(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Nov. 15, 2016 /PRNewswire/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE MKT:NGD) today announces that the company
has received approval to commence construction of the tailings
management facility at its Rainy
River project, located in northwestern Ontario. Separately, New Gold has entered into
hedges to lock in current copper prices for a portion of the
company's first half 2017 copper production.
RAINY RIVER TAILINGS
MANAGEMENT FACILITY CONSTRUCTION UPDATE
As previously
disclosed, during the course of the construction of the water
management facility earlier in 2016, New Gold identified areas
underlying both the water and tailings management facilities where
the strength of the foundation is less than was estimated for the
original designs.
In mid-August, the company received approval for its redesign of
the water management facility from the Ontario Ministry of Natural
Resources and Forestry ("MNRF") and construction activities remain
ongoing. The redesign includes flattening of slopes and the
addition of rock toe buttresses.
Subsequently, after incorporating all of the results of the
company's supplemental geotechnical drilling program and receiving
additional input from New Gold's Independent Tailings Review Board
("ITRB"), New Gold submitted the final redesign of the Rainy River
tailings management facility for approval by the MNRF. The redesign
included the use of flatter slopes across the entire tailings
facility as well as the incorporation of wick drains in certain
areas.
Yesterday, New Gold received approval from the MNRF to commence
construction activities on the Rainy River tailings management
facility. The company is positioned to begin working on
construction of the facility immediately.
Rainy River's development
remains on schedule with first production targeted for mid-2017.
Overall, the Rainy River project enhances New Gold's growth
pipeline through its significant production scale at below current
industry average costs and exciting longer-term exploration
potential in a great mining jurisdiction. The company looks forward
to continuing the advancement of the Rainy River project.
FINANCIAL UPDATE
Consistent with the gold price option
contracts New Gold previously entered into for the first half of
2017, the company decided to hedge a portion of its copper
production to increase its cash flow certainty over the remaining
Rainy River development
period.
On November 14, 2016, New Gold
fixed the price for 31.7 million pounds (14,400 tonnes) of the
company's first half 2017 copper production at $2.52 per pound ($5,552 per tonne) using swaps settling against
the monthly LME average price. The swaps cover 5.3 million pounds
of copper (2,400 tonnes) per month from January through
June 2017.
On October 4, 2016, New Gold
announced that the company entered into gold price option contracts
covering 120,000 ounces of New Gold's first half 2017 production.
New Gold purchased put options with a strike price of $1,300 per ounce covering 120,000 ounces of gold
and simultaneously sold call options with a strike price of
$1,400 per ounce covering an
equivalent 120,000 ounces. In aggregate, the option contracts
provide the company a guaranteed floor price of $1,300 per ounce while also providing exposure to
further increases in the gold price up to $1,400 per ounce. The contracts will cover 20,000
ounces of gold per month for six months beginning in January 2017. The net cost of entering into the
option contracts was less than $1
million.
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, provide the
company with its current production base. In addition, New Gold
owns 100% of the Rainy River and Blackwater projects, both in
Canada, as well as a 4% gold
stream on the El Morro project located in Chile. 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 design for the Rainy
River project; construction activities at the Rainy River project
and their expected progress and timelines, the expected production,
costs, and other operating parameters of the Rainy River project;
and statements with respect to the Company's expected copper
production in the first half of 2017.
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 annual and quarterly management's discussion and analysis
("MD&A"), its Annual Information Form and its Technical Reports
filed at www.sedar.com. 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 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 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 Indigenous
groups in respect of the Rainy River project being consistent with
New Gold's current expectations; (8) all required permits, licenses
and authorizations 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; (10) conditions to the payment of the remaining
$75 million from Royal Gold, namely when 60% of the estimated
Rainy River project development
capital has been spent and other customary conditions, being
satisfied later in 2016; and (11)
in the case of production outlooks at
operating mines for 2017, commodity prices and exchange rates being
consistent with those estimated for the purpose of 2016 guidance.
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 and the United States; discrepancies between
actual and estimated production, between actual and estimated
mineral reserves and mineral resources and between actual and
estimated metallurgical recoveries; changes in national and local
government legislation; 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 uncertainties inherent to current and
future legal challenges New Gold is or may become a party to;
diminishing quantities or grades of reserves and resources;
competition; 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 study 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. 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 the risk of inadequate
insurance or inability to obtain insurance to cover these risks) as
well as "Risk Factors" included in New Gold's disclosure documents
filed on and available at www.sedar.com. 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.
TECHNICAL INFORMATION
The scientific and technical information relating to the
construction of New Gold's Rainy
River project contained herein has been reviewed and
approved by Peter Marshall, Vice
President, Project Development of New Gold. Mr. Marshall is a
Professional Engineer and a member of the Association of
Professional Engineers and Geoscientists of British Columbia. Mr. Marshall is a "Qualified
Person" for the purposes of NI 43-101.
SOURCE New Gold Inc.