New Afton continued to be the company's most significant cash flow generator in 2015 thanks to strong, steady gold and copper production that results in all-in sustaining costs that remain among the lowest in the industry.
Located 10 kilometres from Kamloops, British Columbia, the New Afton Mine is a low-cost gold and copper producer with significant upside potential. In 2015, its third year of full production, New Afton continued its track record of value creation through operating improvements and exploration.
Among its value-enhancing achievements, New Afton:
- Completed a mill expansion below budget and ahead of schedule in the second quarter, significantly adding to its cash flow generation potential.
- Completed a feasibility study for the site’s C-zone, which has the potential to extend the mine life at this valuable asset.
New Afton’s 2015 gold production of 105,487 ounces was within guidance and remained consistent with 2014, as a planned 6 percent increase in mill throughput offset an expected decrease in gold grade.
Copper production of 86 million pounds was also consistent with the prior year. In line with gold production, the higher mill throughput offset an expected decrease in copper grade, while copper recovery remained consistent with the prior year. New Afton’s full-year copper production was within its guidance range of 85 to 95 million pounds.
Costs were impacted by lower copper by-product prices. New Afton’s 2015 full-year all-in sustaining costs of negative $242 per ounce, including total cash costs of negative $724 per ounce, increased relative to the prior year primarily due to lower copper by-product revenues resulting from lower copper prices.
For 2016, gold production at New Afton is expected to decrease by approximately 10 percent relative to 2015 as a decrease in gold grade is only partially offset by the benefit of the mine operating at the higher throughput rate for the full year. Similarly, 2016 copper production is scheduled to decrease by approximately 7 percent, due to the mining and processing of lower-copper-grade ore.
New Afton’s all-in sustaining costs and total cash costs, whether measured on a by-product or co-product basis, are expected to remain among the lowest in the industry.
In terms of value creation at New Afton, nothing is more exciting than the potential of the C-zone. Beyond the seven years of mine life in the B-zone, the C-zone has the potential to add five and half years of additional mine life to New Afton. The C-zone is a continuation of the main New Afton deposit that lies down and along strike of the reserve that is currently being mined. During 2015, New Afton completed a feasibility study for the C-zone to confirm design parameters and project economics, which includes optimization of the underground mine and infrastructure designs, the production schedule, project costs, tailings and stabilization test work, tailings designs and continued baseline environmental work. Work expected to be completed in 2016 includes additional exploration drilling, permit-amendment preparation and submission, mine optimization and planning reviews.