Canadian Mining Journal


New Gold struggles with cost overruns at Rainy River

VANCOUVER  — Shares of Canadian producer New Gold (TSX: NGD; NYSE-MKT: NGD) were hit hard following further cost overruns and delays at its wholly-owned Rainy River gold development 65 km due north of Fort Frances, Ontario. The company’s ongoing struggles with the project have resulted in management turnover and a liquidity shortfall that will likely underpin a forced capital raise later this year.

New Gold revealed the additional capital requirements, along with a three-month production delay, at Rainy River alongside its fourth-quarter operating results on Jan. 30. The company’s shares tumbled nearly 30%, or $1.44 per share, over the following four trading days before settling at around $3.70 at press time.

Rainy River is now expected to cost roughly $195 million more than planned, though the cost overflow jumps to $245 million once $50 million to $75 million in accounts payable, post-commercial production are considered.

Read the entire story at The Northern Miner.