Update New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) and (NYSE American: NGD) provides an update to its 2021 operational outlook for the Rainy River Mine and the consolidated operational outlook. All amounts are in U.S. dollars unless otherwise indicated.
In early August, the Company indicated that July production at Rainy River was primarily from the eastern area of the ODM zone ("East Lobe") and the realized gold grade from this area was below the modeled gold grade in this period. This trend continued in August. Over both July and August, the modeled East Lobe high and medium grade ore negatively reconciled to ounces mined, leading to a total of approximately 20,000 lower gold ounces produced during this period. The Company has since followed up with additional reverse circulation drilling and globally, all areas outside of the East Lobe, continues to reconcile well where mining has occurred or is about to occur, and are consistent with historical results. The East Lobe represents approximately 35% of planned production for the remaining period of September to December 2021. As a result of the variance experienced in the East Lobe, Rainy River's gold equivalent(1) production for 2021 is now expected to be between 240,000 and 255,000 ounces.
The Company continues reverse circulation drilling in the East Lobe and the understanding of the mineralization is improving, however, additional drilling is required to refine the block model and improve its predictability. The Company is advancing an underground optimization study for Rainy River, with completion anticipated by year-end, and results would be incorporated into the year-end Mineral Reserve and Resource and life of mine update.
"While the reduction in our near-term guidance at Rainy River is unfortunate, I remain confident the mine has reached an inflection point, as evidenced by the free cash flow generated in the second quarter and the mine is on track to deliver an improved second half of the year", stated Renaud Adams, President & CEO. We continue to seek ways to further optimize our costs and capital profiles, and with the underground growth potential currently being evaluated, Rainy River is expected to be a meaningful contributor of free cash flow in our portfolio going forward."
As a result of the Rainy River revisions, consolidated gold equivalent(1) production for 2021 is now expected to be between 405,000 and 450,000 ounces. Annual consolidated copper production guidance remains unchanged at 56 to 66 million pounds. New Gold expects its consolidated 2021 all-in sustaining costs to be between $1,415 to $1,495 per gold eq. ounce(2), and total cash costs to be between $960 to $1,030 per gold eq. ounce(2). New Afton guidance remains unchanged.