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New Gold restarting Rainy River

New Gold (TSX: NGD) has started ramping up operations at its troubled Rainy River mine in Ontario, following a voluntary two-week suspension in line with government COVID-19 travel restrictions which had impacted “a significant proportion” of the local workforce.
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New Gold’s Rainy River operation in Ontario

Staff reporter

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New Gold had said about 70% of Rainy River's workforce was made up of local residents and making frequent short trips across the border to Minnesota in the US was a common practice, and the suspension was designed to allow for the recommended 14-day self-isolation period following travel outside of Canada.

The company expected to provide further details of the ramp-up and an update on mid-term plans along with its first quarter operational update in mid-April.

It had said on March 20 it did not anticipate adjustments to Rainy River's annual guidance and its New Afton mine was continuing to operate at normal levels.

New Gold had last week closed a US$300 million strategic partnership with the Ontario Teachers' Pension Plan at the New Afton mine, giving the miner the option to re-acquire 100% of New Afton, reduce indebtedness and increase financial flexibility as it continues to right Rainy River.

Three years was cut from Rainy River's mine life and 1.5 million ounces of gold from its reserves in a mine optimisation plan released in February which outlined a smaller openpit and underground mining starting in 2022.

The updated life of mine plan for New Afton was less dramatic, reducing capex and optimising the self-funded development of the B3 and C-zone.  

New Gold said it would initially use the local workforce during the progressive ramp-up at Rainy River, followed by the gradual reintroduction of the rotational workforce.

"We are implementing shared action plans and preventative measures, while seeking and considering input from our employees, contractors, and local communities to deliver responsive actions consistent with the broader efforts of minimising the impact of the COVID-19 virus," the company said.

Rainy River is expected to produce between 245,000-265,000oz gold-equivalent this year at an all-in sustaining cost of $1,470-$1,550/oz Au-eq.

New Gold shares last traded near the lower end of a 52-week range of C56c-$2.03, closing at 78c to capitalise it at $527 million (US$372 million).