New Gold Announces Blackwater Feasibility Study Results
PR Newswire Association LLC |
(All figures are in US dollars unless otherwise indicated)
Feasibility Study Highlights
- Conventional truck and shovel open pit mine with 60,000 tonne per day ("tpd") whole ore leach processing plant
- 17-year mine life with direct processing for first 14 years and processing of stockpile thereafter
- Life-of-mine operational strip ratio of 1.88 to 1.00
- Life-of-mine gold and silver recoveries of 87% and 49%
- Life-of-mine gold and silver production of 7 million ounces and 30 million ounces
- Development capital costs of
$1,865 million inclusive of a$190 million contingency - First nine years - average annual gold production of 485,000 ounces at total cash costs(1) of
$555 per ounce and all-in sustaining costs(2) of$685 per ounce - Base case economics - at
$1,300 per ounce gold,$22.00 per ounce silver and a0.95 US$ /C$ foreign exchange rate,Blackwater has a pre-tax 5% net present value ("NPV") of, an internal rate of return ("IRR") of 11.3% and a payback period of 6.2 years - Alternative case economics - at
$1,600 per ounce gold,$26.00 per ounce silver and a parity US$/C$ foreign exchange rate,Blackwater has a pre-tax 5% NPV of$2,120 million , an IRR of 16.8% and a payback period of 4.5 years
"The completion of the Blackwater Feasibility Study is an important milestone for our company," stated
"Importantly,
Mineral Reserve Estimate
The
This mineral resource estimate is compliant with CIM (as defined at the conclusion of the release) Definition Standards prescribed under National Instrument 43-101 and is based upon a geologic block model that incorporates 286,966 individual assays from 309,516 metres of core from 1,003 drill holes at a nominal drill hole spacing ranging from 25 metres to 50 metres. Assay data density is sufficient to classify the mineral resource at the Measured and Indicated confidence levels as necessary to support the estimation of a mineral reserve. The drill hole database was supported by approximately 80,000 quality assurance/quality control (QA/QC) check assays.
A proposed mining production schedule was developed through the design of an ultimate open pit within the mineral resource model. The
Blackwater Mineral Reserve Estimate - Effective |
|||||
Tonnes (Mt) |
Gold (g/t) |
Silver (g/t) |
Gold (Moz) |
Silver (Moz) |
|
Direct processing material Proven Probable Total direct processing material |
124.5 169.7 294.3 |
0.95 0.68 0.79 |
5.5 4.1 4.7 |
3.79 3.73 |
22.1 22.3 44.4 |
Stockpile material Proven Probable Total stockpile material |
20.1 30.1 50.2 |
0.50 0.34 0.40 |
3.6 14.6 10.2 |
0.33 0.33 0.65 |
2.3 14.1 16.4 |
Direct processing and stockpile material Proven Probable Total |
144.6 199.8 344.4 |
0.88 0.63 0.74 |
5.3 5.7 5.5 |
4.11 4.05 8.17 |
24.4 36.4 60.8 |
Notes: 1.Reported within an open pit design based on metal prices of silver, with variable recoveries by grade and ore type averaging 86.6% for gold and 49.1% for silver. 2. Contained metal calculated on the basis of Tonnes * Grade / 31.10348 grams per troy ounce. 3. Direct processing reserves are defined as mineralization above a lower cut-off grade that varies by year between 0.26 g/t and 0.38 g/t AuEq and is to be mined and processed directly. 4. Reserves noted as stockpiled material consist of ore tonnage above a 0.32g/t AuEq cut-off grade that is mined and stockpiled before being sent to the mill. This stockpiled tonnage includes ore mined before mill startup, lower grade ore mined during preproduction and commercial production, and ore tonnage misclassified or misallocated during the mining process. All of the ore tonnage classified as reserves and listed here is processed and the total reserves quoted are equal to the total mill feed as shown in the life of mine plan. No stockpiles currently exist at site. 5. Gold-equivalent grade estimate based on average metallurgical recoveries of 88.0% gold and 64.0% silver for oxide mineralization, 85.0% gold and 58.0% silver for transitional oxide / sulphide mineralization, and 85.0% gold and 44.0% silver for sulphide mineralization. 6. All costs are based on estimates and vendor quotes effective third quarter 2013. No escalation has been applied to bring costs forward to |
Mining Operations and Metallurgy
The mining production schedule was developed using four phases. The schedule incorporates an elevated cut-off grade strategy during the first 10 years of mining to raise the mill feed grade. Material below the higher cut-off grade is stockpiled for processing at the end of the Project's life.
