(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, June 27, 2017 /PRNewswire/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE MKT:NGD) today provides an update on the
construction of the company's Rainy
River project, located in northwestern Ontario. Both the project schedule and capital
cost estimate remain in line with New Gold's updated plan announced
in late January 2017. The company
continues to target first gold production in September 2017, and the estimated development
capital cost from the beginning of this year to the targeted
November 2017 commercial production
remains $515 million.
Rainy River – Second Quarter
2017 Highlights
- Project spending in the second quarter expected to be
approximately $170 million, with
estimated remaining capital to achieve November commercial
production of approximately $220
million
- The mining rate during the second quarter averaged
approximately 115,000 tonnes per day despite impact of spring
thaw
- Public comment period for Schedule 2 amendment concluded on
June 12th; amendment
timeline accelerated to fourth quarter of 2017
- Commissioning of primary crusher and conveyor system complete,
with first crush completed on May 11,
2017 as planned
- Installation of mechanical, piping, electrical and
instrumentation in processing facilities over 95% complete
- Ball and SAG mill achieved mechanical completion and hand over
to operations for commissioning
- Energization of all key site power lines completed on
schedule
- Overall earthworks over 85% complete
Financial Update
- Entered into gold price option contracts covering 120,000
ounces of second half 2017 production (20,000 ounces per month)
ensuring a guaranteed floor price of $1,250 per ounce while providing continued
exposure to increases in the gold price up to $1,400 per ounce
- June 30, 2017 cash and cash
equivalents expected to be approximately $175 million, with approximately $175 million also available under the revolving
credit facility
"We are pleased with the solid progress we have made at
Rainy River over the last five
months," stated Hannes Portmann,
President and Chief Executive Officer. "Through the second quarter,
our team has both successfully commenced the staged commissioning
of our process facility and delivered on our mining plan. As the
pit has opened up, our operations team has recently delivered
further increases in the mining rate, including several days over
130,000 tonnes per day."
Overall earthworks are over 85% complete and are tracking in
line with New Gold's updated plan. Starter cell rock deliveries are
scheduled for completion in late August
2017. Energization of all key site overhead power lines and
construction of the tailings pipeline corridor have been
completed.
All of the key structural components of the process facilities
have been finalized and the setting of mechanical equipment and
installation of piping, electrical and instrumentation services is
close to completion. The primary crusher and conveyor system was
successfully commissioned on schedule, and the first crush occurred
on May 11, 2017. Commissioning of the
ball mill and SAG mill has started and is scheduled to be completed
in August 2017. The refining portion
of the circuit should be ready to begin commissioning in
July 2017. Dry and wet commissioning
of the full process circuit is scheduled for August 2017.
The company requires an amendment to Schedule 2 of the Metal
Mining Effluent Regulations to close two small creeks and deposit
tailings. The proposed amendment was published in Canada Gazette I on May
13, 2017 and was followed by a 30-day public comment period
which concluded on June 12, 2017. It
is the company's understanding that the comments received during
the comment period were all in support of the project proceeding as
proposed. In light of the positive comments, the company has
revisited the proposed timeline with Environment and Climate Change
Canada and expects that adoption of the Schedule 2 amendment will
be accelerated to the fourth quarter of 2017.
As previously disclosed, New Gold is presently constructing a
starter tailings cell, located within the broader tailings
management area, that does not require a Schedule 2 amendment. This
will allow New Gold to commence operations prior to completion of
the Schedule 2 amendment. Based on its location and scale, the
starter cell would provide capacity for approximately six months of
production tailings when the mill is operating at full
capacity.
In addition, New Gold has finalized the engineering design to
construct the creek closures using sheet pile at the centre of the
portion of the dam which will cover the creeks. The purpose of this
approach is both to reduce the construction time after receipt of
the Schedule 2 amendment, and most importantly, to be able to
complete the work regardless of weather conditions. New Gold has
met with the Ontario Ministry of Natural Resources and Forestry
(MNRF) to review the design and has also filed its application for
the required permit amendment in support of the design. It is
expected that the Ontario MNRF will complete its review of the
application during the third quarter of 2017.
Project spending at Rainy River
during the second quarter is expected to be approximately
$170 million, which would bring the
total year-to-date project spending to approximately $295 million. The remaining capital cost to the
targeted November commercial production is estimated to be
approximately $220 million. Of the
remaining expenditure, approximately 45% is related to mining and
owner's costs, 45% is related to earthworks, including completion
of the starter tailings cell, with the balance of the remaining
expenditure related to the completion and commissioning of the
process plant.
New Gold continues to look forward to the expected growth in the
company's production and cash flow once Rainy River transitions into operation later
this year. Rainy River has
multiple important asset qualities including its great
jurisdiction, significant annual production potential, long
estimated reserve life and continued exploration potential.
Financial Update
Earlier this month, New Gold entered into gold price option
contracts covering 120,000 ounces of its second half 2017
production (20,000 ounces per month). The company purchased put
options at a strike price of $1,250
per ounce which were largely funded by selling call options at a
strike price of $1,400 per ounce. The
net cost to the company of the gold option contracts was less than
$1 million. As announced on
April 26, 2017, the company also
fixed the price for 43.7 million pounds of the company's second
half 2017 copper production at $2.73
per pound. These initiatives increase the company's cash flow
certainty during the remaining Rainy
River development period and through to its scheduled
commercial production later this year.
About New Gold Inc.
