The average grade to the mill in the second quarter was 0.82 g/t gold.
In order to improve its understanding of the mineralization and reconcile the modelled and mined grades, New Gold is conducting reverse-circulation within and outside of the East Lobe.
The grade issues have also affected all-in sustaining costs (AISCs), which are now projected at US$1,365-US$1,440 per gold equivalent oz., up about 14% from previous guidance of US$1,125-US$1,225 per oz.
New Gold’s guidance for its other producing mine, the New Afton operation in B.C., remains unchanged at 165,000-195,000 gold-equivalent ounces.
“While the reduction in our near-term guidance at Rainy River is unfortunate, I remain confident the mine has reached an inflection point, as evidenced by the free cash flow generated in the second quarter and the mine is on track to deliver an improved second half of the year,” said Renaud Adams, president and CEO. “We continue to seek ways to further optimize our costs and capital profiles, and with the underground growth potential currently being evaluated, Rainy River is expected to be a meaningful contributor of free cash flow in our portfolio going forward.”
Development of a decline to reach the underground Intrepid zone at Rainy River is ongoing, with first production expected in late 2022. The company is also working on an underground optimization study, to be released before the end of the year along with an update of reserves and resources.
Commercial production began in late 2017 at Rainy River, 65 km northwest of Fort Frances, Ont. At the end of 2020, proven and probable reserves were 73.9 million tonnes grading 1.09 g/t gold and 3 g/t silver for 2.6 million oz. of gold and 7.2 million oz. of silver.
Between Rainy River and New Afton, the company now expects gold-equivalent production of 405,000-450,000 oz. At all-in sustaining costs of US$1,365-US$1440 per oz. That compares with previous guidance of 440,000 –490,000 gold equivalent ounces at an AISC of US$1,230-US1,330 per oz.
New Gold also holds a gold stream on the Blackwater gold project in B.C., which it sold to Artemis Gold (TSXV: ARTG) last year.
For more information, visit www.newgold.com.
