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New Gold extends Rainy River's mine life

New Gold has extended the life of mine at its Rainy River gold project in Ontario, Canada, to 10 years, or to 2031, in an updated technical report.
New Gold extends Rainy River's mine life New Gold extends Rainy River's mine life New Gold extends Rainy River's mine life New Gold extends Rainy River's mine life New Gold extends Rainy River's mine life

Nathan Richardson

New Gold president and CEO Renaud Adams called the release "another positive milestone towards delivering sustainable production" and noted the project's "low upfront underground development capital". 

"Further, all-in sustaining costs continue to remain attractive and decrease significantly after 2023, providing for strong margins and free cash flow over the next decade," Adams said. 

Canaccord Genuity Capital Markets analyst Dalton Baretto said that CG agreed the upfront costs are low, while the life of mine is longer than they expected, and the project is "compelling", but added that overall, it views the new plan as "neutral" to CG's estimates as near-term production falls took off some of the shine. 

Rainy River is now projected to produce 843,000 ounces of gold, with 29.2 million tonnes grading 1.01 grammes per tonne over the next three years, which compared with CG's estimate of 922,000oz Au, with 29.3Mt grading 1.12g/t. 

The life-of-mine plan projects 70Mt processed at 1.24g/t Au over the 10 years, which compares with CG's estimate of 58Mt processed at 1.04g/t over a seven-year mine life. 

LOM gold production of 2.525Moz Au beat CG's estimate of 1.738Moz by 45%. 

LOM average operating costs came in at $27/t against CG's forecast of $22/t. 

And total LOM capital expenditure of $718 million was higher than CG's estimate of $441 million. 

As of April 4, New Gold's share price was C$2.31 (US$1.85), up 2% day-on-day, and with a market capitalisation of C$1.57 billion.