TSX- and NYSE American-listed New Gold on Thursday released the results of updated life-of-mine (LoM) plans for the Rainy River gold/silver mine, in Ontario, and the New Afton gold/copper mine, in British Columbia.
CEO Renaud Adams said that the rejigged plans for New Gold set out a “clear and profitable path” forward for the gold miner.
At Rainy River, the focus was on creating a mine plan that would optimise the return on investment, while achieving profitability at an early stage of the plan. The scenarios evaluated prioritised mining in areas that “generate positive margins and drive meaningful cash flow over the balance of a shorter, but more profitable mine life”.
The openpit and underground mine plan positioned the operation for profitability and free cash flow generation beginning in fourth quarter of 2020, Adams said.
There is potential to extend the underground mine life beyond 2028, should the prevailing gold price support the development of additional mining areas.
The updated Rainy River mine foresees LoM production of 2.39-million gold-equivalent ounces (GEOs), or an average of 289 000 GEO a year, at an all-in sustaining cost of $967/oz of gold.
For the period 2020 to 2024, the operation is expected to generate free cash flow of about $250-million at a gold price assumption of $1 300/oz, or about $600-million at a spot gold price assumption of $1 550/oz.
At New Afton, an integrated mine plan would optimise the self-funded development of New Afton’s B3 and C-Zone that could deliver free cash flow of more than $1-billion dollars over the mine life, which is extended to 2030.
The plan puts forward that New Afton would produce 917 800 oz of gold and 745.7-million pounds of copper, or an average of 260 200 GEOs a year, at an AISC of $681/oz of GEO.
The C-zone, which would be self-funded, would start production at the beginning of the third quarter of 2024, ramping up to full output from 2025 to 2029.
New Afton would require LoM growth capital of $460-million and sustaining capital.
Meanwhile, New Gold produced 101 423 GEO, including 66 966 oz of gold, 140 475 oz of silver and 18.3-million pounds of copper in the fourth quarter. Full-year production was 486 141 GEO.
AISC for the quarter were $1 862/GEO and $1 310/GEO for the year, which was below its guidance of $1 330 to $1 430/GEO, owing to lower sustaining capital spend.
Net earnings from continuing operations for the quarter was $0.3-million with a net loss for the year of $74-million. The adjusted net loss from continuing operations for the quarter was $28-million and $47-million for the year.