Vancouver-based New Gold Inc. has announced it willdouble its annual production to 1 million ounces in the next six years, as itmulls introducing a dividend payout for its investors in the fall of2012.
Gold companies'shares perform best in the years when they're increasing production from about200,000 ounces a year to the million-ounce level, Chairman Randall Oliphanttold Bloomberg News.
New Gold Inc. is scheduled to start its New Afton mine in British Columbia in2012. It is likewise reviewing development options for its Blackwater project inBritish Columbia, Oliphant added. New Gold Inc. owns 30 per cent of GoldcorpInc.'s El Morro project in Chile.
"We think we've got quite a lot of runway ahead of us," Oliphant said.
In June, New Gold Inc. got the Blackwater project when it bought RichfieldVentures Corp. for $375 million. The mine is expected to churn 600,000 ounces ofgold a year.
"To us Blackwater was pretty unique, it was a 4 million-ounce gold deposit inCanada that virtually nobody had ever heard of," he said. "I don't know whetherwe will find another one in six months or six years."
Oliphant said New Gold Inc. is reviewing extending a dividend in 2012. Hesaid dividends are more important for large producers that have biggerchallenges to replace reserves and increase production output.
A number of gold producers, including Barrick and Newmont Mining Corp., theworld's two biggest producers by sales, have increased their payouts this yearfollowing the increase in the prices of gold.
Created in 2008 when it acquired Metallica Resources Inc. and Peak Gold Ltd.,New Gold Inc. operates the Mesquite gold mine in California, Cerro San Pedro inMexico and thePeak mine in Australia. Production from thethree mines this year is forecast at 400,000 ounces.
New Gold Inc. continues to expand amid rising gold prices. Oliphant said goldprices will continue to rise as the yellow metal continues to be sought after byglobal central banks. Growing demand from China and India as well as challenges infinding new deposits and new will also trigger gold prices to soat.
Gold hit a record high of $1,923.70 per ounce on Sept. 6. The price withdrew6.9 per cent last week, closing below $1,600 an ounce for the first time sinceSeptember.