Provides Mineral Reserves & Resources
Update
New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE
American: NGD) reports results of the updated Life of Mine
plans for the Rainy River (“Rainy River”) and New Afton (“New
Afton”) Mines. A National Instrument 43-101 (“NI 43-101”) Technical
Report for each operation will be filed within 45 days. (All
amounts are in U.S. dollars unless otherwise indicated). The
Company is also providing updated Mineral Reserves and Resources as
of December 31, 2019. A technical session will be webcast directly
following the Company’s fourth quarter earnings call, which is
scheduled to begin at 12:00 p.m. Eastern time. (webcast details are
provided at the end of this press release. The Technical Session
presentation is available on the Company’s website at
newgold.com).
Over the past year, the Company has undertaken a comprehensive
mine optimization study for the Rainy River Mine that included a
review of alternative open pit and underground mining scenarios
with the overall objective of improving the return of investment
and creating a life of mine plan that secures optimal profitability
at a mineral reserve gold price of $1,275 per ounce. The Company is
also releasing results of an integrated New Afton B3 and C-zone
optimization life of mine study that is focused on de-risking the
execution of the C-zone project, primarily targeting mine plan
optimization and subsidence control, confirming capital
requirements, finalization of the tailings disposal plan,
dewatering and stabilization of the historic tailings area and
advancing permitting efforts while maintaining a self-funded
approach.
“Over the past number of months we have evaluated numerous
scenarios for the Rainy River Mine and are pleased to release an
updated life of mine plan that delivers a solid open pit and
underground mine plan that positions the operation for
profitability and free cash flow generation beginning in Q4 2020
that continues over the balance of the mine life.” said Renaud
Adams, CEO. “We have also released an integrated mine plan that
optimizes the self-funded development of New Afton’s B3 and C-Zone
that could deliver significant free cash flow of more than 1
billion dollars over the life of mine. We now have a clear and
profitable path forward for New Gold, a path that we are confident
will create value for our shareholders.”
Rainy River Life of Mine Highlights
Over the past year, the Company worked diligently on creating a
new operating vision for the Rainy River Mine with the objective of
creating a mine plan that optimizes the return on investment, while
achieving profitability at an early stage of the plan. Consistent
with that objective, the Company has evaluated various open pit and
underground mining scenarios that prioritized mining in areas that
generate positive margins and drive meaningful cash flow over the
balance of a shorter, but more profitable mine life. In future
years, there remains potential to extend the underground mine life
beyond 2028 should the prevailing gold price support the
development of additional mining areas during that period and/or
exploration efforts increase the resource inventory.
Rainy River Life of Mine
Highlights
Life of Mine1,3
Sensitivity2
Tonnes ore mined open pit (Mt)
67.5
67.5
Open pit mined grade (gold g/t)
0.91
0.91
Tonnes ore mined underground (Mt)
4.1
4.1
Underground mined grade (gold g/t)
4.17
4.17
Mill production (ktpd)
25.8
25.8
Milled grade (gold g/t)
1.06
1.06
Gold recovery (%)
89
89
Total gold eq. production (k oz)
2,388
2,384
Avg. annual gold eq. production (k oz)
289
289
Cash costs per gold eq. oz. ($/oz)
$665
$670
AISC per gold eq. oz. ($/oz)
$967
$973
Sustaining capital ($M) 4
$586
$586
Growth capital ($M) 4
$56
$56
Cumulative total cash flow ($M)
$5573
$1,096
After-tax NPV5%
$421
$859
- Assuming $1,300 per gold ounce, $16.00 per silver ounce, and a
foreign exchange rate of 1.30 Canadian dollars to 1 US
- Assuming $1,550 per gold ounce, $17.50 per silver ounce, and a
foreign exchange rate of 1.30 Canadian dollars to 1 US dollar
- LOM value includes a negative cash flow of $68 million post
2028 primarily for closure activities
- Sustaining and Growth Capital spend exclude working capital
movements
- Gold eq. ounces include 3.6 million silver ounces produced
converted to a gold equivalent based on a ratio of the prices for
the commodities in (1) and (2)
Totals may not compute exactly due to
rounding.
