New Gold suspends milling ops at Rainy River

The Rainy River gold mine in northwestern Ontario. Source: New Gold Inc.

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The Rainy River gold mine in northwestern Ontario. Source: New Gold Inc.

New Gold Inc. [NGD-TSX, NYSE American] on Wednesday May 1 released an update on the operation of the mill at its Rainy River gold mine in northwestern Ontario.

In the late afternoon of April 24, management at the Rainy River mine temporarily shut down the mill to assess a buildup of water in the tailings management area. Over the next few days, it was determined that 700,000 cubic metres of excess water was stored in the tailings management area. The buildup of excess water was caused by the rapid spring melt and large snow pack in northern Ontario.

To manage the excess water, the company is transferring water from the tailings management area to the water management pond. The company said extra pumping capacity has been installed and more pumping capacity is being added to expedite the water transfer.

It is expected that the mill will be fully operational within five days, depending on precipitation during this period.

New Gold is a Canada-focused intermediate gold producer. Its key operations are the Rainy River mine in Ontario and Afton mine in British Columbia.

It also holds a 100% of the Blackwater Project, located 110 km southwest of Vanderhoof, B.C.

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.

On Wednesday, the company said management anticipates that any production delays stemming from the excess water and mill closure at Rainy River will be offset so that the company will still be in a position to achieve its annual production guidance.

The company also said mining and crushing operations have not been impacted and continue at planned levels, with ore being stockpiled and segregated for processing when the mill restarts.

New Gold shares advanced 2.6% or $0.03 to $1.18. The shares trade in a 52-week range of 90 cents and $3.22.


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