Mining operations would be carried out with an initial equipment fleet comprising four 200 to 250 millimetre diesel blast hole drills, two 40 cubic metre hydraulic shovels, one 28 cubic metre front-end loader, and fourteen 290 tonne trucks. The mining fleet increases during operations with the addition of four blast hole drills, one electric cable shovel, and thirteen haul trucks. A 12 metre bench height has been selected for mining. This large-scale open pit mining would provide process plant feed at a nominal rate of 60,000 tpd or 21.9 million tonnes per year. Annual mine production of ore and waste would peak at 92 million tonnes. The operational stripping ratio, excluding waste stripping during the development phase, is 1.88:1.00.
The metallurgical evaluation was supported by an extensive metallurgical and grinding test program. The tests were conducted on samples composited to represent process plant feed in the mine plan. Composites derived from 324 exploration drill holes as well as 27 dedicated large bore HQ/PQ core drill holes were used for testing. Mineralogical and diagnostic leach testing indicated that the primary areas of investigation required to optimize the whole ore leach processing were: primary grind size, reagent addition, and leach retention time. Estimated process plant feed grade, recoveries and metal production from commercial production forward are summarized below.
Blackwater Feasibility Study Production Schedule | |||||||
Production Years |
Mill Feed (Mt) |
Head Grade | Recovery | Average Annual Production |
|||
Gold (g/t) |
Silver (g/t) |
Gold (%) |
Silver (%) |
Gold (Koz) |
Silver (Koz) |
||
1 through 9 | 183.4 | 0.85 | 5.6 | 87.1 | 50.1 | 485 | 1,842 |
1 through 14 | 292.9 | 0.79 | 4.7 | 86.8 | 48.5 | 463 | 1,531 |
15 through 17 | 48.9 | 0.40 | 10.2 | 84.4 | 50.6 | 177 | 2,726 |
Life-of-mine | 341.8 | 0.74 | 5.5 | 86.6 | 49.0 | 413 | 1,742 |
Note: Table excludes 2.65 Mt of material mined and milled in the preproduction period. |
Mineral Processing
The 60,000 tpd process plant would use conventional crushing, grinding, leaching, and carbon-in-pulp technology to produce gold-silver doré. The overall design utilizes a simple and conventional flowsheet.
Run-of-mine ore would be crushed and ground to 80% passing 150 µm in a conventional dual-train semi-autogenous grinding-ball milling-pebble crushing circuit. Ground ore would be directed to a leach feed thickener, then to a leaching and carbon-in-pulp extraction circuit. Extracted gold and silver would be released from carbon in stripping columns and recovered by electrowinning before being smelted into gold-silver doré.
Key process equipment would consist of:
- A 1,520 x 2,870 millimetre (60" x 113") gyratory crusher
- A SAG/ball mill/crusher grinding circuit:
- Two 11.0 x 6.7 metre diameter (36' x 21.5') 17-Megawatt SAG mills
- Two 8.2 x 12.8 metre diameter (27' x 42') 17-Megawatt Ball mills
- Two 1,000-Kilowatt pebble crushers
- Whole ore leaching and carbon-in-pulp circuit:
- 24 leach tanks of 18 metre diameter
- Two trains of seven 400 cubic metre capacity carbon-in-pulp tanks
- Two 80 metre diameter thickeners
- Three cyanide destruction vessels
Project Capital Costs
The Project is located 112 kilometres southwest of
The
During the development stage, an 880-person construction camp would be established on site which, together with the expansion of the existing camp from 250 to 426 persons, would provide accommodations for contractors and construction management staff. This construction camp would be removed once development is complete. An airstrip is planned to be built for use during the construction phase of the Project in order to increase accessibility and reduce travel time to the site. The presence of an airstrip supports
The total estimated development capital cost for the Project is
A detailed breakdown of the key components of the Project's development capital are shown below.