- The open pit mine plan considers mining a smaller pit shell
using a $1,275 gold price and a mineral reserve cutoff grade
ranging between 0.46-0.49 g/t gold eq. that focuses on mining open
pit ore at a lower strip ratio of 2.53:1 (waste:ore) over a mine
life from 2020 to 2024, with full depletion of the open pit in
early 2025. While the operating cut-off grade has increased to a
range of 0.46-0.49 g/t gold eq. (from 0.30 g/t), the lower grade
open pit ore (0.30-0.46/0.49 g/t gold eq.) will continue to be
stockpiled for processing during the underground mine life, which
continues beyond the completion of open pit mining. The reduced
size of the open pit significantly decreases capital requirements
as waste mining (including overburden stripping) requirements
decrease by more than 150 million tonnes and required stabilization
of the waste dumps is minimized. Using new unit costs,
geotechnical, metallurgical, water balance and capital requirement
assumptions, the new plan delivers superior value and free cash
flow over the period 2020 to 2024, as well as the life of mine, as
compared to the 2018 plan, even with reduced gold Mineral
Reserves.
- The underground mine plan was evaluated on a zone by zone basis
and includes mining areas that provide optimal profitability at a
gold price of $1,275 per ounce. Underground mining is expected to
begin in 2022 and ramps-up over the underground mine life with peak
production from 2025 to 2027. All gold ounces located in zones that
did not meet the profitability threshold have been removed from the
underground mine plan. The underground mine will be accessed via
five portals, including four in-pit portals, as well as the
Intrepid zone portal located to the east of the open pit, which
significantly reduces capital development spend. There remains
potential for underground mine life extension should the gold price
environment support the inclusion of additional mining areas during
the underground mine life and/or exploration efforts increase the
resource inventory.
- The mill facility is planned to average approximately 25,800
tonnes per day and availability is expected to average 92%. Head
grade over the life of mine is projected to average 1.06 gold grams
per tonne at a recovery rate of 89%. The low-grade ore stockpile is
expected to supplement underground mill feed from 2026 to
2028.
- Capital spend for the life of mine was optimized with a
significant reduction in capital required for the Underground
development and infrastructure. From the life of mine period, the
operation is expected to generate free cash flow (including capital
leases, closure costs and gold stream payments) of approximately
$550 million at a gold price assumption of $1,300 per gold ounce,
or more than $1 billion at a spot gold price assumption of $1,550
per gold ounce.
- For the period 2020 to 2024, the operation is expected to
generate free cash flow (including capital leases and gold stream
payments) of approximately $250 million at a gold price assumption
of $1,300 per gold ounce, or approximately $600 million at a spot
gold price assumption of $1,550 per ounce.
New Afton Mine
In early 2019, the Company reinvested in the future of the New
Afton Mine by re-launching a self-funded development strategy for
the C-zone, which extends mine life to 2030, including processing
of stockpiled ore, with robust economics. Over the past year, the
Company has focused on de-risking the execution of the C-zone,
including the finalization of the mine design, tailings disposal
plan, subsidence and stabilization and advancing permitting
efforts. The updated mine plan also provides technical and cost
updates for the life of mine.
New Afton Life of Mine
Highlights
Life of Mine1,4
Sensitivity2
Tonnes ore mined (Mt)
48.1
48.1
Head grade mined (gold g/t)
0.68
0.68
Head grade mined (copper %)
0.77
0.77
Avg. Mill production (ktpd)
13.3
13.3
Gold recovery (%)
86
86
Copper recovery (%)
89
89
Total gold production (oz)
917.8
917.8
Total copper production (Mlb)
745.7
745.7
Avg. annual gold eq. production (k oz)
260.2
221.1
Cash costs per gold eq. oz. ($/oz)
$610
$717
AISC per gold eq. oz. ($/oz)
$681
$801
Sustaining capital ($M)3
$175
$175
Growth capital ($M)3
$460
$460
Cumulative total cash flow ($M)
$1,051
$1,092
After-tax NPV
$735
$766
- Assuming $1,300 per gold oz., $16.00 per silver oz., $3.00 per
copper pound and a foreign exchange rate of 1.30 Canadian dollars
to 1 US dollar
- Assuming $1,550 per gold oz., $17.50 per silver oz., $2.75 per
copper pound and a foreign exchange rate of 1.30 Canadian dollars
to 1 US dollar
- Sustaining and Growth Capital spend excludes working capital
movement
- LOM value includes a negative cash flow of $9 million post 2030
primarily for closure activities offset by salvage values
- Gold eq. ounces include copper pounds, and 2.3 million silver
ounces produced converted to a gold equivalent based on a ratio of
the prices for the commodities in (1) and (2).
