New Gold buoyed by drilling at New Afton

Vancouver — Good mines never die easy, and to prove the point, New Gold (NGD-T) is encountering continued success in its efforts to revive the past-producing New Afton copper-gold property near Kamloops, in south-central British Columbia.

The Vancouver-based company expects to complete an underground infill drilling program to upgrade resources at its wholly owned property by the end of this year. Results from the ongoing 27,000-metre program will be used to calculate reserves that will be incorporated into a feasibility study to be awarded by year-end. A final feasibility study is scheduled for completion in the fall of 2006.

Based on the positive results of a previous scoping study, New Gold is looking to develop a new underground mine below and adjacent to the Afton open-pit mine successfully operated by a company related to Teck Cominco (TEK-T) in the 1970s and 1980s.

New Gold (formerly known as DRC Resources) acquired the project in 1999, when metal prices were low, and subsequently outlined resources based on about 100 holes completed from surface.

The 2003 scoping study, updated in 2004, estimated measured and indicated resources at 68.7 million tonnes grading 1.08% copper, 0.85 gram gold and 2.62 grams silver per tonne, plus 0.12 gram palladium. Of this total, 9.5 million tonnes were classified as measured, while the indicated resource stood at 59.2 million tonnes.

The underground program is progressing well, with the main exploration decline completed to its target distance of 1,226 metres. Combined with crosscuts, drill bays and other excavations, underground development had reached 1,725 metres by late August, or about 85% of the contracted program. Ground conditions were described as “very good” and better than anticipated from drilling data.

Results are in hand from six underground holes recently drilled on sections 64E and 68E. Highlights include: hole UA-17, which returned 1.36% copper, 2.16 grams gold, 2.62 grams silver, and 0.22 gram palladium over 112 metres (76 metres true thickness); and hole UA-22, which returned 2.10% copper, 1.45 grams gold, 5.59 grams silver, and 0.14 gram palladium over 136 metres (57 metres true thickness).

“These latest results include some of the most significant yet obtained from the underground diamond drill program, and are therefore very encouraging,” says New Gold President Chris Bradbrook.

The company notes that the average weighted grades of the main intersections on both sections were higher than the current resource grade, on a copper-equivalent basis.

The weighted average grades of the main intersections on section 64E were 1.64% copper, 1.18 grams gold, 4.76 grams silver, and 0.12 gram palladium (or 2.48% copper-equivalent) over 138 metres.

The weighted average grades of the main intersections on section 68E were 1.44% copper, 0.59 gram gold, 3.32 grams silver, and 0.04 gram palladium (or 1.86% copper-equivalent) over 119 metres.

The company was particularly encouraged by hole UA-18 (drilled from section 64E), which intersected mineralization beyond the limits of the resource model. The main intersection returned 1.3% copper, 0.6 gram gold, 4.83 grams silver, and 0.08 gram palladium (or 1.75% copper-equivalent) over 234 metres (127 metres true thickness) about 32 metres beyond the limit of the model.

A second interval returned 0.69% copper, 1.18 grams gold, 3.47 grams silver, and 0.12 gram palladium (or 1.53% copper-equivalent) over 6 metres (3 metres true thickness) 40 metres farther down-hole, below the lower limit of the resource model, at a vertical depth of 680 metres. The mineralization remains open at depth.

New Gold also holds exploration properties that cover extensions of satellite deposits mined at Afton, and related known zones. These targets offer potential for additional resources at the New Afton project, which is well serviced by infrastructure, including haul roads to known zones and past-producing deposits.