Press Release
Development activities at New Gold’s Rainy River project, located in north of Barwick, continue to advance and the project is scheduled to transition from construction to operation in the third quarter of 2017.
Both the project schedule and capital cost estimate remain in line with New Gold’s updated plan announced on Jan. 30.
Project spending during the first quarter totalled $126 million, with estimated remaining capital to achieve November commercial production of $389 million.
The mining rate during the quarter averaged more than 110,000 tonnes per day.
Overall earthworks is roughly 70 percent complete.
All key structural components of the process facilities are complete while installation of mechanical, piping, electrical, and instrumentation in processing facilities is about 85 percent complete.
The primary crusher and conveyor system is roughly 95 percent complete.
Commissioning of the crusher started in March, with the first crush scheduled for early May.
Upcoming key milestones in the second quarter include:
•complete commissioning of the crusher and complete first crush;
•commence commissioning of ball and SAG mill; and
•energization of all site power lines
Third quarter milestones include:
•dry and wet commissioning of the full process circuit;
•complete tailings management area starter cell; and
•first ore to mill and mine start-up
The September start-up is based on an expectation the mining rate will continue to increase to an average of roughly 120,000 tonnes per day, which includes both planned productivity gains and takes into consideration the impact of changing weather conditions through the spring and summer months.
There are multiple catalysts for the planned productivity gains.
As pit water management impacts productivity, particularly during the spring thaw, the commissioning of the water management pond will facilitate increased pit dewatering which, in turn, will provide greater access and improved mining conditions.
As well, an additional construction rock source has been identified outside of the pit and closer to the tailings area, which currently is being brought online.
Once fully operational, this will shorten the cycle time of rock material mined from the pit as it primarily will be delivered to the waste dump instead of the longer haul to the tailings area.
These changes, as well as operational improvements in the mining and maintenance areas, underpin the planned increase in mining rate to 120,000 tonnes per day.
Through March 31, more than 800,000 cubic metres of construction material has been placed at the tailings management starter cell, which is scheduled to be completed in August.
Construction of the water management pond is tracking in line with the company’s updated plan, and approval was expected in the coming days to pump up to 1.4 million cubic metres into the pond.
Completion and energization of all site overhead power lines, and completion of the tailings pipeline corridor, is planned for the second quarter.
Subsequent to the end of the quarter, approval was received to commence construction of the mine rock pond.
Meanwhile, all of the key structural components of the process facilities have been completed while the setting of mechanical equipment and installation of piping, electrical, and instrumentation services is well advanced.
The primary crusher and conveyor system are roughly 95 percent complete.
As well, the company continues to work towards obtaining an amendment to Schedule 2 of the Metal Mining Effluent Regulations, required to close two small creeks and deposit tailings.
In recent discussions with senior officials from Environment and Climate Change Canada, New Gold was advised that public notification of the proposed amendment is expected to be published in the second quarter of 2017.
The final publication and adoption of the Schedule 2 amendment is expected to occur in January, 2018.
As previously disclosed, New Gold presently is constructing a starter tailings cell, located within the broader tailings management area, that does not require a Schedule 2 amendment.
This will allow New Gold to commence operations prior to completion of the Schedule 2 amendment.
Based on its location and scale, the starter cell would provide capacity for about six months of tailings.
In addition, New Gold is finalizing its evaluation of an approach to constructing the creek closures which incorporates sheet pile at the centre of the portion of the dam which will cover the creeks.
The purpose of this approach is both to reduce the construction time after receipt of the Schedule 2 amendment and, most importantly, to be able to complete the work regardless of the weather conditions.
The approach is expected to require provincial and federal regulatory approvals.
New Gold continues to look forward to the expected growth in the company’s production and cash flow once Rainy River transitions into operation later this year.
Rainy River has multiple important asset qualities, including its great jurisdiction, significant annual production potential, long estimated reserve life, and continued exploration potential.
“As we indicated to our stakeholders at the beginning of this year, our priorities are enhancing our financial flexibility, delivering operationally, and executing on our updated Rainy River plan,” stated Hannes Portmann, president and CEO of New Gold.
“I am very pleased to report that we have made significant progress in all three areas.”