Totals may not compute exactly due to
rounding.
- From 2020 to 2024, the development of the higher-grade C-zone
will continue to be advanced, with production beginning in Q3 2024
and ramping up to full production from 2025 to 2029.
- Development of the C-zone is expected to be self-funded using
life of mine gold and copper price assumptions of $1,300 per gold
ounce and $3.00 per copper pound or using spot gold and copper
prices of $1,550 per gold ounce and $2.75 per copper pound.
- Lower production is expected for the period of 2021 to 2024
(with lower production planned for 2024), until the C-zone begins
production. This lower production period could be partially offset
with the potential incorporation of additional resources from the
Sub-level cave (“SLC”) zone into the mine plan as we potentially
grow the zone through exploration drilling programs.
- The updated life of mine plan incorporates thickened and
amended tailings to increase stability of the current and
historical tailings, with in-pit thickened tailings deposition
planned for the C-zone ore portion.
- The new mine plan also provides geotechnical study updates with
the objective of enhancing the mine plan and subsidence
control.
- Total capital for the life of mine ($175 million and $460
million in sustaining and non-sustaining capital, respectively) is
expected to remain high from 2020 to 2023, primarily related to the
development of the C-zone and decrease significantly in 2024 to
2026, with minimal capital over the balance of the mine life.
- Over the life of mine the operation is expected to generate
free cash flow (including capital leases) of more than $1 billion,
at metal prices of $1,300 per gold ounce and $3.00 per copper pound
and spot gold and copper prices of $1,550 per gold ounce and $2.75
per copper pound. Over the capital intensive C-zone development
period from 2020 to 2024, the operation will generate free cash
flow of more than $100 million at metal prices of $1,300 per gold
ounce and $3.00 per copper pound and spot gold and copper prices of
$1,550 per gold ounce and $2.75 per copper pound.
- There remains significant potential to further extend mine life
as exploration programs advance at depth below and down plunge of
the SLC-zone and east of the C-zone block cave and within the
broader New Afton land package.
Mineral Reserves and Resources (as at December 31,
2019)
As at December 31, 2019, New Gold is reporting Mineral Reserves
and Resources as summarized in the table below. Detailed Mineral
Reserve and Resource tables follow at the end of this press
release.
Mineral Reserves and Resources Summary1
As at December 31,
2019
As at December 31,
2018
Gold
koz
Silver
koz
Copper Mlbs
Gold
koz
Silver
koz
Copper Mlbs
Proven and Probable Mineral
Reserves
Rainy River
2,636
6,266
-
4,186
12,116
-
Open Pit
1,748
3,602
-
2,554
5,993
-
Underground
549
1,034
-
1,021
2,728
-
Low grade and stockpile
339
1,629
-
610
3,395
-
New Afton
1,005
2,844
802
1,077
3,280
903
Blackwater
8,170
60,800
-
8,170
60,800
-
Total Proven and Probable
Reserves
11,811
69,909
802
13,433
76,136
903
Measured and Indicated Mineral
Resources (exclusive of Mineral Reserves) (1)
Rainy River
1,914
5,120
-
2,139
7,321
-
Open Pit
245
789
-
1,361
5,133
-
Underground
1,669
4,331
-
778
2,188
-
New Afton
1,118
3,754
933
1,061
3,645
891
Blackwater
1,402
8,915
-
1,400
8,733
-
Total Measured and Indicated Mineral
Resources
4,434
17,788
933
4,600
19,699
891
Total Inferred Mineral
Resources
754
3,124
121
1,001
3,860
132
- Refer to the detailed Mineral Reserve and Mineral Resource
tables follow at the end of this press release for the estimates as
at December 31, 2019 and the Company’s Annual Information Form
dated March 29, 2019 for estimates as at December 31, 2018.
