the Company from time to
time; the adequacy of internal and disclosure controls; conflicts
of interest; the lack of certainty with respect to foreign
operations and legal systems, which may not be immune from the
influence of political pressure, corruption or other factors that
are inconsistent with the rule of law; the successful acquisitions
and integration of business arrangements and realizing the intended
benefits therefrom; and information systems security threats. In
addition, there are risks and hazards associated with the
business of mineral exploration, development, construction,
operation 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 most
recent annual information form, MD&A and other disclosure
documents filed on and available on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov. 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
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.
Technical Information and
Qualified Persons
The scientific and technical information contained herein has
been reviewed and approved by Andrew
Croal, Director, Technical Services for the Company. Mr.
Croal is a Professional Engineer and a member of the Professional
Engineers of Ontario. Mr. Croal is
a "Qualified Person" for the purposes of NI 43-101. To the
Company's knowledge, Mr. Croal holds less than 1% of the
outstanding securities of the Company. No limitations were imposed
on the Qualified Person with respect to the verification of the
data contained herein. Further detail about the Mineral Resource
and Mineral Reserve estimates, including assumptions, parameters,
risks and data verification measures, is available in the updated
Technical Report.
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SOURCE New Gold Inc.