TORONTO (miningweekly.com) – The development of TSX-listed intermediate gold miner New Gold's $877-million Rainy River gold project, in north-western Ontario, is proceeding on time and on budget, with first production slated for mid-2017.

The 21 000 t/d, combined openpit and underground operation was expected to produce an average of 325 000 oz/y of gold over its first nine years at an all-in sustaining cost (AISC) of about $670/oz, including cash costs of $570/oz.

New Gold, which hosted an analyst and investor tour of the property on Tuesday, also announced the planned retirement of president and CEO Robert Gallagher in June 2016. The company had an established leadership transition plan that would see executive chairperson Randall Oliphant continuing to lead New Gold, while Gallagher's portfolio of responsibilities would be transitioned to members of the company's executive team over the next nine months.

Gallagher had been instrumental in shoring up New Gold’s coffers over the last two months, which saw the company complete two significant transactions that boosted the balance sheet without any dilution.

In July, the company announced a $175-million streaming transaction with Royal Gold on future gold and silver output from Rainy River, of which $100-million was paid on closing. In August, New Gold agreed to sell its 30% interest in El Morro, Chile, to Goldcorp for $90-million in cash, the cancellation of the company's $93-million carried funding loan and a 4% stream on future gold output from El Morro.

Subject to meeting the conditions required for payment of the second installment of the stream, as well as the conditions of closing the El Morro sale and, net of applicable taxes, New Gold said it would have improved its financial position by about $333-million.

New Gold's June 30 cash balance of $327-million, the $175-million Rainy River stream proceeds, the $65-million El Morro proceeds and the $236-million available under the company's credit facility, provided the company with total pro forma liquidity of about $800-million.

This was more than enough to cover the outstanding development capital estimate to complete Rainy River.

Further, New Gold advised that its 2015 targeted AISC remained $300/oz to $350/oz below the current gold price of around $1 105/oz, which was expected to enable the company to generate additional free cash flow to support the project's development.

The company further pointed out that its exploration team was preparing to undertake a 2 500 m reconnaissance drilling campaign during the coming months to test four areas located “within a few kilometres” of the central mine development area, with good potential to host significant gold mineralisation in the subsurface.

The team had also discovered multiple prospective gold showings on the broader Rainy River claim holdings that further supported the potential for future discoveries in one of Canada's newly emerging gold districts.

New Gold expected to update its mineral resource and reserve estimates at the end of the year to incorporate the added mineral resources on the Burns Block, which the company gained as part of its acquisition of Bayfield Ventures in late 2014.