Consolidated gold Mineral Reserves decreased by approximately
1,622,000 gold ounces as compared to 2018. This decrease includes
approximately 280,000 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 29,900 gold ounces of positive resource to reserve
conversion resulting from 2019 drilling and the updated and
operational plan at the New Afton Mine.
- The decrease in gold Mineral Reserves for the Rainy River Mine,
is primarily associated with the updated open pit and underground
mine plans, resulting in a 1,549,000 gold ounce decrease (inclusive
of mine depletion) in Mineral Reserves. The decrease in Mineral
Reserves was driven by:
- Updated estimates to life of mine operating and capital
costs;
- Updated recovery model applied to open pit ore material;
and
- Removal of marginal underground material from the life of mine
plan.
- At the New Afton Mine, Mineral Reserves decreased by
approximately 72,000 gold ounces over the prior year as a result of
mine depletion and optimized block cave shapes, partially offset by
the addition of 29,900 gold ounces from the SLC zone.
- At the Blackwater project, Proven and Probable Mineral Reserves
remain unchanged as compared to 2018.
Consolidated Measured and Indicated Mineral Resources decreased
by approximately 166,000 gold ounces due to the decrease in open
pit Mineral Resources at the Rainy River Mine, partially offset by
increased underground Mineral Resources at the Rainy River and New
Afton Mines.
- Rainy River Mine Measured and Indicated Mineral Resources have
correspondingly decreased by 225,000 gold ounces due to the
decrease of 1,116,000 gold ounces of open pit Mineral Resources as
a result of the impact of key inputs and drivers, partially offset
by an increase of 891,000 gold ounces of underground Mineral
Resources reclassified from Mineral Reserves.
- Total Measured and Indicated Mineral Resources at the New Afton
Mine increased by approximately 57,000 gold ounces.
- Measured and Indicated Mineral Resources at Blackwater remain
materially unchanged as compared to the prior year.
Consolidated Inferred Mineral Resources decreased by
approximately 226,000 gold ounces due to the decrease at Rainy
River and Inferred Mineral Resources at the New Afton Mine and at
Blackwater remain materially unchanged as compared to year end
2018.
Technical Information and Qualified Persons
The technical information was developed through the combined
efforts of the Company’s internal technical team and independent
consultants including:
- Francis McCann, General Manager / Principal Mining Engineer,
AMC Mining Consultants (Canada) Ltd. Toronto – QP for the Rainy
River Open Pit Mineral Reserves Estimate and Open Pit Mining
- Herbert A. Smith, Senior Principal Mining Engineer, AMC Mining
Consultants (Canada) Ltd. Vancouver – QP for the Rainy River
Underground Mineral Reserves Estimate and Underground Mining
- Dinara Nussipakynova, Principal Geologist, AMC Consultants
(Canada) Ltd. Vancouver – QP for the Rainy River Open Pit and
Underground Mineral Resources Estimate
- Ken Bocking, Golder Toronto – QP for Rainy River Waste dumps,
Open Pit Overburden slopes studies
- Ed Saunders – SRK Vancouver – QP for the Rainy River Open Pit
Hard Rock Slopes studies
- Andre Zerwer, Principal Geotechnical Engineer, BGC Sudbury – QP
for the Rainy River Tailings Dam studies
- Andrew Millar, Principal Metallurgist, AMC Mining Consultants
Pty. Ltd. Brisbane - QP for the Rainy River Metallurgical
studies
- Twila Griffith, Senior Environmental Specialist, Rainy River
Mine – QP for the Rainy River Environmental Study
- Normand L. Lecuyer, P.Eng., Roscoe Postle Associates Inc. (RPA)
– QP for technical information for New Afton
- David W. Rennie, P.Eng., Roscoe Postle Associates Inc. (RPA) –
QP for technical information for New Afton
- Holger Krutzelmann, P.Eng., Roscoe Postle Associates Inc. (RPA)
– QP for technical information for New Afton
- Luis Vasquez, M.Sc., P.Eng., Roscoe Postle Associates Inc.
