New Gold Inc. [NGD-TSX, NYSE American] got a boost Tuesday April 16 amid news that its $1.8 billion Blackwater gold project in British Columbia has been given a green light by the Federal Government of Canada.
In a decision statement issued under the Canadian Environment Assessment Act, the Ministry of Environment and Climate Change said the project is not likely to cause significant adverse environmental effects.
However, the approval comes with 172 conditions that the company must meet during the mine’s construction and operation phases to reduce or eliminate any impact on the environment.
On Tuesday, New Gold shares eased 2.12% or $0.025 to $1.15 and trade in a 52-week range of 90 cents and $3.24.
New Gold is a Canada-focused intermediate gold producer. Its key operations are the Rainy River Mine in northwest Ontario and Afton Mine in southern British Columbia.
It also holds a 100% of the Blackwater Project, located 110 km southwest of Vanderhoof, BC. The proposed open pit mine is expected to produce 60,000 tonnes-per-day of gold and silver ore over a 17-year mine life.
Proven and probable reserves currently stand at 8.2 million ounces of gold and 60.8 million ounces of silver.
Blackwater is expected to create up to 1,500 jobs during the construction phase and almost 500 while the mine is in operation.
In a February 14, 2019 press release, New Gold President and CEO Renaud Adams said 2019 is a pivotal year for the company as management position’s New Gold for long-term success.
Adams also said the company will continue to assess alternative project scenarios at Blackwater that would consider lower initial capital requirements and a higher-grade pit configuration that would generate positive returns at current metal prices.
During 2019, New Gold said it may consider strategic alternatives with respect to Blackwater, but did not elaborate.
New Gold shares went into freefall last year when the company reduced production forecasts at Rainy River to between 210,000 and 250,000 ounces from an earlier target of between 310,000 and 350,000 ounces. Three years ago, the shares were trading at close to $8.
That prompted a management restructuring that resulted in the elimination of five vice-president positions. The company also reduced its core asset base to two operating assets including the Rainy River and New Afton mines. This follows the divestment of the Mesquite and Peak mines last year.
New Gold’s forecast for 2019 includes high all-in sustaining costs of US$1,790 an ounce at the company’s Rainy River gold mine in Ontario where production is forecast at between 245,000 and 270,000 ounces.
The company’s New Afton Mine in British Columbia is expected to produce between 55,000 and 65,000 ounces of gold in 2019 as well as between 74 million and 85 million pounds of copper. All-in sustaining costs at New Afton are forecast at between US$500 and US$420 per ounce.