Canadian mining company New Gold (TSX, NYSE: NGD) has unveiled an ambitious roadmap aimed at significantly increasing its gold production over the next three years. The company’s plan targets a remarkable 35% growth in gold output, with production expected to reach between 410,000 to 460,000 ounces by 2026. This expansion strategy encompasses ramping up production at existing mines and completing ongoing growth projects.
In addition to its ambitious gold production targets, New Gold aims to substantially boost its copper production by 60% from 2023 levels. The projected output for copper is anticipated to range between 71 million and 81 million pounds by 2026. This increase will be primarily driven by the commencement of commercial production and subsequent ramp-up at the C-Zone of New Afton mine scheduled for this year.
New Gold’s strategic plan emphasizes not only increased production but also significant cost efficiencies. The company anticipates achieving its production growth targets while implementing total capital reductions and lowering operating costs. This focus on efficiency is reflected in the expected decrease in total costs, on a by-product basis, by 7% compared to the midpoint of 2023 guidance, estimated to be between $725 and $825 per ounce.
The company anticipates tangible progress from its three-year plan as early as 2024, with consolidated gold production projected to range between 310,000 to 350,000 ounces. This represents a notable increase compared to the 321,178 ounces produced in the previous year. Similarly, copper production for the current year is forecasted to be between 50 million and 60 million pounds.
New Gold’s commitment to growing production while simultaneously reducing costs is expected to have a positive impact on its financial health. As of the end of the October 2023 quarter, the company reported $395.7 million in long-term debt and $214.1 million in current debt. The successful execution of its growth strategy is poised to strengthen the company’s balance sheet and enhance its overall financial position.
Looking beyond the immediate three-year horizon, New Gold’s president and chief executive, Patrick Godin, outlined the company’s strategic objective of targeting a sustainable production platform of approximately 600,000 gold equivalent ounces per year. This long-term vision underscores New Gold’s commitment to unlocking the full potential of its operations and delivering value to its shareholders.
Challenges Behind
New Gold, which has the Rainy River gold mine in Ontario and the New Afton copper-gold operation in British Columbia, said issues affecting the assets productivity are all in the past.
At Rainy River, which began operations in 2017, the company has been transitioning mining underground, from where it expects to produce first ore this year.
“At Rainy River, the challenges are behind us … we are achieving our targets quarter over quarter,” the mine general manager, Gord Simms, said during a webcast following the announcement.
The mine produced 253,745 ounces of gold last year, 10% more than in 2022, with output slayed to jump over the next three years as higher-grade underground production ramps up to supplement open pit production.
The underground portion of Rainy River contributed 10% of production in 2023 and will ramp to 5,000-6,000 tonnes per day by 2027 to produce 150,000-200,000 ounces per year.
Production at the operation, located 65 km (about 40 miles) northwest of Fort Frances, near the border with Minnesota, is forecast to grow to 315,000-355,000 ounces in 2026, the company said. This will help drop all-in-sustaining costs (AISC) from about $1,500 per ounce in 2023 to $1,000-1,100 per ounce.
Production at New Afton is forecast to increase about 50% for gold from 67,000 ounces in 2023 to 95,000-105,000 ounces in 2026. Copper output will increase 60% from 47,400 million pounds in 2023 to 71-81 million pounds in 2026.
The production growth and copper credits will turn the operations AISC on a by-product basis from $450-550 per ounce to negative $800-900 per ounce.
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