New Afton
New Afton is an exciting project currently under construction in
Western Canada, which will be an important cash flow generator
for New Gold and a contributor to the regional and local economy.
Estimated Average Annual Production
Gold:85,000 oz
Copper:75 million lbs
History and Location

The New Afton mine construction project is located 10 kilometers from the center of Kamloops in south central British Columbia, Canada on the site of the historic Afton Mine, a previous operation of Teck. New Afton is New Gold's primary development project and is expected to commence production in the second half of 2012. The project will be an underground block cave mine and flotation concentrator, which will produce an annual estimated average of 85,000 ounces of gold, 214,000 ounces of silver and 75 million pounds of copper over a 12 year mine life.

On November 12, 2008, New Gold announced that due to the volatility and uncertainty of capital markets, the development schedule for New Afton would be extended to reduce costs and maximize financial flexibility in the complex and uncertain financial climate. Under the original fast track schedule, operations were to commence in late 2009, ramping up to achieve full production in the second quarter of 2011. With the revised plan, underground development is continuing while surface construction will resume at the end of 2011, with full production being achieved in the second half of 2012. The total project development spend excluding interest was $167.8 million up to December 31, 2008. Under the revised development schedule, the estimated remaining spend (excluding interest) to bring the project into production is $60 million in 2009 and $340 million between 2010 and 2012.

Health, Safety, Environment and Sustainability

The New Afton site achieved 339 days without any lost time due to injury to December 31, 2008, and the underground operating team completed 2008 without any lost time due to injury. New site safety orientations, underground orientation and equipment re-training, along with annual mine survival training for underground employees were completed.

The New Afton mine will be an important direct and indirect contributor to the regional and local economy. New Gold maintains effective discussions with local government, First Nations groups, tenure holders, special interests groups and the general public concerning the impact of the New Afton project.

In March 2008, New Gold signed a participation agreement with the two local First Nations Skeetchestn and Tk’emlups bands. This is a ground-breaking agreement in the Province of British Columbia that opens the way for local governments and other organizations to develop their own meaningful agreements with Canada’s First Nations. The main components of the agreement address mining-related educational initiatives within local schools; local hiring practices; band member owned and operated contractor agreements; and financial compensation throughout the developmental and operational stages of the mine.

New Gold undertook environmental baseline studies including air quality, wildlife, hydrology, surface water quality and quantity, soil and vegetation in the areas surrounding the New Afton project. New Gold intends to use reclaimed water from the Afton pit for its operations, in order to minimize fresh water use, and has ensured that the project design includes no surface water discharge from the site. The Company also has initiated extensive plans to ensure that the final reclamation and re-vegetation of the mine site is successful.

2008 Operating Results

Development of the New Afton project in 2008 progressed according to the revised development schedule. Underground development to the bottom of the ore body has proceeded as planned with 4,477 meters completed during 2008. Transition to owner-operator mining crews was completed during the first quarter of 2009 in response to the revised development schedule for the project.

Surface development work at New Afton includes commencement of construction of the mill building in 2008, which is scheduled to be completed in the first quarter of 2009. The mill building will provide a secure location for the storage of mine and mill equipment that has been received to date, some of which includes the SAG and ball mill, a sag mill discharge screen, flash flotation cells and a flotation air blower. As of December 31, 2008, all required major permits were in place.

Full scale surface construction is expected to resume at the end of 2010, with full production achieved in the second half of 2012. The total project development spend excluding interest was $167.8 million up to December 31, 2008.

Looking Forward

In 2009, New Afton will continue with the advancement of the underground development to the base of the ore body, complete the enclosure of the mill building, continue to take receipt of key equipment items and complete the detailed engineering to the 95% confidence level. Project spend at New Afton is expected to be approximately $60 million in 2009, excluding interest.