The recent drop in the market value of gold has caused New Gold Inc. to caution a possible delay of its Blackwater gold mine project southwest of Vanderhoof.
Originally projected with a potential construction start of as early as 2015, New Gold said in a Dec. 12, 2013 feasibility report that mine construction would have to wait until market conditions improve. Market conditions do not currently support construction start.
“The combination of gold being down by over $500 per ounce since we completed the preliminary economic assessment for Blackwater in September of 2012 and our Rainy River project having a more modest capital requirement, results in our primary objective being the advancement of Rainy River,” said New Gold executive chairman Randall Oliphant.
Rainy River is a New Gold project west of Thunder Bay, Ontario. Like the Blackwater project, Rainy River is in pre-application stages for its provincial and federal environmental applications.
Despite this cautionary announcement, New Gold will proceed with slated environmental application work over the next year, which is exactly what New Gold’s previous 2014 plan for the Blackwater project was for before the Dec. 12 announcement.
“We’ll continue with the permitting process on both projects… but with current gold prices we wouldn’t be able to start the capital investment to build the mine [Blackwater] until prices recover,” said New Gold director for corporate communications and investor relations, Julie Taylor.
“We’re going to continue through 2014 as if it were a go,” Taylor added. If gold prices recover, then the project will be that much further ahead with a completed feasibility study and environmental permitting.
The New Gold Blackwater project is expected to have an approximate 20-year working lifespan before closure and reclamation. According to information provided during a May 8, 2013 open house in Burns Lake, the project would require more than 1000 workers to build the mine and provide 500 full-time positions once in operation.
New Gold is a B.C.-based mining company with four mines operating in Canada, the U.S., Australia and Mexico.
New Gold’s New Afton mine operation near Kamloops, B.C. is not affected by the recent slide in the price of gold.