VANCOUVER (miningweekly.com) – Canadian gold miner New Gold has added further financial flexibility into its budget as it focuses on completing construction of the $1.05-billion Rainy River project, in Northern Ontario.

The TSX-listed company has increased its credit facility by $100-million to $400-million, saying $275-million is currently available for ongoing requirements.

The company estimates it will have pro forma available liquidity totalling $500-million when the revolving credit facility is combined with the cash balance of $150-million and the remaining payment of $75-million from Royal Gold for the Rainy River gold stream.

New Gold expects $425-million in capital expenditure will be needed to complete Rainy River.

In a project and financial update published on Tuesday morning, New Gold revealed that it had successfully relaxed the net debt to earnings before interest, taxes, depreciation and amortisation covenant to 4:1, extending it to late in 2017. New Gold expects to remain below a ratio of 3.5:1 over the Rainy River start-up period.

With 2016 guidance for all-in sustaining costs (AISC) of $750/oz to $790/oz, New Gold's four operations continue to generate robust margins and cash flow with which to finance mine construction.

However, the company has extended its use of gold price option contracts to increase its cash flow certainty over the remaining Rainy River development period. New Gold has hedged 120 000 oz gold at a floor of $1 300/oz and a ceiling of $1 400/oz.

PROJECT UPDATE
New Gold reported that construction at Rainy River was now 55% complete, with major items such as the power line complete. The line is on schedule to be connected to the grid in November.

New Gold said the tailings management facility amendment was submitted in August and is expected to be approved by mid-2017. The revised facility’s new starter dam, which does not require an amendment, should provide capacity for about six months of operation.

Construction on the five amended water dams was resumed in August, with two of the five completed. All five are expected to be complete by November.

The company expects all mechanical and electrical instrumentation in the processing facility to be completed by late April 2017.

New Gold reports that mining activities continue to ramp up according to plan, saying the team is currently operating at 85 000 t/d.

New Gold further adds that it recently completed a thorough review of its operating cost estimates at Rainy River and is targeting average total cash costs of $550/oz, and AISC of $710/oz, over the first nine years of the mine life, compared with the previously assessed total cash costs of $570/oz and AISC of $670/oz over the same period.

Meanwhile, New Gold announced that it will defer the development of the underground mine by one year to the second half of 2018 to preserve capital. New Gold advised that the initial underground development is estimated to cost about $100-million over a two-year development period and that the deferral will better position Rainy River to generate robust free cash flow once the mine starts production in mid-2017.

New Gold’s TSX-listed stock fell as much as 9.2% on Tuesday, to C$5.12 a share, in line with a markedly lower gold price at $1 272.4/oz.