Overview -
New Gold, through MSX its wholly-owned subsidiary, controls 100% of the Cerro San Pedro open pit gold and silver heap leach project located in semi-arid central Mexico in the state of San Luis Potosi some 20 km east northeast of the city of San Luis Potosi.
Construction was completed in the first part of 2007, while the first gold pour was reported in April 2007. Full production capacity was expected to be achieved by the fourth quarter of 2007.
Approximately 194 million tonnes of material - ore and waste for a stripping ratio of 1.26:1 - will be mined and 86 million tonnes of ore will be processed over a mine life of 10 years, at an average ore processing rate of 28,000 tonnes per day, or approximately 8.6 million tonnes per year.
Mineral reserves are estimated at nearly 86 million tonnes of ore grading 0.55 g/t Au and 22.5 g/t Ag. Because of the fact that the deposit is characterized by large tonnages and low grades, mineral reserve estimates are sensitive to metal prices, metallurgical recoveries and operating costs.
In 2007 the mine produced 26,800 ounces of gold and 228,620 ounces of silver. The project is expected to produce an average of 89,000 ounces of gold and 2.1 million ounces of silver over its currently estimated mine life or approximately 125,000 gold-equivalent ounces annually.
The Cerro San Pedro project economic analysis forecasts annual cash flows after Year 1 (2007) that generally range between US$12 million and US$22 million, varying according to grade fluctuations and waste stripping requirements. Base case project cash flows are estimated to total nearly US$199 million, using variable gold and silver price assumptions derived from recent market experience.
The only outstanding royalty is a 1.95% gross value royalty owned by Newmont Mining.
