New Gold Provides 2021 Operational Estimates for the Rainy River Mine and Updated Mineral Reserves and Mineral Resources

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Overig advies 10/02/2021 17:14
TORONTO--(BUSINESS WIRE)-- February 10, 2021 – New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE American: NGD) provides annual operational outlook for the Rainy River Mine and updated Mineral Reserves and Mineral Resources as of December 31, 2020. Annual operational estimates for the New Afton Mine will be released at a later date. All amounts are in U.S. dollars unless otherwise indicated.

Following the tragic underground mud-rush event at the New Afton Mine that occurred on February 2, 2021, the release of annual operational estimates for the New Afton Mine will be slightly delayed allowing the Company sufficient time to advance a more fulsome analysis and consider the potential impact on our 2021 production plan as additional information from our investigation becomes available. As noted in the press release dated February 8, 2021, the mine has restarted some underground activities and is currently operating at approximately 3,000 to 5,000 tonnes per day. The mill is currently processing ore from the live pile, which contains approximately 100,000 tonnes at 0.65-0.75% copper and 0.40-0.50 grams per tonne gold. The intermediate-grade surface stockpile contains approximately 1.4 million tonnes at 0.35-0.45% copper and 0.20-0.30 grams per tonne gold.

“We will continue to prioritize the health, safety and well-being of our workforce as we continue to safely and sequentially ramp-up underground operations at the New Afton Mine. As we consider the impact on the 2021 mine plan, we have flexibility to adjust the 2021 mine plan, including the optionality of supplementing mill feed for a period of time from our surface stockpiles,” stated Renaud Adams, President and CEO. “At the Rainy River Mine, the Company will continue to focus on optimizing our operational and cost performance with the objective of outperforming the 2021 technical report estimates as we build on the many accomplishments achieved over the past two years. We will also evaluate the potential expansion of the underground mine beyond the current life of mine, focusing on organic growth opportunities and advancing the exploration program.”

Sustainability and ESG

At Rainy River we continue to engage with our Indigenous partners on our environmental and social impacts. We take a collaborative approach to environmental monitoring through the development of our Environmental Monitoring Board, which is made up of Community members and members of the Rainy River team. We understand our approach to the environment is important to surrounding communities and we incorporate traditional knowledge into our monitoring as much as possible to ensure we respect the shared knowledge of our partners. During the year we will be focusing on increasing local procurement by working with local partners to provide business opportunities to more Indigenous companies. Economic development for the surrounding area continues to be the priority and we know that through business development opportunities and increased local employment we can have a long-term positive impact for our partners, creating more resilient communities.

2021 Rainy River Mine Operational Outlook

The operational outlook for the Rainy River Mine assumes that our operations will continue without any significant COVID-19-related interruptions. New Gold continues to maintain preventative measures at all our sites to protect our workforce and communities, and to mitigate the effects of COVID-19 on our operations. Any reduction or suspension of our operations due to COVID-19, could impact our ability to achieve the Rainy River’s 2021 outlook. Please see the Cautionary Note Regarding Forward-Looking Statements at the end of this news release.

During 2021, the Rainy River Mine will build on the transformational success that has been achieved, which supports expected production growth and a decrease in operating and capital costs over the prior year. The focus in 2021 is to drive further operational, cost and Mineral Reserves optimization.

Rainy River Operational Estimates

In 2021, the Company will continue to report production on a gold eq. basis as well as on a per-metal basis. Cash costsand AISCwill be reported on a per gold eq. ounce basis. Guidance has been prepared assuming $1,800 per gold ounce, $3.50 per pound of copper and $25 per silver ounce and a foreign exchange rate of 1.28 Canadian dollars to the US dollar (“Guidance Assumptions”).

Rainy River 2021 Guidance Estimates

Rainy River Mine 2021 Operational and Cost Guidance

2021 Operational Estimates 2021 Guidance
Gold Produced (ounces) 270,000 - 290,000
Gold Eq. Produced (ounces)1 275,000 - 295,000
Cash Costs per gold eq. ounce 1,2 $715 - $795
All-in Sustaining Costs per gold eq. ounce1,2 $1,125 - $1,225

2021 Capital Investment & Exploration Expense Estimates 2021 Guidance
Sustaining Capital & Sustaining Leases ($M)2 $95 - $125
Growth Capital ($M)2 m $10 - $15
Exploration Expense ($M) ~$5

Gold eq. ounces includes approximately 538,000 to 568,000 ounces of silver.
Refer to the “Non-GAAP Measures” section of this news release.
The Company announces its 2021 operational outlook for the Rainy River Mine with an approximately 22% increase in production. Cash costs and All-in Sustaining Costs (“AISC”)1 are expected to decrease over the prior year, primarily due to lower cash costs and sustaining capital requirements as all deferred construction capital programs were completed in 2020. Growth capital is expected to increase over the prior year, primarily related to development of the underground Intrepid Zone.

