Located 10 kilometres from Kamloops, British Columbia, the New Afton Mine is New Gold’s most significant cash flow generator. New Afton is a low-cost gold and copper producer with significant upside potential, primarily through increases to mill capacity and exploration at the site’s highly prospective C-zone.

In 2014, the mine’s second full year of production, New Afton continued its track record of excellence by achieving a 20 percent increase in gold production over the year before. The increase in gold production was driven by the combination of a 17 percent increase in throughput and a 4 percent increase in grade, which was only partially offset by an expected 2 percent decrease in recovery stemming from the higher throughput.

Costs were also low for the year. All-in sustaining costs of minus $650 per ounce were below guidance, while total cash costs of minus $1,248 per ounce were within guidance.

The spirit of continuous improvement is strong at the mine. Steady increases in throughput since start-up in June 2012 have increased mill throughput from its 11,000 tonnes per day (tpd) design capacity. In mid-2015, we plan to complete a mill expansion that takes the mill to 14,000 tpd. This one-time $45 million investment has the potential to increase cash flow by over $20 million per year.

In 2015, New Afton is expected to achieve increased gold and copper production due to an increase in the annual throughput rate. Costs are expected to be slightly higher than in 2014 due to lower copper by-product price assumptions.

Exploration at New Afton’s C-zone provides further exciting upside potential. The C-zone is a continuation of the main New Afton deposit that lies down and along strike of the reserve that is currently being mined. In 2014, New Gold completed a scoping study to evaluate the potential for the C-zone to extend the mine’s life. The results indicated five years of additional mine life, with 522,000 ounces of gold and 377 million pounds of copper contained, and estimated full year average production of 107,000 ounces of gold and 77 million pounds of copper. This resource remains open at depth with the potential to grow laterally to the west. The C-zone is a truly exciting resource with potential that promises to further enhance New Afton’s track record for exceeding expectations.

See Development and Exploration Review – New Afton C-zone, British Columbia, Canada on pages 65–67 for additional information regarding the New Afton C-zone.