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Rainy River mine construction behind schedule

New Gold shakes up project roster, picks up the pace
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Cost over-runs and delays in digging out an open-pit gold mine near Fort Frances resulted in sweeping management changes at New Gold’s Rainy River project in northwestern Ontario.

In a Jan. 30 news release, the Toronto-based miner said the project is $195 million over budget and is months behind schedule.

The company is targeting first production in September, approximately three months later than the previous estimate, with full-blown commercial production starting Nov. 1.

The three-month delay was attributed to “slower than planned ramp-up of mining rates” that impacted the delivery of construction materials.

These conclusions were reached after New Gold conducted a detailed review of the project in January.

The mine site is 65 kilometres northwest of Fort Frances in Richardson Township.

An estimated $515 million will be spent this year on development. An additional $40 million that was earmarked for use during the mine’s operating period is now shifted into the construction capital category. A temporary construction camp will also be required for an additional three months at a total cost of $5 million.

As a result of the project’s delay, some personnel moves were made.

Back aboard as interim chief operating officer is Ray Threlkeld, the former president-CEO of Rainy River Resources, who helped develop the deposit before it was sold to New Gold for $310 million in 2013.

Greg Bowkett, general manager of New Gold’s Peak Mines in Australia, slides in to take the same position at Rainy River.

Pierre Légaré, a 30-year veteran of mine developer, is the project director for the balance of construction.

Peter Marshall, New Gold’s vice-president of projects, leaves at the end of February, but will remain as a part-time consultant until his replacement is named in the coming months.

"With a new leadership team on site at Rainy River and a comprehensive review of the project's remaining construction schedule and commissioning plan completed, we are committed to delivering on our updated plan at Rainy River," said Hannes Portmann, New Gold president-CEO.

In other personnel moves, Randall Oliphant is stepping down as executive chairman, with former Falconbridge-Xstrata Nickel executive Ian Pearce replacing hm.

Through the end of January, 24 million tonnes of overburden and waste rock has been mined from the open pit.

The mining rate has increased to an average of 100,000 tonnes per day with the daily rate expected to pick to 120,000 tonnes over the next seven months.

Using smaller equipment should help pick up the pace of carving out the pit, along with better weather heading into the spring, the company said.