New Gold Enhances Mining Operations with Extended Mine Lifespan
New Gold (TSX: NGD) (NYSE American: NGD) has successfully extended the operational life of its New Afton mine in British Columbia and Rainy River mine in Ontario through several strategic technical growth projects implemented over recent years.
Growth in Gold and Copper Reserves
Increases in reserves are notable at New Afton, where copper and gold reserves have risen by 15% and 13%, respectively, compared to the end of 2024. This boost is mostly due to a 27% increase in tonnage at the C-Zone, along with the promising introduction of the East Extension Zone, showcasing copper and gold grades that are more than double those found in the C-Zone.
New Gold clarified that these new mineral reserves came at no extra expense and are projected to allow for a one-year operational extension until 2031. Further opportunities to extend the block-caving operation in British Columbia exist through exploration of the K-Zone, HW Zone, and D-Zone.
At the Rainy River site, the open pit—initially expected to be depleted by early 2025—has now been extended to 2028 due to an optimized Phase 5 pit design. This approach will also facilitate processing of low-grade stockpiles, allowing the mill to run at full capacity until 2029.
Though there was a 2% decrease in open pit reserves at Rainy River, the company reported a striking 76% increase in gold resources, presenting significant opportunities for extended operations. Underground reserves have also increased to approximately 1.34 million ounces.
CEO Patrick Godin noted that the company’s life-of-mine plans “successfully outline New Gold’s strong production profile with reducing costs, strong free cash flow generation and increasing net asset value while also highlighting exciting opportunities to build on over the longer term.”
2025 Production and Cost Expectations
As a result of these mine extensions, New Gold has outlined a promising three-year outlook that projects increased production and reduced costs, leading to significant cash flow generation.
In 2025, the Toronto-based miner anticipates a 16% increase in consolidated gold production, ranging from 325,000 to 365,000 ounces. This growth is primarily attributed to the improved production profile at Rainy River, which is expected to average 300,000 ounces per year over the next three years.
Similarly, copper production is projected to remain steady with expectations of 50-60 million pounds, consistent with 2024 levels. This is due to the ramp-up in New Afton’s C-Zone throughput being slightly offset by lower grades resulting from the depletion of the B3 cave and initial draw bells from the C-Zone.
The all-in sustaining costs are expected to drop by $215 per ounce, or 17% compared to the 2024 midpoint guidance, resulting in costs between $1,025 and $1,125 per ounce. This decrease reflects higher production levels and lower operating costs from upgrades at New Afton’s C-Zone crusher and conveyor system, as well as a reduction in the Rainy River Phase 4 strip ratio.
New Gold anticipates total capital expenditures in the range of $270-$315 million, aligning with the 2024 guidance. Continued ramp-up at New Afton’s C-Zone and Rainy River underground operations, along with initial development at the New Afton East Extension and Rainy River Phase 5 expansions, are included in these projections.
“In 2024, the company reached a free cash flow inflection point and 2025 will continue to build on that,” Godin added. He expressed optimism that ongoing investments will yield value through increased production, lower costs, and substantial free cash flow generation.
Projected Increases in Margins
Looking ahead to 2026 and 2027, consolidated gold production is foreseen to rise even more significantly, with projections of 55% (435,000-490,000 ounces) and 37% (375,000-445,000 ounces) growth, respectively, from 298,303 ounces in 2024. Once again, these increases will be driven by improved production profiles at both Rainy River and New Afton as growth projects are brought online.
Copper production is also set for growth, with 2027 estimates between 95-115 million pounds—an increase of approximately 94% compared to 2024, spurred by improved grades and throughput from New Afton’s C-Zone.
The all-in sustaining costs are expected to diminish significantly, projected to be between $400 and $500 per ounce—down about 70% from 2024 midpoint guidance—coinciding with the anticipated completion of the Rainy River Phase 5 expansion in 2026. By 2027, total capital expenditures are expected to decline to $70-$95 million, representing a significant fall from 2024 costs.
New Gold indicated that these trends, characterized by rising production, declining costs, and lower capital expenditures across 2025-2027, are anticipated to enhance margins and generate substantial free cash flow for the company.
As of midday Thursday, shares of New Gold have decreased by 2.6%, trading at C$4.17, bringing the company’s market capitalization to C$3.3 billion ($2.3 billion).