(RPA) – QP for technical information for New Afton
Technical Session Webcast
On February 13, 2020, a technical session will be webcast to
discuss the updated life of mine plans. The webcast will
immediately follow the Company’s fourth quarter and year-end
earnings conference call and webcast scheduled to begin at 12:00 pm
Eastern Time. Details for the fourth quarter earnings and technical
session webcast are provided below:
- Participants may listen to the fourth quarter earnings call and
the technical session webcast by registering on our website at
www.newgold.com or via the following link:
https://onlinexperiences.com/Launch/QReg/ShowUUID=CEE17A95-4B57-414E-90A0-E7B1596C1592
- An archived webcast will be available until March 3, 2020 at
www.newgold.com.
- Presentations for the technical session can be found on the
Company’s website at www.newgold.com.
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 as well as the 100% owned Blackwater
development project. 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 focused on 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 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: guidance for
production, operating expenses per gold ounce sold, total cash
costs and all-in sustaining costs and the factors contributing to
those expected results, including the timing of filing new
technical reports for the Rainy River and New Afton mines, timing
of the implementation of the new life of mine plans, the Company’s
positioning for profitability and sustainable free cash flow
beginning in Q1 2020, the development of New Afton’s B3 and C-zone
and the free cash flow expected from that development, statements
under the heading “Rainy River Life of Mine Highlights” and “New
Afton Mine”, and estimations of the Company’s Mineral Reserves and
Mineral Resources.
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 current 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 and U.S. dollar, and to a lesser
extent, the Mexican Peso, 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, New Afton and
Blackwater 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 and the absence of
material negative comments during the applicable regulatory
processes; (9) metals and other commodity prices and exchange rates
being consistent with those estimated for the purposes of 2019
guidance; (10) the qualified persons being able to complete the new
technical reports within 45 days; and (11) the Company’s ability to
implement the new life of mine plans on the timing described herein
or at all.
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 and, to a lesser extent, Mexico;
discrepancies between actual and estimated production, between
actual and estimated Mineral Reserves and Mineral Resources and
between actual and estimated metallurgical recoveries; risks
related to early production at the Rainy River Mine, including
failure of equipment, machinery, the process circuit or other
processes to perform as designed or intended; fluctuation in
treatment and refining charges; changes in national and local
government legislation in Canada, the United States and, to a
lesser extent, 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, 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; 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; 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 risks associated with a mine
with relatively limited history of commercial production, such as
Rainy River, (and the risk of inadequate insurance or inability to
obtain insurance to cover these risks) as well as the "Enterprise
Risk Management and Risk Factors" section of the MD&A, included
in New Gold's Annual Information Form, previous 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.
Technical Information
The scientific and technical information relating to Mineral
Reserves contained herein has been reviewed, verified and approved
by Mr. Andrew Croal, Director, Technical Services of New Gold. The
scientific and technical information relating to Mineral Resources
and exploration activities and results contained herein has been
reviewed and approved by Mr. Michele Della Libera Director,
Exploration of New Gold. All other scientific and technical
information contained herein has been reviewed and approved by the
persons named under the heading “Technical Information and
Qualified Persons” with respect to the technical and scientific
information noted for each name. Mr. Croal is a Professional
Engineer and member of the Association of Professional Engineers
Ontario. Mr. Della Libera is a Professional Geoscientist and a
member of Engineers & Geoscientists British Columbia and
Professional Geoscientists Ontario. Mr. Croal, Mr. Della Libera and
the persons named under the heading “Technical Information and
Qualified Persons” are "Qualified Persons" for the purposes of NI
43-101. No limitations were imposed on these Qualified Persons with
respect to the verification of the data contained herein. Further
detail about the mineral resource and reserve estimates, including
assumptions, parameters, risks and data verification measures, will
be available in the updated technical reports to be filed by the
Company within 45 days following the date of this news release.
