The Rainy River project is an example of New Gold’s strategy of investing in longer-lived, larger-scale, lower-cost assets. When it comes on stream next year, Rainy River has the potential to boost our company’s annual gold production by 75 percent from current levels at lower all-in sustaining costs.
New Gold’s Rainy River project in northwestern Ontario is located in a politically secure, mining-friendly jurisdiction – it offers tax synergies with New Gold’s other Canadian assets, and has compelling economics. The project sits within a broader land package of approximately 192 square kilometres. Ideally located, it benefits from its proximity to existing infrastructure, including hydroelectric power, a railway line and a network of all-weather roads that branch off from the well-maintained Trans-Canada Highway.
Development highlights for 2015 include:
- The federal and provincial governments approved the project’s Environmental Assessment in January, enabling the processing of construction-related permits.
- Also in January, New Gold completed the acquisition of Bayfield Ventures Corp. (“Bayfield”), further consolidating its holdings in the district.
- New Gold successfully concluded a Participation Agreement with Big Grassy First Nation during the first quarter of 2015. This agreement is in addition to agreements that have already been signed with Rainy River First Nations, Naicatchewenin First Nation, the Métis Nation of Ontario and four communities of the Fort Frances Chiefs Secretariat.
- Assembly of initial mine fleet substantially completed.
- Detailed engineering completed.
During the year, our exploration team completed the integration of mineral resources on the property’s Burns Block, which was acquired as part of the Bayfield acquisition, into underground reserves and drill tested two early-stage targets north and south of the central mine development area. For 2016, the team will continue to advance district reconnaissance and target identification.
2015 capital expenditures totalled $246 million, which includes $241 million for development capital costs and the remainder primarily for exploration. This compares to $81 million in the prior year. Total project development capital spending through December 31, 2015 was $312 million.
In 2016, New Gold plans to spend approximately $500 million at Rainy River, with the balance to be spent in the first half of 2017. By the end of 2016, the company is expected to advance overall construction to 75 percent completion.
Over its first nine years of full production, the 21,000-tonnes-per-day, combined open pit–underground operation is scheduled to produce an average of 325,000 ounces of gold per year at well below industry average costs.
The Rainy River project enhances New Gold’s growth pipeline through its manageable capital costs, significant production scale at below-current-industry average costs and exciting regional exploration potential in a great mining jurisdiction.