TORONTO (miningweekly.com) – Vancouver-based New Gold produced more than 301 773 oz of gold in 2009, beating its own guidance, and expects output will increase further to between 330 000 oz and 360 000 oz this year, the firm said on Monday.

The company produced 233 103 oz of gold in 2008, and had forecast output of between 270 000 oz and 300 000 oz for 2009.

New Gold, which has operating mines in the US and Australia and development projects in Canada and Chile, produced a best-ever 111 672 oz of gold in the fourth quarter, up 41% compared with the same period of 2008.

Cash costs for the full year averaged $462/oz sold, after by-product sales, which was below the estimate of between $470/oz and $490/oz.

Costs in 2010 are forecast at between $445/oz and $465/oz net of by-product sales, New Gold said.

The company also reported a record quarterly underground development of 634 m at its New Afton project, in Canada.

"We are extremely pleased with the company's operating performance in 2009; our operations bettered production and cash cost guidance and New Afton continues on its steady path toward production," CEO Robert Gallagher said in a statement.

"With our successful operational performance, New Gold is well positioned for even better results in 2010."

Gold production this year will benefit from the first full year of production at the Mesquite mine, in the US, the firm said.

New Gold was formed in 2008 from the three-way merger of juniors Metallica Resources, New Gold and Peak Gold, followed by the acquisition last year of Western Goldfields.

The company is at the centre of a dispute between larger rivals Barrick and Goldcorp, as Barrick is challenging the legality of New Gold's plan to exercise its right of first refusal on Xstrata's 70% holding in the El Morro project in Chile.

The exercise of the right will be made possible by funding from Goldcorp, which will subsequently acquire the 70% from New Gold.

New Gold owns the other 30% in the project.

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