New Gold Announces Blackwater Feasibility Study ResultsFull post: https://www.newgold.com 12/12/2013 VANCOUVER, Dec. 12, 2013 /CNW/ - New Gold Inc. ("New Gold") (TSX:NGD) and (NYSE MKT:NGD) today announces the results of the Feasibility Study for its Blackwater Gold project ("Blackwater" or the "Project") in British Columbia, Canada. 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, $22.00 per ounce silver and a 0.95 US$/C$ foreign exchange rate, Blackwater has a pre-tax 5% net present value ("NPV") of $991 million, 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 Randall Oliphant, Executive Chairman of New Gold. "The Project has many great attributes including: its secure jurisdiction, long life, robust production potential, all-in sustaining costs well below industry average, and continued exploration potential. However, the combination of gold being down by over $500 per ounce since we completed the Preliminary Economic Assessment for Blackwater in September of 2012 and our Rainy River project having a more modest capital requirement, results in our primary objective being the advancement of Rainy River." "Importantly, Rainy River shares all of Blackwater's strong project characteristics," Oliphant continued. "An updated feasibility study for Rainy River remains on schedule for completion in early 2014." New Gold will continue to move Blackwater through the permitting phase in 2014. The company views the potential of having a fully permitted project as an important and valuable asset. In the current environment, where there has been significant commodity price volatility, New Gold wants to maximize its flexibility in respect of any future development decisions. The company plans to stage the development of its projects with the near-term focus being on the advancement of the lower capital cost Rainy River project. Thereafter, the timing of Blackwater's development will be driven by the prevailing market conditions over the coming years. Mineral Reserve Estimate The Blackwater mineral resource, effective March 31, 2013, is reported within a conceptual pit shell at gold-equivalent cut-off values ranging from 0.3 to 0.4 grams per tonne. The deposit contains Measured and Indicated mineral resources suitable for direct processing of 306 million tonnes at 0.88 grams per tonne gold and 5.8 grams per tonne silver, representing 8.6 million ounces of gold and 57.5 million ounces of silver. In addition, the Measured and Indicated mineral resources suitable for stockpiling and future processing includes 91 million tonnes at 0.30 grams per tonne gold and 4.3 grams per tonne silver, representing 0.9 million ounces of gold and 12.6 million ounces of silver. 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, which represents the proportion of the Measured and Indicated mineral resources included in the production schedule, has been diluted using an average of 4.7% additional tonnes containing 0.15 grams per tonne gold and 3.1 grams per tonne silver. The Blackwater mineral reserve is summarized below. Blackwater Mineral Reserve Estimate - Effective December 2, 2013 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 7.51 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 $1,300/oz gold, $22.00/oz 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 $1,400/oz gold, $28.00/oz silver, and 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 December 2, 2013. 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.