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Analysis

Looking Beyond Cerro San Pedro

Mon, 10/21/2013 - 09:43

New Gold’s Cerro San Pedro mine boasts a very competitive cash cost per ounce. This has allowed the company to establish favorable profit margins, while also strengthening its financial position through the diversity of its deposits. “We are fortunate to have significant byproduct revenues from the copper and silver production at our Cerro San Pedro and New Afton mines, which keeps our total cash costs low compared to our competitors,” says Hannes Portmann, New Gold’s Vice President of Corporate Development. “This also helps us to offset certain cost pressures that would otherwise negatively impact us. We are also pleased that, in general, our mines have maintained consistent grades over their mine lives.” New Gold’s portfolio is looking strong, with four mines now in production and generating revenue that can support the exploration and development works on the company’s three projects that are not yet producing. “We now have four producing mines, and our total cash costs are declining steadily. New Afton came into full production in 2012 and, with its significant by-product revenues, this had a positive impact on our cash costs for 2012, and will have an even greater positive impact in 2013, after a full year of production,” explains Portmann. New Gold’s portfolio is further strengthened thanks to the average lifespan of more than 10 years of each of its mines, though Portmann is confident that with the exploration and expansion plans the company has that forecast will only improve. “We are currently exploring additional resources to extend the LOOKING BEYOND CERRO SAN PEDRO lifespans of the mines, especially at our Peak Gold Mines in Australia and also the C-Zone at the New Afton mine in Canada,” he adds.

New Gold’s strong financial position is a result of the company’s strategic approach to management and operations across the corporation. Portmann explains that there have been five main factors that have helped the company to achieve financial success and its standing as an attractive investment proposition: owning assets in favorable jurisdictions; maintaining low cost production; having a peer-leading growth pipeline; controlling two underexplored districts; and benefiting from a significantly invested management team and experienced board of directors. Looking to New Gold’s future, Portmann says that these criteria will continue to be central in the company’s success. Mexico, too, will maintain an important place in the company’s future, even beyond the life of the Cerro San Pedro mine. “When the Cerro San Pedro mine eventually closes we would like to be able to replace that production, if another compelling opportunity arises. We like mining in Mexico due to the country’s rich mining history, skilled labor, and also the abundance of exciting projects,” he says. “We believe that New Gold has a strong relationship with Mexico, its government, its communities, and its people. We demonstrate this with our commitment to sustainable production and by giving back to the communities where we operate on a daily basis.”