Cautionary Note to U.S. Readers Concerning Estimates of
Mineral Reserves and Mineral Resources
Information concerning the properties and operations of New Gold
has been prepared with Canadian standards for reporting of mineral
resource estimates, which differ in some respects from United
States standards. In particular, and without limiting the
generality of the foregoing, the terms “inferred mineral
resources,” “indicated mineral resources,” “measured mineral
resources” and “mineral resources” used or referenced in this
MD&A are Canadian mineral disclosure terms as defined in
accordance with NI 43-101 under the guidelines set out in the 2014
Canadian Institute of Mining, Metallurgy and Petroleum Standards
for Mineral Resources and Mineral Reserves, Definitions and
Guidelines, May 2014 (the “CIM Standards”). Until recently, the CIM
Standards differed significantly from standards in the United
States. The U.S. Securities and Exchange Commission (the “SEC”) has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the U.S. Securities Exchange Act of
1934, as amended (the “Exchange Act”). These amendments became
effective February 25, 2019 (the “SEC Modernization Rules”) with
compliance required for the first fiscal year beginning on or after
January 1, 2021. The SEC Modernization Rules replace the historical
property disclosure requirements for mining registrants that were
included in SEC Industry Guide 7, which will be rescinded from and
after the required compliance date of the SEC Modernization Rules.
As a result of the adoption of the SEC Modernization Rules, the SEC
now recognizes estimates of “measured mineral resources”,
“indicated mineral resources” and “inferred mineral resources”. In
addition, the SEC has amended its definitions of “proven mineral
reserves” and “probable mineral reserves” to be “substantially
similar” to the corresponding definitions under the CIM Standards,
as required under NI 43-101. Accordingly, during this period
leading up to the compliance date of the SEC Modernization Rules,
information regarding mineral resources or mineral reserves
contained or referenced in this MD&A may not be comparable to
similar information made public by United States companies.
Readers are cautioned that “inferred mineral resources” have a
great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of inferred mineral resources may not form the basis of
feasibility or other economic studies, except in limited
circumstances. The term “resource” does not equate to the term
“reserves”. Readers should not assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. Readers are also cautioned not to assume that all
or any part of an inferred mineral resource exists, or is
economically or legally mineable.
MINERAL RESERVES AND MINERAL RESOURCES
New Gold’s Mineral Reserve estimates as at December 31, 2019, is
presented in the following table.
MINERAL RESERVES
Metal grade
Contained metal
Tonnes 000s
Gold g/t
Silver g/t
Copper %
Gold koz
Silver koz
Copper Mlbs
RAINY RIVER
Open Pit Mineral Reserves
Direct processing
Proven
15,700
1.21
2.4
-
612
1,187
-
Probable
30,675
1.15
2.5
-
1,136
2,416
-
Open Pit P&P (direct proc.)
46,375
1.17
2.4
-
1,748
3,602
-
Low grade
Proven
5,702
0.35
1.9
-
65
341
-
Probable
15,470
0.35
2.2
-
172
1,076
-
Open Pit P&P (low grade)
21,172
0.35
2.1
-
237
1,417
-
Stockpile
Proven
5,928
0.53
1.1
-
102
211
-
Probable
-
-
-
-
-
-
-
Open Pit P&P (stockpile)
5,928
0.53
1.1
-
102
211
-
Open Pit P&P Total Mineral
Reserves
73,476
0.88
2.2
-
2,087
5,231
-
Underground
Proven
-
-
-
-
-
-
-
Probable
4,096
4.17
7.8
-
549
1,034
-
Underground P&P (direct proc.)
4,096
4.17
7.8
-
549
1,034
-
Combined Direct proc. & Low
grade
Proven
27,331
0.88
2.0
-
779
1,740
-
Probable
50,241
1.15
2.8
-
1,857
4,526
-
Rainy River Total Mineral
Reserves
77,572
1.06
2.5
-
2,636
6,266
-
NEW AFTON
A&B Zones
Proven
-
-
-
-
-
-
-
Probable
20,213
0.55
1.9
0.73
357
1,234
323
C Zone
Proven
-
-
-
-
-
-
-
Probable
27,088
0.74
1.8
0.80
648
1,610
478
New Afton Total Mineral
Reserves
47,302
0.66
1.9
0.77
1,005
2,844
802
BLACKWATER
Direct processing Reserves
Proven
124,500
0.95
5.5
-
3,790
22,100
-
Probable
169,700
0.68
4.1
-
3,730
22,300
-
P&P (direct processing)
294,300
0.79
4.7
-
7,510
44,400
-
Low grade Reserves
Proven
20,100
0.50
3.6
-
330
2,300
-
Probable
30,100
0.34
14.6
-
330
14,100
-
P&P (low grade)
50,200
0.40
10.2
-
650
16,400
-
Combined Direct proc. & Low
grade
Proven
144,600
0.88
5.3
-
4,110
24,400
-
Probable
199,800
0.63
5.7
-
4,050
36,400
-
Blackwater Total Mineral
Reserves
344,400
0.74
5.5
-
8,170
60,800
-
TOTAL PROVEN & PROBABLE
MINERAL RESERVES
11,811
69,909
802
Notes to the Mineral Reserves and Mineral
Resources estimates are provided below.