Breakdown of Feasibility Study Project Development Capital Costs | |
Description | ($ millions) |
Direct Costs | |
Mining equipment and pre-production development | 272 |
On-site infrastructure (Truck shop, Warehousing, Earthworks, etc.) | 158 |
Process plant | 600 |
Tailings facilities and water reclaim | 86 |
Off-site infrastructure (Transmission line, Water supply system, Airstrip, etc.) | 121 |
Access corridor | 11 |
Total Direct Costs | 1,248 |
Owner's Costs and EPCM | |
Owner's costs | 74 |
Engineering, Procurement and Construction Management | 108 |
Indirect Costs | |
Construction services, support and utilities | 97 |
Construction camp and facilities | 78 |
Freight and logistics | 42 |
Other indirect costs | 28 |
Total Indirect Costs | 245 |
Total Owner's Costs, EPCM and Indirect Costs | 427 |
Subtotal | 1,675 |
Contingency | 190 |
Total Project Development Costs | 1,865 |
Project Operating Costs
The unique combination of
After the start of commercial production, the Project's mining costs are projected to be
Breakdown of Base Case Feasibility Study Operating Costs | ||
Description | (C$ per tonne milled) |
($ per gold ounce produced) |
Mining | 5.33 | 247 |
Processing | 7.20 | 333 |
General and administrative | 1.43 | 67 |
Royalties | 0.27 | 12 |
Refining | 0.21 | 10 |
Transport and insurance | 0.05 | 2 |
Cash costs | 14.49 | 671 |
Silver by-product sales at |
(2.01) | (93) |
Total cash costs(1) | 12.48 | 578 |
Sustaining capital | 1.99 | 92 |
All-in sustaining costs(2) | 14.47 | 670 |
A key driver of the Project's low all-in sustaining costs(2) is that, at an assumed silver price of
Economic Sensitivity Analysis
The summary below, showing a variety of commodity price and foreign exchange scenarios, holds the following assumptions constant: an electricity rate of
Summary of Feasibility Study Project Economics | |||||
Gold Price ($ per ounce) |
Silver Price ($ per ounce) |
US$/C$ foreign exchange |
5% NPV ($ millions) |
IRR (%) |
Payback Period (Years) |
Pre-tax | Pre-tax | Pre-tax | |||
1,150 | 20.00 | 0.93 | 402 | 7.8 | 7.5 |
1,300 | 22.00 | 0.95 | 991 | 11.3 | 6.2 |
1,450 | 24.00 | 0.97 | 1,582 | 14.4 | 5.1 |
1,600 | 26.00 | 1.00 | 2,120 | 16.8 | 4.5 |
Using the base case assumptions as the foundation, other important sensitivities include:
- Every
$100 per ounce change in the life-of-mine gold price, where all other assumptions are held constant, results in an approximate$442 million change in pre-tax NPV and 2.4% change in pre-tax IRR - Every
$0.05 change in the US$/C$ foreign exchange rate, where all other assumptions are held constant, results in an approximate$270 million change in pre-tax NPV and 1.9% change in pre-tax IRR - Every
$100 million change in development capital costs, where all other assumptions are held constant, results in a$98 million change in pre-tax NPV and 0.9% change in pre-tax IRR
Tax Considerations
A part of
British Columbia mining tax - 2% provincial tax payable immediately upon the start of production, increasing to 13% after applicable capital cost deductions are usedBritish Columbia provincial income tax - 11.0%, payable after applicable deductions are used- Canadian federal income tax - 15.0%, payable after applicable deductions are used
- As the mining tax is deductible for income tax purposes, once
Blackwater becomes fully taxable later in its mine life, the effective tax rate would be approximately 35% based on today's statutory rates
2012 PEA versus Feasibility Study
As
- Project's 60,000 tonne per day scale and whole ore leach processing circuit remain unchanged
- Weighted average gold grade processed in first nine years of production unchanged at 0.85 grams per tonne
- Weighted average silver grade processed in first nine years of production increased to 5.6 grams per tonne from 4.8 grams per tonne
- Life-of-mine average gold recoveries unchanged
- Life-of-mine average silver recoveries decreased by 4%
- Cumulative gold production in first nine years decreased by 187,000 ounces, or an average of 21,000 ounces per year, primarily attributable to a more conservative production ramp-up assumption