Gold eq. production is expected to increase over the prior year due to an increase in higher grade tonnes mined and processed as compared to 2020, which included the impact related to a voluntary two-week suspension due to COVID-19.
Cash costs per gold eq. ounce are expected to decrease over the prior year as production increases and operational cost performance continues to improve. Operating expense per gold eq. ounce is expected to be between $715 and $795.
Sustaining capital is expected to decrease over the prior year as planned.
AISC are expected to decrease, primarily due to higher production, lower cash costs and lower sustaining capital requirements as compared to the prior year.
Growth capital is expected to increase over the prior year, primarily relating to the development of the underground Intrepid Zone.
The initial phase of an exploration drilling program focused on the North East Trend, located approximately 18 kilometers northeast of the Rainy River Mine was launched in late 2020. This first phase of exploration drilling will be completed during the first half of the year and could be expanded based on results.
During the year, operational and cost performance from the Rainy River Mine is expected to be in-line with the 2021 estimates provided in the NI 43-101 Technical Report for the Rainy River Mine dated March 12, 2020 (the “Rainy River Technical Report”), which estimate production of approximately 284,000 gold eq. ounces at AISC of approximately $1,200 per ounce (including equipment leasing), assuming Guidance Assumptions.
2021 Rainy River Key Performance Indicators

Key Performance Indicators
2021 Estimates1
Open pit tonnes mined per day (ore and waste) 150,000 - 152,000
Strip ratio (waste:ore) ~2.70
Tonnes milled per calendar day 26,200 - 26,400
Gold grade milled (g/t) 0.98 - 1.02
Gold recovery (%) 90 - 92

1 These estimates are based on assumptions that, while considered reasonable by the Company as at the date of this press release in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. See Cautionary Note Regarding Forward-Looking Statementsfor more details.

The Rainy River Mine begins 2021 with both the open pit mine and mill operating at productivity levels that are in-line with the estimates in the Rainy River Technical Report and with the objective of potentially outperforming those estimates.

During the first half of the year, grades are expected to be lower as the mine plan focuses on Phase 3 waste mining to bring pit walls to the final pit limit of Phase 3 south. Mining efforts are expected to return to Phase 2 mining in the second half of the year, with higher grades expected from the HS, 433 and ODM zones. Accordingly, the strip ratio is expected to be higher during the first half of the year and then decline in the second half as waste stripping activities are completed. The final Phase 4 overburden stripping is expected to continue to advance in the fourth quarter and into 2022. The plan considers a sustained average mining rate of approximately 151,000 tonnes per day. Cash costs and AISC are expected to be higher in the first half of the year and decrease in the second half of the year as grades improve and the strip ratio decreases.

Sustaining capital is expected to be relatively consistent during the year and is primarily related to waste stripping in the first half of the year, a Stage 3 dam raise in the second half with capital parts and components replacement programs throughout the year.

Growth capital includes the development of the decline towards the Intrepid underground ore zone that will continue during the year, with the operation expected to access the first ore level during the first quarter. The focus in 2021 will be on the refinement of the long-hole mining methodology and block model and to consider the potential to bring forward production from the Intrepid Zone from 2023 to early 2022.

The Company has also released its updated 2020 Mineral Reserve and Mineral Resources statements, which incorporates the conversion of approximately 123,000 ounces of Measured and Indicated Resources (M&I) contained in the Intrepid Zone to Mineral Reserves, using a higher reserve gold price assumption of $1,400 per ounce. (Details regarding the Company’s 2020 Mineral Reserves and Mineral Resources are provided below). As a result, the majority of the ounces contained within the Intrepid Zone can now be considered for inclusion in the underground mine plan and because the Intrepid Zone is independent of the open pit, there is an opportunity to advance the mining of the Intrepid zone as described above.

The 2019 Mineral Resources included a significant number of underground resources that were recategorized from Mineral Reserves to M&I Resources. With the higher gold price of $1,400 per ounce used for the 2020 Mineral Reserve estimates, the opportunity exists for a potential recategorization of a portion of the current M&I Resources as Mineral Reserves that could potentially expand the underground mine life beyond 2028. During the year, the Company is expected to complete an economic study of a potential standalone underground operation scenario beyond 2028, once all remaining surface stockpiles are depleted. The study will also consider a reduced throughput milling scenario that better accommodates the underground scenario. Based on the results of the study, which would include the already converted Mineral Reserve ounces from the Intrepid Zone as well as any further optimizations that may be achieved in 2021, the Company may consider releasing an enhanced NI 43-101 Technical Report in late 2021 or early 2022.

2021 Financial Outlook

Following key transactions completed in 2020, as well as improving operational and cost performance, the Company focused on debt reduction and improved liquidity that supported the transition to free cash flow. The Company is fully exposed to the stronger gold price following the expiration of gold option contracts at the end of 2020. The Company purchased low cost copper put options with a floor of $3.10 per pound to de-risk the execution of the 2021 C-Zone capital program while remaining fully exposed to higher copper prices.

