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Spring flooding waters down gold production at Rainy River Mine

New Gold anticipates second half bounce-back as underground operations begin
New Gold Rainy River Intrepid Zone development
Underground mine development in the Intrepid Zone (New Gold photo)

The impact of a harsh northwestern Ontario winter combined with spring rains registered in the bottom line of New Gold’s Rainy River gold mine.

The gold company released its second quarter earnings and production numbers on Aug. 4 showing decreased gold production at its open-pit mine, northwest of Fort Frances.

During May and June, the pit flooded from a combination of snow melt and then heavy rainfall, impacting the ability to extract ore at the pit bottom. The pit was pumped out and a second dewatering system was added. 

Second quarter production at Rainy River stood at 43,759 ounces, down from 55,163 ounces posted during the same period last year.

Rainy River’s year-end gold target, known as guidance, has been revised from 265,000 to 295,000 ounces to 230,000 to 250,000 ounces.

The company expects production to boost in the second half of this year.

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"While the operational outlook changes to this year are unfortunate, our teams remained resilient during a challenging quarter and I remain confident that we are positioned to have a stronger second half of the year, and deliver on our updated guidance," said New Gold CEO Renaud Adams in a news release.

"Heavy rainfall and flooding in the quarter impacted Rainy River's mine plan, but over the last month, we have made tremendous progress on our dewatering efforts and mining at the bottom of the pit has resumed. Our priority for the remainder of the year continues to be on positioning the open pit operations to their optimal conditions.”

Over the next four years, New Gold will be making the transition from mining the pit to ramping up operations underground.

Contractors are advancing a decline to the Intrepid Zone, covering 774 metres during the quarter. It's on schedule to start production in the fourth quarter of this year. Extraction of the first ore starts next week.

The pit's life is expected to last until 2025. The development of the Intrepid Zone will extend the overall mine life to 2031

Like other mining operations across Northern Ontario, New Gold said it's feeling the pinch from inflation in fuel and other consumables.

“We are facing the same inflationary pressures felt by our peers and across the industry, but I remain positive on several opportunities available to us,” added Adams.

“The increase in fuel prices has had the largest impact to Rainy River, and one opportunity to reduce our fuel consumption is to minimize the amount of rehandling required to feed the mill by optimizing the in-pit blending strategy to maximize direct feed which will reduce stockpile movement.” 

Along with running the Rainy River mine, New Gold operates the New Afton copper-gold mine in British Columbia.

During the quarter, the Toronto miner recorded a net loss of US$37.9 million with cash generated from operations at $37 million. In total, from its two mines, New Gold Gold produced 70,514 ounces of gold, 7.4 million pounds of copper and 17,318 ounces of silver.

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