- Cumulative silver production in first 9 years increased by 395,000 ounces, or an average of 44,000 ounces per year
- Overall smaller pit design with 149 million tonnes less waste mined, including pre-production waste, resulting in lower stripping ratio
- Decrease in total cost per tonne milled, net of silver by-product credit, to
C$12.48 per tonne fromC$13.01 per tonne, despite using lower silver price assumption - 0.9 million ounce decrease in life-of-mine gold production, primarily driven by years 10 and beyond, resulting from the incorporation of infill drilling, related updates to the geologic and geostatistical model, inclusion of a 5% mining dilution factor and resulting revisions to the mine plan
- 2.3 million ounce decrease in life-of-mine silver production, driven by years 10 and beyond
- In Canadian dollar terms, the estimated development capital has increased by 8%, which has been offset by a 9% depreciation in the Canadian dollar from US$/
C$1.03 at the time of the 2012 PEA to US$/C$0.94 today - The 2012 PEA applied a parity exchange rate to the development cost, whereas the Feasibility Study applies a US$/
C$ 0.95 exchange rate $110 million increase in life-of-mine sustaining capital costs of which the majority is related to ongoing tailings dam expansion in first five years of mine life
Environment, Permitting and Corporate Social Responsibility
The mine design includes a robust closure plan with simplified water management requirements resulting from the compact project layout and integrated waste management strategy. The closure plan employs proven practices and is not dependent on long-term active treatment and monitoring. All Project components would be decommissioned and reclaimed according to best industry practices and provincial and federal regulations. Proposed end land use objectives for mine closure are wildlife habitat and return of the land for traditional use by First Nations.
Approval to develop and operate major mines in
The provincial review is administered by the
The company is consulting with First Nations, government, and other stakeholders regarding the Project. The intent of the consultations is to increase the mutual awareness and understanding of the Project.
Forestry, agriculture, and, to a lesser extent, tourism, are the primary industries driving the economy of the region, with mining targeted as an emerging sector. The area's economy has historically been driven by forestry, but the Mountain Pine Beetle epidemic, the downturn in the forest industry, and the closures of certain sawmills in the area, have led to economic decline in the region.
About
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including any information relating to
All forward-looking statements in this news release are based on the opinions and estimates of management as of the date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond
Cautionary Note to U.S. Readers Concerning Estimates of Measured, Indicated and Inferred Mineral Resources
Information concerning the properties and operations of
Technical Information
The scientific and technical information in this news release has been reviewed and approved by
Mark Petersen , AIPG Certified Professional Geologist (New Gold Inc. )Ronald G. Simpson , P Geo (GeoSim Services Inc. )Jay Horton ,P. Eng (Norwest Corporation )Bruno Borntraeger ,P. Eng (Knight Piesold Ltd. )Gary Christie ,P. Eng (AMEC)Ignacy (Tony) Lipiec ,P. Eng (AMEC)
Mineral Resources
Blackwater Mineral Resource Estimate - Effective |
|||||
Tonnes (000s) |
Au (g/t) | Ag (g/t) | |||
Measured & Indicated Resources Direct processing material Measured Indicated M&I (direct processing) Stockpile material Measured Indicated M&I (stockpile) Total M&I |
116,955 189,044 305,999 26,521 64,382 90,904 396,903 |
1.04 0.78 0.88 0.30 0.30 0.30 0.74 |
5.6 6.0 5.8 4.1 4.4 4.3 5.5 |
3.90 4.73 8.62 0.26 0.62 0.87 9.50 |
21.06 36.47 57.52 3.50 9.11 12.60 70.13 |
Inferred Resources Inferred (direct processing) Inferred (stockpile) Total Inferred |
13,815 3,785 17,600 |
0.76 0.31 0.66 |
4.1 3.6 4.0 |
0.34 0.04 0.38 |
1.82 0.44 2.26 |
Notes:
1. Reported within a conceptual open pit shell based on metal prices of
2. Total contained metal calculated on the basis of Tonnes * Grade / 31.10348 grams per troy ounce.
3. Gold-equivalent grade estimate based on
4. Direct processing material defined as mineralization above a 0.4 g/t AuEq cutoff and likely to be mined and processed directly.
5. Stockpile material defined as mineralization above a 0.3 g/t AuEq and below a 0.4 g/t AuEq cutoff that is suitable for stockpiling and future processing based on average metallurgical recoveries of 79.0% gold and 37.0% silver. The 0.3 g/t AuEq lower cutoff grade is considered adequate to cover mining, processing, and additional handling costs.
Mineral Reserve
1. Reported within an open pit design based on metal prices of
2. Contained metal calculated on the basis of Tonnes * Grade / 31.10348 grams per troy ounce.
3. Direct processing reserves are defined as mineralization above a lower cut-off grade that varies by year between 0.26 g/t and 0.38 g/t AuEq and is to be mined and processed directly.
4. Reserves noted as stockpiled material consist of ore tonnage above a 0.32g/t AuEq cut-off grade that is mined and stockpiled before being sent to the mill. This stockpiled tonnage includes ore mined before mill startup, lower grade ore mined during preproduction and commercial production, and ore tonnage misclassified or misallocated during the mining process. All of the ore tonnage classified as reserves and listed here is processed and the total reserves quoted are equal to the total mill feed as shown in the life of mine plan. No stockpiles currently exist at site.
5. Gold-equivalent grade estimate based on
6. All costs are based on estimates and vendor quotes effective third quarter 2013. No escalation has been applied to bring costs forward to
7. Cutoff grade values are based on a gold price of
a. | minimum profit | ||
b. | operating cost (ore mining, hauling cost, processing, G&A) | ||
c. | sustaining capital cost for mining, tailings storage facility and the mill | ||
d. | royalty and refining cost | ||
e. | reduced recovery for stockpiled ore (79%) |
The costs for determining cut-off grade are based on the 2012 PEA updated by
8. There are two primary dilution and loss scenarios. The first scenario sees a surplus of ore being mined and being sent to both the mill and the low-grade stockpile. In the second scenario, all ore mined is sent to the mill with no surplus sent to the low-grade stockpile. Dilution and losses vary for these two scenarios due to the different cut-off grades used, resulting in different ore / waste contact block configurations. As such, the resulting average dilution for periods where both the mill and the stockpile are fed is 5% at a grade of 0.16 g/t Au and 3.19 g/t Ag. For periods where all ore is sent to the mill directly, dilution is 4% at a grade of 0.12 g/t Au and 2.90 g/t Ag. In addition, all isolated ore blocks—ore blocks with waste on all four adjacent sides—will be mined as waste and all isolated waste blocks—waste blocks with ore on all four adjacent sides—will be mined as ore.
Beyond the dilution factor noted above, a misallocation factor is also applied when calculating the ore tonnes. This factor accounts for ore that is intended for the plant, based on grade, but is sent to the stockpile, or vice versa. A factor of 15% of the total material sent to the stockpile was applied to determine the misallocated quantities. The misallocated stockpile ore is made up with the average mill feed ore for the period. This misallocated material would average about 700kt per year, or just under 4% of the total mill feed.
Non-GAAP Measures
(1) TOTAL CASH COSTS
"Total cash costs" per ounce figures are non-GAAP measures which are calculated in accordance with a standard developed by
(2) ALL-IN SUSTAINING COSTS
Consistent with the guidance announced earlier in 2013 from the
SOURCE
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