The Company’s cash position will be positively impacted by the receipt of a second C$50 million payment from Artemis Gold Inc. (“Artemis”) in August 2021, related to the sale of the Blackwater Project (for more information refer to the Company’s June 9 and August 24, 2020 news releases). The Company also holds an 8% gold stream on the Blackwater Project and a 6% equity stake in Artemis.

During the year, depreciation and depletion is expected to average between $460 and $540 per gold eq. ounce for the Rainy River Mine.

As of December 31, 2020, the Company had a cash position of $185 million and a strong liquidity position of approximately $490 million.

Mineral Reserves and Mineral Resources (as at December 31, 2020)

As at December 31, 2020, New Gold is reporting Mineral Reserves and Mineral Resources as summarized in the table below. Detailed Mineral Reserve and Mineral Resource tables follow at the end of this news release.

Mineral Reserves and Mineral Resources Summary1
As at December 31, 2020 As at December 31, 2019
Gold koz Silver koz Copper Mlbs Gold koz Silver koz Copper Mlbs

Proven and Probable Mineral Reserves
Rainy River 2,598 7,152 - 2,636 6,266 -
Open Pit 1,599 3,518 - 1,748 3,602 -
Underground 672 1,795 - 549 1,034 -
Low grade and stockpile 327 1,839 - 339 1,629 -
New Afton 958 2,670 758 1,005 2,844 802
Blackwater - - - 8,170 60,800 -
Total Proven and Probable Reserves 3,556 9,822 758 11,811 69,909 802

Measured and Indicated Mineral Resources (exclusive of Mineral Reserves) (1)

Rainy River 2,005 5,125 - 1,914 5,120 -
Open Pit 187 562 - 245 789 -
Underground 1,818 4,563 - 1,669 4,331 -
New Afton 1,182 4,246 1,003 1,118 3,754 933
Blackwater - - - 1,402 8,915 -
Total Measured and Indicated Mineral Resources 3,187 9,371 1,003 4,434 17,788 933
Total Inferred Mineral Resources 412 917 143 754 3,124 121

Refer to the detailed Mineral Reserve and Mineral Resource tables that follow at the end of this press release for the estimates as at December 31, 2020 and the Company’s Annual Information Form dated March 27, 2020 for estimates as at December 31, 2019.
The Mineral Reserves and Mineral Resources stated above are as at December 31, 2020 and do not reflect any events subsequent to that date.
Consolidated gold Mineral Reserves decreased by approximately 8.25 million gold ounces as compared to 2019. This decrease includes approximately 8.17 million gold ounces related to the sale of the Blackwater Project in August 2020, 253,000 gold ounces of mining depletion at the Rainy River Mine and approximately 85,000 gold ounces of mining depletion at the New Afton Mine. Mining depletion was partially offset by approximately 253,000 ounces of positive resource to reserve conversion from updated mine designs and operational plans at both mines.

At the Rainy River Mine, total Mineral Reserves slightly decreased by approximately 38,000 gold ounces over the prior year, primarily due to mine depletion that was partially offset by the conversion of 215,000 gold ounce from Mineral Resources to Mineral Reserves (92,000 open pit mine plan and 123,000 underground mine plan) due to updated mine designs and operational plan optimization. The increase in Mineral Reserves was driven by updated metal price assumptions and updated cut-off grades for underground reserves.
At the New Afton Mine, Mineral Reserves decreased by approximately 47,000 gold ounces over the prior year as a result of mine depletion that was partially offset by the addition of 38,000 gold ounces from the C-Zone mine plan optimization.
Consolidated Measured and Indicated Mineral Resources decreased by approximately 1.2 million gold ounces due to the sale of the Blackwater Project, partially offset by increased underground Mineral Resources at the Rainy River and New Afton Mines.

At the Rainy River Mine Measured and Indicated Mineral Resources have increased by 91,000 gold ounces due to higher gold prices and lower cut-off grades applied for underground ore material.
Total Measured and Indicated Mineral Resources at the New Afton Mine increased by approximately 64,000 gold ounces driven by additional drilling in 2020.
Consolidated Inferred Mineral Resources decreased by approximately 340,000 gold ounces due the sale of the Blackwater Project.

About New Gold Inc.

New Gold is a Canadian-focused intermediate gold mining company with a portfolio of two core producing assets in Canada, the Rainy River and New Afton Mines. The Company also holds an 8% gold stream on the Artemis Gold Blackwater Project located in British Columbia and a 6% equity stake in Artemis. The Company also operates the Cerro San Pedro Mine in Mexico (in reclamation). New Gold's vision is to build a leading diversified intermediate gold company based in Canada that is committed to environment and social responsibility. For further information on the Company, visit www.newgold.com.

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 is “forward looking”. All statements in this news release, other than statements of historical fact, which address events, results,



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