New Gold unveils three-year plan for 35% production growth

New Gold (TSX: NGD; NYSE: NGD) has defined the path forward to increase gold production by 35% from last year’s total to 410,000 to 460,000 oz. in 2026, which includes boosting output at current mines and completing growth projects.

The company is also seeking to raise copper production by 60% from 2023 levels to between 71 million and 81 million lb. in 2026, thanks to the start of commercial production and following ramp up at New Afton’s C-Zone this year.

New Gold said it anticipated to achieve this with higher production, total capital reductions and lower operating costs.

The Toronto-based miner expects total costs, on a byproduct basis, to decrease by 7%, compared with the 2023 midpoint of guidance, to between US$725 and US$825 per ounce.

The miner expects to show in 2024 the first results of its three-year plan, with consolidated gold production reaching 310,000 to 350,000 oz., compared with 321,178 oz. last year. Copper production this year is slated to hit between 50 million and 60 million lb., it said.

Growing production and declining costs will help the company’s balance sheet, which at the end of the October 2023 quarter included US$395.7 million in long-term debt and US$214.1 million in current debt.

“Looking beyond our three-year guidance, the company has a strategic objective of targeting a sustainable production platform of approximately 600,000 gold equivalent ounces per year with a line of sight until at least 2030,” president and chief executive Patrick Godin said in a statement. “Following the successful execution of operational stabilization initiatives and growth projects over the past two years, we are increasingly looking to unlock the long-term value of our operations,” he said.

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 oz. 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 oz. per year.

Production at the operation, located 65 km northwest of Fort Frances, near the border with Minnesota, is forecast to grow to 315,000-355,000 oz. in 2026, the company said. This will help drop all-in-sustaining costs (AISC) from about US$1,500 per oz. in 2023 to US$1,000-1,100 per ounce.

Production at New Afton is forecast to increase about 50% for gold from 67,000 oz. in 2023 to 95,000-105,000 oz. in 2026. Copper output will increase 60% from 47,400 million lb. in 2023 to 71-81 million lb. in 2026. 

The production growth and copper credits will turn the operations AISC on a byproduct basis from US$450-550 per ounce to negative US$800-900 per ounce.