New Gold Inc. is bucking the commodities downturn, reporting record gold production in its 2015 results along with the results of a feasibility study on extending the life of the New Afton mine.
On balance, the year’s results were mixed for the Toronto-based mining producer. New Afton is the company’s newest operation among four producing assets and two major development projects.
Record gold production — 435,718 ounces, exceeded the guidance range of 390,000 to 430,000 ounces — amounting to a 15 percent increase, along with solid fourth-quarter results, were among highlights.
"Our solid operating performance in 2015, and particularly our record-setting fourth quarter, enabled us to generate cash flow similar to last year, despite the decrease in metal prices," stated Randall Oliphant, Executive Chairman.
On the down side, the company had a net loss of $10 million or $0.02 a share. Shareholders should be encouraged, though, by results of the New Afton C-zone study, indicating that the mine could have an additional five or six years of life beyond its previously projected life.
Given the current commodity price environment, New Gold plans to sequence the development of its projects with the near-term focus being on advancement of the lower capital cost Rainy River project followed by the New Afton C-zone.
The C-zone is the down plunge extension of the B-zone currently being mined through block caving. At the end of 2015, the B-zone had remaining mineral reserves of 36.5 million tonnes at 0.55 grams per tonne gold and 0.85 percent copper, sufficient to support production through 2022. Beyond that, ore would need to be mined from the C-zone in order to extend New Afton's life.
A robust cash flow in combination with additional liquidity from its Rainy River gold mine in northwestern Ontario and its El Morro, Chile, operation enables continued investment for New Gold, Oliphant said.
“Rainy River, which is now less than a year and a half from starting production, provides New Gold with the potential to increase production, reduce costs and increase average mine life. Thereafter, we will look to the New Afton C-zone and Blackwater as future opportunities for long-term value creation.”
The C-zone will require six years to develop and an investment of $400 million at the mine, 10 km west of Kamloops.