Name and Location
Rainy River gold/silver project, Ontario, Canada.

Client
New Gold Inc.

Project Description
The Rainy River gold deposit contains measured and indicated mineral resources suitable for direct processing, from mine to mill, of 106-million tonnes at 1.54 g/t gold and 2.88 g/t silver, representing 5.2-million ounces of gold and 9.8-million ounces of silver. The openpit measured and indicated mineral resources are suitable for stockpiling and future processing, totalling 71-million tonnes at 0.43 g/t gold and 2.09 g/t silver, representing one-million ounces of gold and 4.8-million ounces of silver.

A feasibility study has identified openpit mining as the primary method to mine the Rainy River deposit, owing to the proximity of mineralisation to the surface. Deeper, higher-grade portions of the deposit will be mined using underground mining methods. The openpit mining production schedule incorporates an elevated cutoff grade strategy during the first nine years of mining to increase the mill feed grade. Material below the elevated cutoff grade will be stockpiled for processing during the later years of the project life.

In addition, the start of production from the openpit will signify the development of the underground mine, with initial underground production expected in 2018. The targeted mill throughput of 21 000 t/d will initially be sourced exclusively from the openpit and, once in full production, the underground mine will contribute 1 500 t/d of ore, with the balance of the 19 500 t/d coming from the openpit.

At full capacity, openpit mining operations will be undertaken with an equipment fleet comprising three 216 mm blast-hole drills, one 29 m3 and two 26 m3 hydraulic shovels, one 18 m3 wheel loader and twenty-two 220 t haul trucks.

A 10 m bench height has been selected for mining.

The openpit mine will provide process plant feed, starting at a nominal rate of 21 000 t/d, or 7.7-million tonnes a year, declining to 19 500 t/d, or 7.1-million tonnes a year, once the underground mine reaches full production.

Total mining of ore, waste and overburden will peak at 69-million tonnes a year. The operational stripping ratio, excluding waste and overburden stripping during the development phase, is 3.5:1.0.

The underground mine will be accessed through a 4 km decline from a surface portal located to the east of the openpit.

The underground design supports the ultimate extraction of 1 500 t/d of ore by longitudinal longhole open stoping. The underground mineralisation occurs in subvertical horizons varying in width from about 3 m to 20 m, with the weighted average width across the various zones being about 8 m. The various areas of underground mineralisation provide for flexibility in the production schedule to recover higher-grade material earlier in the mine life. Longitudinal longhole open stoping in each zone will proceed in a retreating pattern from the strike extent of ore to a common access point on all levels. Mining is scheduled to proceed upwards from the lowest level of the zone or from an adopted sill elevation, with backfill providing the working platform for each successive lift. On average, stopes 8 m wide, 20 m long and 20 m high have been used for mine planning. At full capacity, ore handling from underground workings to surface will be accomplished through a fleet of four 7 m3 loaders and six 45 t haul trucks.

The 21 000 t/d process plant will use conventional crushing, grinding, leaching, carbon-in-pulp and gold recovery technology to produce gold/silver doré. The overall design uses a simple and conventional flowsheet.

Run-of-mine material will be crushed to 165 mm in the gyratory crusher and subsequently conveyed and ground in the semiautogenous mill in closed circuit with a scalping screen and a pebble crusher. Undersize material from the scalping screen will be combined with the ball mill discharge and pumped to a cyclone cluster. The underflow from the cyclone cluster will feed the ball mill. A gravity circuit will treat a portion of the ball mill discharge.

The cyclone overflow will be thickened in a preleach thickener and pumped to the cyanide leaching circuit, which is designed for about 30 hours of retention time.

Net Present Value/Internal Rate of Return
Not stated.

Value
The total estimated development capital cost for the project is $885-million, inclusive of a $70-million contingency.

Duration
Commissioning is targeted for late 2016, with the first year of full production expected in 2017.

Latest Developments
Precious metals royalty and streaming firm Royal Gold has agreed to provide New Gold with $175-million in financing to be used for the ongoing development of its Rainy River project, in exchange for a percentage of the future yearly gold and silver output from the mine. New Gold acquired Rainy River Resources for C$310-million last year.

Royal Gold will provide New Gold with $100-million at the signing of the deal and the remaining $75-million when 60% of the development capital has been spent at the project, which management expects to occur by mid-2016.

New Gold will deliver 6.5% of gold output, up to 230 000 oz, and 3.25% of gold produced after that threshold is reached, as well as 60% of silver output up to 3.1-million ounces, with 30% of silver produced to be delivered to Royal Gold after that threshold.

Royal Gold will pay 25% of the spot price at the time of delivery.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
New Gold media and communications, Julie Taylor, tel +1 416 324 6015, fax +1 416 324-9494 or email julie.taylor@newgold.com.