VANCOUVER (miningweekly.com) – Project developer New Gold has increased the capital requirement for its Rainy River project, in north-western Ontario, by $105-million, which includes a $20-million contingency.

This is up from its previous capital expenditure (capex) estimate of $877-million to build the mine.

The Toronto-headquartered company said Wednesday that total project development capital spending through August 31 was about $565-million, adding that, from September 1 forward, the remaining development budget is $480-million, lifting Rainy River's capex requirement to $1.05-billion.

New Gold has brought forward into the construction phase $35-million in accelerated equipment purchasing, as a result of extending its tailings redesign across the full facility, instead of the previously planned 30% rework.

New Gold said Rainy River remains on schedule for a mid-2017 start-up, from when it is expected to add about 325 000 oz/y gold to the company’s intermediate production profile of between 360 000 oz and 400 000 oz this year.

The company reported that overall construction is 45% complete, while the installation of mechanical and electrical equipment in the processing facilities is 15% complete. It also announced that the water dam permit amendment had been received.

Investors did not take positively to the news, pushing the company’s TSX-listed stock down nearly 10% Wednesday to C$6.57 apiece. In step with buoyant precious metals prices so far this year, New Gold’s stock has appreciated more than 121% year-to-date.

Desjardins Capital Markets analyst Michael Parkin decried the project update in a note to clients titled ‘Cry me a Rainy River’, in reference to a popular song by artist Justin Timberlake.

Parkin assumed an 11% capex overrun to complete Rainy River, noting that, owing to multiple capex revisions for the year to date in connection with Rainy River, analysts’ conviction on New Gold achieving the remaining development budget of $480-million was relatively low.

Factoring in the higher capex and given stock price appreciation, Desjardins analysts downgraded New Gold stock to ‘Hold’ from ‘Buy’ and lowered its price target to C$7 from C$7.25.