New Gold is an intermediate gold mining company. The company has
a portfolio of four producing assets and two significant
development projects. The New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in
Australia and the Cerro San Pedro
Mine in Mexico (which transitioned
to residual leaching in 2016), provide the company with its current
production base. In addition, New Gold owns 100% of the Rainy River
and Blackwater projects located in Canada. New Gold's objective is to be the
leading intermediate gold producer, focused on the environment and
social responsibility. For further information on the company,
please 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 are "forward looking". All statements in
this news release, other than statements of historical fact, which
address events, results, outcomes or developments that New Gold
expects to occur are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the use of forward-looking
terminology such as "plans", "expects", "is expected", "budget",
"scheduled", "targeted", "estimates", "forecasts", "intends",
"anticipates", "projects", "potential", "believes" or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "should", "might" or "will be
taken", "occur" or "be achieved" or the negative connotation of
such terms. Forward-looking statements in this news release include
among others, statements with respect to: planned development
activities for 2017 at the Rainy River project, including the
completion and commissioning of the processing facilities; planned
preparations for operations at the Rainy River project, including
the mining rate, removal of overburden and waste, and storage of
water and completion of the tailings facility; the expected
production, costs, economics, grade and other operating parameters
of the Rainy River project; the capacity of the starter dam;
targeted timing for permits, including the amendment to Schedule 2
of the Metal Mining Effluent Regulations; targeted timing for
commissioning, start-up, production and commercial production; and
targeting timing for development and other activities related to
the Rainy River project.
All forward-looking statements in this news release are
based on the opinions and estimates of management as of the date
such statements are made and are subject to important risk factors
and uncertainties, many of which are beyond New Gold's ability to
control or predict. Certain material assumptions regarding such
forward-looking statements are discussed in this news release, New
Gold's latest annual management's discussion and analysis
("MD&A"), Annual Information Form and Technical Reports filed
at www.sedar.com and on EDGAR at www.sec.gov. In addition to, and
subject to, such assumptions discussed in more detail elsewhere,
the forward-looking statements in this news release are also
subject to the following assumptions: (1) there being no
significant disruptions affecting New Gold's operations; (2)
political and legal developments in jurisdictions where New Gold
operates, or may in the future operate, being consistent with New
Gold's current expectations; (3) the accuracy of New Gold's current
mineral reserve and mineral resource estimates; (4) the exchange
rate between the Canadian dollar, Australian dollar, Mexican peso
and U.S. dollar being approximately consistent with current levels;
(5) prices for diesel, natural gas, fuel oil, electricity and other
key supplies being approximately consistent with current levels;
(6) equipment, labour and materials costs increasing on a basis
consistent with New Gold's current expectations; (7) arrangements
with First Nations and other Aboriginal groups in respect of the
Rainy River project being consistent with New Gold's current
expectations; (8) all required permits, licenses and
authorizations, including the amendment to Schedule 2 of the Metal
Mining Effluent Regulations, being obtained from the relevant
governments and other relevant stakeholders within the expected
timelines; (9) the results of the feasibility study for the Rainy
River project being realized; and (10) in the case of
production, cost and expenditure outlooks at the operating mines
and the Rainy River project for 2017, commodity prices and exchange
rates being consistent with those estimated for the purposes for
2017.
Forward-looking statements are necessarily based on
estimates and assumptions that are inherently subject to known and
unknown risks, uncertainties and other factors that may cause
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking statements. Such factors include, without
limitation: significant capital requirements and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other commodities; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States, Australia and Mexico; discrepancies between actual and
estimated production, between actual and estimated mineral reserves
and mineral resources and between actual and estimated
metallurgical recoveries; fluctuation in treatment and refining
charges; changes in national and local government legislation in
Canada, the United States, Australia and Mexico or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity
and enforceability of the necessary licenses and permits and
complying with the permitting requirements of each jurisdiction in
which New Gold operates, including, but not limited to: in
Canada, obtaining the necessary
permits for the Rainy River project; the lack of certainty with
respect to foreign legal systems, which may not be immune from the
influence of political pressure, corruption or other factors that
are inconsistent with the rule of law; the uncertainties inherent
to current and future legal challenges New Gold is or may become a
party to; diminishing quantities or grades of mineral reserves and
mineral resources; competition; inherent uncertainties with cost
estimates and estimated schedule for the construction and
commencement of production at Rainy
River as contemplated; loss of key employees; rising costs
of labour, supplies, fuel and equipment; actual results of current
exploration or reclamation activities; uncertainties inherent to
mining economic studies including the feasibility studies for the
Rainy River project; changes in project parameters as plans
continue to be refined; accidents; labour disputes; defective title
to mineral claims or property or contests over claims to mineral
properties; unexpected delays and costs inherent to consulting and
accommodating rights of Indigenous groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements, including those associated with the
amendment to Schedule 2 of the Metal Mining Effluent Regulations
for the Rainy River project. In addition, there are risks and
hazards associated with the business of mineral exploration,
development and mining, including environmental events and hazards,
industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses and risks associated
with the start of production of a mine, such as Rainy River, (and the risk of inadequate
insurance or inability to obtain insurance to cover these risks) as
well as "Risk Factors" included in New Gold's Annual Information
Form, MD&A and other disclosure documents filed on and
available at www.sedar.com and on EDGAR at www.sec.gov.
Forward-looking statements are not guarantees of future
performance, and actual results and future events could materially
differ from those anticipated in such statements. All of the
forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold expressly
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
events or otherwise, except in accordance with applicable
securities laws.
SOURCE New Gold Inc.