New Gold Inc. (NGD) is seeing considerable cash flow from production in its low-cost Cerro San Pedro, Mesquite and Peak mines, and the company expects a perpetual cycle of mine life and cash generation in the Peak mine, says Randall Oliphant, Executive Chairman and Director of New Gold Inc.
“Cerro San Pedro is an open-pit, heap-leach operation. It’s in Mexico. It gets a couple million ounces of silver a year as a byproduct which makes it our — before New Afton — our lowest-cost mine. It’s just a cash flow machine, and what we mean by that is, it cost about $90 million to build and generates about $150 million a year of cash flow,” Oliphant said.
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New Gold‘s Mesquite mine is also an open-pit, heap-leach operation, and it has low sustaining capital with a mine life of over 10 years, whereas New Gold‘s Peak mine is showing a continuous eight-year life cycle, Oliphant says.
“[Mesquite] doesn’t have the silver as a byproduct, but what it does have is remarkably low sustaining capital. So while its costs are in the order of $700 an ounce, there really isn’t anything more to spend than that. It too generates a lot of cash,” Oliphant said. “[Peak] started up in 1992 with an eight-year life, and this mine seems to be almost perpetual because after 20 years of operations, it still has an eight-year reserve life and 2012 was just like other years where we more than replaced what we take out of the ground in terms of reserves every year. So it should also generate a lot of cash for us for a very long time.”
Randall Oliphant, Executive Chairman of New Gold Inc. (USA) (NYSEMKT:NGD), Presents at Canaccord Global Resources
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