Measured and Indicated Mineral
Resources
Mineral Resource estimates as at December
31, 2019, are presented in the following tables:
MEASURED & INDICATED
MINERAL RESOURCES (Exclusive of Mineral Reserves)
Metal grade
Contained metal
Tonnes 000s
Gold g/t
Silver g/t
Copper %
Gold koz
Silver koz
Copper Mlbs
RAINY RIVER
High and Medium grade Mineral
Resources
Open Pit
Measured
695
1.46
2.9
-
33
64
-
Indicated
4,813
1.18
3.4
-
182
531
-
Open Pit M&I (high and med. grade)
5,508
1.21
3.4
-
214
596
-
Underground
Measured
-
-
-
-
-
-
-
Indicated
14,866
3.49
9.1
-
1,669
4,331
-
Underground M&I
14,866
3.49
9.1
-
1,669
4,331
-
Low grade Mineral Resources
Open Pit
Measured
293
0.34
1.9
-
3
18
-
Indicated
2,460
0.34
2.2
-
27
175
-
Open Pit M&I (high, medium and low
grade)
2,753
0.34
2.2
-
30
193
-
Combined M&I
Measured
989
1.13
2.6
-
36
82
-
Indicated
22,139
2.64
7.1
-
1,878
5,037
-
Total Rainy River M&I
23,127
2.57
6.9
-
1,914
5,120
-
NEW AFTON
A&B Zones
Measured
17,013
0.63
1.7
0.83
346
940
312
Indicated
9,759
0.44
2.6
0.71
138
825
154
A&B Zone M&I
26,773
0.56
2.1
0.79
484
1,765
466
C-zone
Measured
6,116
0.78
2.0
0.94
154
401
126
Indicated
12,727
0.71
2.1
0.83
292
852
233
C-zone M&I
18,843
0.74
2.1
0.86
446
1,254
359
HW Lens
Measured
-
-
-
-
-
-
-
Indicated
11,362
0.51
2.0
0.44
187
738
109
HW Lens M&I
11,362
0.51
2.0
0.44
187
738
109
Combined M&I
Measured
23,154
0.67
1.8
0.86
500
1,345
438
Indicated
33,854
0.57
2.2
0.66
617
2,409
495
Total New Afton M&I
57,008
0.61
2.1
0.74
1,118
3,754
933
BLACKWATER
Direct processing Mineral
Resources
Measured
288
1.39
6.6
-
13
61
-
Indicated
45,440
0.84
4.7
-
1,227
6,866
-
M&I (direct proc.)
45,728
0.84
4.7
-
1,240
6,927
-
Low grade Mineral Resources
Measured
11
0.29
7.4
-
-
3
-
Indicated
15,831
0.32
3.9
-
162
1,985
-
M&I (low grade)
15,842
0.32
3.9
-
162
1,988
-
Total Blackwater M&I
61,570
0.71
4.5
-
1,402
8,915
-
TOTAL M&I MINERAL RESOURCES
4,434
17,788
933
Notes to the Mineral Reserve and Mineral
Resource estimates are provided below.
Inferred Mineral Resources
INFERRED MINERAL
RESOURCES
Metal grade
Contained metal
Tonnes 000s
Gold g/t
Silver g/t
Copper %
Gold koz
Silver koz
Copper Mlbs
RAINY RIVER
High and Medium grade Resources
Open Pit
2,015
0.61
1.8
-
39
114
-
Underground
1,297
3.76
3.5
-
157
146
-
Total Direct Processing
3,312
1.84
2.4
-
196
260
-
Low grade Resources
Open Pit
167
0.35
1.4
-
2
8
-
Rainy River Inferred
3,479
1.77
2.4
-
198
268
-
NEW AFTON
A&B Zones
6,367
0.34
1.3
0.35
70
272
49
C-zone
7,650
0.41
1.3
0.47
101
316
71
HW Lens
3
0.49
0.6
0.19
-
-
-
New Afton Inferred
14,022
0.38
1.3
0.42
172
589
121
BLACKWATER
Direct processing
13,933
0.76
4.0
-
341
1,792
-
Low grade Resources
4,225
0.32
3.5
-
44
475
-
Blackwater Inferred
18,158
0.66
3.9
-
385
2,267
-
TOTAL INFERRED MINERAL
RESOURCES
754
3,124
121
Notes to the Mineral Reserve and Mineral
Resource estimates are provided below.
Notes to Mineral Reserve and Mineral Resource
Estimates
1. New Gold’s Mineral Reserves and Mineral Resources have been
estimated in accordance with the CIM Standards (2014), which are
incorporated by reference in NI 43-101. 2. All Mineral Reserve and
Mineral Resource estimates for New Gold’s properties and projects
are effective December 31, 2019. 3. New Gold’s year-end 2019
Mineral Reserves and Mineral Resources have been estimated based on
the following metal prices and foreign exchange (FX) rate
criteria:
Gold
$/ounce
Silver
$/ounce
Copper
$/pound
FX
CAD:USD
Mineral Reserves
$1,275
$17.00
$3.00
$1.30
Mineral Resources
$1,375
$19.00
$3.25
$1.30
4. Cut-offs for the Company’s Mineral Reserves and Mineral
Resources are outlined in the following table:
Mineral Property
Mineral Reserves
Lower cut-off
Mineral Resources
Lower Cut-off
Rainy River
O/P direct processing:
0.46 – 0.49 g/t AuEq
0.44 – 0.45 g/t AuEq
O/P low grade material:
0.30 g/t AuEq
0.30 g/t AuEq
U/G direct processing:
2.20 g/t AuEq
2.00 g/t AuEq
New Afton
Main Zone – B1 & B2 Blocks:
US$21.00/t
All Resources: 0.40% CuEq
B3 Block & C-zone:
US$24.00/t
Blackwater
O/P direct processing:
0.26 – 0.38 g/t AuEq
All Resources: 0.40 g/t AuEq
O/P low grade material:
0.32 g/t AuEq
5. New Gold reports its Measured and Indicated Mineral Resources
exclusive of mineral reserves. Measured and Indicated Mineral
Resources that are not Mineral Reserves do not have demonstrated
economic viability. Inferred Mineral Resources have a greater
amount of uncertainty as to their existence and technical
feasibility, do not have demonstrated economic viability, and are
likewise exclusive of Mineral Reserves. Numbers may not add due to
rounding.
6. Mineral Resources are classified as measured, indicated and
inferred based on relative levels of confidence in their estimation
and on technical and economic parameters consistent with the
methods considered to be most suitable to their potential
commercial extraction. The designators ‘open pit’ and ‘underground’
may be used to indicate the envisioned mining method for different
portions of a resource. Similarly, the designators ‘direct
processing’ and ‘lower grade material’ may be applied to
differentiate material envisioned to be mined and processed
directly from material to be mined and stored separately for future
processing. Mineral Reserves and Mineral Resources may be
materially affected by environmental, permitting, legal, title,
taxation, sociopolitical, marketing and other risks and relevant
issues. Additional details regarding Mineral Reserve and Mineral
Resource estimation, classification, reporting parameters, key
assumptions and associated risks for each of New Gold’s material
properties are provided in the respective NI 43-101 Technical
Reports, which will be available at www.sedar.com within 45 days of
this press release.
7. The preparation of New Gold's consolidated statement and
estimation of Mineral Reserves has been completed under the
oversight and review of Mr. Andrew Croal, Director of Technical
Services for the Company. Mr. Croal is a Professional Engineer and
member of the Association of Professional Engineers Ontario.
Preparation of New Gold’s consolidated statement and estimation of
Mineral Resources has been completed under the oversight and review
of Mr. Michele Della Libera, Director, Exploration for the Company.
Mr. Della Libera is a Professional Geoscientist and member of the
Professional Geoscientists of Ontario and of the Engineers and
Geoscientist of British Columbia. Mr. Croal and Mr. Della Libera
are "Qualified Persons" as defined by NI 43-101.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200213005149/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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